Over the past 10 years, the number of young people in the private rented sector (PRS) has shot up significantly, with the average age of a typical first-time buyer climbing to 33.
A growing number of people are joining the ranks of Generation Rent, as the latest figures reveal that 46% of 25- to 34-year-olds are renting a PRS property – up from just 27% a decade ago in 2006/2007. This is according to the latest English Housing Survey from the Ministry of Housing, Communities and Local Government which looks at national statistics from across England for 2016/2017.
Home ownership among young people has shrunk massively, from 57% people 10 years ago to 37% now, and the average age of those who first get onto the property ladder is now 33, compared to 30 back in 2006/2007.
Build-to-rent more important than ever
Faring slightly better, around half (52%) of 35- to 44-year-olds are owner occupiers, although this figure has fallen from 72% over the past 10 years – and the proportion of this age group who rent privately has increased from 11% to 29%, another sign that Generation Rent is not only growing but encompassing a wider demographic of people.
Last year, Knight Frank revealed that investment in the build-to-rent sector – where homes are built or converted specifically for investors to buy and let out long-term to tenants – has expanded massively over the past few years, and the estate agent predicts a surge of 180% in the sector between now and 2022 as 68% of renters surveyed at the time said they expected to still be renting in three years’ time.
James Mannix, head of residential capital markets at Knight Frank, said: “The strength of the UK PRS sector has grown demonstrably in recent years. As consumer demand for affordable, flexible accommodation continues to rise, PRS is firmly establishing itself as a key opportunity for institutional grade investment, due to its long-term potential.”
What’s happened to the property ladder?
House prices have risen more than wages over recent years, making home ownership less of an option for those who can’t either borrow from their parents, stay living at home for longer or pool finances with a significant other – or all three in many cases. While one estate agent sparked controversy last year with claims that millennials ought to eat less sandwiches to get onto the property ladder, the theory was quashed by experts as not being realistic about today’s challenging housing market.
But aside from this, more young people are also choosing to rent, particularly in cities such as London, Manchester and Birmingham, because of the added flexibility as well as the increased standard of living that can be achieved in many build-to-rent homes.
In the Autumn Budget, the government pledged to invest £8bn in private housebuilding and build-to-rent as it is increasingly recognised as a vital market, and this coupled with the latest research from the English Housing Survey is proof that both attitudes and lifestyles in England are changing with regards to home ownership and renting.