Resolution Foundations proposes new protections for lifetime millennial renters
Millennials are perennially identified as the new ‘have-nots’ in society, a group born between 1980 and 1996 who, unlike their predecessors in Generation X (born 1965-80), have not seen their standards of living exceed those of the previous generation.
Indeed, they have looked with envious eyes on the baby boomers, the group who are now at or nearing pensionable age, who, it seems, had it far better. The gulf, whether real or perceived, has significant social implications and also political ones: last year’s general election saw very little divide between the Conservative and Labour vote down the traditional lines of social class, but a huge gulf based on age.
Given that younger people mostly voted Labour, the Conservatives will be mindful of the need to win over at least some of the millennial bloc. This adds to the myriad of existing reasons to tackle the housing crisis, as one of the largest contrasts is between the home-owning baby boomers and Generation X on the one hand, and millennial renters.
From Generation X to Generation Rent
The issue has been given fresh prominence by a new report from the Resolution Foundation thinktank, which noted that around 40 per cent of millennials were still renting at the age of 30, twice as many as was the case among Generation X.
According to the report, on current trends this will mean about a third of millennials will never become homeowners, and thus will be destined to rent throughout their lives.
How much this will impact on individuals will vary. The report suggested that for single people with few ties, the inherent insecurity of tenure – such as tenancies with fixed time limits – will not pose too many problems, as they will be flexible enough to deal with changes such as moving area.
For families who have to rent, however, the situation could be far more disruptive – children having to suddenly change school being an obvious example – and while at present 1.8 million families rent, this could climb much higher.
Seeking a solution
The question is, what can be done about it ‘ Part of the Resolution Foundation’s call was for the government to help young people to get on the housing ladder, through the provision of more affordable housing.
However, the foundation also argued that, if so many millennials are likely to have to rent, they need more regulatory support.
A key proposal was a switch to a new system of indefinite tenancies rather than time-limited ones, giving people far more security of tenure. This would have obvious appeals for families who want and need to put down roots in a particular locality. Such a system is used in Germany, a country where renting is seen as the norm, just as in countries like France and Switzerland.
The foundation also suggested an inflation cap on three-year rent increases, aimed at preventing landlords pushing the cost of letting too high.
Lindsay Judge of the Resolution Foundation said: “If we want to tackle Britain’s ‘here and now’ housing crisis we have to improve conditions for the millions of families living in private rented accommodation. That means raising standards and reducing the risks associating with renting through tenancy reform and light-touch rent stabilisation.”
Use tax to attract, not attack
However, these are not the only proposed solutions. The Residential Landlords Association’s policy director David Smith suggested the best way to deal with this “perfect storm” for young people was to change tax policy to encourage the growth of rental supply.
He said: “This is at a time when government tax increases are discouraging many landlords from investing in new homes to rent out.
“Ministers need to make pragmatic changes to their approach to private rented housing, with a series of policies that support, rather than attack, the majority of private landlords who are individuals to invest in the new homes to rent we need alongside all other tenures.”
He suggested what is needed is a regime that rewards landlords who offer long tenancies without impeding their capacity to evict tenants who misbehave.
So, while the issues faced by millennials are clear enough, it seems not everyone agrees on what the best solution is.
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