You worked hard to buy your home and now it's time it worked for you. Around the world, people are questioning the conventional wisdom behind owning their home after retirement and are opting to sell up and rent instead.
In Germany, 64% of homeowners now plan to rent in their later years, with the practice rising in popularity in the UK, Canada and the US too. It may seem like a big decision, especially if you plan to pass your estate on to your family, but today it makes more sense than ever. When it comes to finances, practicality, quality of life and personal freedom, renting a senior apartment offers distinct advantages.
It may seem counterintuitive, but the cost of home ownership can be higher than renting. In fact, renting works out cheaper in 98% of US cities with high populations of over-65s. This is because tax, agency fees, surveyors and solicitors can drive up costs for homeowners – even more so if you pass on a home as an inheritance.
Renting, meanwhile, comes with little administration, leaving you with a larger pension pot. Although monthly rental costs may seem higher, they don’t just cover the roof over your head, they pay for maintenance too. With predictable monthly costs, it’s much easier to budget for the long term. That leaves you free to plan retirement projects without interruptions from unexpected repair and maintenance tasks, saving you time and minimising stress.
Downsizing is often seen as a way of unlocking capital for travel and hobbies in your retirement, while preserving the security of home ownership. The reality is that it can be an awkward compromise. You’re still locked into a property, with less space, and have only some of your old home’s equity to spend on retirement. If you sell your house and opt to rent, you release your capital and you’re free to move when you wish, or to lock the door and go travelling without worrying about caring for an investment.
If the house had been earmarked as an inheritance, you could instead help your children buy today. 44% of Canadian millennials rely on parental support for property purchases, UK parents spent £6.5bn helping children onto the property ladder in 2016, while 37% of US millennials return to live with their parents to save for a deposit. By cashing out now you can ensure your children get on the property ladder, without sacrificing your lifestyle or losing money on inheritance tax.
If you're selling your pride and joy, you've already committed to a new lifestyle, so why not choose one that's comfortable, as well as practical? By opting to rent rather than buy, you can afford to look at luxury senior apartments that offer creature comforts.
Real estate developers are aware of the rise of retired renters and the changing way we view property. Consequently, the availability of luxury property with amenities, services and locations specifically tailored to the over-50s is increasing. As the competition for your custom builds, you’ll find not only that the spaces on offer improve, but you’re free to move between them as you choose.