The term “generation rent” has been bandied about so widely and so often it has become a somewhat meaningless stereotype.
Some may think they know what they mean when they describe generation rent, yet the term cloaks a wide array of different situations, aspirations and attitudes towards housing tenure.
Therefore, perhaps it’s helpful to unpick what’s meant by the term a little. Is generation rent a force of circumstance, or a lifestyle choice?
Circumstance or Choice?
Generation rent might, in fact, be split into two tribes. One tribe continues to chase the dream of homeownership, but is forced to rent for the moment through sheer necessity; and the other has consciously chosen – or resigned itself – to renting…
Force of Circumstance
Membership of generation rent might originally have been considered a temporary necessity. This was caused by the unavailability of mortgages, a shortfall on the required deposit and a lack of suitably priced homes.
As renting is considered a temporary state of affairs, this group continues to save and hope that the housing market changes just enough for them to get that first foot on the ladder (despite the first Bank of England rate rise in more than 10 years).
In London, for example, it might mean searching for that first house in previously less-desirable or more remote suburbs. Buy-to-let landlords have faced increasing challenges to turn a profit on such investments. first time buyers offer an increasingly competitive challenge in the market.
This may also be the group of generation rent that is casting its eyes further afield and looking to rent – on a temporary or permanent basis – outside of the capital. Rents outside of London are generally cheaper, and saving for the first home purchase might be quicker and easier.
Renting as a Choice
The last group might also suggest a cross-over between the two tribes of generation rent. Even those who have made a conscious decision to rent, rather than buy, are also looking for cheaper rents outside of London.
This is a group of generation rent which the London Evening Standard called “forever rent”.
As a member of “forever rent”, you have mobility on your side. You may choose to move at the drop of a hat and may have a wider choice of where to live, in housing that may be out of your reach if you wanted to buy it.
Generation rent isn’t just today’s millennials – according to recent data, the number of retirees and older people moving into rented accommodation has increased by 13% in the last four years. With higher property maintenance costs, difficulty in downsizing and the need to move closer to other family members, renting can be an attractive option.
What’s Next for Generation Rent?
With home ownership in England at a 30-year low, plus:
- the effects of Brexit on the housing market still unknown.
- house price growth in the UK’s biggest cities hitting a 13-month high as the gap between average earnings and property values hits record levels; and
- the government admitting in a white paper that the housing market is “broken”
generation rent may become the norm.
For first time buyers looking to get on the property ladder, it’s excellent news that stamp duty is now abolished for first-time buyers on homes under £300,000. This is, hopefully, the first of many “fixes” the government introduces to help people get on the property ladder – if they want to of course!
Whether you’re looking to buy or rent, find out more about your new area with a Move iQ property report! A full report contains information on everything from schools to noise pollution. Simply enter your postcode to find out more here.