The inaccessibility of homeownership could cause the number of retired households who rent privately to almost treble in the next 20 years, a new report from tenant lobby group Generation Rent predicts.
New analysis of Government data suggests that the number of private tenant households in England headed by someone aged 65 or older could rise from 370,000 in 2015-16 to 995,000 by 2035-36.
These retired households will rely on the state to cover their rent, which would increase the amount of private tenants claiming housing benefit by 58% and £3.5 billion per year to the cost in today’s prices.
These predictions arrive as a Generation Rent survey reveals that older renters are more likely to prefer stable and affordable renting above homeownership compared with younger tenants, putting pressure on the Government to reform renting, as well as address shortages of supply.
The Government-commissioned English Housing Survey 2015-16 found that 370,000 private rental households are headed by someone aged 65 or older, with a further 1,114,000 heads of household aged between 45-64-years-old.
Almost all of these older tenants face a lifetime of renting, given the difficulty of getting a mortgage beyond the age of 40.
1m Retired Households to Rent Privately by 2035, Report Predicts
Based on the English Housing Survey estimate that 50,000 heads of household aged over 45 bought a home in the previous three years, Generation Rent expects just 167,000 of this cohort to become homeowners in the next 20 years.
Furthermore, considering the Office for National Statistics (ONS) figure that 13% of the over-65 population is aged over 85, Generation Rent estimates that 48,000 of today’s renting retired households will live to 2035, and are included in the predicted figure.
According to the English Housing Survey, there are currently 6,425,000 retired households, and the ONS forecasts that the population of this age group will increase by 23% between 2014-34. Such a rise would put the total number of these households at 7,903,000 in 2035, and see the proportion renting privately increase from 6% to 13%.
The English Housing Survey also found that 1.074m private rental households receive housing benefit, with 356,000 private tenant households retired – 96% of the 65+ age group. Assuming that 96% of 2035’s private renters aged 65+ are retired and receiving housing benefit, this equates to 600,000 households, increasing the housing benefit caseload by 56%.
This would cost an additional £3.46 billion per year by 2035 in today’s prices, based on an average weekly claim of £111 recorded by the English Housing Survey.
The prospect of a lifetime of renting for millions of people is fuelling demand for reform of the rental market to provide cheaper and more stable homes.
A survey of 1,181 Generation Rent supporters found that, while the majority wanted to own their own homes, this desire declined for older respondents, who increasingly preferred an affordable rental option.
Tenants over 60 are almost twice as likely as renters in their 20s to prefer affordable rental tenure over homeownership.
The study also found that respondents who had faced the greatest hardships as a tenant were 21.5% more likely to support limits on rent rises than those who had faced the least hardship. The same respondents were 70% more likely to support compensation for tenants who are evicted than those with the least negative renting experiences.
The oldest respondents were 38% more likely to support the building of social housing than the youngest respondents.
The survey results are included in the report published today. David Adler, the Oxford academic who authored the paper, says: “The idea of homeownership is still popular among those who are starting out in renting, but the longer, or worse, someone’s renting experience has been, the more likely they are to favour reform of the rental sector over an escape to owner-occupation. As the renter population ages, this preference, and demands for reform, will only increase.”
Dan Wilson Craw, the Director of Generation Rent, continues: “With most debates on housing focused on young adults, politicians risk neglecting the vast numbers of people who are already too old to get a mortgage and face a lifetime of renting. As they start retiring in greater numbers, the state will have to pick up the tab, unless it makes some fundamental changes to the housing market.
“The answer is not further cuts to housing benefit, because that will only further immiserate people who have nowhere else to turn. Instead, we need years of investment in new homes to bring down rents and a transformation of the private rental market into a professional provider of long-term homes. This means giving tenants protection from unfair evictions and putting a limit on rent rises.”