One million retirement age people are expected to rent within the PRS over the next 10 years, real estate agent Hamptons has predicted.
The latest English Housing Survey data shows that over the past 10 years, the number of retirement age private renters has steadily increased, going from 258,000 in 2003/2004 to 403,000 in 2021/2022.
However, Hamptons has projected that this number could more than double in the next ten years, due to lower homeownership rates among the tail end of baby boomers and Gen X generations.
In cash terms, Hamptons calculated — based on current rental prices — that households aged 65 and above will go from spending £5.1bn a year in rent to £12.7bn by 2033.
Based on analysis of the latest English Housing Survey, the real estate agency also claimed that the age group succeeding those currently aged 65 and over are nearly twice as likely to rent privately.
Aneisha Beveridge, head of research at Hamptons, commented: “As households get onto the ladder later in life, over the next decade, there’s likely to be an increase in older households still paying off their mortgage beyond the age of 65.
“However, this increase is likely to be a small fraction of the growing number who will be paying rent beyond pensionable age which, in turn, has the potential to bear significant social, economic and political consequences down the line.”
Honor Barratt, CEO at retirement BTR developer Birchgrove, sees this change in rental demographic as an opportunity: “We're thrilled by Hampton's research, because it verifies what we have been striving to prove: that traditional housing options for over 65s exclude those who don't wish to buy, and that there is a mammoth potential market for rented assisted living across the UK.
“Purchasing and owning a home can be a burden, while many elderly people wish to sell their home to free up capital. Rising mortgage rates are also making homeownership harder, and more and more people are already renting when they retire too.
“These are just some of the factors driving the market for rental-in-retirement — and while the model isn't perfect for everyone, it is, as Hampton's report demonstrates, perfect for an ever-growing number of people.”
Jeremy Leaf, estate agent and former residential chairman at RICS, partly disagreed with the Hamptons report, stating that while he has seen the average age of renters increase, this is not as prevalent for over-55s or over-65s.
“In our area people of that age prefer to buy if they can — buying gives them continuity and stability and they don’t have to think about moving on after a year or two, which is often the case with an AST.”
“There is a halfway house and that is a dedicated retirement flat. We are seeing increasing numbers of those let on longer-term contracts, but such accommodation isn’t to everybody’s tastes,” he added.
However, he claimed the dynamic could change considerably if the Renters Reform Bill becomes law next year: “Older people with the opportunity of a longer-term let may be more interested in renting if they know they can stay in a place for several years and not run the risk of being turned out, or at least reduce that risk,” he explained.
