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Attracting older downsizers to rental sector could free up homes for first-time buyers

  • 31/01/2023
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Attracting older downsizers to rental sector could free up homes for first-time buyers
Older homeowners turning to the private rental sector (PRS) to downsize could make more homes available for first-time buyers, the National Residential Landlords Association (NRLA) has suggested.

In a report ‘A Housing Market that Works for Everyone’ from ChamberlainWalker Economics and commissioned by the association, it said the PRS could be a “conduit” to encourage older homeowners to move.

It said the average age of tenants was already rising, citing that while the share of younger renters had remained relatively unchanged since 2011 and 2012, there was a 56 per cent increase in older renters.

In 2021 to 2022, there were 1.2 million renters aged 45 to 64, compared to 782,000 households a decade before.

The NRLA also said older homeowners tended to struggle with the upkeep of their properties.

It added: “The general presumption is that people want to live in the owner-occupier sector and stay there for the rest of their days.

“If the PRS could be made a better conduit and option for downsizing to happen, it could boost the efficient use of the existing housing stock by freeing up family-sized homes for ‘second-time buyers’, in turn releasing housing for first-time buyers down the chain.

“The upshot then is that the private rented sector could actually support first-time buyers and help younger people meet their homeownership aspirations, whilst better meeting the housing needs of older people: a housing market that works for everyone.”


Promoting homeownership

The NRLA said the government had been placing more stock on homeownership in recent years, and public policy since 2016 had resulted in a contraction of the market size from 20.3 per cent tenure share, or 4.7 million households, to 19.1 per cent share, or 4.6 million households over that time.

It said that this alongside the recent Rental Reform White Paper and conversations around the cost of living risked reducing the attractiveness of the sector further.

However, NRLA said with first-time buyers typically getting onto the property ladder in their 30s, the market was the right size to serve those tenants.

NRLA said the PRS was an “entry point” to the housing market as it gives younger people independence and prepares them for homeownership.

It added: “The PRS is often painted as a blockage to homeownership – the argument being that the large numbers entering it simply get stuck there.

“However, it appears to be a better springboard into homeownership than other housing options such as remaining in the parental home or being in social rented housing.”

It said the political aim to have 70 per cent of properties being owner-occupied, a pledge made by Labour leader Keir Starmer, could also lessen the number of privately-rented homes. NRLA said this implied a decrease in PRS tenure share, if it is assumed that social rented share remains the same.


The desire to rent

As part of the report, a survey by Opinium found that 40 per cent of renters intended to buy a home within the next five years, but this figure dropped to 17 per cent among 18 to 34 year olds. Conversely, just four per cent of renters within that age group said they did not intend to buy a home at all. Across all age groups, 14 per cent of tenants had no plans to purchase.

Overall, 29 per cent of respondents said they wanted to continue renting, meanwhile, 45 per cent said they wanted to buy but were not yet able to.

For those wanting to continue renting, 21% said they don’t want the hassle of homeownership and 21% noted that they didn’t want to be tied down to homeownership at the current time. Career reasons are cited by 18% and social reasons by 16%, even though they intend to buy in the future.

Significantly, these percentages are much higher among younger private renters (18-34): 25% don’t want to be tied down to homeownership, with career reasons cited by 30% and social reasons by 26%.

For those who want to buy, 55 per cent said they did not have a big enough deposit and 51 per cent said house prices were too high. A further 35 per cent said they did not have enough of an income to get a mortgage.

NRLA said the PRS supported the labour market as it allowed people to move for work.

Ben Beadle, chief executive of the National Residential Landlords Association, said: “Today’s report makes clear the positive and vital role the rental market has to play in the economic and social life of the country.

“Contrary to the rhetoric from many, for the vast majority of tenants their experience in rented housing is positive. This is the platform the government needs build upon to ensure a sector that works for renters and responsible landlords.”

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