Generation rent


Straight out of university and into the mortgage industry, I can safely say I didn’t know much about mortgages. However, after being with Skipton coming up to five years, my understanding has built.

Christopher Smith, Telephone Business Development Manager

One of the things that’s become apparent throughout my time working in this industry is the lose/lose situation that many, including myself, find themselves in. We’re regularly called ‘generation rent’ and whereas I cannot deny this myself (as I rent), it’s easy to see why many of us don’t have much of a choice.

Coming straight out of university and moving in with my partner, I was thrust into the life of renting, the same as many of my friends. I had no choice but to watch my disposable income go into the pocket of my landlord and essentially halt any progress I had made towards saving up for a deposit. I started to wonder if it was just me who was struggling, but after joining Skipton in 2016 and learning more about the market, I realised it wasn’t just me. It’s the same for many in my generation.

Over 50% of Baby Boomers (born 1946 – 1965) owned their own home by the age of 30, this figure has now reduced to around 30% for Millennials (born 1981 – 2000) which isn’t surprising seeing as house prices have skyrocketed in comparison to the UK’s median income. According to the Office for National Statistics, the UK’s median household income was approximately £29,990 at the end of the 2020 financial year against an average house price of £234,612 meaning the average price to income stands at 8.3x. This suggests a buyer at 90% LTV who is looking at using only their savings would have to save just short of a full year’s wage without spending a penny to save a deposit for a 90% LTV mortgage.

Factor in what is happening with the BTL market and we can see where generation rent has been born from.

Figures from the HomeLet Rental Index show that the average rent in the UK rose 5.9% between June 2020 and June 2021 with every region of the UK recording increases in rent. If we exclude London, UK rent is actually now 8% higher than June 2020, meaning in 2021 across the UK the average rent surpassed £1,000 for the first time, coming in at £1,007. Coupled with an increasing demand for rental properties, it doesn’t look like increases to rent are going to stop any time soon. Which I think suggests my generation are likely to increase the average First Time Buyer age above the 34 years we saw in 2020.

On the face of it, it seems to me as though generation rent are left with three choices:

  • save as much as possible and buy when they can later in life
  • hope the bank of Mum and Dad comes knocking
  • receive some inheritance, which is a very sombre thought.

But this depressing outlook on the situation of generation rent has given me an appreciation of lenders such as Skipton whom I am proud to work for, as they’ve made moves to help first time buyers get on the housing ladder. Whether that’s through the Lifetime ISA helping to bolster deposits or bringing back 95% LTV mortgages. It’s nice to know that there are lenders such as Skipton out in the market who are actively looking at helping and I hope one day with the help of such lenders the market will become a little easier for ‘generation rent’.

Christopher Smith

Telephone Business Development Manager, Skipton Building Society

These views are Christopher’s own.

All information correct at time of publish.

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