We are becoming known as generation rent due to the sheer number of people that are renting rather than owning their own homes.
The huge gap between income and the soaring property prices are denying many of the young people from ever stepping on the property ladder.
By 2020, first time buyers in the UK will need a salary of £64,000 to be able to afford a home, a fifth more than is needed today, at £52,000. In London, where first time buyers currently need to earn £80,000, they will need to earn £106,00 in four years time.
In comparison, the average salary in the UK is £27,531 and double for London – £48,023 and that is before you factor in the huge gaps of income gain. Unless you double the average salary right now, and almost triple by 2020, you won’t be able to access the property ladder.
In fact it is expected that London will be a city of renters by 2025, with 60% of Londoners renting and just 40% owning their own homes. This is a reversal of 2000, when 60% of Londoners owned a home outright or with a mortgage.
But, while we often hear that the young are unable to get on the property ladder, what about the older generation – why are the over 40’s and 50’s still renting?
Well, there could be several reasons for this – one being that they have never actually owned a home because they haven’t been able to.
Mid-aged renters find it just as hard to get on the property ladder, regardless if they have stable, well paying jobs, or not. In London, renters pay up to 72% of their income to their landlord. With rents up by 10.5% from last year, the London typical rent is now around £1,600 per month.
That leaves little to nothing to save up for a down deposit on a home of their own.
Photographer Alex Forsey, 44, says:
“I get quite well paid, but I’d have to put £40,000 down as a deposit for one of the tiny boxes that developers are putting up in London.”
Naturally, downgrading on living space, quality of life and tying yourself up with a mortgage for the next 10 – 20 years isn’t exactly an amazing perspective on your future when already in your forties. Also, owning a property comes with it’s own set of responsibilities and risks hiding in potential market crashes that can happen way ahead of you completely clearing out the mortgage.
For some tenants in their 40s and 50s, owning a property is not even a plausible outcome, as many cannot even afford to rent their own place. A survey by the flatshare website SpareRoom found that between 2009 and 2014, the number of flatsharers aged 35 to 44 rose by 186%, while those aged 45 to 54 soared by 300%.
Another survey by the Post Office found that half of British tenants despair of ever being able to afford a home of their own. The reason for this is simple, they have been priced out of the property market as house prices soar.
Meanwhile, others are choosing to sell homes that they once owned in order to rent instead, therefore freeing up the money tied up in their bricks to enjoy in their later years.
However, could this also come hand-in-hand with the rise in over 50’s divorcing?
Such a situation could potentially force both sides out of the home and without a joint income or savings and after the costs that come with a divorce, unable to buy a place of their own and therefore into rented accommodation.
According to the Office for National Statistics, 42% of marriages end in a break-up. However, across the board the number of divorces tend to be decreasing, except for one age group.
The ONS compared the 2013 figures with those from 10 years ago and found that divorce rates has decreased in virtually all age groups except the over-50s. Experts believe the ‘empty nest syndrome’ could explain why more and more people are divorcing as they get older.
To coincide with the rise of the so-called ‘silver separation,’ more than a third of people aged 50 and over now rent, up from a quarter in 2011. Those aged between 50 and 54 in particular were more likely to be renting.
New research by Saga Home Insurance found that 20% of renters in this age bracket are single and trying to get back on to the housing ladder – suggesting that divorce rates are having an impact and causing over 50s to start a new life in rented accommodation after dividing the family home.
If you are going through a divorce yourself you will know that it is stressful enough without having to drag out the process of selling your home to complete the separation.
This blog post was contributed by We Buy Any Home. If you want to find out how you can sell your home and have the money in your pocket in less than a week then you can find out more here.
The views of the author are their own and don’t necessarily reflect or coincide with The Tenant’s Voice.