Millennials may never own homes unless…
Like Nigeria where young people, school leavers, find it pretty hard to buy or build their own homes, generations of young people also called millennials in the UK may never own homes unless there is radical reform in the country’s private rental sector to accommodate them.
A think tank report, which reveals this, argues that if this reform is not done, these millennials face never being able to own their own homes, but will be renting for the whole of their lives.
The report 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.
Propertywire, an online residential real estate platform covering over 100 countries of the world, quotes the Foundation as saying that more should be done to build homes and support young people’s home ownership aspirations. However, the Foundation 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 private rental sector (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.
The Foundation described the PRS as the least secure and lowest quality tenure where two months 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.
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