Do you have a dream? What’s your dream? Is it to see out your twilight years in a home you own outright, having freed yourself from the shackles of the mortgage lender? If so, that’s a good dream.
Sadly, social upheaval, a rise in the divorce rate, access to easy credit and the growth in lifetime mortgages have all combined to make that ambition more of a pipe dream than a reality.
Yesterday came the news that up to one in ten over-55s homeowners across the UK still have interest-only mortgages. This means they must pay the entire capital debt off when the deal runs out. According to the over-60s property expert Homewise which conducted the research, the average amount owed by this group is around £91,000, with one in seven owing more than £150,000. That’s a lot of money to find in the run-up to retirement.
Now Saga Home Insurance, a specialist insurance provider for the over-50s, says that the number of 50-plus people living in rented accommodation has been rising for the past five years.
While some commentators would have us believe that older people are blocking up the housing market by hanging on to large family homes, Saga’s data does not bear this theory out.
A third of people aged 50 and over currently live in rented accommodation; this is up from just over a quarter in 2011. The biggest increase is among those aged 50-54, while the number of people renting aged over 70 has fallen.
So what is driving all this? Saga says divorce is creating the demand for renting as so-called ‘silver splitters’ are forced to divide the family home. More over 50s are getting divorced than ever before, perhaps accounting for the fact that 20 per cent of renters over 50 are single as they try regain a foothold on the housing ladder second time around. I can only imagine how daunting that must be, particularly for women who, among that age group, tend to have taken a number of career breaks to have children and are therefore more likely to be low earners.
There’s more bad news. People over 50 living in rented accommodation have around £20,000 worth of contents in their homes, but nearly two thirds do not have home insurance, leaving them potentially facing big bills should anything happen in their property.
Roger Ramsden, chief executive of Saga Services said: ‘Social changes certainly seem to be having an impact on the homes of the over-50s. It is concerning that so many do not have insurance for their belongings. While the landlord has responsibility for repairing the building should anything happen, they are not responsible for replacing valued possessions should they, for example, be damaged by fire or even a significant water leak.’
What’s the solution? We live in a society where we take on more debt than our forebears and are more likely to be divorced by the time we’re 50, and there’s little sign of that changing in the near future. What we can do is take advice. There are a myriad of agencies out there offering help, often at no cost. A good place to start is Citizens Advice and go from there.
Helen Nugent is Online Money Editor of The Spectator
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