One of the often-repeated tropes of the current housing situation that dominates political discussion is that older people, or so called ‘baby boomers’, have ruined the housing market for the younger generation and that they enjoy most of the benefits of home ownership whilst pulling up the ladder for their children and grandchildren.
In some respects that may be true in the sense that when that generation was under the age of 35 the requirements for deposits, affordability and the income ratio required to purchase were much more reasonable. So too were house prices which, in relation to average income, were a fraction of what they are today.
However, there is a problem with simplifying this issue into a soundbite or a binary definition. It ignores the fact that many of the older generation didn’t actually benefit from the property boom that occurred through the 80s and exploded through the 90s and early 2000s. Now, it makes sense that those who were never able to afford a home are renting.
New research supports this. As reported in the Financial Times, the latest data from the Centre for Ageing Better (CfAB) shows that the number of over-60s renting privately rose from 254,000 in 2007 to 414,000 in 2017. The report also predicts approximately a third of over-60s could be living in private rented accommodation by 2040.
Not only this, but it also predicts that an increasing number of pensioners are voluntarily selling up and renting through retirement. It appears that many are releasing their asset wealth in order to help their children or grandchildren enter the housing market for the first time and are themselves renting instead.
What could this mean for the future of buy to let property investment? Firstly it means an increase in the number of people competing for high quality rental accommodation. People are living longer, healthier lives and, given the average retirement age is 65, most can expect to enjoy 20 years of retirement in the UK.
For those looking to invest in buy to let property this is good news. The market has grown and is taking in high quality tenants and the social status of renting has moved almost unrecognisably from where it was even ten years ago. Perhaps it’s time to re-evaluate our assumptions and ideas about the rental market once again.
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