Surge in pensioners renting expected as homeownership declines

One in three pensioners could be renting by 2044 as falling homeownership leaves more retirees facing housing costs in later life, according to a new report.

Research from the Association of British Insurers (ABI) and the Pensions Policy Institute (PPI) warns the number of pensioners renting is set to more than triple over the next two decades, rising by 1.3 million people.

The PPI is urging policymakers to rethink pension policy as growing numbers of retirees face the prospect of paying rent alongside relying on pension income.

Significant challenge for retirement

According to the data, only 65% of households aged 45–65 are owner-occupiers today, around 15 percentage points fewer than 20 years ago.

The data also reveals renters face much higher costs in retirement than those who own their home outright.

According to the data, renting a two-bedroom home privately costs £200,000 – £400,000 throughout a person’s retirement. In comparison, the average person’s DC pension pot is £154,000, falling to £105,000 for women.

The PPI and ABI warn that rising rental costs could consume a person’s entire private pension savings, leaving the state pension to cover all other living expenses.

Dr Priya Khambhaita, head of research at the Pensions Policy Institute (PPI), said: “The PPI projects over one in three pensioner households will be renting by 2044, posing a significant challenge for retirement adequacy.

“With a greater share of retirees’ individual private pension wealth being eroded by ongoing housing costs throughout later life, this fast-accelerating pension adequacy challenge is already being felt by some of today’s pensioners, and no single policy lever will be enough to address it in isolation.

“To improve retirement outcomes, the central question is not only how much saving should increase, but who most needs support, and how pension policy must interact with housing, social care, and the wider welfare system.”

Introduce reforms

The two organisations are calling on the government to introduce reforms to better support renters in retirement.

They say means-tested benefits should better reflect modern household structures and shared financial circumstances, with eligibility criteria that more flexibly account for household size and composition.