Traditionally the thoughts of people moving into their 50’s have turned to retirement and repaying their mortgage. However, new figures show an increase in the number of people over the age of 50 renting their home.
The latest Countrywide Quarterly Lettings Index, for the second quarter of 2013, shows a 6% rise in the number of over 50’s renting their home compared to the same time last year.
Experts believe the number of over 50’s living in rented accommodation could be down to a number of factors, including an inability to get a mortgage due to their personal circumstances or the lack of a house deposit.
Commenting on the Index, Nick Dunning of Countrywide, said: “Renting a property was previously a choice for the younger generation as they saved for a few years to get on the housing ladder. However, there is currently a demographic change in the UK rental market with people renting for longer and in some cases for life. Reasons vary and for some it is because they cannot afford to save a deposit to buy their own home but others choose to rent and enjoy the flexibility it gives them especially in terms of job mobility. Tenants aged 41 and over now equate to nearly a third (29%) of all of those renting a property through Countrywide in England, Scotland and Wales and this figure is likely to rise in the future.” (Source: Countrywide)
Whilst the number of older renters is on the rise, the survey also found a surprising fall in the number of younger tenants. The number of people under the age of 25 and renting their property dropped by 7%, compared to the same period last year.
The fall could partly be explained by an increase in the number of first time buyers in the first half of the year. Spurred on by the Funding for Lending scheme, which has helped to reduce interest rates and the Help to Buy Scheme first time buyers have found it easier to get onto the housing ladder and therefore reducing their requirement for rented accommodation. Indeed, new figures from the Council of Mortgage lenders show the number of first time buyers has risen by 42% over the last year.
The survey also found the average length of a tenancy now stands at 19 months, slightly down on 2012.
Buy to let investors will be interested to note the average rental yield in the UK is now 6.10%. Wales shows the highest yield at 9.10%, whilst the South West is the least attractive at just 4.50%. The statistics in full:
Region Average Rent Q2 2013 Average Rent Q1 2013 Average Rent Q2 2013 Yield %
Greater London £1,110 £1,107 £1,096 6.20%
Central London £2,398 £2,387 £2,486 4.80%
East of England £821 £814 £788 6.20%
South East £1,058 £1,054 £1,079 5.90%
South West £739 £745 £737 5.70%
Midlands £640 £636 £627 6.50%
North £624 £603 £599 6.40%
Scotland £619 £580 £594 5.80%
Wales £623 £618 £624 6.60%
Total £845 £835 £836 6.10%
As the housing market recovers slowly from the depths of the financial crisis in 2008 it will be interesting to see how the rental market fares and whether supply starts to outstrip demand.