Millennials who are looking to take their first step onto the property ladder are facing unprecedented barriers to owning their own home. While house prices may start to come down with the number of sales being at their lowest since May 2022, it is unlikely to bring house prices to an affordable level for most first-time buyers. Rising interest rates continue to drive mortgage rates up while the number of houses on the market remains low. These facts, along with other economic factors that are contributing to the current cost of living crisis, mean that many Millennials simply have no opportunity to buy, even if they wanted to.

Members of Generation Y, more commonly known as Millennials, include anyone who was born between 1981 and 1996. While 45-50% of those belonging to the previous two generations – Gen X and Baby Boomers – were able to buy their own home by the time they reached 30, it is estimated that the figure has dropped to around 30% for Millennials.

Generation Rent

This generation have earned the label “Generation Rent”, because so many of them cannot afford to buy their own home and therefore default to private rented accommodation. While some may not have any ambition towards owning their own home, other simply are unable to save enough funds to afford a deposit.

Unfortunately, the number of available properties within the private rented sector is also comparatively low. This scarcity drives the rental prices up, which further impacts the tenants’ ability to save towards a deposit on their own home.

Renter challenges

It is no secret that the UK’s property market currently revolves heavily around homeownership, primarily because owning your own home provides you with an asset which will normally appreciate in value over time.

This focus on homeownership results in a weaker rental market; one that has fewer rights for tenants when compared with some of our neighbouring countries. The German housing policy for instance is geared much more heavily towards renters. Indefinite tenure and the right to posthumously pass on your lease are just two examples of rights that German tenants have which do not exist in the UK.

The changes under the proposed Renters Reform Bill are expected to make some headway towards improving the rights of those in private rented accommodation, but it is unlikely that they will shift the scales from a homeowner focussed property market significantly.

That being said, if the trend towards rented accommodation continues, the property market may shift back to the position it was in about a century ago. Before the overall individual wealth increased in the mid-20th century, more people lived in private rented housing than owned their own home.

Government assistance for first-time buyers

There are ways in which the Government are providing help for those who are looking to leave private rented accommodation however. Stamp Duty Relief is available to first-time buyers in England and Northern Ireland, provided the property is worth less than £450,000.

In addition, funds saved in a Lifetime Individual Savings Account (LISA) can be used towards the purchase of a first home. Any money saved in a Lifetime ISA is bolstered by an additional 25% bonus from the state. However, these accounts are only available to those aged 18-39 and a maximum of £4,000 can be paid into it per year, so starting early is definitely advised where possible.

Expert commentary to help keep you informed

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Want to know more?

Read our article: A Surveyors View On The Growing Divide Between Homeowners And Renters

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