As intergenerational inequality steadily inclines, and as the hourglass economy strengthens the divide between the upper and lower class, the prospects of home ownerships for generation Z and millennials, particularly those without great family wealth, diminish further.
British culture is one in which owning a home is a life ambition. And yet, generation Z is notably the most pessimistic regarding home ownership, with little belief in the possibility that they will ever own their own property. The idea of renting is thus becoming more attractive (or simply the only option). And is renting really so terrible?
Pros to home ownership
With renting comes lack of security and stability, a daunting prospect for any renter. The potential for being given a month’s notice to leave your home at any given time, having to find further suitable accommodation, pack your bags, and move your family on, is an awful possibility.
Homeowners can build, decorate, and design their houses. There is unlimited freedom with homeownership, creating a safe haven, completely to one’s taste. Renters don’t have this luxury; they can slightly alter décor, but not without consulting landlords, who often deny requests.
Though payments are usually higher with a mortgage, it’s reassuring to know this payment rate is fixed for a term with most mortgage deals. With renting, although landlords can’t just increase the rent whenever they like, there is an element of uncertainty, particularly with shorthold tenancies. This in turn can mean mortgage payments may well be cheaper in the long term.
Advantages of renting rather than owning a home
A huge advantage of renting a property lies with the repairs and maintenance, which fall on the landlord. Homeowners are faced with regular costs for maintaining their home, with surprise costs being particularly unwelcome (consider the unexpected £1,500 for a new boiler during the festive season, as can happen!). Mould and water damages are also frequent issues. Home owners must keep the property well checked and regulated to keep them presentable and safe, though repairs don’t usually add to the property’s value.
When renting a home you usually have one upfront cost which is a security deposit, equating to the price of one month’s rent, and that is all. Security deposits are usually returned to the renter when they move out provided there is no damage to the property. When purchasing a house you must provide a hefty down payment which is often tens of thousands of pounds.
Applying for a mortgage is often a long-haul struggle though, filled with many discussions and meetings with estate agents, solicitors and mortgage providers. There are numerous added costs of checks on the house prior to moving, which is all avoided when renting a property.
The process involved in renting a house is significantly easier than buying, so for those that have to find new accommodation in just four weeks, there are some bright sides. It is usually the responsibility of the estate agent to make transfers and payments, saving tenants plenty of time.
Impact on young people
Because so many young people now rent houses, they have been branded ‘generation rent’.
One of the government’s new schemes encourages young people to buy properties rather than rent – ‘Helping ‘generation rent’ become ‘generation buy’’. But a lack of moderately-priced housing has had a detrimental impact on the property market, as the dream of home ownership declines.
The Brookings Institute, anon-profit public policy organisation based in the US, stated:
“Homeownership in the UK peaked around 2003. The decline in homeownership coincided with a revival of the private rental market, with the latter roughly doubling its share from below 10% in the mid-1990s to nearly 20% in 2018.”
Young people entering this market stand very little chance, unless backed by family wealth, of jumping onto the property ladder.
“Renting is widespread among younger households; only about 41% of household heads aged 25 to 34 own their homes. Renting is also the most common tenure (at 59.2%) among those with the lowest incomes (households earning less than 300 GBP/week)”, they continued.
The term ‘generation rent’ carries negative connotations – poor, lazy, and unsuccessful. This term simply cannot be perceived as a good thing, particularly when comparing the home ownership rates of previous generations.
Home ownership within Germany
Unlike the UK, in Germany renting is considered the social norm and viewed as a means of triumph, having tremendous advantages throughout their society. Germany has the second-lowest share of homeowners in the developed world, differing from many countries in that it has no political incentives to encourage the prospect of buying a house.
Jim Kemeny, an economist, wrote:
“The role of public policy was to follow a third way that involved striking a sensitive balance between ‘letting the market rip’ in an uncontrolled manner and strangling it off by heavy handed intervention.”
Renting is much cheaper in Germany and the market itself is heavily regulated with favourable regulations for renters. For example, German law allows state governments to cap rent increases at no more than 15 percent over a three-year period, which keeps payments at a similar, affordable price for tenants. German property prices historically rise very slowly and tax laws favour those that rent.
Germans don’t need to buy homes to avoid excessive rental prices. The market is very well regulated, a stark contrast to the UK. There is no added frustration or pressure to jump on the property ladder.
According to Statisca, in Germany:
“In 2020, just under 29 million people lived in a house they owned, 36.9 million rented and 4.8 million lived in shared accommodation.”
Kirstie Allsopp
Kirstie Allsopp recently appeared in the headlines, sparking yet more controversy with her out of touch and detrimental advice to generation Z about how to start on the property ladder. The television host said “loads of people” could buy a home if they let go of luxuries such as holidays and Netflix subscriptions. She went as far to say that she feels “enraged” when people complain about not being able to afford a home.
Allsopp clearly hasn’t experienced true hardship, and her comments reflect a lack of capacity to imagine the struggles that others face. Allsopp bought her first home in 1992, when the market was at a fraction of the price of where it is currently standing, with the help of her dad’s fortune (a man who has his own coat of arms). Contrast this to young people today who don’t have such luxuries, or to people who have lost their jobs in the pandemic, or to single parents with little or no disposable income after bills, rent, and food for their children.
Allsopp’s comments are not only the epitome of privilege, but even more so of arrogance and blatant idiocy.
