Is making it onto the London property ladder too big a dream for Millennials? Do they even want to take on the commitment of a huge mortgage? Millennials have grown up in a different age. They are approaching work, and life in general, differently than the generations before them.
Research by Willetts’ intergenerational commission at the Resolution Foundation think tank reveals that today’s 30-year-olds are only half as likely to own their own home as their parents. They are also four times as likely to rent privately than two generations ago.
The ability for Millennials to save for a deposit to buy property is also in serious jeopardy. The financial website, thisismoney.co.uk, report that Millennials struggle to buy a home as they spend £53K on rent by the time they hit 30 – that’s £44K more than their parents’ generation.
So if making it onto the London property ladder isn’t an option, what are the Millennials housing choices?
Millennials, currently aged between 18-36, simply can’t afford London house prices. Unless they have a healthy ‘bank of Mum and Dad’ to fall back on, or they’ve landed themselves a mega-paid job in the city, they quite frankly don’t have a chance in hell of making it onto the London property ladder. The best they can hope for is a transfer of equity from a parent or grandparent. Many surveyors, such as Daily Move, offer equity transfer alongside their regular conveyancing services. For some Millennials it really is the only way they will ever own a property in London.
Living at home
According to research undertaken by CBRE in 2016, 41% of Millennials were still living in the family home. Almost half of these said they intended to move into their own place within the next two years, but to rent rather than buy.
Moving out of the capital
The Guardian reported this year that Millennials, fed up with over-priced London, have been leaving the capital city in droves. Renting even the tiniest room in the city used to be like hunting for gold dust, but landlords or those renting out a spare room no longer have a queue of prospective tenants waiting at the door. Millennials work remotely more than any other generation, so living and working outside of the capital is a more desirable and affordable option for many.
New ways of living in London
In an interview with Marie Claire, Millennial, Colette Moore, said although she is earning more than the average London wage (£34k) and having £20k in savings, she found it impossible to get onto the London property ladder. With her savings and a small loan she opted to buy a boat and now pays £700 per month to moor it at one of East London’s coolest spots.
Millennials are redefining housing rules. The FT recently reported that London Businesses are wising up to the issues faced by Millennials unable to buy property in London. Savvy employers are lending rental deposits to their employees, interest free, and allowing them to pay back the loan over the course of a year. This is at least keeping Millennials in the capital.
Property Guardianship used to be a clever housing arrangement giving many a roof over their heads in the city, but with knock down rents. Sadly, that bubble has burst. Property Guardianship used to give people the opportunity to live in interesting and large spaces at relatively low cost, albeit with virtually no rights, and many caveats.
Empty buildings, from churches, former GP surgeries and offices to disused fire stations are temporarily brought back into use as housing. It has prevented vandalism and worked as a cheap housing solution in the capital.
When the schemes first launched back in the 2000, they were an attractive housing alternative. Now guardians suffer high prices and increasingly unsuitable living conditions. There are, however, some social enterprises attempting to make property guardianship work for both guardians and property owners.
What the future holds
Dan Wilson Craw, director of campaign group Generation Rent, told The Guardian: “Young adults have been hit with a double whammy of rising house prices which make ownership unaffordable, and rising rents which they cannot escape.” Craw also points out the fact that getting a mortgage becomes harder beyond the age of 40, so many face a lifetime of renting.
Research carried out by the Resolution Foundation on attitudes to the living standards of different generations found much pessimism towards the standard of living being experienced by Millennials. On housing, respondents were most pessimistic, reporting that Millennials will have a worse life than their parents. Rising house prices and a lack of stable employment opportunities are being seen as the main drivers. Millennials don’t look likely to be jumping on London’s property ladder anytime soon.