Why Are So Many People Renting?
We hear much of a phenomenon entitled ‘Generation Rent’ in the media, an entire age-group of today’s 18 to 30 year-olds who struggle to raise the capital to purchase a home and get on the first step of the property ladder owing to prohibitive prices. And yet, we know from experience the demographic within the private sector is much more diverse than this and the reasons people have for renting property are much more varied and complex.
‘Generation Rent’ may be an easy category for the media to latch on to in a narrative of exorbitant house prices and financial crisis but it bears little resemblance to reality. For letting agents and landlords it is important to have a clear picture of the sort of people who might be interested in renting and their motives for doing so.
There is no doubt that affordability is one of the prime reasons why demand in the rented sector is so high. Wages over the last decade have increased little whilst house prices have continued to rise, forcing many out of the market for home ownership.
With recent measures such as the Mortgage Market Review making getting a mortgage from a lender much more difficult and with interest rates threatening to rise, getting together the capital to invest in a home is simply beyond the means of many, especially young people. Research carried out by Aviva shows that well over half of renters surveyed cited affordability as their main reason for renting rather than purchasing.
However, of those who cited affordability as a root cause of their renting property the age range was much more varied than any notion of a single generation would suggest. Increasingly young families in their thirties and forties rely on renting rather than buying outright. Moreover, retirees form a significant proportion of renters – these are people who have previously owned their own home and brought up their family and now sell their home to fund their retirement plans, their children’s higher education, and rent their home.
There may also be more general social factors behind the increase in renting. More and more people stay single longer, marrying later and having children later than their parents’ generation. This means couples do not pool their financial resources until later to buy a home, preferring to rent. The goal of owning a home that was once widespread is no longer as important as it once was. Research conducted by the insurers LV in 2013 showed that under a third of under-35s regarded owning their own home as an important aspiration, compared with 95 per cent of those aged between 55 and 75.