A growing number of young people don't want to own their own home. Here's why

No thanks. Image: Getty.

Home ownership. Compared to renting from a private landlord, it’s a no-brainer. Monthly payments are cheaper. As long as you can pay no one will kick you out. You can have pets, decorate, and put up political posters. And you get to keep it.

For all these reasons, I would rather own my home – as would most young adults. But according to the latest Halifax survey for Generation Rent, the number of 20-45-year-olds who don’t want to own is rising – from 24 per cent of non-home owners in 2011 to 29 per cent now. Only 43 per cent are actively saving for a deposit.

A 5 per cent shift is hardly a dramatic reconfiguration of Generation Y’s aspirations but it is a sign that rampant house price inflation is beginning to wear on young Britons who were raised to believe that hard work gets rewarded. The past two years have seen a 20 per cent increase in the price of the average first home, and it would be an understatement to say wages have not kept up. Even if your income permitted it, there seems little point in saving for a deposit if it will just be wiped out by yet more inflation.

Halifax is dismayed by these findings, pointing out a “clear disconnect” between the perceptions of their survey respondents and the “reality” of the housing market. After all, there has been an increase in first-time buyers to 311,000 in 2014, the highest number since 2007. But between 2002 and 2007, the average number of new homeowners was nearly 400,000 a year. Since 2007 the annual shortfall against that number has added up to 1.2 million households who haven’t bought a home and they’ve ended up in the private rented sector or living with their parents.

The rate of new home-owners has a long way to rise before we’re back at a pre-crisis equilibrium. Halifax reckons that the government’s Help to Buy scheme and the 195 different 95 per cent loan-to-value mortgages available on the market would boost buyer numbers even higher if only there was more communication of the options on offer. 

It’s an interesting point. I took to the internet to see if I could buy a house near where I live on the frontier of gentrification in east London. My wife and I rent a two-bedroom flat at the cost of £1000 a month. Nearby there are similar properties going for £250,000.

Briefly allowing myself to dream that we had a deposit of £50,000, a price comparison website told me a £200,000 mortgage would cost £817 a month to pay off. Returning to reality, a 95 per cent mortgage of £237,500 would set me back £1188 a month – more than my rent, but at least a) I wouldn’t need to save anything and b) all the reasons I listed at the start.

Maybe I could buy after all, I thought. I went on Halifax’s own online mortgage calculator to see what sort of loan they’d be willing to offer us, seeing as we’re the average would-be first-time buyers they’re so concerned about. Let’s say we’re on the average household income for London of £35,740.

It turns out Halifax is very much not our ticket out of the private rented sector – on the basis of our income they would lend us an underwhelming £153,682. Enough for somewhere up north but for a home with room for two adults and a child anywhere near my job: no chance.

If we wanted to buy a property nearby we would need a deposit of £97,000 or a household income of £63,000. On a national scale, it is not much better. The average first home costs £208,000 and you can only get a 95 per cent mortgage on that if you earn £52,000 – the median income is £29,636.

Source: Generation Rent; ONS, GLA and Halifax data.

The awkward truth for Halifax is that houses are simply too expensive and not even 95 per cent mortgages will overcome that if an average earner can’t access them. The bank recognises that we need to start matching demand for homes with supply and that involves building 2.5 million homes in the next decade.

In the meantime, those millions stuck renting shouldn’t have to tolerate a second-class tenure. Reform of the sector could extend nearly all the benefits of ownership to tenants: rent control could bring costs down, while a shake-up of tenancy law can start protecting tenants from eviction at a landlord’s whim, and give them greater latitude to make their house a home. As for tenants actually getting to keep the property, we’re working on it. 

Dan Wilson Craw is Communications Manager for Generation Rent.

 
 
 
 

17 things the proposed “Tulip” skyscraper that London mayor Sadiq Khan just scrapped definitely resembled

Artist's impression. See if you can guess which one The Tulip is. Image: Foster + Partners.

Sadiq Khan has scrapped plans to build a massive glass thing in the City of London, on the grounds it would knacker London’s skyline. The “Tulip” would have been a narrow, 300m skyscraper, designed by Norman Foster’s Foster & Partners, with a viewing platform at the top. Following the mayor’s intervention, it now won’t be anything of the sort.

This may be no bad thing. For one thing, a lot of very important and clever people have been noisily unconvinced by the design. Take this statement from Duncan Wilson, the chief executive of Historic England, from earlier this year: “This building, a lift shaft with a bulge on top, would damage the very thing its developers claim they will deliver – tourism and views of London’s extraordinary heritage.”

More to the point, the design was just bloody silly. Here are some other things that, if it had been built, the Tulip would definitely have looked like.

1. A matchstick.

2. A drumstick.

3. A cotton ear bud.

4. A mystical staff, of the sort that might be wielded by Gandalf the Grey.

5. A giant spring onion.

6. A can of deodorant, from one of the brands whose cans are seemingly deliberately designed in such a way so as to remind male shoppers of the fact that they have a penis.

7. A device for unblocking a drain.

8. One of those lights that’s meant to resemble a candle.

9. A swab stick, of the sort sometimes used at sexual health clinics, in close proximity to somebody’s penis.

10.  A nearly finished lollipop.

11. Something a child would make from a pipe cleaner in art class, which you then have to pretend to be impressed by and keep on show for the next six months.

12. An arcology, of the sort seen in classic video game SimCity 2000.

13. Something you would order online and then pray will arrive in unmarked packaging.

14. The part of the male anatomy that the thing you are ordering online is meant to be a more impressive replica of.

15. A building that appears on the London skyline in the Star Trek franchise, in an attempt to communicate that we are looking at the FUTURE.


14a. Sorry, the one before last was a bit vague. What I actually meant was: a penis.

16. A long thin tube with a confusing bulbous bit on the end.

17. A stamen. Which, for avoidance of doubt, is a plant’s penis.

One thing it definitely does not resemble:

A sodding tulip.

Anyway, it’s bad, and it’s good the mayor has blocked it.

That’s it, that’s the take.

(Thanks to Anoosh Chakelian, Jasper Jackson, Patrick Maguire for helping me get to 17.)

Jonn Elledge is editor of CityMetric and the assistant editor of the New Statesman. He is on Twitter as @jonnelledge and on Facebook as JonnElledgeWrites.

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