With home ownership figures at their lowest since 1986, Arthur takes a look at the reality of ‘Generation Rent’.
London’s affordable housing deficit means that many young people have been priced out of the property market altogether as house prices become increasingly unrealistic for first time buyers. This has led to the creation of ‘Generation Rent’.
Recent findings show that the crisis is no longer confined to the capital. According to Resolution Foundation‘s data, it is in fact Greater Manchester that has seen the greatest decline in home ownership. It fell from 72% in 2003 to just 58% this year. Both Leeds and Sheffield have also exhibited a strong decrease in home ownership figures.
House prices have risen much faster than average household incomes between 2002-2016. The means increasing prices have completely absorbed the income gains of potential first time buyers. So, unless they can find support in the ‘Bank of Mum and Dad’, property price surges have significantly reduced the likelihood of getting a foot on the property ladder. Hence the creation of Generation Rent.
Despite a variety of politicians’ plans to address the problem, namely the soon-to-expire Help to Buy scheme introduced in 2013, the lack of effective government policy means that the negative outlook for first time buyers looks set to continue into the foreseeable future. So, are people being dissuaded from the prospect of aspiring to buy their own homes altogether?
Generation Rent is growing.
Halifax’s 2015 Generation Rent study found that within the ever-expanding Generation Rent bracket, there is a growing group of potential buyers aged 20-45 who do not believe that they will ever be able to own a home. The main difficultly for non-owners appears to be the size of the deposit required for a mortgage. This being said, the study also points towards a potential disparity between Generation Rent’s perceptions of mortgages and the realities of the housing market. Considering the rise of 5% deposit mortgages available in recent years, Halifax suggests that this is an awareness issue that should be addressed.
Whether as a result of unaffordable prices across Britain, or rather a change of lifestyle choices and social attitudes, the reality of the situation is that Generation Rent is here to stay. Perhaps it is prime time to re-evaluate whether or not home ownership should continue to be considered a societal norm in Britain and when doing so, take the necessary measures in order to make renting more attractive.
This would consist of a legislative process for further improving tenants’ rights in the UK. The proposal to ban unfair and extensive agency fees featured in the Baroness Grender’s Renters’ Rights Bill is currently making its way through parliament. Other calls for improvement focus on expanding current rent regulation laws. Advocates for this process support the introduction of a rent cap, similar to Berlin. This would mean the risk of being priced out of a rented home at a month’s notice would be eliminated. Implementing policies to benefit tenants would eventually make renting a more attractive and secure reality for those who are confined to Generation Rent and simply can’t afford to get onto the property ladder.