Generation Perma-rent: Who are they and what do they want from landlords?
Over the past two decades, UK house prices have doubled. A 27-year-old today is half as likely to own property than they were 15 years ago. There are a number of reasons for this, but if you’re looking for a simple answer, you can refer to the laws of supply and demand. There aren’t enough houses coming onto the market to satisfy demand, which has driven up prices.
The increase in the number of landlords in the UK – as of last February, one in 30 UK adults were a landlord – has exacerbated the issue. It would be unfair, though, to blame landlords for the UK’s housing crisis. The main contributors are a downturn in large scale public construction projects and a reluctance in the private sector to pick up the slack.
Millennials who are trying to save for a deposit typically spend 45 per cent of their income on rent. And rent is only expected to get more expensive as landlords increasingly leave the market and sell their rental properties.
A few years ago, the uphill struggle faced by millennials trying to get a foot on the property ladder earned them the nickname ‘Generation Rent’. With no end to the housing crisis in sight, it’s likely that this is the first generation in living memory who may never get on the property ladder. This isn’t just Generation Rent, it’s Generation Perma-rent.
So what does this new cadre of lifetime renters look like? And what does it mean for today’s landlords?
They’re not just millennials
We tend to think of renters as people in their twenties and thirties saving for a mortgage. But this is no longer the case. The demographics of the UK rental market have shifted.
Generation Perma-rent refers to people in their middle and old age, as well as young adults. In fact, people aged 35-49 are now the most common occupants of UK rental property. And The Centre for Ageing Better has reported a 63 per cent increase in renters over 60 from 2007 to 2017. On top of this, Scottish Widows predicts one in eight retirees will be renting by 2032, which is three times higher than today’s figure.
Each of these groups has very different priorities and needs.
Younger renters living in city centres tend to live in HMOs and value having large, open communal spaces where they can socialise with housemates and friends. People in middle-age tend to be more family-oriented and will be looking for child-friendly gardens and kitchens, as well as second and third bedrooms for children. Finally, older renters may want proximity to restaurants and theatres, as well as manageable staircases – or none whatsoever. Renters over 35 are also less likely to want to live in HMOs.
It’s more important than ever for you to identify and understand your ‘ideal tenant’, and to tailor your property and listings to appeal to whatever demographic you decide to target. While young, middle and old-age renters can fall under the ‘Generation Perma-rent’ umbrella, they have little else in common. Except, perhaps, that all three groups are quite choosy and expect more for their money than renters used to.
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They want to be close to work, family and good schools
If you’re wondering which demographic to go after, location might be a good place to start.
City centres continue to be the obvious choice for younger renters. The vast majority of young renters said it was important to live close to work, as well as to bars, restaurants and other social venues. In fact, the number of 20 to 29-year-olds living in city centres is almost three times higher now than it was between 2000 and 2010.
However, perhaps surprisingly, older renters also seem to be drawn to the hustle and bustle of urban (or suburban) life.
Having moved to the country to raise their families, these older renters are now looking to downsize their properties and move closer to social activities and their children, who are more likely to live in urban areas.
A quarter of UK parents – buyers and renters – have moved house in order to live within the catchment area for a good school. School catchment areas have been shown to increase a property’s value by up to £27,000 – and the same rules apply for renting. Landlords with property inside the catchment area for a good school – or who are considering investing in one – are well placed to target families who want to secure a quality education for their kids.
They want quality accommodation and service
Renting is no longer a short-term fix. It can be a long-term, or even lifelong situation. As a result, ‘Generation Perma-rent’ tend to have higher expectations of landlords and their properties than short-term renters. This is especially true for middle and old-aged renters. As we get older, we expect a higher quality of life for ourselves and our families.
Older renters who have previously owned hard-to-maintain properties are increasingly drawn back to renting because they don’t have to worry about upkeep. When something breaks or goes wrong, the landlord is obligated to fix it. For older renters, particularly those who live alone, this stress-free way of living is very appealing.
Renting provides, in a sense, an attractive middle ground between home ownership and ‘serviced accommodation’. However, landlords targeting older renters need to provide a high level of service and be aware that older tenants may be more demanding than their younger counterparts.
A key concern for renters of all ages is stability. Whether you’re a young professional, a parent or a retiree, rent increases and the lack of long-term security will weigh heavy on your mind. Any assurances that landlords can provide to tenants in terms of their long-term future in your property will be warmly received.