Middle aged and forever renting: developers’ new target market

Irene has spent the better part of two decades bouncing between rental properties. Now in her early forties, she and her partner live in a house share in north London with five other housemates in their twenties and thirties.

Irene works in film production; irregular hours on set means she and her partner cannot live in London’s cheaper outskirts. As a result, they are entering middle age at the whims of the private rental sector

“We keep getting kicked out because the landlords keep selling. So we keep moving from one to another and [it] never seems to end,” she told the Financial Times.

Irene, who asked not to give her full name as she didn’t want to publicly comment on her personal finances, is one of a group of older renters priced out of buying a home by an affordability crisis that has created a growing demographic for the UK’s nascent build-to-rent sector.

According to government data compiled by Paragon Bank, people over 35 accounted for more than 57 per cent of England’s private renters last year, up from 49 per cent in 2013. And estate agency Savills predicts that new demand among the over-35s for private rental tenancies will increase eightfold by 2030.

Targeting that shift are corporate landlords, which claim to offer tenants more stability than small landlords can provide, and are drumming up investment to supply a frenzied UK rental market characterised by soaring demand and record costs.

The build-to-rent sector attracted £4.5bn in investment last year according to Savills, brokering deals at a time when asset managers are wary of most other real estate sectors. In June US private equity giant Blackstone agreed to buy about 1,750 new rental homes from housebuilder Vistry through a subsidiary, marking its second major UK housing deal in eight months.

Britain’s rental market is more dominated by small private landlords than other countries such as the US, with few big institutional providers. The UK’s build-to-rent sector stood at 102,629 completed homes in April, according to Savills, accounting for just under 2 per cent of all rental homes in Britain, but is growing fast, with a further 161,750 homes under construction or in the planning pipeline.

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Lucian Cook, head of residential research at Savills, said providers had “really picked up on this trend of greater demand among older renters and are catering for that”, with deals for multifamily and single-family homes hitting the second-highest number on record in the last quarter of 2023.

They include Grainger, the UK’s largest listed buy-to-rent landlord, which is targeting an older demographic with co-working areas and events such as wine and cheese tastings geared towards the over-35s.

Older tenants are an appealing proposition for big developers. They have typically more stable earnings than younger renters, and tend to move less frequently, reducing costs.

“It’s more expensive if people move out because we freshen up [the properties],” said Grainger’s chief executive Helen Gordon. “It’s actually quite good for us to have people with us for a long time”.

Smaller landlords are also enthusiastic about this age bracket. Richard Rowntree, mortgage managing director at Paragon, which specialises in buy-to-let mortgages, said older renters “are a good tenant . . . What we hear is that there’s less issues in terms of antisocial behaviour and noise”.

Build-to-rent groups such as Grainger and Greystar claim to offer longer-term tenancies than smaller landlords can provide, purportedly creating better stability for UK renters who have scant legal protection from sudden rent rises or eviction.

“[Older renters] want to know that they can rent long term and not think that they’re going to have to move because it’s going to be sold out from under them,” said Todd Marler, senior director of operations at Greystar.

Danielle Bayless, chief operating officer at Quintain Living, a division of Quintain that manages the developer’s rental portfolio, said 32- to 45-year-old renters were “the segment that is growing the fastest” year on year. It hopes tenants will move through life stages — getting married, having children and growing old — in its rental properties.

An increase in build-to-rent homes would help address Britain’s supply crunch at a time when smaller landlords have come under pressure from rising mortgage rates. In March rents rose by a record 9.2 per cent annually according to the Office for National Statistics, taking the average monthly rent in Great Britain to more than £1,200, and above £2,000 in London.

However the rate of new building is likely to be glacial, given planning constraints and a lack of available sites, while the number of people renting in Britain is skyrocketing. A recent report from the Resolution Foundation said the number of people living in private tenancies for longer than a decade had almost doubled since the financial crisis.

Housing campaigners say that without legislative change, the lack of legal protections for tenants in the UK will also continue to make it an unstable and expensive way to live.

In London, rent accounts for more than 30 per cent of gross pay for more than half of workers on moderate incomes, such as many teachers and NHS staff, according to research by property fund manager Thriving Investments — a level considered “unaffordable” by the UK Office for National Statistics.

Outside the capital, rents are still unaffordable for 30 per cent of these workers — those earning from the 25th percentile up to the median income, typically about £27,000 to £35,000.

Cath Webster, chief executive of Thriving Investments, said the rental market was “critically undersupplied” and there was an “urgent need for regional strategies” to channel investment into affordable housing.

The government of Prime Minister Rishi Sunak failed to pass the long-awaited renters’ reform bill before parliament was dissolved for the general election. However the Labour party has committed to immediately abolishing so-called no-fault evictions, and empowering renters to “challenge unreasonable rent increases”.

In the meantime, renters and campaigners say the lack of stability is having a detrimental impact on people’s lives, and hampering their ability to make decisions surrounding marriage, children and employment.

“A lot of people are nervous about settling down or starting a family when they’re in an insecure tenancy,” said Dan Wilson Craw, deputy chief executive of campaign group Generation Rent.

“There’s very little autonomy for the tenant. It’s very easy to lose your home. It’s more expensive and you’re exposed to rents going up at the whims of the market and your landlord, [while] the quality of the homes is often very poor” he added.

SpareRoom, the rental housing platform, said the average age on its site had been rising too, with 30 per cent of its active users looking for flatshares now older than 35.

“People are coming out of job changes, life changes, long-term relationships, and maybe 10 years ago they’d have rented a place on their own. Now they’re looking around and going: ‘there’s no way I can afford to do that,’” said Matt Hutchinson, director of communications at SpareRoom.

Irene, the North London renter, said she was frustrated. “It’s a gold mine for [landlords] isn’t it? We’ll have more stability and more money than in our twenties. But it’s appalling that we don’t have enough to live in a civilised, adult manner.”

This article has been amended to correct the spelling of the name of Grainger’s chief executive, Helen Gordon