Today, 20 million people are over the age of 55; by 2043, that number will grow to 26 million. Over-55s are turning to the private rented sector in increasing numbers.
While the numbers are still relatively low in the context of the whole market, 16.3 per cent of private renters are over 55, the forecasted growth of the over-65 age demographic across the UK will result in increasing numbers of people relying on private rental homes in later life.
The care home sector is failing to keep pace with demand for new beds and social and demographic changes are creating increasing numbers of single person households, the majority of whom are in the over 55 category, and home ownership is often out of their reach.
Other factors include divorce, which is rising in the over 65 age group but falling in others, men living longer and stagnating retirement incomes.
The average income of all pensioners in 2018/19 was £320 per week, compared to £314 in 2009/10. However, inflation averaged 3.1 per cent per year over the same period, meaning something costing £100 in 2009, would cost £135.15 in 2019, putting strain on retirement incomes.
The low interest rate environment of the past decade has also limited income from savings, while the proportion of pensioners receiving an income from investments has declined consistently since the mid-1990s.
An option for asset rich, cash poor homeowners could be to sell and either downsize or rent.
For many, the private rental sector will be the solution and landlords are already reacting to this trend.
Meeting the needs
Paragon’s research shows that a fifth of landlords expect growth in the market for retired renters over the next year and the good news is that this age demographic like the benefits it offers.
Two thirds of over 55s said renting suited their needs or they enjoyed renting, compared with 49 per cent in the under 55 group,
An overwhelming majority (63 per cent) said they were pleased they do not have to worry about repairs.
When asked about the reasons for renting, 39 per cent said they didn’t have a mortgage deposit, while 22 per cent said they didn’t want the responsibility of owning a home – compared to 9 per cent of under 55s.
Additionally, 16 per cent said it enabled them to live in an area they could not afford to buy in and 15 per cent because it gave them the flexibility to move easily.
Tenants aged over 55 are also much less likely to want to own their home – 45 per cent compared to 81 per cent of under 55s.
Catering for later life renters presents opportunities and challenges for landlords.
This cohort of tenants typically stay in a property for longer, maintain the home well and benefit from stable income, usually in the form of a pension.
However, homes need to cater for the physical restrictions some of these tenants may face. This tenant group has a greater propensity to have a disability or long-term illness.
The private rental sector has proven capability to adapt to meet the needs of a broad range of tenant groups, from those leaving home for the first time, to young couples, families and, increasingly, those looking for a home for their later years.