Rise of mid-life renters as many 30 and 40-somethings have a landlord
People in their mid-30s to mid-40s are three times more likely to be renting their home than 20 years ago, according to the Office for National Statistics (ONS).
About three in 10 (27.6%) people aged 35 to 44 in England were renting from a private landlord in 2017, compared with fewer than one in 10 (8.5%) in 1997.
The ONS said that if this trend persists into older age, in the future, older people will be more likely to be living in the private rental sector than today.
Meanwhile, the current generation of over-65s are much more likely to own their home outright, with no mortgage left to pay, than their age group in the early 1990s.
Nearly three-quarters (74%) of people aged 65 and over owned their homes outright in England in 2017, with just 4.4% of homeowners in this age group still having a mortgage to pay off.
This was up from 55.7% in 1993 in this age group who were mortgage-free homeowners, while 5.8% owned with a mortgage.
The ONS said this group includes the first people to benefit from the Right to Buy initiative, which saw social housing stock sold at reduced prices from the 1980s, and boosted home ownership.
The scheme was open to a large proportion of the population. In 1979, a third (33.2%) of homes across Britain were social housing.
This compares with a quarter (24.9%) in 1990 and 17.6% in 2017, the lowest since records started, the ONS said.
Declines in home ownership rates at younger ages may have an impact on the type of accommodation older people live in, in the future, according to the ONS.
The report suggested there may be some advantages if more older people are renting privately in the future. For example, it may be easier to move into more suitable accommodation if needs change, rather than relying on a house sale.
But the potential benefits of living more flexibly in the private rental sector in older age could come at a price – and may mean people need to have saved up a much bigger pension pot than if they were a homeowner.
While homeowners with mortgages also often have high housing costs, repayments stop when the mortgage is paid off, often before retirement.
The report said: “A market rent that is affordable to someone of working age may cease to be affordable after retirement, when income decreases.
“Research suggests that someone who owns outright could expect to maintain their living standards on a pension pot of £260,000, while someone who rents privately would need almost double this (£445,000).”
Nathan Long, a senior analyst at Hargreaves Lansdown, said: “Problems are being stored up for those in their 40s and early 50s.
“Not only were they born too late to benefit from final salary pensions, they were born too early to benefit from a lifetime of automatic pension saving and many won’t be able to call on their house if times get tough.
“Relying on the trickle down of wealth from older generations doesn’t look like a good strategy to fund retirement, so taking control of your retirement by boosting contributions now is sensible.”