What happens when generation rent hits retirement?

Published on
2 min read

Currently most workers over 40 expect (or at least hope) to pay off their mortgage before they retire. Additionally they expect this will give them a greater net income during their last decade or more of work before they retire. When they do retire their outgoings should be less than they currently are (allowing for inflation) and everything looks rosy.

One gloomy cloud on the horizon is the many reports warning of a pensions time bomb as peoples’ pension savings fall short of expectations. One solution is to sell your home (down size if you are lucky enough to have a home bigger than you need) to bridge the gap.

But what happens if you rent? When do you stop paying rent? When you retire? Nope.

If the current generation of “nearly at pension agers” (to coin a new phrase) are looking to sell their homes to fund their pensions what happens to those coming after them who have already made the decision to rent for life and not buy?

These two factors, pension deficits and life time renters, are going to have a significant impact on the economy and the property market at some point. Add in student debt for those a little further down the road and you have a triple whammy.

How will this impact on the property market? Not just residential but leisure and retail too?

If you have a leisure or retail industry with a significant amount of retired people with good disposable incomes as its key customer base. What happens when that market no longer has the disposal income of their forbears? Presumably they spend less and demand drops.

When it comes to retirement private rental sector will the government step into the market to control or impact in some other way via the tax system?

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