Over 50s are now the fastest growing rental age group
Posted on: 02 September 2019 by Mark Burns
One change is that renting is no longer something young people do until they are ready to have children at which point they buy their own home.
While young people do still make up the majority of renters, the number of renters aged over 50 has reached a record high and they are now the fastest-growing rental demographic.
According to research from letting agents Hamptons International, the over 50s now constitute 15% of all private renters (approximately 792,000 households).
This is a 3% increase from 2012. There are many reasons for this, each with slightly different implications for the housing market.
The life-long renter
Life-long renters can be split into two groups.
Firstly, there are those who would like to buy, but who have been priced out of the market (it’s unlikely to be a coincidence that the South East has the largest concentration of renters over 50, where they make up 20% of all tenants).
Secondly there are those who actively choose to rent as a lifestyle option. When analysing the housing market, it’s important to remember that although home ownership is an aspiration shared by many people, everyone is an individual and some people see the commitment of home ownership as an unwelcome drag rather than a welcome sign of stability.
These two groups of people, therefore, require different situations to be happy.
The former group may still welcome an opportunity to invest in property, even at a later stage in life and might well be happy with the sort of smaller properties which would typically be looked on as “starter homes”.
Failing that, they would probably appreciate the stability of longer tenancies.
The latter, however, may prefer the flexibility of shorter tenancies or, at least, tenancies which they can end themselves, if they wish, after a relatively short period of time.
The break-up renter
One interesting point about over-50s renters is that even though almost half of them (48%) live alone, they have a preference for two-bedroom properties and have the earnings to pay for them (in the form of an average rent of £1,000 a month).
This suggests that relationship break-ups may be a factor in the increase in “silver tenants”.
If this is the case, then, again, this may be a situation in which short-term tenancies are preferred as they may only be needed while people are actually in the process of divorce (and more specifically arranging their finances). After which point the party who has left the family home will know where they stand (both financially and in a broader sense) and may then opt to return to the property market as a buyer.
The downsizing renter
One final reason for the increase in older renters may be as an astute means of estate planning.
A family home can take up a substantial chunk of an individual’s inheritance tax allowance; in fact, it can even make a noticeable dent in a married couple’s joint IHT allowance, especially in the south of England where property values are often amongst the highest in the country.
In this situation, there may again be a split between those who value the stability of longer tenancies and those who prefer the flexibility of shorter ones.