A rise in the number of pensioners who rent rather than own their home is set to add billions to the housing benefits bill.
Soaring rents, including for older people, means demand for support from the benefits system will also spiral, according to economists.
Currently, the Treasury spends £6.7bn a year on housing benefit payments to pensioners, but this is expected to more than double within a decade.
The estimates come from the Centre for Economics and Business Research (CEBR) which suggests the figure could reach £15.4 billion a year.
This is based on the trends of soaring rents and the fact a greater proportion of elderly people now rent rather than owning their home outright.
Samuel Miley, an economist at CEBR, warned that the rise reflected a combination of “the difficulties that are presented by an ageing population with the separate issue, which is a housing market that is arguably not functioning too well”.
He said: “Limited supply of housing and growing demand are creating a perfect storm for quite difficult housing conditions across all age groups, not least the older cohorts.”
The Office for National Statistics projects that the number of people aged 65 to 84 will rise from 10.8m in 2020 to 14.4m by 2040, which will inevitably increase the share of pensioners who are renting.
Rising property prices have led to a sharp drop in home ownership in recent years, impacting almost all age groups across Britain, including pensioners.
The English Housing Survey shows that the share of people aged 65 to 74 renting privately has risen from 4.2 percent to 7.4 percent since the financial crisis. For those in their late 50s and early 60s, the proportion has risen from 7 percent to 10.9 percent.
The CEBR said the housing benefit bill will only grow once millennials and Gen Zs hit retirement age.
Mr Miley said: “Unless there is a stark structural change whereby house prices fall, whether that is triggered by an intervention or a shock to the market, or alternatively, earnings rise significantly, I think it’s likely that those cohorts are going to be disproportionately priced out of the housing market.”
Charities and experts have warned that the unpredictability of the private rental sector is often unsuitable for the elderly, particularly those who struggle with health conditions.
