Millions of millennials will never own homes so it’s time to make renting work better

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Theresa May’s ‘British dream’ of home ownership is an impossible one for millions of millennials. 

According to the Resolution Foundation’s ‘Home Improvements’ report, on current trends up to half could be renting into their 40s and a third by the time they claim their pensions. So, permanently. 

Even now, 40 per cent are renting privately at age thirty, double the rate for Generation X, and four times that of the baby boomers. 

It isn’t just that the cost of a deposit for a new home has spiralled as prices have headed skywards:  access to social housing has fallen sharply at the same time. 

The problem with this is that the private rented market is governed by rules which work wonderfully for landlords, and more or less ok for those for whom private renting is a temporary activity while they save enough to buy. 

But the model is deeply flawed for those for whom renting is now the norm. These people are moving into their child rearing years in accommodation they can be turfed out of at short notice under their tenancy agreements. Rents can also rise sharply at the end of a year. 

The current Government’s response to what is now established as a housing crisis is focussed on trying to make it easier for people to get a piece of that “British dream” through buying. 

Trouble is the help to buy policy has simply served to hike demand, and thus the price, of first time buyer properties that are in short supply. Meanwhile, subsidising council house/housing association sales takes ever more social housing circulation. Did someone say “nightmare”? 

What’s required is a recognition that while encouraging ownership is all very well, the problems of those who can’t attain it need to be addressed too.

The Foundation has some good ideas. For a start it calls for the introduction of indeterminate tenancies as the sole form of contract in England and Wales, following Scotland’s lead and the practice in Germany, the Netherlands, Sweden and Switzerland, where renting is more common, and accepted. 

Bringing stability to rents by linking rises to CPI inflation for three year periods is another senisble suggestion. So is the creation of tribunals to help resolves disputes. 

The Foundation further calls for limits also need to be placed on the ability of landlords to turf tenants out beyond the failure to pay the rent or treat the property nicely.

However it accepts that a desire to reoccupy or sell the home would be a ‘good reason’ to move a tenant on. 

I’d be inclined go further by limiting that too: If you’re going to enjoy the financial benefits of being a landlord you should be in it for the long haul. That should include having limits placed on your ability to sell/take over a rental property at your convenience regardless of any inconvenience to the tenant. 

It might also be wise to look at ways to encourage more professional, long term landlords, to build and maintain rental properties. 

While current rules are too favourable to landlord, the core issue is that generation rent is here to stay and faces multiple issues that need to be addressed by policymakers. 

With so many destined to miss out on the home ownership their parents, and especially their grandparents, enjoyed the least we could do is make renting work better for them.

Resolution has recognised that. Ministers need to catch up.

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Source link: http://www.independent.co.uk/news/business/comment/generation-rent-millennials-home-ownership-house-prices-resolution-foundation-a8308396.html

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