Lettings agents and landlords could be dealing with more older tenants in the future as new figures suggest one in three pensioner households could be renting by 2044.

A new report from the Association of British Insurers, Pensions Adequacy: Housing, Households and Auto-Enrolment, highlights that almost two million more people are expected to retire without owning their home, marking a major shift in how future generations will experience retirement.

Most of this growth will come from private renters, the ABI said, where the number of pensioners renting is projected to more than triple in the next twenty years, increasing by 1.3 million people.

The research, commissioned by the ABI and conducted by the Pensions Policy Institute (PPI), highlights that renters face much higher costs in retirement than those who own their home outright.

The analysis found that renting a two-bedroom home privately costs between £200,000 and £400,000 throughout a person’s retirement.

In comparison, the average person’s defined contribution pension pot is £154,000, falling to £105,000 for women.

It means that rental costs threaten to swallow a person’s entire private savings, and the state pension would need to cover all other expenses.

Dr Yvonne Braun, Director of Long-Term Savings Policy at the ABI, says:  “We have made remarkable progress in expanding pension saving and reducing pensioner poverty.

With more people renting, paying off a mortgage, or living alone in older age, we need to rethink what an adequate retirement looks like.

“But the future will not be like the past. For previous generations, home ownership was a cornerstone of financial security in retirement, but for many younger people it will no longer be the norm.

“With more people renting, paying off a mortgage, or living alone in older age, we need to rethink what an adequate retirement looks like – and whether people are on track to achieve it.”

It also creates new challenges for landlords and lettings agents when assessing tenants and providing homes.

Renting in retirement challenges

Aaron Strutt, Product and Communications Director at London-based Trinity Financial, says: “One three pensioner households renting by 2044 is a worryingly high number especially now that so many landlords have left the rental sector and rents are already unaffordable for lots of people across the UK.

“While renting is fine when you’re younger and working, especially because of the freedom it gives, it is much harder when you are older and not working. It is even tougher when older people do not have a huge pension or investments providing them with a regular income.

“As they get older, most people want more security, especially as far as their housing is concerned and they do not want to be moving home every few years. The Bank of Son and Daughter will be busy.”