Giving up on the idea of ever buying a home
One in five twentysomethings say they have no desire to own their own property
Sunday 20 April 2014
Renting is often labelled as “dead money”, but the British obsession with home ownership seems to be waning in the face of impossible odds.
A recession and housing crisis has left its mark on “Generation Rent”, many of whom have given up on ever owning a property. Some say they aren’t willing to make the necessary sacrifices, while others just don’t have the money. But what are the wider implications of this shift in attitude?
The latest Halifax Generation Rent Report paints a very different picture to the first survey back in 2011 when 20 to 45-year-olds were keen to buy but couldn’t afford to, or feared rejection from lenders.
A resounding 86 per cent of would-be first-time buyers (FTBs) now say they aren’t willing to sacrifice the quality of rented accommodation to save on rent and get a deposit together. Almost half (48 per cent) agree Britain will become a nation of renters within the next generation, and in the youngest age group, 23-27, one in five say they simply have no desire to own a home.
Duncan Stott, from the campaign group Priced Out, says: “The fundamental barrier to home ownership for the 3.5 million taxpayers trapped in renting is the sheer scale of UK house prices. The latest figures show that the average first-time buyer purchase is now £192,000, an extraordinary £18,000 higher than a year ago.”
Prices in the UK rose by 9.1 per cent in the year to February 2014, according to the latest Office for National Statistics (ONS) figures. A lack of available and suitable property has hit FTBs particularly hard – the ONS says they paid 10.5 per cent more in February 2014 than they did the year before, against an increase of 8.6 per cent for owner-occupiers. Help to Buy has enabled more than 16,400 people to get on the ladder, but even with the chance to buy with a 5 per cent deposit, prices are beyond many buyers, particularly in big cities.
Richard Sexton, director of e.surv, the chartered surveyor, says: “If not controlled and addressed, this could in due course start to push first-timers back out of the marketplace. Help to Buy opened the door to the market for thousands, but the only way to ensure that entry remains open is to ... build more affordable homes.”
Adding even more pressure, the average monthly rent for a typical, three-bedroom house rose from £652 in 2009 to £769 in 2013, according to Halifax figures, which is making it virtually impossible for some tenants to save enough for a deposit.
It’s one thing to implement widespread changes to help people get a foot on the ladder, but if rent takes a huge proportion out of an ordinary earner’s wage, some might never get started. Long term, this could change the profile of the market completely.
Craig McKinlay, mortgages director at Halifax, says: “It seems people are beginning to accept a lifetime of renting and this would not only change the way the property ladder looks in the future; it could even bring into question whether or not it will exist at all for some people.”
Campaign groups warn that there are troubling social implications in a widening gap between those who can and cannot afford to buy a home, not least because many people use property as a way to prop up their retirement. Ultimately, if there aren’t any FTBs funding new construction, the whole housing market could once again grind to halt. And, of course, more people will be stuck renting, which can be expensive and unstable, particularly for families who need the security of owning a home.
Landlords increasing rents are only half the story; complaints against lettings agents have jumped 22 per cent to almost 14,000, according to the latest annual report from the Property Ombudsman, with some cases revolving around tenants’ deposits. Add to the list the fact that standard tenancy agreements only last for six or 12 months, and home ownership can naturally be the more appealing option.
However, it is worth noting that the number of loans taken out by FTBs is actually rising. New data from the Council of Mortgage Lenders shows that loans for new buyers reached 22,200 in February 2013, an increase of 41 per cent compared with the same month last year.
Greater confidence has returned to the property market and, with interest rates still at record lows, mortgages are appealingly cheap.
Access to higher loan-to-value lending has also improved, thanks to government schemes. Plans to extend Help to Buy until 2020 should persuade more FTBs to make their move and fuel more housebuilding – something Britain needs if it’s going to keep a lid on house prices.
But were we to become a nation of renters, it may not be such a bad thing if it leads to stronger protection for tenants. Some positive steps have already been taken, including a legal obligation for all letting agents and property-management agents in England to be members of an approved redress scheme, which is expected to come into effect later this year.
If we could model our rental market on somewhere like Germany, which has the highest proportion of people renting in the EU, tenants could benefit from good-quality rental accommodation, regulated rents and secured tenancies.
Mr Stott says: “We are urging the Government to introduce longer leases into the private rented sector, which would start to make renting a real alternative to ownership and help take away some of the desperation to buy from the housing market.”
Independent Partners: Get fee-free expert mortgage advice and find the right mortgage deal for you.
- 1 Isis 'jihadi bride' claims forced sex with Yazidi girls is never rape because Koran condones it
- 2 Art Garfunkel calls Paul Simon a 'monster' with a Napoleon complex
- 3 Woman accidentally shoots herself in the head while posing for a selfie
- 4 Isis burns woman alive for refusing to engage in 'extreme' sex act, UN says
As a white man, I'm surprised more women aren't tweeting the hashtag #KillAllWhiteMen
Scotland may have to leave the EU even if it votes to stay in, David Cameron confirms
The day that Britain resigned as a global power
Almost a third of school pupils believe 'Muslims are taking over our country', study claims
SNP fury as HS2 finds 'no business case' for taking fast train service to Scotland
Gay marriage 'Bert and Ernie' cake bakery found guilty of discrimination in Northern Ireland
iJobs Money & Business
£40-50K: Guru Careers: We are seeking an experienced Software / C# Developer w...
£45,000 - £55,000: Neil Pavier: Are you looking for your next opportunity for ...
£45,000 - £55,000: Sheridan Maine: Are you a newly qualified ACA/ACCA/ACMA qua...
£50,000 - £60,000: Laura Norton: Are you looking for an opportunity within a w...
Day In a Page
On the market for the first time in more than 50 years, this six-bedroom home is a project with vast potential - spread over three floors of living space.
This five-bedroom home comes with a range of outbuildings including a large barn which could be converted into a self-contained granny-flat or rental.
Surrounded by rolling countryside, this four-bedroom barn conversion comes with a self-contained, one-bedroom annexe that could serve as an office or a holiday let.
Located near Harrogate town centre, this five-bedroom Victorian terrace is arranged over three storeys while a current study serves as an optional sixth bedroom.
A ground-floor flat in a country house, located a mile from Sway; this two-bedroom home would make an ideal weekend retreat on the edge of the New Forest.
On a popular residential lane in Caterham on the Hill, this four-bedroom family home offers a secluded garden and a convenient location for local schools and public transport.
Just a short walk from Westerham green, this three-bedroom cottage has a light kitchen with exposed brickwork and double doors that lead to a south-facing garden.
In a prime spot opposite the River Thames, this one-bedroom flat has an 18sq ft reception room with glass doors that open out to a private terrace.
Set in the hills above Llanwrda Village, west Wales, this 18th-century three-bedroom farmhouse has holiday-let potential from a separate barn conversion and annexe.
This charming end-of-terrace townhouse is arranged over three floors, with two double bedrooms and a private courtyard garden located at the rear of the property.
This four-bedroom Edwardian home offers a combination of original features and contemporary design after a renovation by the current owners.
Located in the University area, this semi-detached five-bedroom home is arranged over three floors - there's even a rear garden and off-road parking too.
Only a few minutes' drive from the charming town of Marlow, this two-bedroom home sits on the private riverside estate of Harleyford.
This detached four-bedroom home in Middleyard is arranged over two floors, with features that include a wood-burning stove and bespoke oak staircase.
In a row of eight detached Georgian residences, this five-bedroom home offers views of The Sound, Mount Edgcumbe and Cornwall from its impressive veranda and full-length balcony.
If you love cooking for friends this two-bedroom flat - complete with views of the iconic Battersea Power Station and an open-plan kitchen/dining area - will go down a treat.
Located above Grasmere village, this five-bedroom home is arranged over three floors and offers countryside views across Grasmere Lake towards Silver Howe.
Surrounded by the Western fells, this five-bedroom Georgian home retains many original features including panel-plastered ceilings, sash windows and fireplaces.
This six-bedroom home is set amongst three acres of grounds. Currently a large family home, Clift Hill has potential to make a B&B, subject to change of use permissions.
A former period coach house, Glebe Farm Stable is now a three-bedroom cottage with a double car barn, office, kennels and an outbuilding that's currently used as a gym.
Set sail for this four-bedroom farmhouse in Cowes. With five acres of land and an indoor pool, this home oozes character. There is even potential to let a one-bedroom annexe.
Surrounded by woodland, this five-bedroom manor house has plenty of outdoor storage space in the form of three converted loose boxes, two smaller outhouses and a woodstore.
This four-bedroom detached home comes with a double carport, useful workshop, garden and two walkways that offer views of the adjacent countryside.
With space for an equestrian business, a greenhouse for growing your own veg, a wine store and a gym; this five-bedroom home has all the ingredients for a country retreat.
This four-bedroom home has exposed brick chimneys and a vaulted ceiling in a breakfast room that's ideal for summer entertaining - the doors open to the patio and garden.
The decked roof terrace of this two-bedroom flat is perfect for summer drinks while large windows and ample storage space make for a light and spacious interior.
Surrounded by approximately 15 acres of grounds, this six-bedroom grade II-listed home has been extensively refurbished yet retains many period features.
This four-bedroom home comes with a two-bedroom cottage and commercial office, with planning to extend, in a stunning courtyard setting.
In a pretty Norfolk village, this four-bedroom family home is surrounded by landscaped gardens, with even a self-contained annex for guests.
A few miles from the seaside at Perranporth, this four-bedroom farmhouse sits amongst nine acres of idyllic grounds - including a lake and two barns used as holiday lets.
This five-bedroom home is arranged over three floors of a converted Victorian hospital, offering spectacular views of the Pentland Hills - only three miles from the city centre.
This four-bedroom detached home comes with grounds that span to approximately 2.5 acres, as well as two large patio areas and a double garage.
This four-bedroom cottage is a Grade II-listed town house, well-located for the thriving market town of Nailsworth.
A four-bedroom apartment on the ground floor of a stunning period property in North Yorkshire, with two kitchens and a large south-west facing garden.
This high-spec two-bedroom home is part of a smart collection of new flats at Beaufort Park and has a large decked balcony that's perfect for summer drinks.
Capitalise on the fabulous views of Trevone Bay by taking two homes and creating one spacious boutique B&B. Just a cliff-top walk from Padstow.
Overlooking a golf course, this six-bedroom Edwardian detached home spans four storeys and retains many period features including the original, operational servants' bells...
On the edge of the city, this six-bedroom home comes with an outdoor swimming pool and a large garage block that has annexe potential.
In a Grade II-listed manor just outside of Bath, this three-bedroom home is arranged on two floors with a skylight in a vaulted roof line.
Open the living room's bi-fold wooden doors to reveal a retro-style kitchen, and a conservatory leading to a paved garden at this three-bedroom home.
A Grade II-listed, four-bedroom home, in a charming Somerset village, with a two-storey studio that could be converted into a holiday cottage
A modern four-bedroom Victorian home, within walking distance to the high street
A luxury apartment in the Gothic mansion of Wyfold Court in Kingwood, offers six bedrooms spread over three floors and a turret
This school conversion, near Stockwell Tube, oozes New York loft style. The one-bedroom flat features double height ceilings and exposed brick work
This six-bedroom Georgian home is on three floors with open fireplaces, a two-oven Aga, an annexe, and cottage gardens with outbuildings and a car barn
High Crest House covers an impressive 9384sq ft, with almost three acres of grounds including a tennis court and summer house enclosed by electric gates
A six-bedroom farmhouse with separate accommodation in converted stables. Situated in the village of Church Aston, within walking distance to the market town
A two-bedroom flat with under-heated walnut floors and bespoke built-in storage. The Tube and Clapham Common are a short stroll away
A refurbished seven-bedroom townhouse with staff quarters, cinema room, superb gym, steam room and plunge pool
A minimnalist four-bedroom home designed to the highest spec, featuring glass walls and a kitchen space lit by a glass roof