A third of millennials ‘face renting their entire life’

Up to a third of young people face living in private rented accommodation for all of their lives, a new report by the Resolution Foundation think tank has found.

The Foundation’s ‘Home Improvements’ report says Generation Rent need much more help in the housing market. It called for more affordable homes for first-time buyers to be built, as well as better protection for those who rent. The think tank said 40 per cent of Millennials (those born between 1980 and 1996) were living in rented housing by the age of 30, a figure that is twice as many as for Generation X (born between 1965 and 1980). Although renting is often a reasonable choice for people who have few ties, the private rented sector is “far less fit for purpose” for those with children because of a lack of security.

It predicts an explosion in the housing benefits bill once the Millennial generation reaches retirement age, with the housing benefit bill for pensioners forecast to rise by 250 per cent from £6.3bn today to £16bn by 2060. 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.” The report says the tax system should be changed to discourage second home ownership, reducing stamp duty for people who own one home and increasing surcharges for second home owners.

PRS overhaull

It also calls for a radical overhaul of the private rented sector, proposing a three-year cap on rent increases, limiting rises to the consumer price index inflation rate and the introduction of ‘indeterminate’ tenancies as the sole form of contract in England and Wales. These would replace the standard six-month or 12-month tenancies used by most landlords.

They say this would follow Scotland’s lead, where open-ended tenancies began in December 2017, and is the standard practice in Germany, the Netherlands, Sweden and Switzerland.

Not surprisingly there was a robust reaction from the private landlords body, who criticised any suggestion of rent controls. David Cox, Chief Executive of the Association of Residential Letting Agents, said: “The last time rent controls existed in this country, the private rented sector shrunk from 90 per cent (of all housing) to just seven per cent.

“At a time of demand for private rented homes massively outstripping supply, rent controls will cause the sector to shrink. In turn, this means professional landlords will only take the very best tenants and the vulnerable and low-income people that rent controls are designed to help will be forced into the hands of rogue and criminal operators, who may exploit them.” The Resolution Foundation’s report says that public policy has failed to keep up with extraordinary changes in those who are renting.

“In 2003, the number of children in owner-occupied housing outnumbered those in the private rented sector by eight to one. That ratio has now fallen to two to one.”

Resolution’s intergenerational commission is also calling for the UK to tax foreign investors in rented property more heavily, along the lines of Vancouver in Canada and Australia, where external buyers face levies of up to 15 per cent. It also sets out a number of reforms to improve the supply of houses in the UK, including giving local councils more powers to compulsorily acquire land and greater access to finance to build affordable homes.

By Patrick Mooney, editor