Private renting vs. home ownership: what is the ultimate goal?

Private renting is increasing for people aged 65 and over, 200,000 older adults have joined the rental market in the last four years and estimates suggest a third of over-60s could be living in private rental property by 2040.

A survey by Your Move has identified shifting demographics and changes in circumstances – such as relationship breakdown or relocating for work – as possible contributors to this change in housing tenure.  While the majority of retired renters (58%) have never owned a home, a growing number of older homeowners are now choosing to sell up and rent in retirement.  However, there are several issues those who live in private rental property face, including: non-regulated rents; loose landlord regulations; short-term tenancies; and poor housing standards.

Home ownership in the UK

So why is the private renting market increasing for the older population? Is it because home ownership is increasingly becoming unrealistic or is private renting becoming the preferred choice?

Culturally, in the UK, there is still priority, emphasis, and aspiration for people to own their own home, with a social expectation that to succeed we must buy a house.  The model of renting is traditionally known as a short-term solution on the road to home ownership.

In England our default lease is an assured shorthold tenancy, this usually runs for 6-12 months and landlords are then free to evict tenants with 1-2 months’ notice.  While longer-term leases can be available, they are not regularly used.  Following the Housing Act (1988) assured shorthold tenancies came into action in 1989, and fast became the default option in place of regulated long-term tenancies.  This has contributed to a rental market that is not sustainable, affordable or stable.

If we look at international models, particularly across Europe, long-term renting is the norm.  Germany, Switzerland and Belgium are examples where long-term contracts, more flexibility, and increased security provide tenants with the desire to continue renting, and renting is seen as an acceptable alternative to home ownership.  Rental contracts in Germany get increasingly valuable as tenants get older, with notice periods increasing and rent decreasing.

Protection for older renters

While the UK now has in place a tenancy deposit protection scheme for all private renters, older renters are keen for longer, and better protected, contracts and notice periods.  Those in assured shortholds are most at risk, they are paying market rent and have no protection long-term.  Historically private renting has been short-term and was designed to be that way – with changing demographics, and the biggest growth in renting seen in those aged 55-64, we need things to change, and a model like that commonly used in Europe could be hugely beneficial to shake up the current system.

What about the landlords? While some might not want to be tied into longer contracts, for many a long-term commitment to rent is good news.  Long-term tenants are likely to put more into the property and think of it as their own, and it removes the hassle of constantly looking for new suitable tenants.  Providing there is a good contract in place that protects both the tenant and the landlord, in case of a change in situation, then there is no reason why longer-term contracts can’t suit both.

Raising awareness

Age UK London has started a project to raise awareness of the needs of older private sector tenants – to find solutions to the problems they face.  Age UK identified this as a key need in London, although the findings will be relevant across the UK.  In London there are 146,000 households renting privately where at least one person is over 50, and between 2009-2014 the number of flat sharers aged 45 to 54 soared by 300%.  This project will look at challenges faced by older renters, to inform key policy asks, and aims to improve living conditions for older renters in the capital.

In the UK, renting is still seen as the second-best option.  But, if the renting model is made suitable, it can provide a certain level of freedom, allows you to live in areas often unaffordable to buy, and responsibility for major issues with the house lie in the hands of the landlord.

We need to move away from the short-term model of private renting to a longer-term model, challenging the assumption that we must buy.  Is it time to reimagine home ownership as the ultimate goal?  Well-designed tenancies and long-term renting could be beneficial both for those who have to rent and those who choose to.

First published in 24housing.