Generation Rent

Generation Rent refers to a class of young adults, usually age 18 spanning through 40, who do not have the financial ability to have or own a house. Instead of owning a home of their own, they rent apartments/flats or houses and pay rent. People who opt for Generation Rent are sadly often regarded as having a very slim chance of ever owning a home.

Figures from recent times revealed that one-third of millennials (people within the  23-38 age range as of 2019) may never know what it feels like to own a home, and might rent properties all their lives - others might rent until their forties. It is noteworthy, however, that of this Generation Rent class, some people can afford to buy properties but prefer to rent for reasons best known to them. This class of people who can buy but prefer to rent does not invalidate the struggles of genuine renters, though.

Parent's wealth is one reason, among others, influencing a person's ability to own a home. A chart showing UK's homeownership rate (including Cardiff) by age 30 showed that well more than 50% of the UK's Baby boomers (people born between 1946 and 1964) were property owners by age 30.  Only 30% of Millennials (believed to have way less family wealth to rely upon)  owned properties by age 30. Parental wealth asides, other social and economic factors affect a person's ability to buy own properties.

Possible Causes of Generation Rent

Financial Difficulties

As anyone would rightly guess, Generation Rent is basically due to financial problems. The class opting for Generation Rent is enough to guess affordability of expensive properties is a big issue. Most students fall in this category and are better off renting apartments. Financial constraints such as Tuition fees, health, and food bills, have had student loans on the increase in recent times. How can one possibly repay loans and save to buy properties simultaneously? It is only reasonable to rent for a fee.

Competitive Property Investment Market

Apart from financial constraints, residents have also found an opportunity in the property market which they are taking advantage of. The lockdown introduced a period of low interest in properties, meaning the wealthier populace can buy more properties, pushing up the price of average houses. This demand to buy more properties has kicked the "masses" out of the competition as they do not have the bidding power. These masses are left with no choice but to rent.

Effects of Generation Rent

Tenants are integral parts of the society and the property market, and hence, impact the energy market in more ways than one would think - some of which include;

Increased Renting Costs

Demand for house renting has increased a lot in recent times, and there has been a corresponding rise in the prices of rent. The rise is as much as the tenants having to pay up to 50% of their income.

Reduction In The Proportion of Mortgage Owners

The ever-rising prices of houses and rents have forced a significant fall in the number of mortgage owners while increasing to as much as double, the proportion of private renters.

Long-term Rent Imbalance

One of the looming problems renters will face is the uncertainty of rent price ever coming down. It's quite easy to pay high rent when you're still actively employed with a big salary. The problem comes on retirement when people's income drops significantly and are unable to keep up the rents. The twist here is, prices are likely to keep going up despite the fall in the retiree's income. People like this are likely to move to smaller accommodation, go out of retirement to work more or rely on government housing benefits.

Mortgage, unlike rents, doesn't rise correspondingly to inflation. Mortgage payment concerning a payer's income tends to decrease over time. This is a big difference and an edge for mortgage buyers who also benefit from lower interest rates over those who rent properties.

Displacement From Homes

We have to admit that the ever-increasing price of rent is becoming a problem too bothersome to tenants. The essence of renting is to have a home despite not being able to buy one perse.

This barest minimum is however slipping out the hands of young adults as prices of renting apartments keep skyrocketing. One would think homelessness shouldn't be a modern-day thing but the look of things will have it become a lot of people's reality in no time. Young adults cannot keep up with rent, and unemployment isn't helping matters either.

Problematic Landlords

Young adults are being faced with problems even when they can struggle enough to afford rent. The issue with landlords isn't talked about enough. Quite many landlords hesitate to rent their apartments to young adults due to many reasons, top of which is the preoccupation of the youths being irresponsible. Oftentimes than not, these young ones just want somewhere to live. Here lies the major problem, if landlords do not want to rent out their properties to "irresponsible" young adults, where do these young adults go? Your guess isn't wrong if you think they'll hit the streets.

Landlords, apart from having preoccupied minds, also behave very irrationally some

times. These landlords formulate the most inhumane of rules for their tenants. A tenant has had to vacate a house during her pregnancy because the Landlord allegedly was not comfortable with children living around the property.

Call to Action

The psychological trauma people suffer by merely trying to live decent lives despite not being able to buy a property is sad. It calls for a long-term goal to increase people's ability to purchase their properties. This is hard but achievable, and one of the surest ways to get this done is the creation of more employment opportunities. When people are gainfully employed, they're able to save up and get properties in no time. The lesser loans people collect, the more they're able to concentrate their income on some more rewarding acts.

Also, low interest put on properties should be stopped. With low interests, the richer class can buy more properties and put them out for rent at exorbitant prices. The government is the last resort of the "common man" here.

Conclusion

Generation Rent is said to be a concept that has survived decades but is seen to be on the upside for this particular generation in recent times. Buying properties shouldn't be a luxury but something everyone can afford. Cries are being relayed to the government time after time to help provide enabling environments for young adults. These young adults are ready to prove they don't have to rent properties all their lives.