Young people today in the UK may never own their own home, says think tank
Generations of young people in the UK face never being able to own their own home and instead renting a property for the whole of their lives, according to a think tank report.
The research from the Resolution Foundation says that up to a third of millennials will not be home owners and radical reform is needed in the private rental sector to accommodate them.
It suggests the introduction of new tax reforms to discourage multiple home ownership and better support home ownership among the young, along with support for councils to get more affordable homes built.
The Foundation argues that more should be done to build homes and support young people’s home ownership aspirations. However, it also warns that policy makers cannot afford to neglect a crucial part of the current situation relating to poor quality and insecurity in the private rented sector.
It sets out how private renting has grown rapidly in recent decades. At age 30, four in 10 millennials rent, double the rate for generation X and four times that for baby boomers at the same age. At the same time access to social housing has fallen as fast as home ownership rates.
As more millennials reach their child rearing years, the Foundation notes that policy has failed to catch up with the fact that bringing up children in the private rented sector has now become mainstream. In 2003, the number of children in owner occupied housing outnumbered those in the PRS by eight to one. That ratio has now fallen to two to one as a record 1.8 million families with children rent privately, up from just 600,000 15 years ago.
It described the PRS as the least secure and lowest quality tenure where two month notice periods are standard and one in four properties fail the decent homes standard. The fact that many tenants are on six or 12 month fixed term contracts also means that the prospect of large rent rises at short notice are a big concern.
The report argues that the sector will continue to be a major feature of housing in Britain for many years to come. Even if home ownership accelerates rapidly millennials will never experience levels the baby boomers have seen.
More pessimistically, if home ownership growth follows the weak pattern of the 2000s, up to half of millennials could be renting either privately or in the social rented sector in their 40s, and a third could still be renting by the time they claim their pensions.
In order to improve the housing offer for renters, the Foundation is calling 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.
It also says there needs to be a fair balance of the needs of tenants with the rights of landlords. It points out that 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.
It also calls for ‘light touch’ rent stabilisation that limits in tenancy rent rises to CPI inflation for three year periods and a new housing tribunal to ensure landlords and tenants can have disputes resolved swiftly.
Lindsay Judge, senior policy analyst at the Resolution Foundation, said:
‘Britain’s housing problems have developed into a full blown crisis over recent decades and young people are bearing the brunt, 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. If we want to tackle Britain’s here and now housing crisis we have to improve conditions for the millions of families living in private rented accommodation. That means raising standards and reducing the risks associating with renting through tenancy reform and light touch rent stabilisation.
‘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.’
Kindly shared by Property Wire