The private rented sector is facing a major demographic shift, with significantly more people expected to reach retirement without owning their home.

New research by the Pensions Policy Institute (PPI), commissioned by the Association of British Insurers (ABI), projects that more than one in three pensioner households could be renting by 2044. The number of pensioners renting privately is expected to increase by 1.3 million over the next two decades.

The research highlights a growing problem for people approaching retirement without the financial security traditionally associated with home ownership. It also points to a private rented sector that will look increasingly different from the one landlords have been used to.

Caroline Abrahams, Charity Director for Age UK, said:

“Renting may be a good solution for some older people and having a landlord means less responsibility for managing repair and maintenance. However, the private rented housing sector has the worst levels of disrepair and accessibility – critical issues for older people with disabilities or chronic health conditions, and security of tenure remains an issue. A landlord may want to move into a home themselves or sell, and an older person might then have to find a new home, potentially losing vital community support networks.  Getting adaptations in the private rented sector is also difficult and so an older person who needs a walk-in shower, grab rails or a stair lift may struggle to do so. In some cases, older people will put up with bad conditions, as they don’t want to cause a fuss or they can be fearful of what the landlord might do if they complain.”

Older renters already on the rise

The number of older people renting privately has already been increasing, as home ownership rates among younger generations have fallen.

Previous PPI research found that if current housing patterns continue, the proportion of pensioner households renting privately could rise from about 6% to 17%, with up to 1.2 million more pensioner households renting privately by 2042.

Government research has also identified older renters as a distinct and growing group within the PRS. It found that older private renters are often long-term tenants, with 9 in 10 of the identified group aged 65 or over and half having lived in their current accommodation for five years or more.

For landlords, longer-term tenancies can offer greater stability and fewer void periods. But an ageing tenant population also raises issues around property suitability and affordability.

Caroline Abrahams continues:

“Older renters face a huge shortage of suitable options. 70% of older renters say that they would struggle to find alternative accommodation if they had to leave their home. Age UK sees cases of older renters presenting to their local authority as homeless because they simply cannot find a suitable home within budget. Sadly, there is a worrying lack of choice of homes for older generations across all tenures, a shortage of readily adaptable homes for people who may develop a disability in later life, and limited housing options for older people who want, or are forced, to move.”

A different type of rental property?

Abrahams says that new builds need to address the shortage providing more homes that are suitable for an ageing population across all tenures and for all income levels but particularly for renters; and for some, the private rented sector will never be suitable and we need greater investment in social and affordable housing. She also said that Age UK would also like to see better enforcement of standards in the private rented sector, swifter and more efficient access to aids and adaptations and more holistic help for older people as they navigate repair, maintenance, adaptation and housing choices.

As tenants get older, features that may once have been secondary considerations could become increasingly important.

Accessibility, stairs, bathrooms, heating, energy efficiency and general property condition can all affect whether a tenant can comfortably remain in a property as they age.

This could create opportunities for landlords prepared to invest in good-quality, suitable homes. A property that enables someone to remain settled for many years could potentially provide greater stability for both tenant and landlord. However, longer tenancies can also bring challenges.

One LandlordZONE forum member, Howie Stone, questions whether older tenants could have less financial headroom once they are reliant on pension income.

“Pensions are often rather less than salaries. But market rents are determined by the whole market, pensioners and employed people. So retired tenants may not have much headroom after they’ve paid the rent, especially if their pension increases don’t stay in line with rent increases.”

He also points out that older tenants may be more likely to remain in the same property for many years. A tenant moving in at 66, for example, could potentially still be living there at 76, 86 or beyond.

That can be positive for a landlord looking for stability, but it may also mean that the tenant’s circumstances change significantly during the tenancy. Stone highlights potential issues around hoarding, cognitive decline and reduced mobility, which could have implications for property maintenance and the way landlords manage longer-term tenancies.

Another LandlordZONE forum member, George Price, shares a very different experience, highlighting the potential benefits of having older tenants in a property over the long term.

“I rented to a retired man who was going to be long term, but he didn't say he was on a waiting list for a council-run old people's home, apart from which he was OK,” says Price. “Subsequently rented to an elderly couple, he worked, she was retired. Eventually he retired and died some time later, the widow stayed a few more years until her demise. Several friends were made, she received some benefit payments, but rent was paid and they were model tenants.”

The affordability challenge

For older renters, however, the biggest concern is likely to be affordability.

The latest PPI research estimates that renting a two-bedroom home privately throughout retirement could cost £200,000 to £400,000. In comparison, the average defined contribution pension pot is £154,000, falling to £105,000 for women.

The research also highlights the particular vulnerability of people living alone. About 30% of UK households are currently single-person households, with half of these aged over 65.

For landlords, this creates a difficult balance. Older tenants need secure and affordable homes, but landlords also have to cover mortgages, insurance, maintenance, taxation and compliance costs.

Paul Shamplina, founder of Landlord Action, says the changing tenant profile presents both challenges and opportunities.

“We’re likely to see more people renting well into retirement, and that means landlords will increasingly be providing long-term homes rather than simply short-term accommodation,” he says “There are opportunities for landlords who provide good-quality properties that tenants want to stay in, but affordability will be an important consideration, particularly for those living on fixed income. The key for landlords is to understand how the market is changing and think about the longer-term suitability of their properties as tenants get older. That could mean looking at accessibility, location, energy efficiency and proximity to local services. If the private rented sector is going to house more people in later life, we need to think seriously about whether the homes being provided will meet their needs.”

Planning for the future

The growth in older renters is likely to change the private rented sector for both landlords and tenants.

For older tenants, the challenge is finding housing that is secure, suitable and affordable throughout retirement. For landlords, there may be opportunities in providing properties that meet those needs, but also a need to understand the different financial and practical considerations that can come with longer-term tenancies.

The research makes clear that the future PRS is unlikely to look like the one we know today. More people are expected to reach retirement without owning their home, increasing the importance of private renting as a source of later-life housing.

For landlords, that demographic shift is worth considering now - not simply as a challenge, but as an important part of the future rental market.