The private rental sector has boomed in Britain over the last two decades, seeing a growth in generation rent; the high number of those in their 20s and 30s who are trapped out of the housing market and forced to rent instead.
The use of this term in the press suggests that the public are aware of the young tenants and the future they may face. However, until now, there has been a lack of research and awareness of the landlords who supply to them.
Landlords are a crucial part of the private rental sector, and new research from the Strategic Society Centre have found out who they are.
The report, Understanding Landlords analyses findings from the Wealth and Assets Survey, which ran between 2008-2010.
The study found that the traditional stereotype of landlords is outdated. The following three statements were included in the report’s Executive Summary:
“The socio-demographic breakdown of PRS [private rental sector] landlords suggests they tend to be middle aged (nearly three quarters aged 45-64), married (72%), well educated (two in five have a degree or higher) and disproportionately live in London or the South East (34%).”1
“Three quarters (77%) of PRS landlords are in employment, mainly in private sector employment. Among employed PRS landlords, median gross monthly earnings is £2,400 and 60% of employed landlords earn £2,000 or more per month.”1
Growth in Generation Rent over Two Decades
“Half (49%) of PRS landlords’ main home is worth £300,000 or more, and half (52%) have a home with four or more bedrooms (owner-occupiers only). Over two in five (45%) PRS landlords have total financial assets worth £30,000 or more, with a quarter (26%) having financial assets worth £70,000 or more. Most PRS landlords (78%) feel that their income is enough to meet the cost of everyday outgoings.”1
These figures are to be expected, as these investors have enough spare money to invest in the property market, however, their advantages compared to tenants in the sector is another area that the report focuses on.
One of the most shocking facts is that on average, landlords have far more financial assets than tenants, with the median total financial assets of landlords at £20,500, compared to just £398 for tenants.1
This could be explained by the fact that landlords on average are older than tenants, with almost three quarters of landlords (73%) aged 35-64, and over half of tenants aged 16-34.1
However, the research also found that tenants are much less likely to make savings than landlords. Landlords are twice as likely to have made net savings of £5,000 or more in the last two years.1 This will greatly affect those young renters who wish to own their own house one day, and is thus preventing them from saving a deposit.
The report also looks at the role the private rental sector plays in society. From the findings, it is clear that private renting will have a great effect on the young people hoping to own a home.
Alongside the research, the Strategic Society Centre also released a policy briefing called Whose Home: Understanding Landlords and their Effect on Public Policy, which emphasises the impact of the increase in renting and the decrease in home ownership among the younger generation.
This report highlights the risk of a large amount of people living their whole lives in private rental homes, which could create a Housing Benefit difficulty, when most of these people would not be able to save up enough for a pension that could cover their rent.
The full impact of generation rent is just beginning to surface, however, these debates are set to continue in the next few years.