After a decade of steady growth, the number of older renters is poised to increase rapidly over the next 10 years, new research shows.

Falling homeownership rates among the tail end of the Baby Boomer generation and older members of Generation X will quickly translate into a growing number of older renters.

The slowly rising share of older households renting has been coupled with a much more rapid increase in the number of older households more generally. Taken together, it means the number of households renting in England aged 65 and above will double by 2030. Today there are around 400,000 older households (over 65s) renting and this figure is set to pass the 1,000,000 mark in 2033.

At present households aged 65 and above have some of the highest homeownership rates in history. Growing up at a time when homeownership was rising has meant that just 5.7% of households aged over 65 today rent their home privately. The English Housing Survey suggests that the age group succeeding them are nearly twice as likely to rent privately as those currently over 65, with rented households making up 11.1% of all people those aged 55-64 years.

Therefore, even if homeownership rates remain unchanged, demographics mean that within a decade the proportion of over 65s renting will rise to 11.5% as fewer people reaching retirement are likely to own their home.

The growing number of older renters means that in cash terms households aged 65 and above will go from spending £5.1bn in rent each year to £12.7bn by 2033. This increase assumes no rental growth and reflects rents at 2023 rates. To put these numbers into context, renters of all ages collectively hand over around £69.0bn in rent annually.

The vast majority of households (78%) aged 65 and above own their home outright. However, the number of households aged 65 and above who are renting their home overtook the numbers with a mortgage back in 2010. Today, households aged 65 and above with a mortgage pay around £1.8bn annually in repayments, less than half what gets handed over in rent.

The average rent on a newly let property in Great Britain rose to £1,273 per calendar month (pcm) in June, a new record. This means that the average rent cost £110pcm or 9.4% more than the same time last year, marking the sixth strongest annual rent increase since our records began in 2014. Overall, this increase will cost the average tenant an extra £1,315 a year than if they moved into a new home last year.

Having passed the £1k pcm mark for the first time in May, the average rent on a one-bed home in Great Britain rose 11.1% year-on-year to average £1,017pcm. This means the average one-bed now costs the same as the average two-bed just 15 months ago in April 2022. Similarly, the average two-bed rent (£1,170pcm) is now the same as what a three-bed cost in January 2022. Rental growth has been similar for both two (10.9%) and three-bed (9.3%) homes.

Rents are rising across all regions, however the pace of growth cooled in Greater London and Scotland, where rents have been rising the most, as well as in the East of England. Rents in the North of England joined Greater London in seeing double-digit growth in June. This marked the fourth time on record that rents in the three Northern regions (North East, North West and Yorkshire and The Humber) rose by more than 10%, all of which have occurred in the last 24 months.

Aneisha Beveridge, head of research at Hamptons, said: “The rising number of older renters reflects the gradual unwinding of the large increase in homeownership rates after the Second World War. As younger generations who missed out on the homeownership boom age, growing numbers are likely to be renting when they retire.

“The recent rise in mortgage rates will make it harder to buy later in life. It’s long been the case that if you’re not on the ladder by 40 years old, it becomes more difficult. But higher mortgage rates will make this challenge even tougher given the difficulties in stretching a mortgage term to reduce monthly payments, particularly in the early years.

“As households get onto the ladder later in life, over the next decade there’s likely to be an increase in older households still paying off their mortgage beyond the age of 65. However, this increase is likely to be a small fraction of the growing number who will be paying rent beyond pensionable age, which in turn has the potential to bear significant social, economic and political consequences down the line.

“Rents are rising across the board, which suggests that the supply squeeze and rising landlord costs are pushing up rents across the market. Additionally, high mortgage rates, which have priced out would-be first-time buyers, are stoking rental demand. While there are a similar number of households looking to rent as in 2019, there are 47% fewer homes available. With interest rates set to stay higher for longer and few new landlords buying, these pressures seem likely to continue in the medium term.”