Homeownership is something that young people will inevitably begin thinking about at some point. However, new research suggests that most will still be renting in ten years’ time.
A study by economists at PwC indicates that generation rent will not break into the housing market for at least another decade.
The firm predicts that by 2025, more people will be living in private rental sector accommodation than owning their own home.
This includes over half of Britons born between 1986-2005 that will still be renting from a private landlord.
Director of campaign group Generation Rent, Betsy Dillner, comments: “While the Government has made first time buyers a priority, the chronic housing shortage indicates another decade of rising numbers of people who can’t afford to buy.
How to Escape Generation Rent
“By handing half their pay cheque to their landlord, instead of paying off a home they own, renters struggle to save for the future, swelling the ranks of the have-nots. As more low earners and retirees rent privately with no way to pay the rent, the taxpayer will pick up the tab.”1
The PwC’s research also found that more and more members of the older generation have paid off their mortgages and own their homes outright.
Chief Executive of homelessness charity Shelter, Campbell Robb, says: “No matter how hard they work or save, an entire generation is being forced to watch their dreams of a stable future slip through their fingers, stuck in properties where rents eat up their salaries and short-term contracts leave them with no stability at all.
“It’s time for the Government to make good on their promises – not with piecemeal schemes that will only ever paper over the cracks, but with a real plan to build the affordable homes we so desperately need.”1
A senior economist at PwC, Richard Snook, says that first time buyers are hit with high house prices and large deposits: “The long rise in the UK owner-occupation rate in the post-war years seems to have gone into reverse.”1
How to escape generation rent
The private rental sector is growing at such a rate it is difficult to challenge. But there are ways that renters can help themselves in the fight for homeownership.
- Deposits – The average first time buyer deposit is £25,134. Despite this being a huge sum, the sooner a renter starts to save, the better.
- Government schemes – The Government’s new Help to Buy ISA, due this autumn, can help when saving for a deposit. Also, the Help to Buy scheme can help secure a mortgage.
- Shared ownership – Buyers can purchase a share in a home from a housing association and buy more over time. This can be an easier way to get onto the ladder
- Family – Not everyone can borrow money from their family, but if parents own their own house, they could act as a guarantor for their children, which will allow them to take out a mortgage with no deposit.
- Partners – It is always easier to be granted a mortgage if someone buys with someone else. Often, this is a partner, but could also be a family member or friend.
- Rental property – Whilst housing stock is low, it is still important that renters thoroughly inspect a property before moving in. Also, check any letting agent fees so that you avoid unexpected costs.
- Co-ops – If paying a landlord isn’t appealing to you, you could sign up to a co-op instead. This way, you will still pay rent but the co-op owns the building. As a member, you can participate in discussions about how it is managed.
- Campaigning – It is always worth campaigning for the things that you believe in, especially when it is affecting your lifestyle. Shelter can help you get started: http://england.shelter.org.uk/campaigns/fixing_private_renting/evict_rogue_landlords