Although renting accommodation can be a great option for younger people with no ties, it can mean much less security than owning your own property.
New figures from the Resolution Foundation’s report suggest that up to a third of young people today could be renting into their retirement.
Lindsay Judge, senior policy analyst at the Resolution Foundation, said: “Britain’s housing problems have developed into a full-blown crisis 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 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.”
David Smith, Policy Director for the Residential Landlords Association (RLA); “Today’s report shows the perfect storm that young people face. With home ownership remaining difficult for many to access, demand for homes to rent continues to increase. This is at a time when Government tax increases are discouraging many landlords from investing in new homes to rent out.
“Ministers need to make pragmatic changes to their approach to private rented housing, with a series of policies that support, rather than attack, the majority of private landlords who are individuals to invest in the new homes to rent we need alongside all other tenures.
“This includes greater support and encouragement for those prepared to offer longer tenancies but who are concerned about being locked into agreements where tenants might be failing to pay their rent, not looking after their property or committing anti-social behaviour.”
Up to a third of young people today could be renting into their retirement
The RLA is calling for reforms to support those in the rental housing market. These include:
- Not applying the stamp duty levy where landlords invest in property adding to the net overall supply of housing.
- Using a combination of tax incentives and improvements to the process for regaining possession of a property. Particularly where tenants are failing to look after it or not paying their rent, to provide greater confidence to landlords to offer longer term tenancies. At present it can take up to 22 weeks for a landlord to regain possession of a property when faced with tenants causing disruption. 73% of landlords have told the RLA that they would be encouraged to offer longer term tenancies if such reforms were made.
- Action to stop mortgage providers from prohibiting landlords from offering longer tenancies. 44 per cent of landlords have told the RLA that they have mortgage conditions that limit the maximum length of tenancy that can be offered.
- Establishing a new housing court to improve and speed up access to justice for tenants and landlords when things go wrong.
- Providing relief from Capital Gains Tax where a landlord is prepare to sell a property to a sitting tenant to support first time home ownership.
Tips for Owning a Property, from Hannah Maundrell, Editor in Chief of money.co.uk
“It can be hard for young people who find themselves stuck renting, unable to get a foot on the property ladder. The cost of renting can take up so much of your income, making it hard to find the funds to save. With interest rates currently being so low it’s great if you’re already borrowing for your mortgage but if you’re trying to save for a deposit, the rates just aren’t giving much of a return.
“The removal of Stamp Duty for first time buyers is a small relief, however with house prices being so high even saving enough for a deposit can take many years.
“Don’t let this put you off – there are things you can do to help you get on the property ladder. If you’re sure you want to own a property;
- Save: Try to save the maximum amount you can a month, treat it like a bill and create a direct debit. Make the most of your money with a government backed scheme like Help to Buy or a Lifetime ISA.
- Cut rent: Move back in with your parents or rent with friends to cut down your monthly outgoings and potentially save hundreds.
- What can you afford: Some first time buyer mortgages come with high LTVs, so you may only need to save a 5% or 10% deposit. Use a mortgage calculator to work out how much you could currently borrow.
- Get a guarantor: If you have family or friends who are prepared to cover your mortgage payments if you miss them, a guarantor mortgage could help you buy a property with little or no deposit.
- Share the load: Consider buying with a friend or family member if buying on your own is simply not affordable. Be sure to think seriously about the long-term commitment of owning a house with a friend.
- Compare: Don’t assume your bank will give you the best mortgage deal. It’s worth shopping around for the mortgage deal that suits your needs.
Read more on Build to Rent developments in the UK, as well how young adults are less likely to own a home than ever before.