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Ageing population positive for BTL market but awareness of property adaptations is needed

  • 13/08/2021
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Ageing population positive for BTL market but awareness of property adaptations is needed
The trend of ageing renters will be a positive for the buy-to-let (BTL) market due to their more stable income and longer term periods, but more consideration should be paid by lenders and landlords to disability and age-related property adaptations that will be needed.


Recent figures from the National Residential Landlords Association (NRLA), revealed that the proportion of private rented households with a tenant aged 65 or over increased by nearly 45 per cent over the last decade.

Research from Paragon Bank earlier in the year also found that tenants aged 55 to 64 and 65 plus were the fastest growing segments in the private rented sector (PRS), with those aged 55 and over in PRS more than doubling from 2009 and 2010 to 576,000 in 2018 and 2019.

Paragon Bank’s report added that this was only expected to grow in the future with Office for National Statistics (ONS) figures illustrating that over 55 households would account for half of England’s total households by 2028.

The report cited various factors for the growth in later life renters such as improved life expectancy, divorce, shortfall of care homes, stagnating pension income, downsizing for increased flexibility and an overall ageing population.


Older tenants better for landlords

Paragon Bank’s managing director for mortgages, Richard Rowntree, said that on the whole older tenants tended to be more reliable as their pension income could be used for rent and they tended to stay in properties for longer so there was less likelihood of rental voids.

He said according to landlords surveyed, older couples were the least likely tenant to encounter rent arrears and noted they also tended to be insulated from financial shocks as they usually had savings or equity from properties they previously owned.

Jane Simpson, managing director at BTL specialist TBMC, echoed the above and added: “I am not aware of lenders imposing age restrictions on tenants, so this trend of older tenants is unlikely to affect access to BTL finance.”

Crystal Specialist Finance’s group sales and marketing director, Jason Berry, said: “Older tenants generally spend more time in the properties than younger professionals which could affect wear and tear. My personal experience as a landlord suggests that these additional years of life experience ensure that better care for the property is evident, and they are also at a point in time where their income is less volatile.

“This means that landlords are generally happy to make small but helpful amendments to their securities as investment is more secure and importantly, the transience risk is reduced mitigating the likelihood of rental void periods.”


Support and awareness for property adaptations needed

However, as the proportion of older private renters is expected to grow, more work needs to be done to ensure age or disability-related property adaptations are made.

The NRLA said there was a lack of awareness towards the support available, with 79 per cent of landlords surveyed saying they did not know about disabled facilities grants which provide funds to adapt properties.

Simpson added: “The difficulty for landlords arises when their tenants experience disability or age-related problems and need to have their home adapted. Although there is financial support for landlords to help with the cost of adapting their properties, raising awareness of the issue and the grants available would be beneficial.”

Rowntree said: “In addition to the help available through government schemes, lenders can provide products that equip landlords, such as further advances, with criteria and rates specific to these situations, similar to what we have seen with the recent rise in green finance products.”

He said these changes could help landlords, particularly those with larger portfolios, access necessary funds to meet the needs of older people.

Rowntree said landlords may also want to consider different property types and locations, such as single story buildings and satellite towns, where amenities are close but quieter than cities.

Berry said options like equity release and bridging finance could be leveraged, but said it was in the best interest of landlords to make changes.

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