The problem of millennials struggling to become home owners has been widely documented. But the long-term implications of this have not often been explored.
A report by the All-Party Parliamentary Group on housing and care for older people suggests that, in the words of Richard Best, the group’s chairman, “The number of households in the private rented sector headed by someone aged over 64 will more than treble over the next 25 to 30 years. But unless at least 21,000 suitable homes are built a year, there will be nowhere affordable for them to live. The consequence is bound to be homelessness for some.”
Since people’s incomes typically halve after retirement, those in the private rented sector who pay 40% of their earnings in rent (which is not untypical) could be forced to spend up to 80% of their income on rent in retirement.
If rents rise at the same rate as earnings, the inquiry found that 52% of pensioners in the private rental sector will be paying more than 40% of their income on rent by 2038. This will mean that at least 630,000 millennials are unable to afford their rent.