Britain could become nation of renters within a generation

05 September 2011

Credit crunch has created 'Generation Rent' in Britain

Britain is home to a generation of renters who are giving up on buying their own home, an in-depth new report has revealed. If attitudes become reality, the shape of Britain’s housing market will be fundamentally changed within a generation.

According to the report, the most in-depth research into the attitudes and behaviour of young people toward homeownership since the credit crunch, 77% of all non-homeowners still aspire to owning their own home. However, despite this aspiration, nearly half of 20-45 year olds say Britain is becoming more like Europe where renting is seen as the normal and predict Britain will become a nation of renters within the next generation.

Stephen Noakes, Commercial Director, Halifax Mortgages, commented: “Our research indicates just how many potential first time buyers are not making it to the application stage because of a fear of being declined. We would like to help aspirational home buyers to realise they do have options, that they can apply for a mortgage, and that it is still possible to get onto the property ladder. At Halifax we approve 8 out of 10 mortgage applications from first time buyers, and it is important that today's potential first time buyers don't miss out because of the fear of rejection.”

Commissioned by Halifax and produced by the National Centre for Social Research (NatCen), the report analysed the results of a survey of 8000 20 to 45 year-olds, and identified the emergence of ‘Generation Rent’: two thirds (64%) of non-homeowners who believe they have no prospect whatsoever of buying a home.

The perception that banks are not lending, the size of mortgage deposits necessary, and a fear of the application process has prevented ‘Generation Rent’ from making any significant attempts to buy a home. Longer-term, only 5% of this group are making sacrifices to save for a deposit. 95% say they have no spare cash, no interest in saving for a deposit or were trying to save but failing to do so.

The report revealed widespread pessimism about lenders and the mortgage application process:

• 84% say first time buyers are put off by a belief that banks do not want to lend to them and find excuses to turn them
down
• 92% see it as hard for first-time buyers to get a mortgage, with 60% seeing it as very hard or virtually impossible
• 67% believe there is a general perception that everyone is rejected by lenders so there is little point in applying
• 61% say that first time buyers do not want to go through the stress and anxiety of applying for a mortgage

Alison Blackwell, NatCen report author, commented: “The phenomenon of Generation Rent could have major socio-economic implications. It would mean fewer homeowners being able to buy and therefore fund the construction of the new homes required in the UK to meet demand, resulting in a slowing down in the housing market. It could open up a widening of the wealth gap that already exists between home-owners and non homeowners. And people in Generation Rent risk insufficient finances at retirement.”

Original source of article

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