Yes, most of us own our own homes. But is that the only option for our later years… or even the best one? Tony Watts OBE looks at the renting option, and the impact it could have on your annual income.

The British are, it has to be said, pretty wedded to the notion of property ownership.

Buying your own place is always considered to be one of those benchmark achievements, a rite of passage, and moving up the property ladder as we progress through life can define how far along the road to material success we have travelled.

Home ownership is also traditionally seen as a key way to lock in assets for future use or to pass onto the next generation.  While it has never been a steadily rising graph, our houses are also one way to see our capital appreciate: on average, according to the ONS, house prices have risen by 6.9% per year since 1980 – even including years such as 2009 when prices plummeted by 7.6%.

But of course we forget a few less positive aspects of home ownership things along the way… like the cost of property maintenance and the improvements we put in place, as well as the interest we pay on the capital we have borrowed, bringing down that 6.9% annual rise more than a tad.

Remember too, as assets go, it’s highly illiquid: if you need to sell your house in a hurry you’ll rarely get close to true market value; and if you do, that’s another lump of money down the drain in agents and solicitors’ fees. Buy another house in its place, and stamp duty also cuts in.

So what about the option of renting? In the UK, home ownership accounts for 70.7% of occupied residences according to OECD stats. In Germany, by comparison, it’s just 41%, and in Switzerland even lower… at 38.4%. Do they know something we don’t? After all, these are wealthy, stable countries.

At the other end of the spectrum, the three countries topping the home ownership league are Spain (83.2%), Ireland (81.4%) and, er… Greece at 73.2%: the three countries that went through the biggest problems during the last recession. Much good home ownership did their economy, you might think – and the property bubbles in each country played more than a small role in that debacle.

Germany is often held up as a model for renting and the reasons are partly historical (massive rebuilding was needed after the war); partly political (home owners were not favoured with tax breaks, for instance); partly cultural (there’s no stigma attached to renting); and partly because tenants have more rights, while rents themselves are more affordable.

But Britain isn’t Germany, and while younger people are being labelled ‘Generation Rent’ simply because few can afford to get on the ladder, it won’t necessarily act as a trigger for older people to voluntarily join them. After all, the biggest single deterrent to renting is the lease length: many are six months, which is not the level of security we look for in later life.

Except, and it’s a very big except, many properties available for renting to older people are actually on assured tenancies – providing security for as long as you wish (and fulfil reasonable conditions).

So with that argument out of the way, is there a case for renting in retirement not only as a life choice but also for financial reasons?

The biggest company operating in this field is Girlings Retirement Rentals, who manage several thousands properties throughout the country. Many of their tenants, they say, choose to rent because it allows them to move closer to friends and family without the hassle and expense of buying another property.

For others it means living in a location (such as a seaside town or country idyll) or quality of property they could not otherwise afford.

And a good number of their clients are keen to maximise the quality of their later years, taking extended holidays or visiting family abroad – investing their capital and knowing exactly how much they will have to spend in the years to come, including making an allowance for meeting future care needs.

Why worry about keeping an oversized house that costs money to maintain when you could be seeing more of your family?

The flexibility is also there to move into extra care accommodation later in life should your needs change – without the hassle of selling and buying.

In societal terms, encouraging retirees to downsize also offers the advantage of freeing up a family sized home – always in short supply.

You can find out what your money would buy you by checking out the rental costs on the Girlings site (www.girlings.co.uk) and then test out that scenario on your RetireEasy LifePlan.  Add the value of your home to your assets and calculate a return, add on the rental costs to your outgoings, deduct an amount for home maintenance and you can quickly see what renting in retirement would mean to your annual income…