In the UK, the think tank Resolution Foundation recently revealed that within a decade only 10% of people under the age of 35 would be able to break out of the rent cycle and buy a home of their own. That’s 90% of people on modest incomes locked out of the property ownership market.
The question is, why?
The think tank stated that 18 years ago, in 1998, the majority (more than half) of people aged 16-34 living in households with incomes between 10% and 50% of the national average were buying their own houses.
In 2013-2014 this percentage had dropped to 25% and is now on course to be 10% across the UK by 2025. In the capital the forecast is even lower, at 5%.
Matt Whittaker, chief economist at the Resolution Foundation, said: “With the average modest income household having to spend 22 years to raise the money needed for a typical first time buyer deposit – up from just three years in the mid-1990s – it’s no surprise that owning looks so out of reach.”
For its study the Resolution Foundation used data from the family resources survey conducted by the Department of Work and Pensions. The think tank found an overall decline in home ownership, whilst private renting more than doubled amongst young people and had been predominantly evident for those on low to middle incomes, nine out of ten of whom were employed.
These figures should be of concern to not only to those within the under 35 year old demographic. It should worry their parents as well. Children who cannot afford to buy will need to rent, or stay in the family home for a lot longer than they once did. In 1998, 22% of the under-35-year-olds on modest income were renting, this number recently went up to 53%.
The survey also found that 76% of landlords explained their reluctance to let property to those aged between 18 and 21. A result of the decision to prevent this age group from claiming housing benefits. As a reason for their decision, landlords named the fear that tenants of that age bracket might be unable to pay the rent.
The RLA also said the under-35s may also face difficulties accessing rental accommodation in the future. Not being able to buy is one thing, but finding somewhere affordable to rent is also a problem.
53% of landlords stated they did not intend to renew share house tenancies because of fear about payments not being made. Unemployment and poverty often leads young people to delay or default on their rent, but finding accommodation is obviously vital in order to move forward. It’s a vicious circle.
The analysis by Resolution Foundation registered that the age bracket of 65+ now accounts for almost 33% of all homeowners, a significant increase from under 25% in 1998.
To put this in contrast, those aged 35 and younger account for one-tenth of homeowners, down from almost one-fifth in 1998. The average 30-year-old is also 30% less likely to own a home than they were 15 years ago.
Source: The Guardian
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