How the nation’s housing crisis is contributing to poverty amongst older people

Our State of Ageing 2023/24 report makes it abundantly clear that one of the biggest factors influencing poverty for people aged 50 and above is housing tenure.  

Everywhere in the data, whether we’re looking at poverty levels, savings, pension provision, or the effects of the cost-of-living crisis, we see differences by tenure with social and private renters consistently the most financially vulnerable.  

For example:  

• Almost four in ten older private renters are in poverty after housing costs.  
• Older private renters spend almost half of their income on rent (exclusive of housing support). 
• More than one in five older female renters have less than £100 left each month after paying rent.  
• Almost half of all retirees in the private rented sector say their quality of life is significantly impacted by their housing costs. 
• Almost half of older private renters worry about getting into debt because their housing and other living costs are too high. 
• More than three-quarters of older private renters who are currently working worry that their future pension will not be able to meet increasing rent prices. 

There is a circular relationship at play here: insufficient financial resources prevent people from getting on the housing ladder and leaves the majority in the private rental sector. 

But it’s also the case that being a private renter exacerbates poverty in later life. And this is a huge concern because the number of privately rented homes headed by someone aged 50 and older has doubled from one to two million in the 20 years to 2021 and continues to increase.  

Indeed, the All-Party Parliamentary Group on Housing and Care for Older People has forecast that, by the mid-2040s, 630,000 private renters over pension age will struggle to meet the cost of their rent.   

The risks associated with being a private renter, risks that also include living in poor-quality housing, are a particular issue for people from minority ethnic backgrounds who are far more likely than the average to be renting privately.  

So for people from minority ethnic backgrounds, who are also disadvantaged by low wages, low pension provision and low savings, the fact that they are also privately renting puts them at substantially elevated risk of later life poverty.  

But owning your own home is no guarantee of financial security, contrary to common narratives about rich older homeowners, with one in five owner occupied homes headed by someone aged 75 or older in poverty.  

The situation is particularly acute for people who still have mortgage payments to meet. A quarter of people with a mortgage (24%) have no savings. And 4.6 million people aged 50 and older in this country have mortgages.  

Older people from ethnic minority backgrounds are more likely than the population average to still have a mortgage at older ages.  

As an example, the proportion of people aged 50 to 64 from Bangladeshi and White British backgrounds who have a mortgage is similar, at 34% and 36% respectively, to the 35% of the population as a whole.  
 
But when we look at the 75 and over age group, the proportion of the whole population with a mortgage has dropped to 5% while for Bangladeshi people, it is still sitting at almost a quarter (24%). 
 
Mortgages are of course subject to fluctuations depending on the national economic situation and rises in mortgage payments can leave homeowners with difficult financial decisions which might ultimately increase the likelihood of poverty in older age.  

A survey of mortgage holders by KPMG found that more than one in ten (11%) had cut their pension contributions to cope with higher monthly mortgage payments. 

In 2000, around half of people in poverty lived in the social rented sector. 

But in the years since, the social rented sector has shrunk and those in poverty are now equally distributed across tenure types.  

This would have reduced levels of poverty for individuals, and reduced poverty levels overall for the country.  

Without increasing the levels of affordable housing in this country, there is little hope in tackling poverty rates.  

The poor quality of homes lived in by older people is also an important consideration.  

While the likelihood of living in a non-decent home is highest in the private rented sector, almost one in five homes owned by someone age 55 or older is non-decent.  

And, unlike people in the private or social rental sector, owner occupiers are financially responsible for the upkeep of their homes which is an issue for those in a financially precarious position.   

Analysis by the Department for Work and Pensions identified the cost of home maintenance as among a host of “push” and “pull” factors which can tip a person into, or safeguard them from, poverty.  

Ageing Better’s Good Home Inquiry identified the lack of local, coordinated support and services as a barrier to people being able to address poor conditions in their homes.  

One of the potential solutions identified by the inquiry was the development of a network of Good Home Hubs to help people improve their homes.  

Good Home Hubs would offer advice on home repairs and adaptations including where to find trusted tradespeople, identifying what work needs to be done, how to finance repairs and improve energy efficiency.  

Without greater support, many older owner-occupiers may find the increasing financial burden of their home as it deteriorates around them.