There was an article in The Times last week which caught my attention, referring to a report Hometrack had compiled for the newspaper regarding an increase in mature tenants renting in the private sector. It had me thinking about the profile of our tenants in the 500 or so properties we manage. We now have more tenants 50+ years of age than we’ve ever had in the 25 years we’ve been managing properties.
In 1996/97 the English Housing Survey stated there were around 2 million private rented households in the country. Today there are 4.7 million. The majority of the ‘new’ renters are under 65 years of age, but apparently 40% are over 65. We haven’t been seeing 40% of our new tenants in the 65+ age group by any means, but we may be unusual in that we’re located in an area where the 2011 Census stated the average age of the population was 26. I can state however that over the past 5 years we have seen a significant increase in the number of tenants who are 50+ years of age.
The report refers to these more mature tenants as ‘grey private renters’. The report goes on to say that the number of ‘grey private renters’ is expected to grow considerably. Apparently, there are now more than three times the number of middle-aged private renters, aged 45-64, than there were in 1996/97. Over the next 20 years this age group will naturally become the 65+ age group which statistically should add around another 1.1 million older renting households.
The survey predicts that some of the current 45-64 age group will buy, or move into social housing over the next 20 years, and some of course will die over that period. But they forecast that inevitably there will be some new, older, private renters due to relationship breakdowns and divorce.
Unless there is a change in Government policy towards the building of social housing to accommodate these ‘grey renters’, it seems inevitable demand in the private rented sector will continue to rise. This will be coupled with an ever-expanding younger population (assuming Brexit doesn’t completely shut the door on net immigration and Government doesn’t levy a baby-tax as China did). There is some new private rented accommodation being built, but will this be sufficient to satisfy demand across all geographic areas? I suspect not. House building for sales isn’t keeping up with demand, and what is being built isn’t necessarily in the areas where demand is highest. It would appear rents will continue to rise.
The ‘grey renters’ tend to stay in their accommodation for longer periods. Younger tenants are more ‘nomadic’ – moving with work promotions, relocating to find employment, relationships splitting up (or forming!), etc. As people get older, the tendency is not to move home quite so much. Renters have no choice when served with a Notice to Quit by their landlord. This is of considerable concern to Government, yet ‘intentional’ landlords (rather than accidental) like nothing better than a long-term tenant who pays the rent on time and looks after the property as if it’s their own home. Why would a landlord evict a regular source of income?
The survey indicated that for older private tenants, being forced to move by being served notice was the biggest single reason for moving. Almost 30% of private renting households aged 65-74 who moved did it for this reason in 2016/17. The solution, some would say, is to change the laws, giving tenants greater security of tenure. I would suggest this will discourage further investment by landlords in the private rented sector, worried that a tenant who breaches their covenants for whatever reason, cannot be evicted (at least not easily) in favour of a new tenant who will abide by the covenants e.g. pay rent, cut the grass, clean the windows, not disturb the neighbours, etc. Circumstances change for people, renters included, and landlords have a duty not only to their tenants but to neighbours and the environment. If a previously good tenant suddenly morphs into a not-so-good tenant, why would the landlord want to retain them if they are constantly in arrears with their rent or not looking after the property?
I accept some landlords do not maintain their properties. The majority we act for do keep their properties in good repair and are keen to see the gardens manicured and windows cleaned. It is the small percentage who don’t look after their properties that the public notice and which are highlighted on the news and in documentaries.
I am certainly in favour of more social housing being built. There is a need for this accommodation. But if this is not going to happen, the last thing the private rented sector needs is more legislation regarding tenure and rent controls. The Rent Acts in the 1960’s and 1970’s didn’t work. Rent control leads to minimal investment by landlords who cannot generate a return on their capital. We’re already seeing an increase in the number of landlords selling and getting out of the rental market as a consequence of the changes to the tax system for landlords. We have lost four properties recently where the landlords openly said they are not making any money from their buy-to-lets. Most of these are accidental landlords, with relatively high mortgages; the rent doesn’t cover their outgoings after their income tax liability is taken into consideration.
The sale of these properties will help satisfy demand from first time buyers perhaps, but it won’t help the ‘grey renters’ who have to move out of these nice, pleasant, properties which they’ve made their home. They now have to look for alternative accommodation – most likely at a higher monthly rental cost. If more social housing is to be built it will need to be on the same scale as it was after the Second World War. If Government doesn’t have the money, or stomach to take-on the debt, then the private rented sector will need to be encouraged.