A report by the BBC today highlights just how hard it is for our young people to have access to an independent life. Their ability to rent a property alone is becoming more and more difficult.
The report shows that across the country rents are becoming unaffordable, buying a house is becoming an almost impossible dream. Many in their 20s have been forced to move back in with their parents.
Some have gone back to live with parents because on their salaries, private renting is just unaffordable to them. For others it is to try and save towards buying a house. Renting and saving at the same time is simply unattainable for most.
5 years ago Centrepoint warned of affordable housing shortage.
As far back as 5 years ago, in July 2013, the charity for youth homelessness, Centrepoint, warned of an affordable housing ‘crisis’ looming.
Back then, they said, “A shortage of affordable housing in England will hit “crisis” point by 2021 unless action is taken. 934,388 more properties at sub-market rents would be needed in England.”
“The largest shortfall will be in London, with about 186,333 affordable homes needed. Followed by the East Midlands with 132,587 and Yorkshire and Humber with 128,478.”
“More homes should be built in the private and rented sector and better use made of existing stock.”
At the time Centrepoint chief executive Seyi Obakin said:-
“Local authorities must look at using powers they already have to tackle empty homes and engage further with the private sector. And nationally, government has to review its cuts to housing benefit rates, which has left private rented properties out of reach in many areas of the country.”
He blamed benefit changes, a shortage of affordable homes and “increasing anxiety” amongst landlords over letting to young people on housing benefit.
The research said more than 137,500 properties were needed to meet demand from the under-25s.
5 years on.
5 years on, new research from the BBC shows people in their 20s who want to rent a place for themselves face having to pay out an “unaffordable” amount in two-thirds of Britain.
The report says: –
They face financial strain as average rents for a one-bedroom home eat up more than 30% of their typical salary in 65% of British postcode areas.
Many housing organisations regard spending more than a third of income on rent as unaffordable.
Spending more than 30% of your salary is not recommended by housing organisations. Nonetheless, for young people in their 20s, renting a one bedroom home, in two thirds of the UK, will mean paying an average rent higher than 30% of salaries.
Sharing maybe the only option.
The other option, the go to choice for many of those young people, is to flat share. However, this does not entirely resolve the issue as 12% of postcode areas in Britain remain “unaffordable” for two people in their 20s sharing a two-bedroom home.
But in some parts of the country, finding one or more flatmates is a popular way of cutting the cost for many young tenants. The figures show that two people aged in their 20s sharing a two-bedroom flat in Manchester could pay just over 20% of their income on rent.
What the analysis showed.
Analysis by the BBC’s data team shows – A gross annual income of £24,800 would be needed for the average one-bedroom rental flat in England to become affordable under the 30% measure. In Scotland £20,700 is needed and in Wales £17,600.
Many people can pay more than 30% of income on rent, but housing organisations say this puts considerable strain on the rest of their finances.
Dan Wilson Craw, director of lobby group Generation Rent, said:
“This research is more evidence of how difficult it is to lead the life you expect. If you get a job and work hard, you should expect to have some choice about living arrangements.
“People in areas with a strong jobs market have to find somewhere to share with others in order to afford to live there.”
“The data reveals the importance of location in determining how big a chunk of their monthly salary is likely to be spent on rent.”
Kate Faulkner, housing analyst and managing director of Propertychecklists.co.uk, said that renting can be affordable in many areas outside of London. However, the particular squeeze in the capital dominated the debate and meant many other pressing concerns for these tenants were overlooked by policymakers.
Can young workers afford to live in the Capital?
The cost of living and working in the capital has seen more young people taking up jobs outside of London.
Some large companies, such as PwC, PriceWaterhouseCoopers, are now finding that fewer graduates want to work in their London offices. They are now employing graduates in other offices around the country. The shift away from the capital makes sense. According to the BBC report, a salary of £51,200 is needed to “afford” to rent a one-bed London home.’
For instance, a 20-something with a typical average income, in the capital, would spend 55% of their monthly earnings on a mid-range one-bedroom flat.
Housing charity Shelter considers any more than 50% as “extremely unaffordable”.
That rises to 156%, so one-and-a-half times a typical salary, in one part of Westminster, the most expensive part of London, where an average one-bedroom home costs £3,500 a month to rent.
This contrasts starkly with a tenant aged 22-29 looking for a typical property of this kind in the Scottish district of Argyll and Bute. They would only have to spend 15% of their income.
In separate research, Shelter, the housing charity, suggested tenants may already find that they are cramped for space, compared with those who own their homes.
The charity estimated that private tenants in England are spending £140 more in housing costs than people with a mortgage. In the last 10 years, when families have been increasingly likely to rent, owners have seen the average floor space of their homes increase by 7% compared with a 2% rise for tenants.
That leaves owners with an average of 30 sq.m extra floor space than tenants, which the charity suggests is the equivalent of a master bedroom and a kitchen.
Young people may well look back and be angry. In the decade since the financial crash it is millennials and young people who have had the worst deal.
What many older people took for granted, (get a job, get a house, get married, have children, retire, get a pension) will not be easy for younger generations to attain.
In 1980, UK private renters spent an average of 10% of their income on rent, or 14% in London. However, there were many more people renting from councils or in social housing at that time.
Today, a private tenant in the UK typically spends more than 30% of their income on rent.
This generation of young people face a more uncertain future than their parents. Research shows that for many those ‘taken for granted’ milestones are happening later in their lives than they did a generation ago. The reality seems to be that many have their lives on hold.
So, why is the focus on 20-somethings? Because it’s the age group that is by far most likely to be renting.
Renting has more than doubled over the last 20 years, and 65% of 16-24 year olds and 42% of 25-34 year olds now rent privately, according to House of Commons Library research.
Dan Wilson Craw, director of campaign group Generation Rent, said recently in response to a report by the Resolution Foundation,
“Young adults have been hit with a double whammy of rising house prices which make ownership unaffordable, and rising rents which they cannot escape. The chorus of demands on the government to act decisively is getting louder. But it’s important not to neglect the growing numbers of older renters. Because getting a mortgage becomes harder beyond the age of 40, many face a lifetime of renting.
“Millions of people, young and old, are stuck renting for the foreseeable future. They need much greater security than the market currently provides, with protection from eviction and rising rents.”