Private Renting is No Longer for Just the Young...

The Big Issues

07 January 2023

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Managing Director, Paragon Bank

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Private Renting is No Longer for Just the Young

There are many misconceptions about the private rented sector, but a common one I hear is that it is the tenure of the young.

This is outdated and doesn’t reflect the demographic changes we have seen over the past 10 to 15 years.

Over half of tenants today are over the age of 35 and, if current trends continue, the average age of tenants living in the sector will only rise.

The demographic of tenants that have experienced the fastest growth over the past 10 years is those aged between 45 and 64 – increasing by 70 per cent. Government data shows there are 1.18 million households where the lead household representative is within the 45-64 bracket, compared to 691,000 in 2011.

This is a cohort of renters that have lived in the tenure for the long term and who look set to call the PRS a home for life.

We commissioned research of over 2,000 tenants to gather their views on renting and home ownership aspirations. Our new report – The Middle-aged Tenant Squeeze – shows that less than one in five of this age group is currently saving towards a deposit for their own home, even though the desire to own a home is much higher.

Compared to younger age groups, the 45-64 cohort typically has a lower income, is in less skilled jobs, and sits within lower social grades, inhibiting their ability to buy a home. These tenants have lived in rented homes for the long term and look set to continue to do so; they view the home as their own and they want the security that their landlord won’t sell the home.

This brings me back to a regular theme of this column – Government policy.

Much housing policy is targeted at first-time buyers and focused on the younger ‘Generation Rent’ group of tenants. There seems less consideration for those who will call the PRS home for life, those who need committed landlords who continue to invest in the sector. As long-term tenants age, they will want to stay in the area where they have a good support network. Without incentivising landlords to buy, hold and upgrade rental property, the Government risks reducing the supply of homes for this demographic to rent.

In addition, the Government needs to consider the implications of this group living in the PRS past 65 and the likely cost of such a change. As social housing supply is squeezed, the PRS will remain the home for many.

Looking at the group of over-65s currently living in rented accommodation, the ageing of this cohort past retirement age could have broad implications for the PRS, as well as present opportunities for landlords to provide these tenants with a home.

As with other distinct tenant groups – young couples and students to name but two – older tenants have their specific requirements. Over 65s are more likely to live alone and in smaller homes, for example, and the sector will need to adapt and evolve to cater to this ageing tenant population.

Landlords will need to target smaller homes and be prepared for their tenants to adapt the home to suit their needs.

The good news is that landlords have a strong track record of meeting the needs of their tenants and I’m confident that they will be ready to respond to meet this changing demographic.

* Richard Rowntree is Managing Director for Mortgages, Paragon Bank *

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