Renters over the age of 55 are the fastest growing tenant type in the private rented sector. What’s behind the rise and what will landlords need to consider?
The private rented sector has seen a significant spike in demand in recent years. And over the past decade, there has been a change in the sector’s demographics. Research from Paragon Bank revealed the number of 55-64 year olds with an Assured Tenancy has increased by 118% from 10 years ago. Renters aged over 65 grew by 93%.
These growth rates are nearly double the rate of the next fastest growing age group – 35-44 year olds. The report states an aging population and social and demographic changes are causing this acceleration.
Richard Rowntree, managing director of mortgages at Paragon, says: “There are a number of factors that may have contributed to the increase in over 55s in the PRS over the past 10 years, such as rising divorce amongst older people, poorer pension returns and factors such as men living longer.”
Tenant growth expected to continue
Retirees and those in the upper-middle age will continue to be a growing tenant type in the private rented sector.
Rowntree states: “With the number of over 55s forecast to rise from 30% of the population to 36% – 26 million people – by 2043 and new household formation predicted to be driven by older, single person households, the PRS will have an increasingly important role to play in providing a home for older tenants.”
Paragon Bank’s research also shows that later life tenants are typically happier in private rentals and have lived in the private rented sector for longer. Nearly seven in 10 of over 55s claimed renting suited their needs or that they enjoyed renting.
A recent survey from Knight Knox looked at why people in certain age groups rent. A quarter of over 55s who rent said they don’t want to maintain a property. Nearly a quarter also said they don’t want a mortgage. This shows that more people are renting out of choice instead of necessity, and it’s not just Generation Rent.
Landlords are already responding
Landlords have already started responding to this increase in demand from retiree renters. Paragon Bank’s report revealed 21% of landlords are expecting to rent more to older singles in the future. Additionally, 20% are already anticipating to let their property to retirees. This was second only to renting to professionals or executives and companies.
Rowntree adds: “Landlords are already reacting to the changing demographics of the PRS and, with older tenants becoming more commonplace, will have to increasingly do so. Landlords will need to consider longer tenancy agreements, the location of their property and any adjustments the property may need for later life tenants.”
Renting on the rise across the board
The UK rental market as a whole has been performing particularly strongly. In recent months, there has been a significant amount of activity and interest in the lettings sector. Data from Zoopla revealed that, on average, rental demand in the private rented sector during September was 20% higher than in 2019.
Not only have landlords seen a record number of tenants seeking rental homes, rental prices are also rising everywhere but London. Additionally, void periods have been shorter, minimising the amount of time a property is not yielding a rental income.
As many people are moving due to shifting priorities and circumstances, there is a positive outlook for the future of the private rented sector, and letting to renters over the age of 55 could help provide needed homes for an aging population.
