In its 'Home Improvements' report, the Resolution Foundation said up to half of millennials could be renting either privately or in the social rented sector by their 40s, while a third could still be renting by the time they claim their pensions.
Despite urging more should be done on house building and supporting young people's home ownership aspirations, the Resolution Foundation has also warned that policy makers cannot afford to neglect the poor quality and insecurity that exists with the private rented sector (PRS).
Currently, four in 10 millennials at age 30 are having to rent; double the rate for generation X and four times that for baby boomers at the same age. One of the major factors attributed to this shift is the declining rate of access to social housing which has also fallen as fast as millennials' home ownership rates.
In addition, the Foundation notes that policy has also failed to catch up, with bringing up children in the PRS now becoming mainstream. In 2003, the number of children in owner-occupied housing stood at 600,000. However, a record 1.8 million families are now privately renting with children,
Furthermore, the PRS is the least secure and lowest quality tenure. With one in four properties falling below the decent homes standard, two-month notice periods are also normal. Many renters are also on six or 12-month fixed term contracts, meaning the prospect of large rent rises at short notice are a big concern.
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This rising share of retiree renters, coupled with an ageing population, also poses a risk to the housing benefit bill for pensioners, which could double from £6.3 billion today to £16bn by 2060.
Overall, the Foundation said the sector will "continue to be a major feature of housing in Britain for many years to come". Even if home ownership accelerates rapidly, millennials will never experience the levels baby boomers have.
Lindsay Judge, Senior Policy Analyst at the Resolution Foundation, said: "Britain's housing problems have developed into a full-blown crisis over recent decades and young people are bearing the brunt – paying a record share of their income on housing in return for living in smaller, rented accommodation.
"While there have been some steps recently to support housebuilding and first time buyers, up to a third of millennials still face the prospect of renting from cradle to grave."
In its report, the Foundation has unveiled some key policies to improve the housing offer for renters;
• The introduction of indeterminate tenancies as the sole form of contract in England and Wales, following Scotland's lead and the practice in Germany, the Netherlands, Sweden and Switzerland
• Fair balancing of the needs of tenants with the rights of landlords. A landlord could remove a tenant that fails to pay the rent or treat the property well, or if they wishes to sell or reoccupy the home, but cannot simply end the tenancy at short notice without good cause
• Light-touch rent stabilisation that limits in-tenancy rent rises to CPI inflation for three-year periods
• A new housing tribunal, to ensure landlords and tenants can have disputes resolved swiftly
Ms Judge continued: "If we want to tackle Britain's 'here and now' housing crisis we have to improve conditions for the millions of families living in private rented accommodation. That means raising standards and reducing the risks associating with renting through tenancy reform and light touch rent stabilisation.
"For any housing strategy to be relevant and effective for people of all ages, it must include this combination of support for renters, first time buyers and ultimately a level of housebuilding that matches what the country needs."
Jean-Marc Vandevivere, Chief Executive Officer of developer PLATFORM_, said: "Today's findings that more people will be renting for longer and later into their lives underlines the need for a professionalised rental market that is responsive to the needs of not just young professionals, but families and the elderly too.
"Encouraging long-term flexible tenancies, which many build-to-rent landlords are already offering, will help give renters a greater sense of security and certainty, while new-build developments designed specifically for renting will help tackle many of the issues around quality of accommodation people face in the traditional private rented sector."
To view the Foundations' 'Home Improvements' report, visit here.
(LM/MH)
