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'Generation rent' faces escalating housing crisis
An additional 1.5 million 18- to 30-year-olds will be forced into the private rental market by 2020, a new report warns.
by Victoria Bischoff on Jun 13, 2012 at 00:01Follow @VBischoff
More than a million young people will end up locked out of a ‘badly functioning’ housing system by 2020 unless the government introduces fundamental reforms, a new report has warned.
The number of homeowners under 30 will nearly halve by 2020, according to the Joseph Rowntree Foundation (JRF), with just 1.3 million expected to own their own home.
This means that in eight years an extra 1.5 million 18- to 30-year-olds will be forced into the private rental sector, a further half a million young people will have to stay living with their parents well into their 30s, while the number of homeless young people under 25 is expected to rise to 81,000.
Rental market failing young people
With more people renting – including families, those on low incomes and other vulnerable people who will struggle to compete in the rental market – it is therefore vital that improvements are made to the rental market, said Kathleen Kelly of JRF. Otherwise we risk turning a housing crisis into a homelessness disaster, she warned.
David Clapham, lead author of the report, said: ‘Young people are at a double disadvantage – it takes longer to raise enough for a deposit and their wages are generally lower. But there are simply not enough homes and those we do have cost too much to rent or buy.’
JRF is urging the government to improve the private rental sector, which it claims is viewed by many young people to be ‘unaffordable, unavailable and offering poor conditions’.
Creating sufficient supply and encouraging investment in private rented housing are primary concerns, JRF said, while policymakers also need to consider the needs of tenants and landlords more fully.
‘Many landlords saw mechanisms such as landlord registration or accreditation schemes as burdens that did not offer them any advantages,’ JRF said. ‘An alternative structure of landlord incentives, together with checks and balances around tenants’ interests, would be a good starting point for reform.’
JRF added that in addition to increasing supply of private rented housing, the government should also consider the conditions on which it is offered to tenants, including rent levels and security of tenancy.
International evidence indicates that introducing tax breaks for landlords who offer more affordable rents and longer, more stable tenancies will help overcome the problem of buy-to-let lenders being unwilling to support longer-term tenancies within their mortgage terms.
The report comes just days after a Cambridge University study predicted that more than a third of families will be renting by 2025, with just 27% of people living in ‘mortgaged home ownership’ compared with 43% in 1993-94 and 35% today.
Yesterday, meanwhile, Halifax reported that the size of deposits, high house prices and job security remain the top three barriers to home ownership for 'generation rent'. An overwhelming 91% of parents believe the UK's stagnant economy is discouraging first-time buyers.
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