28 March 2019

Half of all babies now born in rented accommodation

5 min read

 
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Becky O'Connor

Personal Finance Specialist

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Around half of all babies born in Britain – approximately 365,000 a year - are now born into rented accommodation, new analysis from Royal London has revealed, with more half of those - around 200,000 a year - born into insecure private rented accommodation.

For the first time in living memory, a child is at least as likely to be born into a rented home as a home owned by its parents, up from around one in three babies in 2003/04.

The analysis, using data from the Family Resources Survey, suggests that parents are renting from private landlords for longer, with worrying financial, practical and emotional implications. There are now over 1.5 million families in England with dependent children living in private rented accommodation.

Across the United Kingdom as a whole, the number of families with dependent children living in private rented accommodation has risen by 94 per cent in the last decade, from 940,000 in 2006/07 to 1.8 million in 2016/17. The biggest regional increases in England over the period were in the North East and Yorkshire and the Humber, with 138 per cent and 120 per cent rises in the number of privately renting families respectively (see table below).

Table: Number of families with dependent children living in private rented accommodation in 2006/07 and 2016/17 by nation and English region.

Becky O’Connor, personal finance specialist at Royal London, said:

“Renting is no longer something carefree young people do for a few years while they save up a deposit to buy and settle down. Renting is an increasingly long-term tenure and it’s increasingly impossible to escape from.

“For people in their late twenties and thirties, half of whom are starting families in insecure accommodation, not having a home of their own is fraught with practical and emotional issues. The main risk is eviction, which hangs threateningly in the background of normal family life.”

The analysis, published as part of Royal London’s latest policy paper: “The Parent Rent Trap”, also highlights:

-         A short-term rise in the risk of eviction for renters, as landlords are dissuaded  from the market by government policy that makes buy-to-let less attractive

-         The 20 per cent premium paid by private renters, compared with those repaying a mortgage (a mean of £844 a month compared with £678 a month in average mortgage repayments) and the impact of this on the ability to save up a deposit. Renting itself is becoming unaffordable, leaving renting families at particular risk of financial difficulty and even less able to save up a deposit

-         The gap between fairly static rent payments over a lifetime, compared with falling mortgage repayments. Owner occupiers can, generally speaking, look forward to lower mortgage repayments as their house price rises and the loan-to-value limit they are eligible for comes down, bringing down their interest rate and therefore their repayments

-         The increased difficulty in obtaining a big-enough mortgage once parents are paying for childcare

The growth of the private rented sector, coupled with the rising cost of renting, has put home ownership further out of reach of people aged 25 to 34. The age at which most couples have their first child is 29 (mother) and 33 (father). The average age of a first time buyer is 34, up from 26 in 1997, according to the English Housing Survey.

The policy paper recommends measures to improve security of tenure for the increasing number of parents who are starting and continuing to grow their families in properties owned by private landlords:

-         Examine the impact of  Section 21 of the 1988 Housing Act. This piece of legislation enables landlords to evict tenants without giving a reason with two months’ notice once their original tenancy agreement has come to an end. It has been abolished in Scotland and replaced with open-ended tenancies as part of the Private Housing (Tenancies) (Scotland) Act 2016,

-         Encourage lenders to give greater weight to the ability of renters to meet rent payments, which may be higher than the monthly repayments for the mortgage they are applying for, when assessing their affordability,

-         Assess the impact of current policy towards buy to let landlords on the tenants who rent from them and whether reduced incentives have created short-term instability for tenants,

-         Open up planning for institutional landlords to build, own and manage affordable rental accommodation that is suitable for families,

-         Housebuilding that prioritises affordable family homes to buy.

Notes to editors:

The “Parent Rent Trap” Policy Paper 30 is available to read and download here:www.royallondon.com/policy-papers

For further information please contact:

Becky O’Connor, Personal Finance Specialist

About Royal London:

Royal London is the largest mutual life, pensions and investment company in the UK, with funds under management of £130 billion, 8.8 million policies in force and 4,046 employees. Figures quoted are as at June 2019.