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Generation Rent — mainly the under-40s — has long complained that Baby Boomers have bought all the homes, leaving them unable to afford to buy their own. Now it seems that growing numbers of under-40s will be competing for private rental properties with the over-60s who choose to rent in the private sector.
The Centre for Ageing Better (CfAB) has reported that the number of over-60s renting privately has risen from 254,000 in 2007 to 414,000 in 2017. And it predicts about a third of people over 60 could be living in private rented accommodation by 2040.
The CfAB recently reported that not only had 200,000 older adults joined the rental market in the past four years, but “a growing number of older homeowners are choosing to sell up and rent in retirement”.
Many of them are downsizing from large family homes to a property that is more manageable and maybe closer to fun.
Many are parents or grandparents who want to free up assets to help their family on to the housing ladder via the Bank of Mum and Dad. Others want to move closer to their family. For some, the motivation will be moving to a more desirable area.
For example, couples may have substantial properties outside London, having moved to provide a family home when their children were young, and would love to move back to the capital now that they have more time to enjoy themselves.
“Rightsizing: Reframing the Housing Offer for Older People”, a report published by Manchester School of Architecture this month, claims that older people rarely want to downsize and those who do typically only reduce the size of their property by one room.
Its working definition of right sizing is “an older person’s active, positive choice to move home as a means of improving their quality of life”.
The sharp rise in London property prices excludes many homeowners from returning to the capital from rural England. Yet they may have considerable assets and want to return to areas they know.
FT readers are among their number. One retired lawyer in her mid-seventies, who currently lives in a large villa in Italy with its own pool and olive grove, hankers to move back to Notting Hill or Holland Park in central London. She returns often for cultural visits, but knows prices have risen steeply since she left 20 years ago.
She said at a recent FT event: “If I sell up and tried to buy somewhere nice in central London I will have no money left for living because prices have gone up so much. So I want to rent somewhere that is near good restaurants and the West End shops and theatres.
“I want to spend the value of my home on a disgraceful old age. The alternative is that anything I leave will be taken by the state unless I donate it to charity.”
CfAB points out “the renting model can provide a certain level of freedom, allowing you to live in areas often unaffordable to buy, and [where] responsibility for major issues with the house lie in the hands of the landlord”.
That is a further attraction for the reader in Italy, but as she searches the market for a rental property the with wow factor, she is aware that security of tenure may deter her. She does not want to move again.
The CfAB, which says the biggest growth in renting properties is currently in the 55 to 64 age group, is calling for longer leases, such as those offered in Germany, Switzerland and Belgium, to become more readily available. Purpose-built build-to-rent properties will help fill this gap.
According to the British Property Federation, there are almost 131,855 build-to-rent homes in the pipeline across the UK, with just over 25,665 completed. More than 67,000 are in London. These properties developed by major institutional investors are rented out long term. The tenants usually deal directly with the developers to negotiate regulated long-term contracts. Rents often include running costs and extras such as gyms, WiFi and concierge services.
Another FT reader in his early 70s said he was considering selling his home on the south coast and had started investigating central London rental properties. He found the perfect two-bedroom flat in Bloomsbury — close to his first home in London.
There have also been reports in recent months of tactical renters who want to sell their home and rent in London while property prices fall so that they can get more for their money when they eventually buy again. These include Sir Martyn Lewis, the former newsreader, and his wife, Patsy Baker, who sold their Kensington home and now live in a rental property a few streets away.
Renting may give greater flexibility to better off homeowners but there are also growing numbers of renters who have never made it on to the property ladder, and are going to need extra income to cover their housing costs in retirement.
Scottish Widows produced a report this year suggesting that non-homeowners in their 50s would need to save an extra £6,000 a year now to be able to rent in retirement. The average rent in England and Wales is £845 a month, but in London it is £1,250.
Scottish Widows projects that one in eight retirees will be renting privately by 2032 — treble today’s figure. After that, it will continue rising. It says there is a £43bn gap between the income and savings people have now and what the rent bill will be in retirement.
The property market will have to adapt to meet the demand of this new generation of older renters.