There is a housing crisis. Put quite simply, there are too many people, not enough houses and successive governments (on both the left and the right) have failed to build enough houses and prevent the situation we now find ourselves in from getting as bad as it has.
To put things in perspective – there are now more people in privately rented accommodation than in social housing for the first time since the welfare state was created. It is in part because Margaret Thatcher introduced the ‘Right to Buy’ policy, today it’s estimate that 40% of ex-council homes which were sold under the scheme (first introduced in the 1980s) are now being re-let to private tenants. Why? Because being a Landlord became pretty lucrative.
The housing shortage has effectively created a renting crisis. It’s a classic case of demand and supply – there’s loads of demand and not enough supply – loads of renters and not enough good quality rental properties, so renting rates have gone through the roof.
And, because of that, young people today are going to struggle to save enough money to buy a house, because they’re spending all their money on rent. Today the Association of Residential Lettings Agents (ARLA) has warned the government that rents are too high. They have released research that suggests that first-time buyers in England who buy a house this year will already have spent an average of £52,900 on rent by the time they are able to purchase property.
They say that people who start renting this year will average £64,400 on rent before they own a home. Of course, demand for properties means that the cost is higher in London and the South East of England but, there’s no doubt that this is a nationwide problem. And, in any case, many young people are moving to the South East and landing in London for jobs.
David Cox, the Managing Director of ARLA has said that ‘rents are becoming alarmingly unaffordable due to the lack of available housing.’
He continued by pointing out that ‘the north-south divide we’re currently seeing in the UK is a clear illustration of this…this is pushing up rents in the capital, which will continue to put pressure on surrounding areas, including the South East of England, as Londoners relocate to avoid high rent costs.’
There are, as you would expect, regional variations but, even so, in the North East where ARLA reports the lowest figure – first-time buyers will still have spend £31,300 on rent before buying a home.
Roger Harding, director of policy for Shelter, told The Debrief: 'These figures are yet another reminder of our drastic shortage of affordable homes, which is leaving millions of people trapped in expensive and unstable private renting.' And he confirms it's young people who are being hit the hardest, 'young people across the country are becoming increasingly priced out, and spending so much money on rent that it’s virtually impossible to save anything towards a home of their own.'
He added that measures which the government have taken, aren't enough: 'with one of the government’s so-called ‘affordable’ Starter Homes still needing a £40k deposit, it’s clear that David Cameron needs to start prioritising building homes that people on ordinary incomes can actually afford to rent or buy.'
The latest official figures also show that nationally the cost of renting a home is rising faster than the general cost of living in this country– this crisis is very, very real. And it has long-term implications – if people are spending that sort of money on rent, that’s money they are not saving, not investing, not putting towards their pension – this will lead to further problems in the future when Generation Rent inevitably gets old.
This is not only affecting young people across the country, more than half of first-time buyers receive help from their parents, so this is putting pressure on older generations too.
Even a 28-year old Conservative (the party of the Housing Bill) MP, William Wragg, who represents Hazel Grove in Greater Manchester, says he cannot afford to buy a house, despite the fact that he earns 74k a year.
His MP’s salary of £74,000, just to be clear, is three time the national average.
He says he has been forced to move back in with his parents in order to save for a deposit.
Last October, research by the building society Nationwide found that a fifth of young adults are staying in the family home until they are at least 26.
Finally, not only is nearly £53,000 a lot of money but it will be spent over a long period of time. The latest research suggests that, today, the average British homebuyer must save for 24 years in order to rack up enough to be able to put down a deposit on their first home – that’s up from the average of just three years in 1997.
Dan Wilson Craw, spokesperson for Generation Rent, told The Debrief,
'Buying a house is a distant dream when renters are handing over so much of their income to their landlord. It's no surprise that many of us are moving back in with parents in order to put together a deposit, but that's not an option for a lot of people. When even Tory backbenchers are doing this you know it's time for the government to take bolder action to bring down the cost of housing.'
So, as bad as things might be for Mr Wragg, surely they are far worse for many many people. Young adults today, especially in London, but across England, are being caught in a trap by historically low wages and rents which have hit a historic record high.
The Debrief contacted William Wragg MP for a comment, he declined.
The cost of renting for young adults today is high, not just financially but also in terms of where they can afford to live and, one day, it will have bigger implications for welfare in this country. There is a crisis, everyone's talking about it but who is listening? And, who's going to do somethign about it?
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This article originally appeared on The Debrief.