Last week’s news that home ownership among young adults had “collapsed” means more renters than ever are looking for a place to call home – so why is the government cracking down on landlords?
Over the past 20 years, the number of people aged 25 to 34 who are on middle incomes – between £22,200 and £30,600 – and have bought their own home has more than halved to just 27%, according to data from the Institute for Fiscal Studies (IFS). The research shows that this age group now have roughly the same chance of owning a property as those on a lower income, while young adults from affluent families have a significantly higher chance of getting on the ladder.
As the onus switches from owning a property to renting for growing numbers of millennials, opportunities for landlords should abound, as young people are increasingly accepting of the fact that they must rent for longer. However, recent years have seen the government imposing stricter rules and regulations on the buy-to-let market in an effort to dissuade landlords, which the Residential Landlords Association thinks is an issue the government needs to rethink.
Investment in homes to rent
David Smith, RLA policy director, said: “This huge increase in the number of young people unable to buy their own home means that more are renting and for longer periods. This shows the folly of government policy imposing higher taxes to deter investment in new homes to rent.
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As middle-earning millennials are likely to be happier forking out larger sums in order to rent prime accommodation, the build-to-rent sector has seen a sharp rise in recent years, offering purpose-built rental blocks, supported by a range of individual and institutional investors, to give Generation Rent more of what they want.
But with new tax changes coming into effect, as well as the extra 3% stamp duty on additional properties, and stricter lending criteria for some landlords, the government crackdown could be putting investors off the market, which might ultimately be to the detriment of the growing renting population. Extra costs to landlords are likely to be passed onto tenants, inflating rents and keeping those saving for a deposit off the ladder for longer.