Is the increase in private renters a lifestyle choice we should come to accept?

Last week, the Resolution Foundation found that home ownership is at its lowest in 30 years. In fact, home ownership is now comparable with the European countries where we traditionally see renting as the norm.

This drop in home ownership comes as no surprise to us here at Shelter – it’s something that we have been talking about for a long time. Nor will it come as a shock to our new government; Theresa May highlighted in her first statement as prime minister how much harder it has become to buy a home.

A new government provides a real opportunity to turn this around. But do we really need to? Every time someone raises the issue of falling rates of home ownership, there are always people who ask whether falls in ownership are a bad thing or whether they just reflect the fact that more people now want to rent.

You know the: ‘it’s a lifestyle choice’ argument.

Conveniently, the Resolution Foundation research comes hot on the heels of the latest annual report of the English housing survey, and the index of private housing rental prices, which can both help us to answer these questions. Is renting the preferred option for a new generation of more flexible households?

The English housing survey shows that, quite simply: no. People do not prefer renting. Of all private renters who don’t expect to ever step onto the housing ladder, only 1% say it’s because they prefer the flexibility of renting. 9% state that it’s because they like it where they are.

By contrast, the overwhelming reason given for never expecting to buy a home is housing affordability, with 65% listing it as their main hurdle.

Generation rent don’t want to be in the private rented sector forever but they see no alternative because of cost. Even liking things where you are is not necessarily a preference for renting in the long-term. This could mean that a family prefers the community or location they are currently living in, but do not expect to be able to buy a house there.

Reasons to not expect to buy a home

Of course, this opens up another bigger question, which is why private renting is so unpopular in England, when in other countries it’s seen as the norm.

Part of the reason stems from affordability and stability. It is no secret that the cost of private renting is increasing. Prices already cost more than 30% of the median take home salary in almost half of England. Rental prices have increased 2.5% on average across England since this time last year, a trend set to continue. Furthermore, in England the prevalence of, 6-12 month Assured Shorthold tenancies give renters very little security and allows unpredictable rent increases annually.

The increase in people living in the private rental sector has also seen a shift in the types living there. Given the insecurity and cost of being a private tenant, it’s difficult to imagine how the 27% of private renters who are families with dependent children could possibly prefer their current situation. Especially considering the detrimental educational impact for the 65,000 families in the private sector who had to change their children’s school during their last move.

The negatives of our model of private renting are clear and have been addressed by countries across Europe. Longer, more secure tenancies and a clearer plan for rental increases would begin to solve generation rent’s immediate problem.

A clear and comprehensive approach from our new government will then pave the way to fixing home ownership and allow renters to fulfil their dream of owning the roof over their head. We need more genuinely affordable homes of all tenures to help those trapped in private renting, including an expansion of alternative models like shared ownership and building social homes for those who need them.

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4 Comments
  1. There already is a form of tenure that has indefinite and secure stay – home ownership.

    A landlord cannot evict you if there isn’t one. By building more homes, home ownership mortgage repayments can become similar to rent payments.

    Removing stamp duties are also essential for this.

    The claim that ‘the model of private renting has been addressed by countries across Europe’ is not quite correct. These countries feature split rental markets and subtenant markets. Nobody seems to talk about the subtenant markets which have far less security and in addition to that, the major problems that rent controls have had.

    For example, to gain a rent-controlled place in Copenhagen, you need to sign up to a housing queue that is about 12 years long. How is that a solution? It is the same story in The Netherlands and Sweden.

    1. We can look to other countries to see what systems are better and some worse, this is not releavent, we need to look to how to make ours system the best in the world, private rental can never satisfy the vast majority, you pay for something you never own to allow someone else to retire with a healthy earner, rent controls until BTL is banned can work if he Human Right Act is ammended to include the right to a home, ie if the Landlord wants his house back, you should not have to move until you or the Landlord have found a similar suitable property at a similar price should you have to move, if the majority of the rent is being paid, 5 yr tennancies should be the minimum, with the renter ties to 1 months notice, we need to Nationalise estate and letting agents, so the state decides the rent ie a fair one depending on the condition of the property and the same for sales, we need to Nationalise land sales ie the government sets the price not the seller, taking into account the price originally paid, making land affordable is the first major step, then create a state owned builders, build at cost sell at cost inc factory built modular homes 80K for a three bed house fully errected, no BTL on them ever and when sold you will get back the price you paid plus interest and no more zero stamp duty on these, its a win win win for the majority that want a home for under 80K and its a looser to landbankers and BTL landlords, lets make owning a home fun and totally affordable giving people a great home and on a low wage enough to pay al bills and then some spare to do what lifes about time with family, friends and pets

  2. Emphasis on house prices is only understandable because although they effect individuals in their area, across the whole range those effected are the mortgage providers in the City of London. These providers are now protecting collateral in the shape of unpaid mortgage debt of about £1.3 trillion (money charity) and cannot afford a fall in prices. This could be the reason for the constant failure to meet housing targets and avoidance of rent controls.

  3. We can look to other countries to see what systems are better and some worse, this is not relavent, we need to look to how to make ours system the best in the world, private rental can never satisfy the vast majority, you pay for something you never own to allow someone else to retire with a healthy earner, rent controls until BTL is banned can work if he Human Right Act is ammended to include the right to a home, ie if the Landlord wants his house back, you should not have to move until you or the Landlord have found a similar suitable property at a similar price should you have to move, if the majority of the rent is being paid, 5 yr tennancies should be the minimum, with the renter ties to 1 months notice, we need to Nationalise estate and letting agents, so the state decides the rent ie a fair one depending on the condition of the property and the same for sales, we need to Nationalise land sales ie the government sets the price not the seller, taking into account the price originally paid, making land affordable is the first major step, then create a state owned builders, build at cost sell at cost inc factory built modular homes 80K for a three bed house fully errected, no BTL on them ever and when sold you will get back the price you paid plus interest and no more zero stamp duty on these, its a win win win for the majority that want a home for under 80K and its a looser to landbankers and BTL landlords, lets make owning a home fun and totally affordable giving people a great home and on a low wage enough to pay al bills and then some spare to do what lifes about time with family, friends and pets

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