No rental future for families in two-thirds of the UK

 

After a lot of young professionals are already being kept out of the property market, now even renting a home the right size to start a family seems to be getting out of reach.

A recent study revealed that Birmingham, Bristol and Edinburgh as well as all of the south-east of England as areas where young couple could experience financial struggle from having children as the rent they are paying is too big a share of their income.

Using the average regional full-time wage for workers in their 20s and 30s combined with the cost of privately renting a two-bed home in the same area, the Guardian revealed in their results that young couple are expected to spend over 30% of one full-time earner’s wage to keep a roof over their head in 66% of the country.

What exactly a family can afford in the UK hasn’t been officially defined, however, housing charity Shelter says it comes up to 33% of income, whilst the National Housing Federation says it is 25%.

This data has revived calls from MPs and housing campaigners to reintroduce rent caps after they had been abandoned over 20 years ago.

The only areas still affordable are the north-west, north-east and Yorkshire and the Humber.

The least accessible place for young adults to start a family was London, where a two-bed rental will set you back 60% of your average income if you’re in your 20s and 44% if you’re in your 30s. Other unaffordable areas are the south-east, south-west and east.

“For people on modest incomes, having a child will normally involve one parent staying at home while the other works full time, for a period longer than parental leave normally covers,” Betsy Dillner, director of Generation Rent, said. “That means a typical new family will rely on one full-time salary to make ends meet. If the rent is too high, that makes the arrangement unviable.”

For those on lower incomes, Dilner said: “The situation is even worse, with constant anxiety over how to put food on the table, and nothing left at the end of the month to put aside for the future.”

“Not only do young adults face renting for a longer period at a higher cost than their parents, and may never actually buy a home, they are less likely to start a family – a prospect that ought to terrify older generations and policymakers alike.”

She then added that if local leaders wanted to prevent their communities from shrinking because of the housing crisis, they needed to start building on the “uglier parts of the green belt” as well as introducing rent controls.

The initial call for building on the green belts and rent caps was backed by Labour MP Frank Field, chair of the Commons work and pensions committee, which recently started an inquiry into intergenerational fairness.

Field said that “one emergency option” to solve the housing crisis “would be to consider capping rents at an affordable rate for young families seeking their first home”.

A further analysis by pollsters Ipsos Mori reveals the massive generational shift in the UK housing tenure over the last 15 years. The majority of millennials are being pushed into pushed into private renting.

Analysing decades of data from the British Social Attitudes survey, Ipsos Mori found that in 1998, when the average member of Generation X turned 27 years, 55% of them owned their own home and only 24% were renting from private landlords.

In 2014 the average millennial hit the same age, but only 32% could call themselves homeowners whilst 45% were renting privately.

Furthermore, the number of millennials living with their parents rose significantly and Ipsos Mori noticed this change to be underscored by educational disadvantage. Those of Generation Y living with their parents were only half as likely to have a degree, a correlation previously untrue for Generation X, according to the analysis.

Compared internationally, the growth of incomes for young adults in the UK has done well over the last 30 years, but at the same time, the cost of housing, especially in the private rented sector, is putting major strains on young couples trying to start a family.

Jamie Beer is 26 years old and served as a soldier for seven years. Today he lives with his parents in a one-bed flat in Cardiff. To cover the rent they spend 30-40% of their joint income and, according to Beer, having children is something they will put off until they are in their mid-30s.

“We plan to have kids in the next five years [but] the way things are currently … in south Wales, we wouldn’t be able to. We’d be doubling our rent if we wanted anything bigger than we have now.”

“The majority of my friends, bar two or three of them, we’re all underneath the average salary.”

His friends do not talk about the future any more, he said. “We enjoy our lives … but none of us really think about the future too much because it’s depressing.” His graduate girlfriend works in social media with a stable job, “but her salary doesn’t reflect her education”, he said.

“Between me and my partner, we’re still young but when you look at our parents and grandparents, it seems that we have to wait longer in life to do things they did relatively young. Some people might think ‘there’s no harm in waiting’. But you don’t want to wait all your life to start a family.”

“We’re living day to day. We can’t plan for kids in the future, we’re just worried about the rent.”

In a study by the Guardian, Wales ranked as one of the more affordable places to start a family whilst living in rental accommodation. In 2015, the average annual rent for a two-bed home took 31% of a full-time worker’s wage in their 20s, higher than the max level of affordability. For someone in their 30s it takes up 23% of their income.

Leanne Crook, a 30-year-old tutor who lives in Oldham, said she was lucky because her rent has stayed the same for six years: “It is quite good. We live about 15 minutes outside of Manchester city centre. It’s a lot cheaper.”

That has allowed her and her partner, a management accountant, to be diligent savers. “We’re both quite sensible with finances … I feel we’re comfortably saving for a mortgage as well as renting. [But] In the past couple of months, I thought if we have a child, we wouldn’t be able to do all three,” said Crook.

“It’s not something that’s stopping us from having children but if it did happen it would make things more difficult for us.”

According to the Guardian, the north-west remains one of a mere three regions in England where tenants can afford to start a family.

Field said: “The only sustainable way to improve those families’ chances of gaining suitable accommodation, and prevent their children growing up in an overcrowded home, is to increase the supply of houses that are genuinely affordable.”

“This programme will necessarily need to encroach on to some of the grubbier parts of the green belt and, for it to be effective, will have to be accompanied by a renewed effort to control our borders. Failure to act on any of these fronts could cast a whole generation adrift from the housing market.”

Responding to the findings, the the National Landlords Association’s chief executive, Richard Lambert, said: “The cost of housing is high for everyone at the moment, whether you rent or have a mortgage, so frustration about affordability is understandable. However, rents alone are not to blame. They have risen broadly in line with inflation over the past decade.”

“Affordability is being eroded largely because the demand for housing greatly outstrips supply, and because salaries aren’t rising in line with inflation.”

He added that the long-term solution lay in building more homes, particularly in the social sector. “Instead the government is preoccupied with championing home ownership, leaving those genuinely in need of affordable rented housing left clinging to tired political rhetoric like rent controls,” he said.

A Department for Communities and Local Government spokesman said: “We’re determined to create a bigger, better private rented sector – attracting billions of pounds of investment to build homes specifically for private rent – increasing choice for tenants.”

“We’ve also doubled the housing budget to support the boldest housing programme by any government since the 1970s, with £8bn committed to build 400,000 affordable homes over this parliament.”

“We are doing all of this without the need for excessive state regulation that would destroy investment in new housing, push up prices and make it harder for people to find a flat or house to rent.”

Source: The Guardian

Highgrove Mews

High Net Yield Freehold Houses

  • Commutable to London (27 mins to central Paddington station)
  • Rental demand extremely strong with large industry presence in Reading
  • Freehold with 4% net yield

£284,955 - £457,000

St Petersgate – Stockport Manchester

New Launch - Stockport Manchester, apartments from £160,000

  • Discounted launch prices from £160,000
  • Excellent transport links with 3 trains per hour to London Euston and only 9 mins journey to Manchester Piccadilly
  • Experienced development team

Assured Rent Housing Association Leases

Assured Rent Housing Association Leases

  • Assured rent & no rental voids
  • Tenant damage cover & newly refurbished inline with requirements of a corporate sitting tenant
  • Free property and lettings management

From £62,000

Emerging Birmingham Commuter Town With Properties From Just £104,000

The emerging Birmingham commuter town where properties are selling in an average of just 24 days

  • A collection of 62 two bedroom apartments and 28 one bedroom apartments.
  • DE14 is one of the fastest selling postcodes in the West Midlands.
  • 23 minute train journey into Birmingham New Street Station.

Properties from £104,000

Mill, Stockport

The Northwest's emerging property hotspot

  • Discounted off-plan 2-bed prices from £162,000
  • Completion date - Q4 2021
  • Rental yields - 6% plus

Discounted off-plan 2-bed prices from £162,000

South Central – Birmingham City Centre Apartments

Highly anticipated 28 storey launch in Birmingham City Centre with an impressive roof garden and communal facilities.

  • 154 units across 28 storeys
  • Residential multi-media community room, gym, roof garden and sky cinema
  • Excellent future connectivity via the metro system to other key transport hubs and locations around the city

from £205,800

ba-

Talk to us

Speak to our UK property experts today: 

+44 (0) 333 123 0320

Open from 9am-6pm GMT

+852 9865 4446

Open from 9am-6pm HKT

Stamp Duty Calculator

.

Unlock members only investment opportunities and full development details. Join now – it’s free, quick and easy.

Login

Not a member? Sign up for free

private rented sector

No rental future for families in two-thirds of the UK

Example

By submitting your details via this online form you agree to be contacted via email/phone/SMS by Direct Marketplace Ltd t/a BuyAssociation in relation to property investment and property developments . We do not share your personal details with third parties.  To view our full Privacy Policy click here.