CHILDREN OF RENTERS TWICE AS LIKELY TO BE RENTING THEMSELVES
Are your parents homeowners? Are you on the property ladder yourself? Do you think there could be a link between the two?
Our research suggests that if your parents have never owned their own home, you’re twice as likely to be renting compared to those whose parents do own their home. But what are the reasons why people don’t get on to the property ladder? And what can renters do to ensure a financially secure future?
Our recent study examined the different attitudes towards home ownership and property wealth across all generations in the UK. What it revealed was a strong cross-generational influence when it came to home ownership and renting. As home ownership is significantly more common among those whose parents owned. 81% of current homeowners are the children of people on the property ladder themselves.
The research showed that two in every five (42%) renters have parents who rent, compared to only 1 in every 5 (19%) homeowners who have parents who rent. However, it also revealed that the reason for not owning a property is more likely to be because they are unable to buy (29%) rather than because they choose not to buy (15%). All of this exposes an intergenerational trend that appears to be locking renting families out of the housing market.
Communications director at Just, Stephen Lowe, comments: “Some people chose to live in a rented accommodation through preference, but there’s a significant number who simply feel locked out of the property market. It’s alarming to see such a gap in home-ownership based on parents’ tenure, reinforcing the growing belief that when it comes to getting on the property ladder your family background plays a big part.”
Obstacles to home ownership
So what is stopping people from wanting to, or being able to, buy a property?
More than half (52%) of people yet to step on the property ladder say affordability is the main problem. While one quarter say that the cost of buying a property is much higher than simply moving to another rented property. 20% don’t want to be in debt to a mortgage provider, and 15% say being a homeowner doesn’t fit into their life plan. The least common obstacle to home ownership is the fear that house prices could drop, with only 5% of people claiming this is their main reason for not buying property.
Ambitions changing with age
As you get older, does your ambition to get on the property ladder weaken?
Our research showed that when renters hit their 40s and 50s there is a significant change in their intention to buy a property. Those in their younger years (below 40) mostly intend to buy at some point in their life – 56% of people in their 20s and 28% of people in their 30s.
However, it seems that by the age of 40 those who have yet to buy a property begin to accept a future as forever renters. This is shown by the percentage of people in their 40s with the intention to buy (27%) being lower than the amount who believe they are unable to buy (31%). In your 50s it’s a similar story, with the percentage of renters who intend to buy dropping even further to 17% and those who don’t intend to buy rising to 43%.
Although the amount of people deciding not to buy as a personal choice does rise from 13% of people in their 40s to 21% of people in their 50s. This suggests that people in their 50s have started to feel more settled in their status as renters and become used to the idea of not being homeowners.
Securing your future
Property is a core component of household wealth in the UK. For most people, their home is their single biggest asset and many people consider home ownership as a way to financially secure their future.
On average, property forms 75% of household wealth for those in their 50s. However, 26% of people in their 50s aren’t homeowners. This leaves over a quarter of people in their 50s without a key component of financial security in retirement - property wealth.
Stephen Lowe comments: “Over the last ten years homeownership levels have dropped, particularly amongst the pre-retired and middle-aged groups. Owning a home gives many people a sense of security and independence in older age, it’s also a useful asset allowing owners to release money through downsizing or equity release. Renters feel they are less secure because they don’t have this option.
“For anyone in their 50s who is worried about their financial future there are some positive steps they can take now to put a financial plan in place for their retirement and help them feel more confident about what the future will bring – a great first stop is to contact Pension Wise, the government’s free, independent and impartial guidance service.”
My Home My Future is our brand new campaign on how the UK thinks and feels about property. Learn more and discover real stories from real people today.