Housing costs are hitting young workers the hardest
The economy is on the up, but if you’re under 35 you wouldn’t know it. As the Big TUC Youth Debate on Saturday will reveal, wages are stagnant and the cost of living remains oppressive – with housing costs hitting young workers the hardest. They’re the ones who are most likely to be paying vast sums on rent, and even if they have a mortgage they are paying off an inflated house price. For many, the cost is too much and they are staying in someone else’s home while they wait for that pay rise or save enough to live independently.
In partnership with Generation Rent, the TUC surveyed 2,378 young workers on their living situation and their experiences of the housing market. The findings highlight the urgent need for genuinely affordable housing if today’s young workers are to enjoy a good quality of life.
Only a quarter (26%) of the under-35s who responded have bought a home, while half are renting (45% private tenants, and 5% social tenants) and 23% are living in someone else’s home. Roughly two thirds of the latter group are contributing something to the parent, relative or friend they live with.
Housing is the most expensive basic need people need to meet, and it is considered unaffordable if someone pays more than a third of their income for it. Over half of the survey’s renters (53%) are paying an unaffordable level of rent – with 15% paying more than half of their income to their landlord. In comparison, 34% of young workers with their own home are paying more than a third of their income on mortgage repayments.
In London two thirds of young renters (66%) are paying more than 33% of their income on rent – the proportion of mortgage holders in the capital is 43%.
Using the salary and rent payment figures that respondents gave, we calculated that the average rent-to-salary ratio was 41% – close to the figure found by the government’s English Housing Survey. In London this figure is 44%.
The cost of rent is also going up for many. Thirty one percent of renters had a rent increase in the past year – 5% managed to negotiate a freeze while another 3% decided to move out because the rent went up. In London 46% faced the prospect of a rent rise, with 5% moving out to avoid one and 4% successfully stopping it.
It’s not just the monthly cost of renting that is harmful: renters are in a precarious position with 10% having been threatened with eviction, and 36% reporting that a landlord has made unreasonable deductions from their deposit.
Young workers who have been able to buy have largely had to seek help from parents and others: 59% relied on financial help from their family and friends to buy their home. The prospect of interest rate rises worries 64% of mortgage holders, with 53% admitting that they would not be able to make repayments beyond three months if they lost their job.
Of those young workers who live in someone else’s home, 18% have chosen to because of the nature or insecurity of their job, 2% have caring responsibilities and 8% say they are happy with the arrangement. But most people want to live independently and would rent or buy – 41% are saving for a deposit, while 44% would rent but can’t afford to. (Respondents were able to give more than one answer.) Under 25s living with someone else are more likely to want to rent (45%) than be saving a deposit (35%), but once they reach 30, they are more likely to have their sights set on home ownership – 43% say they are saving a deposit compared to 36% who want to rent.
Each of us would be a lot better off with a pay rise, but we also have a broken housing market that funnels too much of our pay packet into the pockets of landlords, and this needs fixing. As Generation Rent’s Director, Alex Hilton, will explain on the Homes Panel on Saturday, renters in the private sector need a lot more power in the market and that means freedom from letting agent fees, and the right to longer tenancies so that young workers can enjoy a stable home life and feel invested in their community. Ultimately we also need a massive boost to house building in order to meet the overwhelming demand for homes in areas where there are most jobs.
Generation Rent has published a manifesto for a better housing market and will be putting pressure on political parties to commit to improving the lives of renters in the run up to the election.