Giving up on the idea of ever buying a home

One in five twentysomethings say they have no desire to own their own property

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.”

PROMOTED VIDEO
News
news

Rap music mogul accused of running two men over in his truck

Arts and Entertainment
Frank Turner performing at 93 Feet East
musicReview: 93 Feet East, London
News
Toronto tops the charts across a range of indexes
news

World cities ranked in terms of safety, food security and 'liveability'

Voices
A mother and her child
voices
Arts and Entertainment
tv

First full-length look is finally here

Voices
The veterans Mark Hayward, Hugh Thompson and Sean Staines (back) with Grayson Perry (front left) and Evgeny Lebedev
charity appealMaverick artist Grayson Perry backs our campaign
News
Tax now accounts for ‘nearly 80%’ of the price of a bottle of whisky
news

Arts and Entertainment
Peppa Pig wearing her golden boots
film

"Oink! Oink! Hee hee hee!" First interview with the big-screen star

Life and Style
tech

Biohacking group hopes technology will lead people to think about even more dystopian uses

Arts and Entertainment
film
Life and Style
life
Arts and Entertainment
Film director Martin Scorsese
film
News
news

The party's potential nominations read like a high school race for student body president

Finacial products from our partners
Property search
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

ES Rentals

    iJobs Job Widget
    iJobs Money & Business

    Ashdown Group: Product Manager - (Product Marketing, Financial Services)

    £30000 - £35000 per annum + Benefits: Ashdown Group: Marketing Manager - Marke...

    Recruitment Genius: Compliance Assistant

    £13000 per annum: Recruitment Genius: This Pension Specialist was established ...

    Ashdown Group: Market Research Executive

    £23000 - £26000 per annum + Benefits: Ashdown Group: Market Research Executive...

    Recruitment Genius: Technical Report Writer

    £25000 - £35000 per annum: Recruitment Genius: A Technical Report Writer is re...

    Day In a Page

    Isis hostage crisis: The prisoner swap has only one purpose for the militants - recognition its Islamic State exists and that foreign nations acknowledge its power

    Isis hostage crisis

    The prisoner swap has only one purpose for the militants - recognition its Islamic State exists and that foreign nations acknowledge its power, says Robert Fisk
    Missing salvage expert who found $50m of sunken treasure before disappearing, tracked down at last

    The runaway buccaneers and the ship full of gold

    Salvage expert Tommy Thompson found sunken treasure worth millions. Then he vanished... until now
    Homeless Veterans appeal: ‘If you’re hard on the world you are hard on yourself’

    Homeless Veterans appeal: ‘If you’re hard on the world you are hard on yourself’

    Maverick artist Grayson Perry backs our campaign
    Assisted Dying Bill: I want to be able to decide about my own death - I want to have control of my life

    Assisted Dying Bill: 'I want control of my life'

    This week the Assisted Dying Bill is debated in the Lords. Virginia Ironside, who has already made plans for her own self-deliverance, argues that it's time we allowed people a humane, compassionate death
    Move over, kale - cabbage is the new rising star

    Cabbage is king again

    Sophie Morris banishes thoughts of soggy school dinners and turns over a new leaf
    11 best winter skin treats

    Give your moisturiser a helping hand: 11 best winter skin treats

    Get an extra boost of nourishment from one of these hard-working products
    Paul Scholes column: The more Jose Mourinho attempts to influence match officials, the more they are likely to ignore him

    Paul Scholes column

    The more Jose Mourinho attempts to influence match officials, the more they are likely to ignore him
    Frank Warren column: No cigar, but pots of money: here come the Cubans

    Frank Warren's Ringside

    No cigar, but pots of money: here come the Cubans
    Isis hostage crisis: Militant group stands strong as its numerous enemies fail to find a common plan to defeat it

    Isis stands strong as its numerous enemies fail to find a common plan to defeat it

    The jihadis are being squeezed militarily and economically, but there is no sign of an implosion, says Patrick Cockburn
    Virtual reality thrusts viewers into the frontline of global events - and puts film-goers at the heart of the action

    Virtual reality: Seeing is believing

    Virtual reality thrusts viewers into the frontline of global events - and puts film-goers at the heart of the action
    Homeless Veterans appeal: MP says Coalition ‘not doing enough’

    Homeless Veterans appeal

    MP says Coalition ‘not doing enough’ to help
    Larry David, Steve Coogan and other comedians share stories of depression in new documentary

    Comedians share stories of depression

    The director of the new documentary, Kevin Pollak, tells Jessica Barrett how he got them to talk
    Has The Archers lost the plot with it's spicy storylines?

    Has The Archers lost the plot?

    A growing number of listeners are voicing their discontent over the rural soap's spicy storylines; so loudly that even the BBC's director-general seems worried, says Simon Kelner
    English Heritage adds 14 post-war office buildings to its protected lists

    14 office buildings added to protected lists

    Christopher Beanland explores the underrated appeal of these palaces of pen-pushing
    Human skull discovery in Israel proves humans lived side-by-side with Neanderthals

    Human skull discovery in Israel proves humans lived side-by-side with Neanderthals

    Scientists unearthed the cranial fragments from Manot Cave in West Galilee