Four in 10 millennials – those born between 1981 and 2000 - are living in rented private accommodation at the age of the 30, with home ownership seemingly out of reach for many.
According to a report by think tank the Resolution Foundation, that’s double the number of those born between 1965 and 1980, known as ‘Generation X’.
Stricter lending criteria, steep house prices and large deposit requirements are usually the main obstacles faced by those hoping to get on the property ladder. However, as many as 65% of those renting still aspire to own their own home.
Despite these aspirations, up to 16% of millennials are set to rent their whole lives, the Foundation said. The number of households with children renting privately has tripled in recent years to 1.8m in 2016.
It wants to see action on tenancy reform, providing greater protection for those living in rental properties, and is calling for more affordable homes for first-time buyers.
The government’s target is to build 300,000 more homes a year, although there have only been six years since 1946 in which this number of homes or more were built.
Options for first-time buyers
Although first-time buyers face many challenges, there is help available, enabling some to realise their dream of homeownership. For example, recent years have seen an increase in the number of mortgage deals available to those with only a small deposit to put down. Many lenders now offer mortgages to those looking to borrow up to 95% of the property value. See our mortgage best buys for the top deals if you have a 5% deposit.
There are also government schemes designed to boost the amount first-time buyers save for a deposit. The Help to Buy Individual Savings Account (ISA), for example, enables buyers to initially pay in up to £1,200, followed by up to £200 a month, and the government will add another 25% to any contributions you make. The maximum bonus you can claim is £3,000. The Lifetime ISA is an alternative option.
If you’re purchasing a new build property, you may also be eligible for the Help to Buy equity loan scheme. Under this scheme, you need to put down a 5% deposit. The government will then lend you a further 20% of the property price interest-free for the first five years, or 40% if you’re buying in London. Read our Guide to Help to Buy to find out more.
Under changes announced in last November’s Budget, first-time buyers no longer have to pay Stamp Duty on property purchases up to £300,000, which has reduced the cost of buying a home. First-time buyers purchasing properties costing up to £500,000 don’t have to pay Stamp Duty on the first £300,000.
More help needed for ‘Generation Rent’