We need to help protect 'Generation Rent'

We all know the housing market has changed dramatically in the past 10-20 years. Long gone are the days when people in their early 20s would celebrate getting the keys to their first home or have the security of a job for life.

Today, the average age of a first-time buyer in the UK is 30 years old and rising house prices are pushing home ownership further out of reach.

It’s estimated that there are currently 10.2m households in rented accommodation in the UK, so there is a clear opportunity to service this sizeable market.

As millennials born in the 80s and 90s, the demographic cohort is now frequently known as ‘Generation Rent’ and was brought up in an era when TV shows like The Fresh Prince of Bel-Air portrayed the lives of the rich.

Today the lives of these 30-somethings are quite different; indeed, quite different to their 'Baby Boom' parents who would have been married with a home and children by their mid-twenties.

It is time our focus extended beyond just mortgage protection, to give suitable consideration to the opportunities that lie within the rental market.

Generation Rent could be forgiven for thinking their parents had it easy when they themselves face average private rental costs that take up to 35 per cent of their income.

Although many are accepting of the fact they don’t own their own home, they do seek security. Insight undertaken for Aviva found that most don’t have disproportionate ambitions; they just want to achieve stability in shelter and employment in order to secure their children’s future.

And its easy to see why they feel this way when Aviva’s Protecting Our Families report told us that nearly half (45 per cent) of UK families with dependent children could only survive financially for a month or less, before their savings ran out.

Having little or no savings to cope with unforeseen events such as ill health is leaving Generation Rent highly exposed to eviction should they lose an income. Many know they’re unaware of the options that exist to manage the risks they face.

So, how can the protection industry help? It’s perhaps unsurprising that renters are exposed when most protection is sold to cover a mortgage. However, for those in rented accommodation the need for a stable income and stable home is no less of a need.

Our research findings suggest that millennials have just £156 to spare at the end of each month after essential living costs. It showed they are not confident about their ability to shape their financial future and are instead looking to external sources for help.

Almost two in three (63 per cent) millennials aged 18-35 are relying on a one-off event to help them financially at some point in the future. This probably means they haven’t considered the security that an income protection product could give.

With the need and the market apparent, all that’s needed is the opportunity for a conversation with Generation Rent. It is time our focus extended beyond just mortgage protection, to give suitable consideration to the opportunities that lie within the rental market.

Easy wins might be to look within existing customer databases for clients who have millennial children not yet on the property ladder.

Or, perhaps through effective collaboration with letting agents. Generation Rent could be the key to broadening your client bank and providing a new income stream.

Mark Cracknell is head of distribution for Aviva