“Generation rent” is a term coined by the media to describe that large segment of the – mainly younger – population who are renting rather than buying their own home. The Independent newspaper, for example, has a whole section devoted to the group.
The underlying assumption in practically every reference to generation rent, however, is that the individuals concerned would much rather own their home than rent from a private landlord – if only they had the financial resources to do so.
Generations choosing to rent
Our own recent research, however, suggests that a significant proportion of the population – 16% of them in fact – want to rent instead of buying and choose to do so because they:
- made a conscious decision not to be tied down with a mortgage – the reason given by 4% of the sample;
- want to be free of the responsibility of having to pay for property maintenance and repair costs – 5% of the sample; and
- welcome the financial and physical freedom – to up and move at a moment’s notice, for example – that renting gives them (7% of the sample).
What is more, the decision to rent rather than buy appears to be taken by as many older householders as young ones – generation rent is not the preserve of youngsters:
- in the age group of 45 to 54 year-olds, for example, 24% of those surveyed said they chose to rent – compared to just 3% of those aged 25 to 34;
- in the 55 to 64 age group, 12% of respondents gave their reason as not wanting to be tied down by a mortgage – suggesting that they wanted the option of choosing to move to live elsewhere without the hassle and inconvenience of having to sell a home to do so; whilst
- both of these age groups mentioned “financial freedom” as their principal reason for choosing to rent rather than buy.
Further savings through renting
The cost of buying your own home is clearly a major factor in people’s decision to rent. A story in the Mirror newspaper on the 8th of December 2017, for example, suggested that the average monthly cost of renting in 49 out of 50 of Britain’s largest cities is cheaper than the average monthly mortgage repayment.
But income is unlikely to tell the complete story since 88% of those we recently surveyed who choose to rent because they say they cannot afford to buy are in fact earning more than £40,000 a year.
And it is not only a relatively low income that prevents some people from choosing not to buy. 11% of recently surveyed renters, for instance, said that freedom from the costs of maintaining and repairing a home was a significant factor.
They might also have added freedom from the cost of arranging building insurance if they rent their home. Building insurance, of course, is typically the responsibility of the owner of the buy to let property and is incorporated into most landlord insurance policies. Tenants, on the other hand, only need to safeguard their possessions and belongings with contents insurance.