Analysis from Paragon Bank, based on government data, has revealed that the number of households in the private rented sector (PRS) aged between 45 and 64 increased by 70 per cent over the past 10 years, with those aged 65 or over increasing by 38 percent.
And many of this cohort are expected to remain in rented accommodation, according to the bank’s report –The Middle-Aged Tenant Surge.
Richard Rowntree, Paragon Bank managing director of mortgages, said: “The idea that the private rented sector is the tenure of the young is outdated. 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.“
And given these figures, it is encumbent on landlords to take note and adapt their dwellings accordingly. Paragon’s research showed that 46 per cent of landlords would be willing to fund property alterations to cater for older tenants.
In terms of cost, the survey of nearly 800 landlords revealed that the average amount they would invest is £985. The research showed that 21 per cent would invest up to £1,000, with 11 per cent investing up to £3,000 to adapt the property. And five per cent would go as far as investing £5,000 or more.
Rowntree said: “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 for this ageing tenant population.”
The survey showed that landlords viewed older tenants as advantageous due to the fact they tend to prefer to have longer tenancies (65 per cent), are more respectful of neighbours and the community (63 per cent) and are reliable (58 per cent).
More stress on stretched landlords?
However, despite these perceived advantages, the need to potentially adapt homes to the rising number of older tenants, comes at a time when landlords in the buy-to-let market are already being financially stretched.
Rising mortgage rates, the ongoing cost of living crisis and the need to upgrade their properties to have an Energy Performance Certificate of C or higher in the next two to five years (though not law yet), mean that times are tough for many in the private rental sector.
On the latter point, Rowntree feels that this may not be an issue.
He said: “It’s important to stress that the 2025/2028 dates were proposed over two years ago by the government and the industry is still awaiting the government’s response to that consultation. Therefore, we don’t anticipate the government sticking to that timetable.”
Older tenants a better bet?
Meanwhile, he also stresses that many landlords are willing to invest more in order to both build their capital but also provide decent accommodation.
He said: “With almost all of Paragon’s lending classed as specialist, we work with a largely professional landlord base. We see professional landlords as operating their portfolios like SMEs, meaning they are often well placed and willing to invest in their properties in response to market and regulatory changes, as well as tenant demand.
“This investment obviously offers capital appreciation and rental income potential but, contrary to the perception seen in some sections of the media and politics, landlords strive to provide high quality homes. Research undertaken as part of our forthcoming report on ‘Raising the standards of privately rented property’ shows that landlords’ main driver for investing in improving their properties is to ensure they are providing a good home for their tenants.
Rowntree also added that older tenants could be a better choice for many landlords.
He said: “In addition, further Paragon research shows that older tenants are more satisfied with their rented accommodation, increasing the likelihood of them remaining in it for longer. This means that senior renters offer landlords stability through reduced void periods and reliable rental income.”
