What does an aging tenant population mean for the private rented sector?
A new report by the Social Market Foundation predicts that growing numbers of renters in England will continue renting into middle age and beyond. While 12% of 55 – 64-year-olds currently rent privately, the report predicts that up to a quarter could do so by 2035. The proportion of over-65s renting from private landlords could also double by the same year.
According to the report, the trend is driven by the growing unaffordability of homes. Of the 50% of tenants who expect to rent privately for the next 15 years, 68% say that they would like to buy property but do not expect to be able to do so.
But while many renters would prefer to be homeowners, they also report high levels of satisfaction with their current homes (81%) and their landlords (85%). Older renters are also more likely to be happy with private renting in general than younger ones: almost three quarters of renters over 55 would be happy to rent for the next 15 years.
Landlords may want to adjust their investment strategies to appeal to an aging tenant pool. Older people have different priorities from those of younger ones when choosing a place to rent, placing more value on being close to shops and healthcare facilities, and preferring detached and semi-detached houses and bungalows to flats. They are also much more likely to prioritise unfurnished properties than younger renters.
However, the trend could also pose new challenges for the sector. Many landlords are already worried about the cost of meeting stricter energy efficiency requirements in the near future, and may not want to spend even more money making their properties more suitable for older people. Additionally, forecasters are warning that future retirees’ pensions will not be enough to cover rent.
The SMF makes several policy recommendations to improve the private rented sector for older tenants, including giving them greater rights to redecorate and keep pets, setting a standard minimum tenancy length and offering landlords tax incentives for home improvements. Property professionals and aging renters will now have to wait and see how the government responds.
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