Member Article

Thatcher’s children are struggling to get on housing ladder... but their rents are getting cheaper

People born in the 1980s are half as likely as their parents to own their own homes – but the rents they’re paying are falling in real terms.

Research from the Institute for Fiscal Studies suggests home ownership is falling among younger generations, with only 21% of people born in 1980s owning their own home by the age of 25, compared with 34% in the 1970s and almost half born in the 1960s.

Ajay Jagota of North East-based property business KIS - who was this week invited onto SKY News to discuss the houing market - believes cultural change could be behind the figures, but also believes that falling household incomes are making it harder for young adults to save up for a deposit on a house – a situation set to improve as the economy grows.

Children born in during Thatcher government are however benefiting from rents which are falling in real terms, with recent figures from LSL Property Services – the owners of RightMove - showing a month on month increase in private sector rents of just 0.6%.

The increase is three times less than the UK current rate of inflation, which rose by 0.4% to 1.9% in June.

Research from KIS’ own analysis of the North East property market detailed in its monthly Housing NOW report suggests North East rents rose 0.9% in June, half the rate of inflation.

KIS manage properties for 700 landlords from branches in Sunderland, South Shields, North Shields and Welwyn Garden City.

The firm recently expanded into residential sales, as well as being named Letting Agent of the Year at the Landlord and Letting Awards.

Founder and Managing Director Ajay Jagota said:

“Margaret Thatcher’s government is synonymous with home ownership, so it does seem a little ironic that children born in that era have grown up to be adults less likely than their parents to be homeowners, but it’s important to make a distinction between who people who can’t buy their own homes and people who don’t want to.

“Although GDP is finally growing, household are continuing to lag behind for now. The IFS research suggests they fell 13% for the under 30s between 2007 and 2013, so naturally there will be some delay before they catch up. When they do that can only help those who want to get on the property ladder but currently can’t.

“It definitely means that the Bank of England has a tricky balancing act ahead of them – interest rates are going to have to rise sooner rather than later, but I feel that we will need to see some upward movement in wages first.

“We must remember that more people than ever simply don’t want to buy their own home - the last census showed a ten year jump in private renters of 2,000,000 with the number of homeowners flat. We are increasingly a nation of renters and figures like these suggest that is not necessarily a bad thing.”

This was posted in Bdaily's Members' News section by Ajay Jagota .