A generation of young adults who, because of high house prices, live in rented accommodation and are regarded as having little chance of becoming homeowners.
Last week it was reported that 60% of Londoners will be renters by 2025*. We regularly see the phrase ‘Generation Rent’ splashed across our papers. With a city of renters and demand for decent rental properties at an all time high, we talked to one of our Surveyors -John Eden, who is currently renting in Maida Vale and has been a tenant for the last 6 years. He says ..
“‘For many people, buying a property would mean big compromises -moving to a less desirable location and facing other costs such as commuting fares, being further away from friends and family and fewer work opportunities.”.
In areas where there is a shortage of housing and inflated prices it is no surprise that we have a generation of renters. But is Generation Rent such a bad thing?
“Renting provides flexibility – you are not trapped in to a mortgage or a slow market, so if your life changes (new job, move to a new area, growing family, etc.) you have increased flexibility, plus moving while renting takes a comparatively shorter time than if you had a house to sell & another to buy. It removes the ‘hassle factor’. As a tenant, your landlord is responsible for repair, buildings insurance and general maintenance. ‘When anything has broken (whether it is the boiler, blocked drains, leaking pipes, exploding dishwasher, etc.) I have been able to arrange to contact the Landlord to get it repaired and at no money or time spent by me.”
It is reported that Millennials spend a yearly average of £6,589 on nights out**. This suggests that – to millennials – disposable income for a social life is more important than spending it on mortgages and the upkeep of a home. For many renters, a short commute to work and living close to friends and family is important. Renting allows for many people to live in areas where they might not be able to afford to buy.
John considers Generation Rent .. “It is not strictly a good or bad thing, depending on how it evolves. The important thing about renting a property is about maintaining a good relationship between landlord and tenant. This means being aware of the rogue landlords and agents, but also for landlords to be able to suss out over-bearing tenants. When there is a healthy relationship between landlord & tenant there should be no problems, and if they are, the are easily resolved. Hence why I have so easily been able to renew my tenancy each year.”
There are obviously some downsides to renting, particularly for families who are usually long term tenants. John points out that “As you don’t own the property you are restricted to what changes you can make and what you can do within the property.” Plus, not forking out a huge lump sum for a mortgage deposit won’t leave you any better off, in fact one of the reasons for pushing home ownership at a policy level is that you will pay far more for your rent over the rest of your life than you’d pay in mortgage costs, with no asset at the end of it. ***
We asked John about his long term plans… “Realistically if I had a young family the security of owning a property would become more important to me but in the immediate future I enjoy the flexibility of not being tied down and being able to live somewhere which would otherwise be out of my budget”.
**Money Advice Centre