Recent figures suggesting that nearly £1 billion was withdrawn by over-55s through equity release in the first three months of 2019 show how the ‘rent in retirement’ option is growing in popularity.
That’s the claim from Girlings Retirement Rentals, which says 20,400 home owners borrowed equity release against their properties in the first three months of this year, with the average owner taking out a lump sum of £97,763.
Girlings business director Jamie Turnbull says that whilst equity release suits some people, there are alternatives such as downsizing and mainstream sector renting which could make people financially better off.
“We have seen a year on year increase in the number of people choosing to sell their family home to downsize and rent, instead of buying. One of the main benefits is to have access to all their capital without paying interest, like many people have to do when taking out equity mortgages” says Turnbull.
“By selling up and renting people can choose to invest and earn money on their savings, as well as have a lump sum to spend on things like home improvements or helping family. Obviously with renting there are no stamp duty costs either.
“Often when people rent they can plan their finances more carefully as they know their monthly outgoings plus there are no surprise bills for upkeep and maintenance when people own their home. The main barrier to renting in our experience is security of tenure. However with most of our properties coming with assured or ‘lifetime’ tenancies this doesn’t need to be an issue.
“Renting enables people to downsize to a more manageable sized property, release capital, save on bills and enjoy additional benefits such as access to a ready-made community and services they may need when they are older. They can then just get on with enjoying their retirement” concludes Turnbull.