UK's aging population increasingly favouring rented properties over expensive homeownership, report finds
The private rented sector may have to adapt to accommodate more mature tenants after a new report found that households headed by individuals over the age of 45 will account for at least half of all privately rented homes by 2035.
Conducted on behalf of Paragon Bank, the report by the Social Market Foundation (SMF), Where next for the private rented sector?, found that half of households headed by a person aged 45 or older will be renting privately by 2035 - up from 35% currently.
This will equate to an additional 1.14 million households, bringing the total number to 2.7 million.
The report, published earlier this month after polling a total of 1,376 adults in rented accommodation, cited rising house prices, deregulation of the private rented sector and the introduction of buy-to-let mortgages as reasons for the rise in England.
Home price appreciation was linked to low interest rates and supply shortages, as well restrictions on mortgage credit.
Read more: How to tell if there is a property crash coming
The SMF modelled its projections on housing market trends during a 10-year period between 2009 and 2019. Overall, it forecasts that the proportion of total households privately renting will increase from the current 20% to 22% in 2035, with those in homeownership falling from 63% to 61%.
The share of private renters has, however, been rising steadily since the year 2000, having doubled from 1 in 10, to 1 in 5 households during that period.
More mature tenants showed clear preference for homes to be located near shops, family and health facilities. Nearly half (48%) of those aged 55 or over said that being close to shops was in their top three priorities, compared to 32% of those aged between 35 and 54. Good transport facilities (40%), being close to friends and family (36%) and proximity to health services (34%) also scored highly for those aged 55 and older.
With regard to what renters want from a property, 41% of those aged 55 and above said having an unfurnished property was in their top three priorities, far greater than among younger age groups. This age bracket also expressed a greater desire for pets, with 21% stating this was a top priority, compared to 14% of those aged 34 or under.
Richard Rowntree, Paragon Bank managing director of mortgages, noted that the trend in the private rented sector reflected the country’s aging demographic, adding that the sector would need to adapt and cater for his age group.
“The UK has an aging population and projections show that the population will generally be older in the coming years,” he said. “This is reflected in the SMF’s modelling, which highlights that a growing proportion of older households will live in privately rented accommodation in the next 15 years.
“The challenge for the private rented sector is how to adapt to accommodate more mature tenants, including where and how they want to live.
“The SMF tenant research shows that more mature tenants want greater security in the form of longer tenancies and control over their property, such as the freedom to make cosmetic changes. They also want to have pets in their homes and these are all things landlords need to consider.”
Amy Norman, SMF senior researcher and one of the report authors, said: “The typical renter of the future will look different from today’s. How different will depend on a range of factors including rates of construction, interest rates, house price inflation and government housing policy. That said, one thing is clear - the private rented sector will be getting older.
“That reality means we need to revisit our preconceptions about renting being the preserve of young, mobile households. Mature tenants have different needs and preferences. They want accessible, ground-floor homes within a stone’s throw of shops, transport links, health services, and their loved ones.
“Policymakers, developers, and landlords therefore face a challenge ahead to future-proof the private rented sector and ensure that renting policies and homes are suitable for all tenants, including those who are renting for longer and into later life.”
Earlier this month, Mortgage Introducer (MI) covered the report’s other main finding, which was related to renters’ inability to build wealth as their biggest concern and not dissatisfaction with their accommodation or landlord.
Read more: What are renters’ long-term concerns?
Speaking to MI, Matthew Rowe, director of Buy To Let Broker, said the findings reflected his own, albeit anecdotal, experience.
“We would very much feel that the vast majority of renters who rent from our landlords are extremely satisfied with both their property and their landlord,” he said.
He stressed that his company worked only with professional landlords, and predominantly those that looked at long-term investments/yields.
He also pointed out that the residential lettings sector in England and Wales made a large contribution to the UK economy, estimating a total turnover of more than £4 billion, and contributing more than £5 billion in taxes.
While he strongly backed the study’s key recommendation that renters should be able to build wealth while remaining in the private rental sector, he was more dismissive about some of the SMF’s key recommendations, such as deposit builder ISAs, which he described as a “sticking plaster”.
“The government needs to be incredibly innovative in this respect,” he said. “Perhaps the quickest way to homeownership for many may lay in multigenerational living/living with parents, or the reduced costs of multi-occupancy living (ie, HMOs), rather than what may prove to be well-meaning, but potentially rather ineffective policies such as ‘deposit builder ISAs’.”
