Despite the impact of Covid-19, we must not fail Generation Rent.
Generation Rent is a symptom of Britain’s broken housing market.
While many young people across the country have been lucky enough to rely on the growing generosity of mum, dad, family and friends, there are millions of people under-served by the mainstream mortgage market.
These people are stuck in a cycle of renting.
Rising house prices, stagnant incomes and the increasing cost of living have all made it harder to get on the property ladder. In fact, more than two-thirds of people aged under 25 are now renting – that’s up from less than half just two decades ago, according to data from the Office for National Statistics.
Of course, for many people renting is a choice. Landlords too continue to play a vital role in the UK’s housing sector, providing accommodation for millions.
However, a growing number of people who want to buy are finding themselves locked out of the housing market.
Generation Rent isn’t just made up of hopeful young people looking for their first chance at home ownership, either.
From the over-55s who’ve long aspired to own their own home to key workers, including nurses and delivery drivers – Generation Rent spans all ages and reaches across our society.
In 2017, more than a quarter of those in their mid-30s to 40s were renting, compared to fewer than one in 10 in 2000, ONS stats have shown. Now Generation Rent is set to grow further. People across Britain are starting to feel the economic shock of Covid-19.
Finances have been battered by the sudden loss of income, while job insecurity or even furlough have made it harder for many to get a mortgage.
A growing number of the self-employed, workers on zero-hour contracts and part-time employees are all being locked out of homeownership by traditional lending criteria, too.
Homeownership was already on the decline before the pandemic - in just 18 years, the number of households owning their own home fell from a record high to its lowest level since 1986, according to a 2016 article by The Guardian. Now it’s in full retreat.
This does not mean Generation Rent is a lost cause, however. At Vida, we think the mortgage market has a social responsibility to stand up for these underserved borrowers and find ways to turn ‘Gen Rent’ into ‘Gen Buy’.
Our first step must be to understand the challenges facing those stuck renting. Vida will shortly be releasing new research into Generation Rent, examining exactly how Covid-19 has impacted the homeownership ambitions of millions of people.
But most importantly, we must deliver the options that borrowers really need.
From the self-employed to key workers that have given up so much for us in this crisis, Generation Rent needs innovative mortgage solutions to give them every opportunity to own their own home in the future.