According to a new survey by business consultancy firm Hargreaves Lansdown, almost four in 10 people who rent privately think they will rent for their entire life.
20% of households in the UK rent privately. Of these, almost 40% expect to rent for their entire life without ever getting on the housing ladder.
Renting used to be cheap, allowing young people to save for a deposit to buy their first home. But today rent payments are no longer that much cheaper than mortgage payments, which means it is no longer cheaper to rent.
Why So Many Renters Expect To Rent For Their Entire Life
Making it onto the housing ladder can be difficult, especially with house prices soaring and interest rates on the rise as well.
But one of the main issues is getting the required deposit for a mortgage, with only 55% of renters having any savings. And with the current cost-of-living crisis, many people will have to use their savings to come by.
In comparison, 81% of homeowners had savings, according to Hargreaves Lansdown’s research.
Looking at the new data in more detail reveals that private renters spend 31% of their income on rent. Homeowners only spend on average 18% of their income on their mortgage.
Because renters have to spend such a big percentage of their income on rent, they are unable to put money aside for a deposit, which makes it more likely that they have to rent for their entire life.
Millions of people are caught in the rental trap – paying a small fortune to keep a roof over their head, and struggling to save, while prices soar even further out of reach.Sarah Coles, Senior Personal Finance Analyst at Hargreaves Lansdown
While mortgage payments have risen by 11% in the last 10 years, rental payments have risen by a staggering 40% in the same time, according to Rightmove’s House Price Index from May 2022.
We are also facing a shortage of rental properties. According to a survey by Propertymark, the number of rental properties registered with letting agents has halved.
Like with sales properties, this shortage is driving up prices. This means potential tenants might have to enter a bidding war to secure a rental property. And with rising prices, it becomes even more difficult to save money to buy a home.
All this combined, makes it difficult for people in private rentals to buy their own home and the current cost-of-living crisis is only going to make this problem worse.
Renters Are Getting Older
While renting used to be what young people did, before they could buy their own home, today the average age of people who rent privately is getting higher.
In 2020/21, 21% of private renters were between 35 and 44 years, 17% were aged between 45 and 54 and 9% were 65 years or over.
And with it getting more and more difficult to buy a home, the average age of people renting will continue to rise.
Renting can be a stressful thing, with being at the landlord’s mercy. In 2020/21, 6% of private renters who moved did so because they were asked to leave. 63% of those said the reason was that the landlord wanted to sell the property.
And this is even more difficult, when children are involved, because it means to uproot a whole family.
This [having to move] is hard enough at any age, but we’re renting later in life, which makes the upheaval even more difficult to live with. […] What’s more, by this stage we may have families to uproot. Just under one in five private renters were couples with children and just over one in 10 were single parents.Sarah Coles, Senior Personal Finance Analyst at Hargreaves Lansdown
Majority Of Renters Are Happy
However, a recent English Housing Survey report has shown that 80% of private renters are happy with their rented home.
This seems to suggest that the rental market has adapted to the fact that many renters will have to rent for their entire life and as a result the quality of rental properties is better than it used to be.
63% of private tenants were satisfied with their tenure, with only 17% considering making a complaint to their landlord or letting agent.
But while it is good to see that the majority of people in private rent are happy with their rental, that does not mean that they would not like to buy their own home. Unless this housing crisis is fixed, many people will have to rent for their entire life.