1.5 million young people who are unable to get onto the property ladder, or qualify for social housing, will be forced to rent privately by 2020, says new research.
These figures come from a study by the Joseph Rowntree Foundation, who say the predicted amount will apply to 18-30 year olds. For those who cannot access housing benefit, but find saving the large deposits required for most mortgages difficult, living in rental accommodation might be a long-term state.
Director of flat and house share website, SpareRoom.co.uk, Matt Hutchinson, says: “There is a lot of pressure on Brits to own their own homes, even though in the current market there are numerous barriers to entry, especially for the younger generation.
“Soaring living costs mean it’s a struggle for many households just to keep their heads above water each month, let alone have enough spare cash to put aside towards a deposit.”
The prospect of renting for many years may be dismal, but some say it could be a positive. If these long-term renters are the future of the housing market, the UK must find a way to deliver good quality, affordable rental properties.
Harry Downes is the Managing Director of new private rental initiative, Fizzy Living, based in London. He says: “With an ever-decreasing supply of affordable homes, the average age of first time buyers is now 39 and rising.
“Add the difficulties in getting a mortgage and the high deposits required, and you can see that young people being excluded from the market is an ever-growing problem. Putting in place an affordable, well-run rental sector must be the right solution.”1
Landlords Should Deliver High Quality Housing
Across Europe, rental sectors are soaring, and this could be the same for the UK too. As many young people are waiting to start a family much later, and are less likely to gain high returns on house prices seen by their parents’ generation, a strong rental market would benefit them.
With renting not necessarily being a negative situation, there are still problems in the area. Affecting the industry are amateur landlords, high rents, and short-term leases.
Hutchinson explains: “The difficulty
is that Britain is not prepared to be a nation of renters just yet.”
He also states that average leases are just 12 months long, and don’t offer security to tenants, as well as there being rogue landlords who ignore the necessary legislation: “The solution is to free up the red tape surrounding rental processes and come down harder on rogue landlords. We have to make the industry accessible for renters and a viable alternative to buying, not just in the immediate future, but over the long term.”1
Fizzy Living are aiming to solve the problems in one part of the market, after opening their first new block of rental apartments in Canning Town, east London. They are marketing the housing as professionally run student accommodation, for people between 25-35, beginning their careers.
The flats won’t be cheap, however, at £1,050 a month for a one-bedroom, and £1,450 for two bedrooms. Tenants will, however, be offered broadband packages, furniture, onsite parking, cycle storage, and access to a committed property manager. The company are backed by £30m from the Thames Valley Housing Association, who will manage the accommodation.
If other housing groups followed suit and focused on the private rental sector, their expertise could quickly provide affordable homes for young people. The quality of this housing would also be improved, and private landlords would be regulated.
However, landlords are responding to the need for secure, long-term agreements, with over half of tenancies currently lasting between two and three years.
There is still a long way to go before the problem is solved, as landlords are increasing rents for short-term tenancies.
Additionally, just 8% of private rental sector landlords are full time, and therefore use their properties as an investment, or gain a second income from their practises.
Tenants should remain wary of letting agencies charging unnecessary fees for their part in arranging Assured Shorthold Tenancy (AST) agreements. Many documents that they charge for can be downloaded online for free.
1 http://www.landlordexpert.co.uk/2012/09/19/uk-landlords-must-start-to-consider-security-for-long-term-tenants/
