Millions of future pensioners are destined to spend their retirement in rental accommodation as home ownership plummets, estimates show.

Up to a third of 60-year-olds will be renting by 2040, with many never having been able to own their own home, it is claimed.

Academics describe renting in retirement as a ‘time bomb’ which will stretch the finances of the elderly while costing taxpayers billions in housing benefit and social care.

Professor Steve Wilcox, from the University of York’s centre for housing policy, believes up to a third of 60-year-olds will be renting by 2040, with many never having been able to own their own home (file picture)

Professor Steve Wilcox, of the University of York’s centre for housing policy, estimated that only two-thirds of 60 year olds will own their own home within 35 years. Charities warned this could leave them vulnerable to poverty, poor living conditions and eviction.

It comes as figures from the Council for Mortgage Lenders (CML) show half of those born in 1960 were homeowners by the age of 30 – but barely a third of those born in 1980 will achieve the same. It will drop even further for those born in 1990, with only a quarter managing to buy before they are 30.

CML estimates that over three-quarters of people born in 1960 owned a home by the age of 50, while just over half of those born in 1980 will achieve this.

Professor Wilcox, who wrote a report for the Chartered Institute of Housing on the issue, said: ‘Britain is facing a housing benefit ticking time bomb. There will soon be huge proportions of pensioners who never own their own home.

‘This will inevitably have an impact on housing benefit costs because many pensioners will not be able to afford the rent on their pensions. This needs to be taken into account by the Government when they are setting policy on providing opportunities for younger households to become homeowners.’

Academics describe renting in retirement as a ‘time bomb’ which will stretch the finances of the elderly and leave them vulnerable to poverty and eviction while costing taxpayers billions in housing benefit and care

Professor Wilcox added that most current pensioners retired mortgage-free or with the ‘fag ends of a mortgage with only £10,000 or £20,000 left to pay’.

He said: ‘Many then intend to use the equity on their home to pay for social care if they need it. But if people are renting ... this cost will also fall to the State.’

Paula Higgins, of the HomeOwners Alliance, said: ‘Owning your own home gives people security and independence in older age. It is a useful safety net to release money through downsizing or equity release.’

Caroline Abrahams, of charity Age UK, expressed concern that the private rented housing sector ‘has the worst levels of disrepair and accessibility’.