But today's potential first-time buyers are renting - not out of necessity, but out of choice. They can see that in their sector of the market the value of a house is static or falling, while the cost of buying it is increasing. Those who take out new mortgages after October will not be protected by housing benefit if they lose their jobs. For them, buying a house is a risky business.
The latest figures to support the view that renting will remain the choice for some time of people in their twenties comes from Cluttons London Residential Lettings. The company has looked at its rental renewals over the past three years: half of all tenants stayed put in their property; 14 per cent moved to another rented home; 22 per cent went abroad; 7.5 per cent moved out of London; and only 6.5 per cent bought their own homes.
The two reasons cited most often in favour of renting were flexibility and the fact that the potential purchasers just did not want to buy. The firm's office in Clapham, south London, has seen the number of young people wanting to rent double in the past three years.
More than half are well-paid professionals working in the law, the City, accountancy and advertising, who would once have been the first people to buy. "If you speak to young professional tenants, most will also say that it is the hassle-free way of life that appeals," said Penny Parr- Head, director of Cluttons London Residential Lettings. "Job security - or the lack of it - is another reason. They do not want the millstone round their necks that owning a property can represent."
The move away from buying comes as the numbers of those in their twenties is falling. The Council of Mortgage Lenders estimates that the number of potential first-time buyers will drop by about 10 per cent by the year 2001 as a result of the birth rate falling in the Seventies. The council is campaigning to persuade the Government to make owner- occupation a more attractive proposition.
Meanwhile, everyone else is campaigning for a boost to the private rental sector. Knight Frank & Rutley and the Joseph Rowntree Foundation both agree that institutional investors must be encouraged into the rental market.
Richard Ford, of Knight Frank & Rutley, pointed out that the Electricity Board pension fund has invested £200m in US property for which it receives a federal grant. "British institutional investment in residential properties for letting is desperately needed, but has not been encouraged," he said. "We'd like to see institutions such as the Electricity Board pension fund investing here but the figures don't add up for them."
The Joseph Rowntree Foundation wants to replace the Business Expansion Schemes, which gave tax relief to landlords who invested in the private rented sector. It advocates grants and tax exemptions to draw in institutional funds and warns that without them the supply of homes for rent could dry up. The trust argues that a healthy rental sector is vital for a healthy economy. Any further decline would affect the labour market, making it more difficult for young adults to move for work.Reuse content