Despite a number of Government schemes launched to support first-time buyers, property is proving a pipe dream for many millennials.
A third of young people will never get on to the property ladder and face renting a home for the rest of their lives.
An estimated 40% of millennials, defined as those born between 1980 and the mid-1990s, will still live in rented accommodation at the age of 30, twice as many as for the previous generation.
A record 1.8m families with children are also renting privately, up from only 600,000 15 years ago, according to a report by the Resolution Foundation.
Lindsay Judge, its senior policy analyst, said: “Britain’s housing problems have developed into a full-blown crisis over recent decades and young people are bearing the brunt - paying a record share of their income on housing in return for living in smaller, rented accommodation.
“Up to a third of millennials face the prospect of renting from cradle to grave.”
Why is this happening?
Millennials are finding it harder to get on to the property ladder than previous generations due to the fact that house prices have risen faster than earnings for a number of years.
Mortgage affordability criteria have also been tightened following the financial crisis in 2008, leaving young people having to put together bigger deposits than in the past.
Many millennials find themselves stuck in a cycle of renting while they save for a deposit, but unable to set aside much money each month due to the high proportion of their income they spend on rent.
Who does it affect?
The research makes grim reading for aspiring first-time buyers, many of whom are already wondering if they will ever be able to get on to the property ladder.
It also highlights the plight of children being raised in privately rented properties, pointing out that they lack the security of a long-term home, with many tenants on six or 12-month fixed term contracts, while one in four properties in the sector fails the decent homes standard.
The report adds that the rising number of people who are still renting when they have retired, combined with the ageing population, could more than double the housing benefit bill for pensioners from £6.3bn now to £16bn by 2060.
Can the trend be reversed?
The Government has introduced a raft of measures in attempts to help aspiring first-time buyers.
Its flagship initiative is the Help to Buy scheme, which assists people to purchase a new build home with just a 5% deposit, with the Government providing a 20% equity loan, rising to 40% in Greater London that is interest free for five years.
The Help to Buy ISA also helps people saving for a deposit by enabling them to set aside £200 a month tax-free. The Government will top this up with a bonus of 25% of the total amount saved, up to a maximum of £3,000 on savings of £12,000, when they buy a house.
The Starter Homes Scheme enables people aged between 23 and 40 who have not previously owned a property to buy one at a 20% discount to the market price, while under shared ownership, buyers can purchase a share in a property of between 25% and 75%.
Most recently, it was announced in the Budget that first-time buyers would not have to pay stamp duty on the first £300,000 of a property purchase.
Top 3 Takeaways
- A third of young people face renting a home for the rest of their lives
- An estimated 40% of millennials will still be living in rented accommodation at the age of 30
- A record 1.8m families with children are renting privately, up from only 600,000 15 years ago