Affordability of Pensioners

Landlord Discussion
1

My 2 bed has had enquiries from potential renters who are retired.

The normal affordability test is 30x monthly rent.

What is the affordability test if they retired and receiving a pension. I think the guy also does a bit of work cash in hand. They are currently renting but owner is selling up.

Would like an idea please so I can ask them rather than just reference them only to fail and cost me 2x £20
Thanks

2

If that “30x” isn’t a typo, you’re going to struggle to let the place.

2.5-3x is a typical measure of affordability and that’s usually irrelevant of their work status. If they’ve got that coming in on a regular basis, then they pass the affordability test, simple as that.

I ask for 6 months of bank statements to verify this because applicants tell me all sorts about their income that often turns out to be less than truthful. Ask for those (including any savings accounts) and then have a good look through them to make sure they’re saving each month, have regular credited income, don’t have unexplained debts and that what they’ve told you matches what you see.

Some of the plus points with retirees on a pension is that

  • they have a guaranteed income that isn’t dependent on them
  • they’re usually low-maintenance both on the property and in terms of their demands
  • they’ve probably got a long rental history you can get references for
  • they’re likely to be a long-term let

I would discount any cash in hand income as that’s not reliable at all.

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No it’s not a Typo. 30x £1,000 pcm = £30,000 pa income

But thanks for the info, I’ll check their bank statements before referencing them

4

There’s no particular reason why it should be a different multiple for older people. Its more down to lifestyle/regular spending habits.

5

Annual income of 30 x monthly rent is pretty standard. Retired people might spend a bit less than working people but their income is unlikely to keep pace with rent rises. Pluses & minuses here.

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6

Ha! I was talking pcm. So monthly income is 2.5-3x rent. It’s much easier to go on monthly than to faff on with calculating annual. After all, people don’t pay rent or get paid annually so when you’re looking at statements, it’s the monthly figure you’ll want.

7

If their pensions are index linked then they should. If they start off with no affordability issues, they’re likely to stay that way unless the LL decides to hike the rent unreasonably.

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