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Will Most of Your Future Tenants be Pensioners?

Peter Hemple looks at the implications of the upcoming ‘silver tsunami’

The number of households aged between 45 and 64 that live in privately rented homes in the UK soared by 70% in the 10 years to 2021, according to research by Paragon.

The firm released a report entitled: The Middle-Aged Rental Squeeze at the end of 2022, which looked at what this means for the private rented sector overall. Paragon commissioned the Social Market Foundation (SMF) to analyse trends in the PRS. By 2035, the SMF anticipates that over half of households in the PRS will be headed by someone over 45, up from around a third today.

However, there are two schools of thought regarding what impact the ‘great wealth transfer’ from Baby Boomers to their children (more on this later), will have on the UK property market. As Paragon highlighted in its report, around half of these tenants aged 45-64 still have aspirations to own a home. Breaking down this cohort further, the research showed that 28% of those aged between 45 and 64 would like to buy but have no savings plans in place for a deposit, while a further 19% were actively saving to buy.

So, on the one hand, the demographics indicate that the number of tenants aged 45+ looks certain to rise, but on the other hand, what the demographic data is not taking into account is the future inheritance that this age group will be receiving in the next 10-20 years.

According to a 2020 report by the Institute for Fiscal Studies (IFS), for people born between 1953 and 1962, the average age of receiving their inheritance was 58. For 1970s-born children it is expected to rise to 62, and to 64 for those born in the 1980s. How this wealth flows through the generations and how the inheriting generation prioritise any windfall is yet to be seen, but the next 10 to 20 years could have a significant impact on the housing market.

If a lack of savings, or an insufficient salary, are what is stopping half of all the middle aged tenants from buying a home to live in at the moment, then that hurdle will soon be skipped over by many of them when the Baby Boomer generation eventually passes away. 

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