A quarter of young adults in the UK are still living at home with their parents, according to a study by Civitas.
The think tank found that a million more young adults in the UK are living with their parents than were two decades ago, with a quarter of 20-34-year-olds unable to buy their own homes.
This rises to 41% in London, where housing is the most expensive, but falls where homes are the cheapest – in the North East (14%), and Yorkshire and the Humber (17%).
As for 23-year-olds in the UK, the proportion living with their parents has soared from 37% in 1998 to half (49%) in 2017.
The Editorial Director of Civitas, Daniel Bentley, says: “As owner-occupation and social housing have each become more difficult to enter, hundreds of thousands of young adults have taken one look at the high rents in the private rented sector and decided to stay with their parents a bit longer instead.”
He adds that it is essential for the Government to take this into account when forecasting future housing need.
The study also suggests that young adults who do move out of their parents’ homes are much less likely to live on their own than they were in the late 1990s.
Single-person households have dropped to 30% in recent years, it found.
This is in stark contrast to most of northern and western Europe, where single-person living has been increasing rapidly.
In France and the Netherlands, for example, 35% of households are single-person, while this rises to over 40% in Germany and Denmark.
While the report highlights the difficulty in getting onto the housing ladder, it also indicates that even renting from a private landlord is too expensive for young adults today.
Have you experienced an adult child living at home due to high rent and house prices?
Almost half of the children in private rental sector homes in England are living in poverty, according to a new report by the National Housing Federation (NHF).
The study found that around 1.3m children living in the private rental sector fall below the poverty line, which marks a whopping 69% (537,325) increase since 2008.
The report blames unaffordable house prices and insufficient social housing for the boom in families, who have already been hit by tax credit cuts and the Universal Credit rollout, staying in private rentals.
Despite such high poverty rates, seven in ten families are in work. The NHF is demanding that the Government creates more social housing, to help pull low income families out of homes that they cannot afford and out of poverty.
Kate Henderson, the Chief Executive of the NHF, insists: “It is a disgrace that, in one of the wealthiest countries in the world, we cannot provide our children with a secure and affordable home.
“The critical lack of social housing is pushing more and more families into poverty, by forcing them into insecure privately rented homes they cannot afford.”
She continues: “It’s so obvious that we need to be building more social housing, and the Government has a duty to our children to invest in this. This means increasing funding for social housing and urgently reforming the way that land is sold in this country.
“We will only be able to build desperately-needed social homes for children living in poverty if housing associations have access to land, instead of the current situation, where they are forced to bid directly against private developers, who make millions from luxury properties.”
Over the past ten years, the number of low income families renting privately has risen by more than three quarters, which was faster than couples and single people.
The NHF also found that almost 250,000 of those children would not be living in poverty if their families could access social housing.
Darren Baxter, the Housing Policy and Partnerships Manager for the Joseph Rowntree Foundation, also comments on the report: “It is not right that any child should be swept into poverty, or live in a family which struggles to keep food on the table or a roof over their head. But this is the reality for more than four million children in the UK – and it doesn’t have to be this way.
Half of Children in the Private Rental Sector are Living in Poverty
“Many families are now unable to access low-cost rented homes, and this means they can be stuck in expensive or unsuitable accommodation, despite the fact that more people are in work than ever.”
He explains: “Working families are increasingly being swept into poverty by their essential costs, such as housing, and we need to see decisive action to tackle this. As well as making sure that work is a route out of poverty, we need to see a step change in the number of low-cost rented homes being built and made available for those who need them.
“That’s why we are calling on Government to set out a plan to increase the supply of social housing at rent levels that ensure affordability for families on low incomes.”
Last year, the NHF and housing charity Crisis announced that 90,000 new social homes would need to be built in England every year to meet demand. In 2018, however, just 6,463 were completed.
Chris Town, the Vice Chair of the Residential Landlords Association (RLA), offers his thoughts on the findings: “The biggest driver of poverty in the private rented sector remains the Government’s freeze on Local Housing Allowance rates. Support for housing costs is simply failing to keep up with the realities of rented housing, and we call on the Government to use its spending review to drop the freeze.
“It is, though, disappointing that today’s report failed to note that the official data shows that the proportion of income spent on private sector rents is falling compared to the social sector, where it is increasingly. Data also shows that, over the last year, private sector rents fell in real terms.”
He adds: “In the end, the best way to ensure rents are affordable is to boost the supply of homes to rent, alongside all other tenures. This means the Government adopting a positive, pro-growth tax regime that supports and encourages the majority of good landlords to provide them.”
The latest English Housing Survey shows that, between 2010/11 and 2017/18, the proportion of household income (including housing benefit) that private tenants spent on rent dropped from 35% to 33%. In the same period, the amount spent on social rents rose from 27% to 28%.
The Office for National Statistics has reported that, in the year to December 2018, private sector rents in the UK increased by 1%, which is well below inflation.
A report for the RLA by Manchester Metropolitan University claims that Local Housing Allowance rates are the main drivers of tenancy failuresin the private rental sector.
A new whitepaper, Neighbourhoods
of the Future 2 from The Agile Ageing Alliance and Tata Steel, was launched
at the House of Lords in Westminster on 21st January 2019, offering
a new vision for the housing market, as the UK finds itself in a crisis.
The whitepaper advocates a fundamental shift in the way that
housing is considered. Rather than a series of rungs that the homeowner must
climb, from starter home upwards and then back down again in later life,
properties must be capable of adaptation, the report insists – of morphing to
support a growing family, and then adjusting to accommodate an ageing one.
Gillian Girling, the Chief Executive of Girlings Retirement
Rentals welcomes the whitepaper, particularly its focus on an ageing
population, and the need to develop homes and neighbourhoods with older people
in mind.
She says: “We
are an ageing nation, but housing has not kept pace with the changing needs of
the population. House builders and Government have, in the past, focused more
on the younger generation, but we are facing a housing crisis that can only be
solved by looking at the needs of all generations. The lack of affordable
housing for young people, as well as the lack of desirable retirement housing,
needs to be addressed.”
In
the report, leading experts have shared their views on how neighbourhoods and
housing could be developed in the future, in a collection of articles on key
areas: housing, design, health and care, technology, finance, and ageing
societies.
The whitepaper highlights that ageing
populations are a global phenomenon. Towards the end of 2019, there will be
more people worldwide aged over 65 than under the age of five. And, by 2050, in
the UK, 30% of the population will be over 60-years-old.
The question is: Where and in what type of
homes will these older adults live, and to what extent can technology support
healthy ageing and independent living?
One of the major challenges, summarised by Judith Torrington, the author of Future of Ageing: Adapting Homes and Neighbourhoodsin Neighbourhoods of the Future 2017, is that people age differently, but physical decline is inevitable.
She highlights that the key features of
accessibility – level access, flush thresholds, wide doors and circulation space,
and entrance level toilets – are only found in 5% of English homes. Also, older
people may have difficulty getting in and out of baths, walking upstairs,
bending down, and reaching up.
Some of these needs can be met by adapting
existing homes, but studies suggest that 16% of properties would need major
structural alterations to become fully accessible, while alteration would not
be feasible in 28% of homes.
The Future of Housing for an Ageing Population
The whitepaper considers several housing
options, such as retrofitting existing homes to better suit people as they get
older, multigenerational living (which is on the rise in the USA), and mixed
communities, with housing built to suit different ages.
There is also some consideration given to
renting, especially when it comes to community-based housing associations. Jim
Ripley, the CEO of Phoenix Community Housing, pointed out that, by 2028, around
one third of the residents who live in Phoenix homes will be 75-years-old or
over. Today, just 12% of its tenants and 5% of its leaseholders are in this age
range.
Ripley comments: “We knew
that lots of older people were struggling to maintain their homes. Many
struggled with heating bills, and with the garden and the cleaning. And we knew
that, presented with the right offer, many would be keen to downsize to
properties that better met their needs.”
Renting
in retirement is on the rise. The Centre for Ageing Better predicts that, by
2040, a
third of people over 60-years-old could be living in rental
accommodation.
Research
agency Boomer found that 27% of those between 55-85-years-old said that they
would choose to rent instead of buy, citing a lack of stress, being able to
live in a place that they couldn’t afford to buy, avoiding Stamp Duty, and the
ability to release equity.
Girling
says: “Renting is increasingly a key consideration for people when they
downsize. Many of our tenants have chosen to downsize and rent in a retirement
development, rather than buy, because our apartments are adapted to meet the
needs of older people. They also offer some support services, such as a 24-hour
care line and have a manager on site. Renting can make financial sense, too, as
people no longer have to contend with maintenance costs or service charges, and,
if they have sold a property, they can use the capital to invest or spend and
enjoy their retirement.”
“As pointed out in the paper, the pursuit of
age-friendly housing is important, because very few variables have as much
power to support or derail healthy, productive ageing and the related quality
of life,” adds Girling.
On a more eco-conscious
level, a recent study highlighted the homes of the future that homeowners and tenants are interested in – do the requirements
align with the whitepaper?
Desperate councils across the country are being “ripped off”
by private landlords, who are taking advantage of the growing homeless
population, according to a new study.
New figures reveal that local authorities’ spending on
temporary accommodation has soared to almost £1 billion.
Analysis by the Guardian
and housing charity Shelter found that councils across England spent £997m
on temporary accommodation in 2017-18, which is up by 71% on the £584m spent in
2012-13.
Some councils are spending as much as £200 per head on
sheltering homeless households in their areas.
Housing policy experts said that the sharp rise in
homelessness, coupled with higher charges from private landlords, were behind
the increase.
The number of homeless households in England living in
temporary accommodation has risen by 47% in the past five years, according to
official data. At the end of June 2018, there were 82,310 families in temporary
housing, which is up from 55,840 in June 2013.
In a demonstration of the extent of London’s housing crisis,
all 32 boroughs in the capital appeared among the top 45 local authorities with
the highest per capita spend on temporary accommodation.
Around 55,000 London households are living in temporary
accommodation, and almost 70% of England’s homeless families are based in the
capital. Only about 6% of London’s private rental market is available to
families relying on housing benefit.
Most London councils rely on small private landlords to
provide their temporary accommodation. In many cases, landlords can make more
profit from accommodation at the bottom end of the market, if it is let to
councils for homeless households.
Councillor Darren Rodwell, the London Councils Executive
Member for Housing and Planning, said that the cost of securing suitable
accommodation for homeless households was growing and the situation was
unsustainable.
“These figures show how local authorities and taxpayers are
being ripped off by failings in the national approach to this issue,” he said.
“The Government needs to take action. It’s clear we can’t keep relying on increasingly
expensive private sector accommodation, so more must be done to boost provision
of social housing.”
Councils being “Ripped Off” by Private Landlords, Study Warns
According to a list compiled using Government statistics,
Hackney spent the most per head of its population (£208) on temporary
accommodation, which is more than ten times the national average of £18.
While Kensington and Chelsea did not record its spending on
temporary accommodation with central Government, a spokesperson said that the
council spent £34.35m in the last financial year, which is an equivalent of
£218 per capita. That figure does not include spending on housing for the
families living in Grenfell Tower.
Among the non-London councils to reach the top 45 were Luton,
which spent £77 per capita, Brighton and Hove (£76), and Milton Keynes (£38).
Manchester and Peterborough were the first areas outside of the
South East to appear in the list, at £30 and £22 respectively. Birmingham came
in at 42nd place, spending £20 per head on temporary accommodation.
Greg
Beales, the Campaign Director for Shelter, said: “Long queues of homeless
families pleading with councils for help and a billion pounds spent on
temporary accommodation are just some of the unwanted consequences of welfare
cuts, rising rents and a failure to build social homes.
“And this
bill is getting even higher, as landlords charge desperate councils over the
odds for some of the least suitable and worst places for homeless families to
live, like emergency B&Bs.”
He added: “Not only are these incredibly expensive, families are
often forced to share bathrooms and kitchens with strangers, sleep in one
cramped room or even share a bed, and children are left with nowhere to play.”
The charity is preparing to publish its major post-Grenfell
tragedy report into the future of social housing in England this month.
Heather
Wheeler MP, the Minister for Housing and Homelessness, said: “Having somewhere
to stay and a place to call home is vital in helping those who are homeless
rebuild their lives, and we are determined to make this a reality.
“Temporary
accommodation acts as an important safety net – ensuring that the most
vulnerable have a roof over their heads until longer-term housing can be found.
We’re providing more than £1.2 billion to tackle all forms of homelessness,
including funding for programmes such as the Private Rented Sector Access Fund,
which will support more homeless families into long-term private rented
accommodation.”
The Guardian and Shelter looked at the rise
in expenditure on temporary accommodation between 2012-13 and 2017-18. The
analysis used Office for National Statistics population estimates to work out
per capita spending for each local authority, in order to account for
differences in population size.
The property industry is looking ahead to what 2019 will
bring for the UK’s struggling housing market.
We all know that 2018 has been a turbulent year for the
housing market, with huge changes across the private rental sector, continued
pressures on social housing, and no let up in the difficulties that people face
in getting onto the property ladder.
Alexandra Morris, the Managing Director of proptech firm
MakeUrMove, discusses the greatest issues that will affect the housing market in
2019:
“It’s hard to make any
predictions for the housing market without talking about Brexit and its
potential implications on all sectors of business.
“Of course, we still don’t
know whether or not Theresa May’s Government will be able to secure a deal that
will be beneficial to lenders, tenants, landlords and homebuyers alike, or if
we will crash out of the EU with no deal at all.
“The biggest impact of a no-deal
Brexit in relation to housing is a potential fall in house prices – the Bank of England has warned that it could lead to a fall of up to 30% in house
prices, although this is very much a worst-case scenario. As a result of a
fall, even a smaller one, many homeowners could find themselves in negative
equity.
“The industry is hopeful
that this would be a short-term blow, but I expect that the housing market will
slow down dramatically in 2019, as home movers slam the brakes on plans to buy
or sell, adopting a wait-and-see policy.
“A fall in house prices
because of a no-deal Brexit may provide some opportunities for property to be
bought by first time buyers next year. However, because it will be a time of
uncertainty, it’s likely that people will be more cautious about making
commitments such as buying property. Buying conditions may also become more
difficult. Instead, it’s likely larger landlords will grow in 2019 as they
acquire these properties, because they will be able to spread the risk.
What will 2019 bring for the Struggling Housing Market?
“With uncertainty about the
rights of EU workers if the UK leaves without a deal, areas of the country
where landlords provide accommodation to large EU migrant communities could
also be affected next year. If EU workers return to the continent, there will
be a host of empty houses and flats. Landlords will be hit financially if they
can’t find new tenants to let the properties.
“This will have a knock-on
effect on rental prices. In areas where there is then an oversupply of rental
properties, landlords will be forced to reduce rents or sell.
“On the other hand, leaving
with a good deal could drive the market upwards in the latter part of 2019, as
strengthened consumer confidence leads to stability, which is what we need in
the industry right now, after such a prolonged period of uncertainty.
“If Theresa May can secure
Parliament’s approval on her deal with the EU, we will have until December 2020
before anything fundamental changes, and, during this transition period (which
could yet be extended), we will still be subject to existing EU regulations,
giving the industry a much-needed adjustment period.”
The tenant fees ban
“The private rental sector
has undergone significant changes in 2018, and there’s no sign this will change
in 2019. Tenant fees legislation continues to progress through Parliament, and could
be the biggest change the sector has seen for decades.
“We’re confident tenant
fees will be banned in 2019, but, although this has been hotly anticipated for
spring, I predict that it will be autumn by the time anything comes into
practice.
“Whilst we always welcome
regulation to support tenants, it needs to be carefully thought through. The
bill has a much wider impact than simply removing tenant fees, and it’s likely
to have many unintended consequences. In 2018, we carried out research and discussed
this matter with our landlords and tenants to gauge their response, and, whilst
landlords are understandably nervous, it’s clear many tenants don’t appreciate
the additional long-term costs they are likely to face, with 85% of tenants
saying they don’t understand the ban and a quarter unaware it could lead to a
rent rise.
“Our fear is that, while
the Government’s intention was to make the private rental sector more
affordable and fairer for tenants, they will likely end up worse off. Unless
letting agents can transform their business models, many landlords,
particularly the smaller landlords – who make up the biggest proportion of the
private rental sector and often operate on very tight margins – will be forced
to raise rents to cover the increased costs they will incur as a result of the
bill.
“We are working hard to
develop a new technology solution, which will ensure that our landlords don’t
face additional costs, and, as a result, tenants who rent their properties
through our portal won’t have to shoulder any rent increases.”
Section 24
“The introduction of Section 24 has had huge implications for UK landlords, and will
continue to in 2019.
“The act, which started in
April 2017, is being phased in gradually over four years. It means that
mortgage, loan and overdraft interest costs will not be considered when
calculating taxable rental income, and will ultimately see many landlords
paying more tax on their property income.
“As per the tenant fees
ban, this could mean that smaller and accidental landlords, who operate on
small budgets, could end up passing these costs to tenants by increasing rents.
Considering that these landlords are currently propping up the UK housing
market, the act spells disaster for the housing market as it rolls out throughout
2019.”
Electrical safety
“Next year, we hope to
finally see new legislation introduced which places more focus on electrical
safety within the private rental sector.
“However, with research by
the Government showing that tenants are more likely to face electrical shocks
and fires caused by electrical faults in their private rental property than
those in social housing, it needs to be clear to landlords exactly what their
responsibilities are when it comes to electrical safety. The current
legislation is confusing and can cause misunderstanding. For example, landlords
are not required to have an electrician carry out an annual inspection for
their portable appliances, but they do have an obligation to check their safety
throughout the tenancy and not just at the start.
“We welcome any changes by
the Government which make electrical safety a mandatory aspect for landlords,
as it will ensure both the landlord and tenant are protected, should any
electrical faults arise.
Continued uncertainty
“The housing market is
currently suffering from market failure. This is one of the biggest problems
our economy faces next year.
“A major worry for 2019 is
that, with Brexit and other issues dominating the agenda, the Government will
be distracted, taking their attention away from solving the problems we already
have in the housing market.
“We saw this in the 2018 Budget, where, despite the complete failure of the housing
market, only small concessions were made on housing.
“What’s more, the
Chancellor announced that the Government is going to consult on lettings relief, with a view to reducing the amount of Capital Gains
Tax relief that landlords get.
“The move will particularly
affect the UK’s accidental landlords in the coming year, many of whom purchased
at the height of the market and are renting out their properties after being
unable to sell them. This is a phenomenon that picks up when market activity
slows, exacerbated by a reluctance among buyers to commit to a big property
purchase, which is largely being driven by Brexit uncertainty, and the fear of
a no-deal Brexit related crash.
“If, after the consultation
in 2019, as the Chancellor outlined, the relief only applies where the owner is
sharing occupancy of the home with the tenant – and the final period of
exemption from Capital Gains Tax is reduced from 20 months to nine months – the
Government will be actively discouraging stock into the private rental sector.
“This
suggests the Government will continue to move in the direction of professionalising
the market in 2019; they appear to want to reduce the numbers of private
landlords and replace them with larger portfolio landlords, who run their
properties as a business.
“If this is
true, smaller landlords, who make up over 90% of the market, will be
continually penalised. The Government needs to realise the true value of these
landlords fast, and bring in legislation to support them, or they risk a mass
exodus of smaller landlords from the rental market.”
What do you
think of Morris’ predictions for the 2019 housing market?
By Marc Trup, the
Founder and CEO of Arthur Online
Historically, property management has been slow to embrace
technological change. In the last decade, technological advances have shaken up
property management, drastically changing the way these businesses are run.
Many property managers are falling short of tenants’
expectations, stemming from a lack of communication between landlord/agent and
occupier. There is a clear need to modernise property management, starting with
more transparent and consistent levels of service.
So, what’s the solution? Companies need to innovate and
adopt cutting-edge business processes, and advance the use of technology as a means
of measuring, monitoring and maintaining consistent standards. Disruptors and
innovators have an opportunity to make a positive and significant difference.
As a result of the rise of digitisation, more and more
property professionals have started to move their businesses to the cloud. By
introducing software designed specifically for the property sector, landlords
and agents can streamline their businesses, allowing them to scale more easily
or simply reduce the cost of their current business. Proptech platforms also
allow companies to further professionalise and formalise their business
processes, thanks to the many white labelling and customisation options
available.
There are now lots of different software out there to make
your life easier. Be that new payment systems, such as GoCardless, e-signature
platforms, such as Signable, or full management systems such as Arthur Online.
Does PropTech have the Potential to Save the Property Sector?
At its heart, property management is a people business.
Managers are tasked with keeping tenants, owners and contractors happy, whilst
trying not to tear their own hair out at the same time. One way that proptech
is making management easier is by bringing all these groups together. In the
past, disparate communication between different groups meant a manager would
spend half their time on the phone, typing with one hand and writing an address
with the other, and heaven forbid they had to produce proof of receipt.
For the occupiers, using an app allows them to raise and
track maintenance issues, access documents, track their rental statements and
so much more. This is guaranteed to give them peace of mind. In the long-term,
this will help promote a longer relationship with tenants, improving trust and
therefore tenant retention.
Thanks to technology, property managers can send emails with
recorded delivery. Systems like this protect a property manager against
potential disputes. Alternatively, managers can use CRM systems to email their
contacts; this means that all their conversations are marked against the
contact. By keeping records of interactions with someone against their contact
card, management is made a lot easier. The best solutions bring all the
different groups onto one platform, allowing them to communicate with only the
people that matter. This prevents different people using different platforms.
One of the areas that property managers can waste a lot of
time is financials. With the best will in the world, rents don’t get paid,
payments get missed and it can cause managers a lot of problems. However, now
there are a lot of different options for managers to make their life easier.
New payment portals, such as GoCardless and Strype, allow managers to have greater
control over charging and recharging tenants. On top of this, managers are now
using cloud accounting software, like Xero and QuickBooks, to follow live
payments and reconcile charges to easily see the state of their portfolio.
Finally, by linking management platforms together, automated communication can
be set up to notify tenants of outstanding charges. By creating this sort of
ecosystem around the payment of monies, arrears can be brought down, and time
can be saved, thus making the management of a property portfolio easier.
Property management can involve a vast amount of paperwork.
Previously, this meant having a room dedicated to filing cabinets. That was
until software, such as Dropbox and Google Docs, came to be. This solved part
of the problem, however, they were not specific to property. Now, true document
management systems for property have been created.
There are several different areas where these systems can be
very helpful and streamline your business. The first is by constantly updating
your documentation to ensure you have a legal contract, notice, etc. The second
is by reminding property managers when something needs to be done. As an expiry
date approaches for a certificate, systems can automatically contact
contractors or managers. This prevents a manager from non-compliance.
In the world of cloud software, some systems integrate by
using open APIs. This means the two systems have a conversation, pushing and
pulling data to offer a complete solution.
The next five years will certainly be an exciting time, as
we continue to see accelerated adoption of proptech, with the UK leading the
way.
