In focus: 50 years of Generation Rent
In the sixties, fewer people owned their homes than now, but today’s renters face new challenges, according to Hargreaves Lansdown.
The investment firm analysed Office for National Statistics data, looking at homeownership and renting from 1961 to 2011.
And it revealed some fascinating trends in the way we live.
In 1961, only 42% of households owned their own home, and in several parts of London fewer than 10% did. However, by 2011, 64% of people owned their own home, and the area with the lowest level of home ownership was still in London – Shoreditch at 16%.
But renters face a different landscape now with far fewer council houses availble and more homes to let privately.
Drop in social housing
In 1961, 28% of households were privately rented, and 24% were rented from a council or New Town Corporation (homes run by these corporations were later handed to councils). By 2011, only 9% were rented from the local authority, and 15% rented privately.
Sarah Coles, personal finance analyst, Hargreaves Lansdown: “Generation Rent is nothing new, in fact it’s the norm. But changes since the 1960s means today’s Generation Rent have an even harder time than their 60s equivalents.
“During this time, there has been a gradual switch from renting from the public sector to renting from private landlords. Back in 1961, the sector was split roughly evenly between the public and private sector, but in 2011, the private rental sector was much bigger (15% compared to 9% rented from a local authority). Private rent tends to be more expensive, which means that right now, on average renters spend 32% of their income on rent.”
Hargreaves Lansdown also pointed out that our expectations of homeownership have changed massively over 50 years. In 1961, our parents were far less likely to own, so we had lower expectations of ownership. Now our parents are more likely to own than we are, so renting feels like a backwards step.
Coles added: “Leaving Generation Rent has become harder, because property prices have been racing ahead of average incomes for so long. Back in 1961, the average property cost just over four times average earnings, whereas by the end of 2020 it cost almost eight times average earnings. In fact we’re back to the levels we saw at the end of the 19th century.
“It means we need all the help we can get in order to buy a property. If you’re saving for your first home, and expect to buy at least a year down the line, it’s worth considering a Lifetime ISA for the first £4,000 of your savings each year. The government will top it up by 25% – so every year you could get £1,000 of free money from the government towards your property purchase.”