A new poll of private renters by the National Landlords Association (NLA)* shows that the proportion of retired private renters has grown by 13 per cent since 2012 (approximately 220,000). It also highlights that 17 per cent of the retired private renting population live in the South East of England, with just 3 per cent in London and only 4 per cent in the North East.
House prices in each area no doubt have an impact on whether people can afford to buy but also to rent and with London being the least affordable for both its hardly surprising there are fewer retired renters.
In our experience many people in the South East also choose to sell up in retirement and rent, taking advantage of years of house price rises and releasing equity to invest in their future.
There are huge challenges ahead though for the retirement housing market.
One highlighted by the NLA is that the proportion of landlords who let to retired renters has almost halved since 2012. They found that just nine per cent of landlords said they currently let to retirees compared to 19 per cent in 2012.
The reasons stated are the issues renting to a more vulnerable section of the population and pension cuts, plus tax changes for landlords which means in expensive high demand areas they can only afford to rent to people with high paying jobs.
Another report a few weeks ago from Knight Frank^, ‘Retirement Housing 2016’ provided further insight into the state of the housing market for Britain’s retired and the housing challenges ahead.
The report highlights that by 2037 three quarters of households are likely to be headed up by someone aged 65 or over. It also points out that according to the University of Reading only 2 per cent of housing stock is retirement housing.
Current planning is for only 5,500 retirement housing units a year, but Knight Frank estimates that potential demand will reach 30,000 retirement units needed per year.
As Michael Ball, Professor of urban and property economics at the University of Reading says: “Within 10 to 15 years we might see retirement housing demand equalling today’s demand for starter homes.”
The UK is already experiencing a shortage of retirement homes which is preventing people from being able to downsize and this situation looks set to get worse.
Knight Frank estimates that the over-50s hold 66% of all housing wealth, equalling about £2.5 trillion – if they were able to downsize successfully, they would able to be free up much needed family homes whilst releasing equity.
Downsizing to a home with one less bedroom will release around £52,000 in equity on average across England and Wales, with large regional variations.
Over the next 20 years the demographics of UK are going to change quite significantly as we shift to being an older population. House building needs to reflect this changing demographic and provide enough suitable housing, for both renting and buying, to suit people’s needs as they get older, which in turn will free up homes for those further down the ladder.