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18/04/2018

Millennials face a lifetime of renting, claims report

Words: Laura Edgar
Young families face a lifetime of renting / iStock-546201806

The private rented sector needs to be ‘radically reformed’ to ensure that it can accommodate families raising children and people who are retired because young people face never owning their own home, according to the Resolution Foundation.

The think tank says that while more should be done to build homes and support young people’s aspiration to own a home, policymakers “cannot afford to neglect” the private rented sector.

Four in 10 millennials at the age of 30 rent, double the number for Generation X and four times more than baby boomers at that age. This suggests that not only have ownership rates fallen, so has access to social housing.

Policy has failed to catch up with the fact more people are bringing their children up in the private rented sector, “it has now become mainstream”.

Home Improvements states that there are 1.8 million families with children in the private rented sector, up from 600,000 in the early 2000s. Furthermore, housing benefit covers 55 per cent of the housing costs of non-working, private renting millennial families at age 25. For Generation X families, the figure was 77 per cent.

“Up to a third of millennials face the prospect of renting from cradle to grave” – Lindsay Judge

The private rented sector is the least secure tenure, with two-month notice periods as standard, and six or 12-month fixed-term contracts leaving many fearing large rent rises.

If home ownership growth follows the “weak pattern” of the 2000s, up to half of millennials could be renting (privately or socially) in their 40s. A third could be renting by the time they are claiming their pensions, says the think tank.

Lindsay Judge, senior policy analyst at the Resolution Foundation, said young people are “bearing the brunt” of the housing crisis, “paying a record share of their income on housing in return for living in smaller, rented accommodation”.

“While there have been some steps recently to support housebuilding and first-time buyers, up to a third of millennials still face the prospect of renting from cradle to grave.”

To tackle Britain’s housing crisis, private rented conditions have to be improved, she continued.

“For any housing strategy to be relevant and effective for people of all ages, it must include this combination of support for renters, first-time buyers and ultimately a level of housebuilding that matches what the country needs.”


The Resolution Foundation has called for:

  • The introduction of indeterminate tenancies as the sole form of contract in England and Wales, following Scotland’s lead and the practice in Germany, the Netherlands, Sweden and Switzerland.
  • Fair balancing of the needs of tenants with the rights of landlords. A landlord could remove a tenant that fails to pay the rent or treat the property well, or if they wish to sell or reoccupy the home, but cannot simply end the tenancy at short notice without good cause.
  • Light-touch rent stabilisation that limits in-tenancy rent rises to CPI inflation for three-year periods.
  • The government to use use the tax system to better purpose to rebalance demand and it should tax second and empty properties more effectively.

Reaction:

Johnny Caddick, managing director at rental developer Moda, said: “Renting in Britain has a poor reputation because there is no consistency in the market. Companies like ours and others in the build to rent space will change that by offering a range of buildings at different price-points offering various levels of service – much like we see with cars or hotels. It’s vital the public can start to have confidence in the sector and part of that means putting an end to rogue landlords and agents.”

Jean-Marc Vandevivere, CEO of build-to-rent firm PLATFORM_, said: "The findings that more people will be renting for longer and later into their lives underlines the need for a professionalised rental market that is responsive to the needs of not just young professionals, but families and the elderly too. Encouraging long-term flexible tenancies, which many build-to-rent landlords are already offering, will help give renters a greater sense of security and certainty, while new-build developments designed specifically for renting will help tackle many of the issues around quality of accommodation people face in the traditional private rented sector."


Image credit | iStock

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