Young people are less likely to move to the UK’s larger cities where they can get higher paying jobs, according to a new report. The prospect of paying a large proportion of their income on high city rents meant that, despite the prospect of higher wages, younger people were unwilling to make use of any financial incentives for a move into the city.
The number of young people renting privately who have moved due to a change of job has almost halved over the last 20 years, and any rise in pay seems to be swiftly curtailed by the cost of housing.
“For young people in particular, there are real advantages to moving when it comes to trying new roles and developing skills. Housing should not be a barrier that prevents them doing this,” said Lindsay Judge of the Resolution Foundation.
In some of the UK’s highest paying local authority areas, private rents have risen nearly 90% and in the lowest paying areas they have risen by over 70% in the past 20 years. Back in the late 1990s, after the cost of rent was deducted from salaries, renters of private property who were moving from a lower wage area to a more affluent area, such as a move from East Devon to Bristol, would have made a financial gain of approximately 16%. Compare that to today’s prices and the financial gain is minimal at just 1%. Indeed, when you take into account things like quality of life and wanting to live nearer to family or friends, a lot of people aren’t going to want to forfeit this for a 1% financial gain.
This generation has other reasons for not moving apart from money, too. Family ties, finding suitable employment and their children’s education are also big factors. The true cost of living is not always reflected in the wage packet either, and the cost of house prices, rents and way of life in London and other cities means living costs are also scaled up.
The Resolution Foundation believes the number of households facing affordability issues with their housing costs has increased most in the rental market, and the Residential Landlords Association (RLA) argues that the biggest threat to rent levels are the policies being pursued by government which are choking off the supply of homes for private rent, as demand is increasing.
Policy director for the RLA, David Smith, said: “We warned Ministers that this would happen but they have not listened. Instead of attacking the private rented sector we need pro-growth policies that recognise the need for more homes of a good standard and at an affordable rent.”
The Royal Institution for Chartered Surveyors (RICS) estimates that average annual rent rises are likely to be around 3% per annum for the next five years as a result of the demand for rental properties continuing to outstrip supply.
Government statistics show that 10% of private landlords representing 18% of tenancies are already planning to decrease the number of properties they rent out, whilst 5% of landlords, representing 5% of tenancies, plan to sell all of their properties. Recent stamp duty statistics point to a slow down in investment in the sector.
“Making renting less attractive for landlords will not make a substantial difference to the availability of property. We must focus on building more homes to address this,” Smith added.
If you’re buying a house to let out, ask a Chartered Surveyor for a building survey and valuation to ensure you aren’t paying over the odds for your new property.