‘Generation rent’ is a term that has been popularised by the media, social commentators and housing campaigners, referring to the phenomena whereby young people are excluded from homeownership and spend longer periods of their lives in the private rented sector. Headlines consistently lament the way in which young people are increasingly ‘stuck in a rent trap’ due to difficulties in saving for deposits and in navigating precarious youth labour markets. Faced with soaring private rents in more prosperous locations, and with welfare conditionality disproportionately affecting young people at the other end of the spectrum, it is clear that today’s generation of young people experience very different housing opportunities as compared to their parents. Housing continues to be a key mediator of inter and intra-generational inequalities. This is an issue that we are exploring as part of the Leverhulme Trust-funded research project ‘Mind the Housing Wealth Gap’.
This generational shift in housing opportunities reflects broader international trends around the neo-liberalisation of welfare, with a movement towards individualised asset-based welfare regimes, in which housing features prominently. Individuals and families are expected to accumulate and draw upon housing wealth to meet their own current and future needs, including its use as a resource to top-up pensions, to fund social care in older age, to meet the rising cost of higher education, or crucially to help their children access homeownership. However, we know that while previous generations were supported into owner occupation by policies such as Right to Buy and Mortgage Interest Tax Relief, housing has become significantly more expensive relative to incomes, paralleling a decline in the number of 16-34-year-olds who own their own home. Those who do are increasingly reliant on the ‘bank of Mum and Dad’. Analysis published in 2013 showed the 64% of first-time buyers were reliant on financial assistance from their parents due to high deposit and stringent mortgage requirements.
The implication of this is that access to owner occupation is strongly tilted in favour of those fortunate enough to access financial support from their family. What we are witnessing, is therefore a widening social cleavage between young people who can draw upon family resources and support to help them with buying a home, and those who cannot. Young people’s access to homeownership – an asset they are encouraged to access for future welfare needs – is shaped by the levels of familial wealth they are able to draw upon, but it is obvious to anyone that these resources will be unevenly distributed across regions, age cohorts and income spectrum. These inequalities have a significant impact on young peoples’ life chances, for those who cannot access owner occupation repeatedly find themselves resident in the family home or in the private rented sector. Debates around the often insecure and unregulated nature of the PRS are well rehearsed and demand policy intervention, but critically the English Housing Survey tells us that the average household in the PRS spends 40% of their income on rent, compared to 20% of income paid by the average mortgaged owner occupier. This helps to perpetuate the reliance on family support, as young people struggle to save for a deposit – especially in ‘hot’ property markets – and contributes to the ways in which our housing system is strengthening and extending existing socio-economic inequalities.
Public policy has tried to tackle these issues to some degree, but has by and large tinkered at the edges. Most prominently, the Help to Buy scheme tried to support first-time buyers but has been critiqued for potentially contributing to affordability problems (as demand continues to exceed housing supply) and has been shown to favour more affluent households compared to traditional shared ownership models that have similar objectives. There has also been important discussion around making the private rented sector a more secure and sustainable option, but this alone will not solve the difficulties younger generations face, particularly in the context of international shifts towards asset-based welfare regimes (see Ronald and Elsinga’s 2012 book for an excellent overview).
Far from creating a property-owning democracy, in which people can make money from houses as commodities to draw upon in later life, the focus of current housing and welfare policy continues to be highly exclusionary. Homeownership may be the preferred tenure of choice for a majority of households, but this is driven by a lack of secure, affordable and attractive alternatives which encourage this, as well as a welfare system that supports the pursuit of equity gain and housing wealth. Instead, we need to rethink what we perceive housing to be for, and how it should be used. Above all else, policy needs to valorise ‘home’ above ‘homeownership’. For example, limited equity models of homeownership, as used by community land trusts and advocated by housing campaigners, can offer secure and affordable access to forms of property ownership that balance individual property rights with collective concerns over long-term affordability for future generations, challenging the perception that homes are an investment through which wealth can be derived. The recent Lyons Review also recommended a return to local authority involvement in the commissioning and building of social housing, which can help to create secure rental options that support those in need. And, perhaps most critically, public policy could do more to recognise the specificities of place in creating housing solutions. Different communities, regions and nations within the UK require locally nuanced and unique solutions, with a support from and steer from national policy frameworks. For instance, our emerging study highlights the ways in which young people on the very lowest incomes are finding it increasingly difficult to reside in the South East. For these people, the problem is not exclusively of ‘rogue landlordism’ and regulation in the PRS, but the fact that social housing is in short supply and other housing options are far too expensive for those on modest incomes.
The challenges faced by young people have far-reaching implications, for their limited housing opportunities impact not only on financial welfare but also their personal sense of well-being, independence, future family formation and labour market opportunities. The Lyons Review commented that “The impacts of the shortage of housing … hit the youngest and poorest hardest.” It is time that public policy had a constructive debate and identified suitable solutions to the way in which housing, as part of wider social and economic change, is mediating and limiting the current and future welfare of young people, and thus perpetuating intra and inter generational inequalities.