The rise of the (rented) bungalow?

Bungalows could be back in fashion over the next decade amid a projected increase in the number of private tenants who are over the age of 55 and prefer the practical benefits of single-storey homes, research shows.

The ‘Where next for the private rented sector?’ report, conducted on behalf of Paragon Bank by the Social Market Foundation (SMF), found that homes headed by a person over the age of 55 will account for more than a quarter of all privately renting households by 2035.

It added that nearly one in 10 rented homes in the UK could be a bungalow in the next 10 years, reflecting the country’s ageing population, which is expected to increase to 74.3 million by 2039.

But although bungalows offer practical benefits, particularly for older tenants who prefer not to have to climb stairs, they have fallen out of favour in recent years.

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According to recent data, less than 1% of new builds were bungalows in 2020 (1,833), representing a 23% drop compared to 2019 and a whopping 80% reduction compared with the 9,347 bungalows that were built in 2000.

However, Paragon’s survey of more than 1,300 tenants in the private rented sector (PRS) showed that the percentage of people living in a bungalow is expected to treble from 3% to 9% in 10 to 15 years’ time.

Additionally, while 18% of households are currently private renting and headed by somebody aged 55 or over, that figure is expected to rise to 27% of households by 2035, according to the SMF’s projections.

Richard Rowntree, Paragon Bank managing director of mortgages, said the evidence suggested that the demographics of private renters was shifting and that the profile of tenants “is getting older”.

Consequently, landlords would have to meet the challenge by “providing the right homes for older tenants”.

He said: “Bungalows are typically regarded as unfashionable, but they offer practical benefits for people who may not be as mobile as they once were and certainly have their place in the PRS. Landlords are not yet buying this type of property in scale, but we would expect that to accelerate to match forecast levels of tenant demand for bungalows in future.”

Speaking to Mortgage Introducer, he conceded that bungalows had an image problem, but added that the public’s perception was changing.

“If you think ‘bungalow’, you typically think of your traditional sort of cottagey- type chalet/bungalow that’s in the middle of nowhere, but I think that this outdated sort of ‘70s or ‘80s bungalow view is changing, definitely in terms of the old, adult type of stock.”

Paragon highlighted a possible shift in that direction. Last year, landlords purchased 3,370 bungalows with a buy-to-let mortgage, compared to 1,844 in 2017, showing “strong growth in the number of bungalows purchased by landlords over the past five years”, although the bank stressed that the figures remained low as a proportion of total properties acquired. 

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The Government’s English Housing Survey also shows there are currently 141,000 bungalows in the PRS in England, representing 3.3% of the total number of rented homes.

Rowntree said the research showed that people looking to downsize to a bungalow had limited choices as there “isn’t really a great deal of bungalow stock available”.

This could be because bungalows are also more expensive to develop due to their larger footprint, an added challenge to an already acute home building crisis.

According to the National Housing Federation and Crisis from Heriot-Watt University, 340,000 homes a year will be needed by the mid-2020s to solve the shortage backlog in England alone.  

But the latest figures show that only 216,000 homes were built during 2020/21.

Paragon’s research also found another significant shift in property type towards semi-detached homes, expecting an increase in demand among renters from the current 20% to 25% in the future.    

Conversely, demand for terraced homes and flats is expected to drop. Just under a third (30%) of tenants currently live in a terraced home, with 20% saying they expected to rent this type of property in the future.