Opinion: The next generation rent?
Published by Max Salsbury for 24dash.com in Housing
Opinion: The next generation rent?
Robert Flint, solicitor, Winckworth Sherwood
My parents tend to talk about my respective grandmothers (I have three, curiously) as living alone under the menacing shadow of aging. It is not uncommon at Sunday lunch to hear cries of “It’s just not safe for her there anymore!” or “We have to get her out of there!” We don’t get them out, of course, we just talk about it.
And while mine is a generation of renters habitually looking to buy, could theirs be the next generation looking to rent? Since David Willetts’s The Pinch: How the Baby Boomers Took Their Children's Future, and Why They Should Give it Back, it has been a fairly standard argument (if an electoral no-go) that those aged over 50 should gradually downsize and share some of the national wealth (they currently own over half of it).
I am sure most people agree there is at least some truth to that. But that should not distract us from the fact that over 65s are already renting in large numbers and increasingly so. Indeed, according to the Housing Learning and Improvement Network, of households who rent privately, 23% are headed by someone over 50. This is probably not evidence of enthusiasm for renting, but rather the lack of an alternative. People can get trapped in housing which is not right for them or be forced to move because of family breakdown.
There are also plenty of reasons why people who own their own homes might not want to move to rental accommodation. They do not know how long they will live so there is always the risk of running out of cash to pay the rent. They may be more inclined to pass on wealth directly to their children rather than, well, everybody else’s children. Asking an Englishman (or woman) to sell her home is somewhat like asking an eighteenth century French aristocrat to sell her castle (though I’m not actually sure women could own castles back then). You would need a revolution to make it happen.
What sends policymakers into paroxysms of delight is talk of a virtuous circle where the older generation liquidate their assets and use the remaining cash to pay rent to institutional landlords (i.e. pension funds). On a large enough scale, the private rented sector is attractive to those investors because the rents are predictable, regular and should rise only with inflation. It is attractive to policymakers because it means older rent payers are helping to fund the pensions of their children.
It is going to take a lot of work to get it right. One of the big problems with the utopian vision is that at the moment most renters’ landlords are not pension funds, but individual buy-to-let landlords. This is problematic because it means that the rent goes to private landlords and not into the pensions of the next generation.
The dominance of buy-to-let landlords also means that the private rented sector mainly consists of small scale properties with few amenities that people of a certain age want. Some on site care would be good, together with 24-hour concierge. Mixed tenures would be preferable so we’re not just shunting people into grey-haired ghettoes.
But it would be misleading to focus on the differences between the needs of the different generations. Ultimately, my grandmothers and I are looking for the same thing: a decent landlord, longer term tenancies, good amenities and a nice community. We can all take advantage of the flexibility of renting and the lack of hassle compared to buying a house.
They need what we need: a professional rented sector.