The Rent Trap

In this quite disturbingly specific expectation of lifetime accomplishments, published by loans company Amigos, at age fifteen you should’ve had your first kiss, by twenty two you should own your first car and by twenty seven you should be married and own your first flat. Besides the fact this is quite an insipid and over-simplified view of a person’s life, the expectations simply don’t match up to the reality for the majority of young people - especially when it comes to housing.  

PWC predict that by 2025, two thirds of 25-34 year olds will be living in privately rented accommodation, however, according to the Amigos survey during that period you should have bought your first house, a brand new car and have had your second child. More staggering is that the survey suggests by age thirty nine you should be looking to purchase your very own buy-to-let property, PWC’s findings suggest that 60% of people of that age will still be renting someone else’s. 

According to the 1,600 people surveyed, by age twenty four you’re expected to be renting your own flat (i.e. not with a friend), by contrast, in September Patrick Collinson wrote a piece in The Guardian on the growing number of over forty year olds sharing flats with strangers. According to spareroom.com in the years between 2009-2014, the number of flatsharers aged between 35-44 rose by 186%, during the same period flatsharers aged between 45-54 shot up by 300%. This can be attributed to various personal circumstances; breakups, job loss etc. - however, ultimately the key disparity between the, for some, idyllic and formulaic journey laid out in the Amigos survey and what the future really holds for many people, young and older, can be attributed to what is known as the ‘rental trap’. 

The rental trap is used to describe the increasing phenomenon in which renting a property is no longer just a stop gap for young people whilst saving up for their own property, it is instead becoming the only option available and one that leaves many out of pocket. There is an argument that lifestyles are changing and renting privately is more suitable for the transient job landscape and nationwide opportunities available for young people, but it’s simply not that way for the majority. The British Social Attitudes study showed that 68% of renters would choose to buy but are under no illusion as only 17% expect to buy in the near future. 

The most obvious reason for this is that rent prices are overtaking income. Shelter reported that a third of renters were left with nothing at the end of each month after paying for essentials, worryingly, according to the Joseph Rowntree Foundation private rents are projected to grow by more than 90% in real terms by 2040. This leaves owner-occupiers better off than private renters, as typical tenants spend 40% of their household income on rent where as owner-occupiers on average spend just 20% on their mortgage. The issue here being, people are unable get a mortgage without a downpayment and with rents growing faster than wages, for many, obtaining a lump sum of cash is becoming something of a pipe-dream.

This has prompted an increase of young people moving back in with their parents in order to save enough to afford a mortgage, Halifax reported that in 2015 28% of parents said children moved back into the family home to do just this - it appears this milestone was missed off Amigos list. 

This is the reality that awaits most young people, few aspire to move back in with their parents once they’ve flown the nest, but similarly not many wish to reach their forties and be sharing a flat with people half their age. The problems is not the private rental sector but rather the reliance on it and lack of other options. 

Is it time we changed our expectations of at what age we achieve these goals? Or perhaps it is time change was made to bring these goals back to reality?

It seems the private rental sector is here to stay for the foreseeable future, as more and more people are forced to rely on it. With this in mind, Marks Out Of Tenancy is here to make the experience of tenants as easy and stress free as possible, offering the most information available from the people that know the best.