In this blog about residents in the PRS, we shall cover:
- How the demographics in the private rental sector has changed over the last 16 years
- How you might need to adjust your portfolio in the future
- What is the attitude to renting a home
- What could the results be for the private rental sector (PRS) in the future
If you think that the 11 million people (4.5 million households) that have a home in the private rental sector are all young…read on.
You might be surprised to know that over half of the residents in the PRS are over 35 and since the chance of leaving the PRS are getting less, the average age will only increase.
A report by Paragon (The Middle Age Tenant Squeeze) shows that the demographics have changed a great deal over the years and it is the middle aged that are driving the change. The report was generated from a base of 2000 people interviewed in 2022.
Number of rented households by age bracket Source: DHLUC
How the 45-65 demographic has changed
In 2011 the lead household figure in the PRS, within the 45 – 64 age group amounted to 691,000 it is now 1.18 million – an increase of 70% which is the biggest change. These residents have lived in rented homes for the long term and look set to continue to do so; they view the home as their own and obviously want the security that their landlord won’t sell.
Over a fifth of those aged between 45 and 64 (22%) have lived in privately rented accommodation for more than 15 years, with a further 17% in the sector for between 11 and 15 years.
What this age group will be looking for going forward?
Although the owner / resident is a mutually beneficial one, you need to be aware of what your resident will be looking for. If you plan on being an owner for the long term, bare in mind that over 65s will have their specific requirements.
For example they are more likely to live alone and in smaller homes, therefore if you are looking to expand your portfolio, looking to the future, this is the type of home that may well be worth exploring. A downstairs loo and shower facilities would also be of benefit.
As long-term tenants age, they will want to stay in the area where they have a good support network. Without incentivising landlords to buy, hold and upgrade rental property, the Government risks reducing the supply of homes for this demographic to rent. As social housing supply is squeezed, the PRS will remain the home for many.
There is indication that they will not have an option to leave the PRS – shown in the Paragon report was that although 40% of this group had an aim to buy a home, only 20% were actively saving toward as this.
How the 35 – 45 demographic has changed
In 2013 27% of households in the PRS were aged over 45 that has now increased to 35%. By adding in those over 35 you reach 56% which totally blows the thought that renting is the option only for the young.
Why are people happy in the PRS?
I always find it very strange that the rhetoric around owners and the PRS can be quite negative. The PRS provides a basic need that social housing is not.
But then good stories rarely reach the headlines unless they are about a cat!
Overall, two thirds of tenants aged 45+ like renting or have no strong feelings about renting. Of the 34% who didn’t like renting, the biggest issue was the fact that they would prefer to own their own home (42%) rather than being due to any adverse relationship with a landlord or the property.
Nearly four in five (78%) tenants aged 45+ say they like the property they live in, with three quarters saying it feels like home. Meanwhile, 80% find it easy to contact their landlord and 76% have a positive relationship with their landlord.
What 18 to 44 age group value about renting a home
The results from the paragon report where in keeping with the owners and residents we work with.. Over 40% said that renting gives them flexibility to move areas if their job requires it. Also, the fact that they don’t have to worry about repairs was a big factor. Just under 30% said that renting allowed them to live in a home they could not afford to buy.
What the 44 plus group value about renting a home
Near enough 50% sited the fact that they did not need to worry about repairs and 30% felt that it was good not to have to worry about owning a home. Interestingly of this group only 25 % said they were allowed to keep pets.
What’s your takeout from this?
When extending your portfolio, look for kerb appeal and make sure that any repairs are done in a timely fashion.
See results from the Paragon report below.
How could the PRS be affected in the future?
As mentioned above, four in ten people aged over 45 would like to buy their own home, but only 17% are actively saving to purchase a property, Paragon’s research shows. This suggests that a high proportion of those currently in rented accommodation will remain in the PRS for some time to come.
As there does not seem to be a government initiative to build more homes. According to Kate Faulkner OBE, we are short of about 1.5 million of social housing homes, and developers rely on supply and demand to keep prices high. The obvious outlet will be the PRS. However whatever party wants to get into power can obviously see that 11 million votes of residents in the PRS out plays 2.7 million votes of owners.
What is obvious is the quick wins by the government to earn more from the PRS has pushed a number of owners out of the market with the result that rents have gone through the roof due to a lack of supply.
Purely from someone who works within the PRS, I can see there will always be need to provide a home for those that cannot access social housing or afford to buy. The vast majority of owners I work with take the responsibility of looking after their residents seriously. Also matched with the vast majority of residents who appreciate the home they have.