Renters face £419,000 bill in retirement

Rents are expected to more than double over the next 20 years, taking the total cost of renting in retirement to around £419,000, according to new analysis from Standard Life.  This is set to place significant pressure on retirement incomes, with renters facing materially higher financial requirements than those who own their homes outright.

The analysis is based on Office for National Statistics private rental data. It assumes no housing support and annual rent growth of 3.8%*. It suggests average monthly rents could rise from £1,160 today to around £2,350 by 2046.

According to the Pensions UK Retirement Living Standards, for a minimum lifestyle in retirement a single person needs an income of £13,900 a year, rising to £32,700 for a moderate lifestyle. However, these figures assume housing costs are already covered. For those who rent in retirement, housing costs could add the equivalent of around £13,910 over the next twelve months, increasing the income needed to achieve a minimum living standard from £13,900 to £27,810.

Retirement rental costs vary significantly across the UK. In London, retirees could face rental costs over £800,000 over a 20-year retirement. In the South East, total costs are expected to reach £531,000, and in the East around £480,000.

Even in regions with lower starting rents, costs remain significant, with retirees in Scotland facing costs of around £382,000, and those in the North East, around £291,000. This variation highlights how both housing and location are becoming increasingly important considerations in retirement planning.

Pete Cowell, Head of Annuities at Standard Life said, “Housing costs don’t stop at retirement, and renters face a very different reality to that of homeowners. For a growing number of people, housing costs could be the single biggest expense they face in later life, adding many thousands of pounds a year to the income needed to maintain a minimum standard of living.  While support is available for those on the lowest incomes, many retirees will still need to plan for how ongoing housing costs will be met over the long term.

“As renting in later life becomes more common, planning how those costs will be met is likely to become one of the most important financial decisions people make. Whether through savings, guaranteed retirement income products or a combination of both, having a clear plan for meeting those costs can make a significant difference to long-term financial security.”

Catherine Foot, Director of the Standard Life Centre for the Future of Retirement said “Renting in retirement is set to become far more common in the years ahead. That exposes a fundamental flaw in our current pension system, which is built on the assumption that housing costs fall in later life. With a quarter of 60–65-year-olds already living in poverty, a rise in renting risks pushing even more retirees into financial difficulty.

“As the Second Pensions Commission considers the long-term future of pensions, it must reflect the financial realities today’s and future retirees face. Its recommendations will shape the system for decades to come, it’s vital that it results in tangible measures that build people’s financial resilience and support better long-term outcomes.”

Average annual rents across the UK: 2026 – 2046
Region	Year 1	Year 5	Year 10	Year 20	Total
Average	£13,910	£16,150	£19,460	£28,250	£419,000
North East	£9,670	£11,220	£13,520	£19,630	£291,000
North West	£11,850	£13,750	£16,570	£24,060	£357,000
Yorkshire and The Humber	£10,650	£12,360	£14,900	£21,630	£321,000
East Midlands	£11,350	£13,170	£15,870	£23,050	£342,000
West Midlands	£12,010	£13,940	£16,800	£24,390	£362,000
East	£15,920	£18,480	£22,270	£32,330	£480,000
London	£28,520	£33,110	£39,900	£57,940	£859,000
South East	£17,610	£20,450	£24,640	£35,770	£531,000
South West	£15,330	£17,800	£21,450	£31,140	£462,000
Scotland	£12,690	£14,730	£17,760	£25,780	£382,000
Wales	£10,390	£12,060	£14,530	£21,100	£313,000
NI	£10,920	£12,680	£15,280	£22,190	£329,000

• Figures are based on an average life expectancy in retirement of 20 years and a projected 3.8% annual rent increase.