The UK has a demographic challenge. Put simply, we’re not having enough children to sustain an ageing population.
Fertility rates across most developed economies have been falling for decades, and the UK is no exception. In 2023, the total fertility rate dropped to 1.44 children per woman, the lowest level on record.
As the post-war baby boomer generation ages, the pressure on the nation’s economy and infrastructure is intensifying. Today, there are approximately three workers for every retiree, compared to five in the 1960s.
This is a complex issue, and you might wonder why it matters to a buy-to-let lender. But the connection is clear: a lack of housing -particularly in the rental sector – is stifling new household formation and contributing to the issue . Without access to affordable homes, whether to buy or rent, it becomes increasingly difficult for people to start families.
Historically, the path from the family home to a rental property was a rite of passage for younger generations. Renting offered a first taste of independence and helped build the financial habits needed for eventual homeownership, such as managing bills, maintaining a property and budgeting monthly expenses.
It was also where many couples took their first steps towards building a life together, often confirming their compatibility (and sometimes discovering they weren’t quite as compatible as they thought!).
But in recent years, this route has become increasingly blocked. Rental availability has shrunk, and average rents have surged. Our analysis of the Government’s English Housing Survey shows that the number of younger households renting privately has declined over the past decade. Between 2014 and 2024, the number of renters aged 16–24 fell by 16% to 447,000, while those aged 25–34 dropped by 9% to 1.45 million.
Meanwhile, older renters are becoming a larger share of the market. Households led by someone aged 55 or over now make up one in five private rentals in England, up from 14% in 2014. In contrast, those aged 24 or under now represent just 41% of households, down from nearly half a decade ago.
The Institute for Fiscal Studies found that the number of 25–34-year-olds living with their parents has increased by over a third in the past two decades. The 2021 Census confirmed this trend, showing a 14.7% rise in adult children living at home in England and Wales between 2011 and 2021. Today, one in every 4.5 families includes an adult child still living at home.
The social consequences are significant. Young adults are delaying key life milestones; moving out, forming relationships and starting families. Even those who do manage to rent face higher costs that strain household budgets and delay decisions about having children.
Too often, housing policy is made in isolation from broader demographic and economic trends. Measures aimed at curbing the growth of the rental market have contributed to rising homelessness, record spending on temporary accommodation and a generation of young adults stuck in the family home.
Landlords can play a vital role in addressing this challenge by expanding the supply of rental homes. But for that to happen, policy must support continued investment in the sector. A stable, well-regulated rental market is not just good for landlords, it’s essential for enabling young people to form households, start families and sustain the demographic balance the UK needs for long-term prosperity.
Louisa Sedgwick is Paragon Bank’s Managing Director of Mortgages