Generation Rent predicts the inaccessibility of home ownership could see the number of retirees who rent privately nearly treble in the next 20 years.
Government data suggests that the number of private renter households in England headed by someone aged 65 or older could increase from 370,000 in 2015-16 to 995,000 by 2035-36.
These households will rely on the state to cover their rent, which would add 58% to the number of private tenants claiming housing benefit, and £3.5bn per year to the cost in today’s prices.
These predictions come as a Generation Rent survey reveals that older renters are more likely to prefer stable and affordable renting above home ownership, compared with younger renters, putting pressure on the government to reform renting as well as address shortages of supply.
The government-commissioned English Housing Survey (EHS) 2015-16 found that 370,000 private rented households are headed by someone aged 65 or over, with a further 1,114,000 heads of household aged between 45 and 64.
Almost all these older renters face a lifetime of renting given the difficulty of getting a mortgage beyond the age of 40.
Based on the EHS estimate that 50,000 heads of household aged over 45 bought a home in the previous three years, Generation Rent predicts that only 167,000 of this cohort will become home owners in the next twenty years.
Based on 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 private renter retirees will live to 2035, and are included in the predicted figure.
According to the EHS, there are currently 6,425,000 households whose head is aged 65 and over, and the ONS forecasts that the population of this age group will increase by 23% between 2014 and 2034. Such an increase would put the total number of these households at 7,903,000 in 2035, and see the proportion renting privately rise from 6% to 13%.
The EHS also finds that 1.074m private renter households receive housing benefit, with 356,000 private renter households retired – 96% of the 65+ age group. Assuming that 96% of 2035’s private renters aged over 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 £3.46bn per year by 2035 in today’s prices, based on an average weekly claim of £111 recorded by the EHS.
The prospect of a lifetime of renting for millions of people is fuelling demands for reform of the rental market to provide cheaper and more stable homes.
A survey of 1181 Generation Rent supporters found that while the majority wanted to own their home, this desire declined for older respondents who increasingly preferred an affordable rental option. Renters over 60 are almost twice as likely as renters in their 20s to prefer affordable rental tenure over homeownership.
The survey results are set out in a new report published today. David Adler, the Oxford academic who authored the paper, said: “The idea of home ownership 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, director of Generation Rent, said: “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.”