We’re used to hearing Millennials described as Generation Rent, but those aged 35 to 44 are now three-and-a-half times more likely to be renting than they were in 1993
The upsurge in the numbers of people who are renting the property they live in rather than owning it is continuing unabated. But up until now we’ve been focusing on this as being primarily a situation faced by Millennials, many of whom lack the sufficient funds to be able to get on the housing ladder.
There is, however, growing evidence that this trend isn’t limited to this younger cohort. According to new data from the Office for National Statistics, there are changes taking place over time to our housing tenure patterns that are directly linked to the fact that we are an ageing population.Economic trend: New data from the ONS shows an increase in the number of middle-aged people renting the property they live in rather than owning Click To Tweet
According to the new data from the ONS, increases in the private rental sector have been seen for all age groups apart from the oldest, but the increase is particularly marked in mid-life, with people aged 35 to 44 three-and-a-half times more likely to be renting in 2017 than they were in 1993.
Almost a third (28%) of people of that age rented from a private landlord in 2017, compared with fewer than 1 in 10 (9%) in 1997.
The ONS says that in general, renting from a private landlord is most common at younger ages, and decreases as people get older when they receive inheritances or take out mortgages. The ONS predicts that if this most recent trend regarding middle-aged renters persists into their older ages, in the future, older people will be more likely to be living in the private rental sector than today.
This means that while only 6% of people aged 65 years and over rent privately today, this number is likely to increase in the future.
Why does this matter?
For older generations, renting property instead of owning it has some advantages, for example not having to bear maintenance responsibilities and the associated costs could be seen as a bonus. Moving house as the occupant’s needs change is also easier if a house doesn’t have to be sold.
However, the private rental sector is expensive. At a time when previously the older cohort would be paying off a mortgage and living off a pension, this trend indicates that in the future there could be many more people paying rent after retirement age and they could struggle to maintain their living standards.
This has serious implications for the future and indicates that careful planning is required now if an uncomfortable retirement is to be avoided.
The ONS highlights worrying research from mutual insurer Royal London that suggests that while an average earner who owns a property could expect to maintain their living standards on a pension pot of around £260,000, someone who rents privately would need an estimated £445,000 – almost double the amount – in order to avoid a slump in living standards when they retire.