Millennials look set to be the first generation in the UK who may never own their own homes.
A recent report estimated that more than 50% of adults under the age of 40 will be living in privately rented accommodation by 2025, and research from the Resolution Foundation stated that up to one third of young adults will never be homeowners. As a result, much of this ‘Generation Rent’ looks likely to remain in private rental accommodation for the rest of their lives.
Long-term renting has often been portrayed as a forced living situation, rather than a choice. But it’s important to remember that homeownership isn’t for everyone, and it shouldn’t be. There are many valid reasons for not wanting to own your own home and there are several distinct advantages to renting. Home ownership can be expensive and can soon prove a serious liability if personal circumstances, finances or careers change. Perhaps the most obvious advantage to renting is the degree of flexibility it allows.
For many, renting is an affordable solution which adequately meets day-to-day needs. And it’s not just the young who are moving to private rental accommodation in ever greater numbers. People aged 65 and older are also now moving into the market in larger numbers than ever before. With over 200,000 older adults starting to rent in the last four years and, by 2040, it’s estimated that one in three people over 60 could be living in private rental accommodation.
The benefits afforded by private rental accommodation
With the private rental sector becoming increasingly popular, purpose-built rental properties can meet the need for modern and good-quality, housing stock. There are close to 131,855 build-to-rent (BTR) houses already built, under construction or planned in the UK, over half of which are in London.
These new BTR properties can offer more than many rental properties, including communal living solutions like shared gyms, pools and other sought-after facilities. Custom built accommodation can also often allow renters to pool their resources together and afford facilities which would be beyond their means as private homeowners.
Research from Your Move also revealed that three-quarters of tenants (74%) showed a genuine interest in some kind of communal service or activity, with an onsite gym being the most popular. Tenants were also willing to pay more rent for perks like pet-friendly housing and high-speed internet, with 28% willing to spend more on pet-friendly accommodation and 21% for high-speed internet.
How Build to Rent (BTR) can help fight the housing crisis
The gap between housing supply and demand has continued to grow in the UK – and whilst the Government’s pledge to build 300,000 new homes a year is certainly a step in the right direction, it continues to remain a challenge for some to find a home that is affordable and also to raise a deposit to buy - particularly if they are renting in the meantime.
As such, a stimulus that will support the BTR market is desperately needed – to satisfy the ongoing need for rental property. A recent report estimated that BTR will create 250,000 rental homes by 2030. These figures could, however, be even higher with additional investment.
In London, the public sector has begun serious investment in BTR. Sadiq Khan announced in 2015 that he wanted to build 5,000 BTR properties, but investment is currently limited to collective investment, not singular bodies. The public sector has correctly identified BTR as a way of boosting supply, but needs to open up the scheme to local councils, authorities and developers, both in London and the rest of the UK.
The future of BTR
The UK’s housing crisis is of major concern and whilst the Autumn Budget saw some limited support for Help to Buy and Shared Ownership, it focused mainly on the demand-side of the equation. However, policies to address the supply-side of the housing crisis are thin on the ground and many believe incentives for BTR would be a smart way to address this.