The BBC recently published an article all about millennials and the housing market. Research and reports done by the Resolution Foundation has shown that up to a third of young people in today’s rental market face living in private rented accommodation ‘for the rest of their lives’. But why have rental rates risen so much, and what does this mean for landlords?
Record Numbers of Families Renting
According to the report by the Resolution Foundation, a property think tank, 40% of "millennials" - those born between 1980 and 1996 - were living in rented housing by the age of 30. That’s twice as many as "generation X" - those born between 1965 and 1980. This is a new record high of families who are in rental accommodation instead of owning their own homes. While the government has said that they are already putting policies in place to improve the housing market, the Foundation’s Home Improvement report said that ‘generation rent’ needed much more help to level the playing field. It called for more affordable homes for first-time buyers to be built, as well as better protection for those who rent.
Caught in The Cycle Of Renting
The main issue facing millennials at the moment is the stark difference between wages and housing prices, which has pushed the possibility of home ownership out of many of their lives. While there have been many calls to ‘just save and not spend so much’, many millennials are spending over 50% of their monthly income on rent alone, which doesn’t leave a lot for spending once you take out things like utility and food bills. This means that many are feeling caught in a ‘cycle of renting’ as it is the only affordable option. With house prices continuing to climb, more and more millennials are choosing either to live with their parents, or to rent instead of buy.
What Does This Mean For Landlords?
Of course, more people looking for rental accommodation is always good news for landlords, and it’s definitively a seller’s (or landlord’s) market. But this shift also represents a change in the type of tenant landlords can expect to see. Renters now are looking for longer term lets and fixed rental rates where they can establish a life and a more permanent home. There will also likely be an increased demand for more flexibility within rental homes – for example the ability to decorate rooms, have pets or make adjustments for children. This last one is particularly important, as the Foundations report states that ‘the private rented sector is "far less fit for purpose" for those with children because of a lack of security. The report also reveals that a record 1.8 million families with children rent privately, up from 600,000 15 years ago.’ For landlords, this means they may want to reassess their current tenancy agreements to see if they are meeting the new needs of lifetime renters. But it also means that landlords can be confident of more secure, long term income from their properties.
At Northwood, we work with landlords to ensure they can provide a high-quality renting experience for their tenants while still making a steady income from their properties. And for those that want the ultimate peace of mind, our Guaranteed Rent Service ensures that landlords never need to worry about having an empty property again. So if you’re a landlord looking to increase your income through some small, basic changes, or you’re looking to become a landlord for the first time, get in touch with us today.