An increasing number of young families are starting their lives in rented accommodation, according to the Parent Rent Trap survey conducted by insurers, Royal London. Figures show that, of around 365,000 babies born in Britain each year, half are now born into families living in rented housing.
The number of families living in privately rented housing has risen by 94% in the last ten years and, for the first time in living memory, around 200,000 babies are being born into private rental homes.
The surge in numbers is a result of parents taking longer to save for a house deposit while not wanting to wait before starting a family.
Data taken from the government’s Family Resources Survey reveals that parents are renting their homes from private landlords for longer and that this has long term financial, emotional and practical implications. In England alone there are over 1.5 million families with dependent children living in private rented housing. The greatest regional increases over the last decade in England have been seen in the North East and Yorkshire and the Humber.
“Generation rent” is evolving into “generation parent” with a third of millennials likely to rent for the whole of their lives. In the 1960s the number of people who owned their own homes rose but that is in stark contrast with the current trend.
Financial specialist at the Royal London, Becky O’Connor, said that escaping from the rental market was “increasingly impossible”. She said: “Renting is no longer something carefree young people do for a few years. It is an increasingly long-term tenure and increasingly impossible to escape from. For people in their late 20s and 30s, half of whom are starting families in insecure accommodation, not having a home of their own is fraught with practical and emotional issues. The main risk is eviction, which hangs threateningly in the background of normal family life.”
It is disheartening that mortgage repayments could actually work out cheaper to pay than rental payments in some areas, but the initial lump sum needed for a deposit can be hard to come by. The impact of high rent makes it even harder to save, and is further impacted by the rocketing cost of living in some areas. An owner-occupier will usually benefit from lower mortgage repayments if the equity in their home increases, which will bring the interest down in turn.
Home ownership is further out of reach than ever for people aged between 25-34. Since 1997, the age of the average first time buyer has risen from 26 years old to 34 years old. This is at odds with the average age of a first time mother, which is 29 years old, and a first time father at 33 years old. The uncertainty of not having a permanent roof over your head when you have a young family can lead to tension and worry. There is likely to be continuing insecurity, despite changes to the Section 21 of the Housing Act 1988, which gave landlords the ability to evict tenants without stating a reason and serve just two months notice to end the tenancy agreement.
Royal London’s Parent Rent Trap report says: “Renting a home was once regarded as a rite of passage for the young … before ‘settling down’ to have children.”
Which would be your first choice – family or stability? If you do decide to purchase your first home, always enlist a chartered surveyor to check over the property.