- Higher rates and end of Help to Buy mean more younger people renting
The amount of rent paid by under-45s has risen 59 per cent over the past decade, according to fresh data.
Under 45s now pay two-thirds of all rent in Britain, according to analysis by Hamptons of the latest English Housing Survey.
In 2023-24, the amount they paid surged by £3.5billion, reaching a record £56.2billion.
Hamptons said this was a reflection of rising rents, rather than an increase in the number of younger tenants.
But it found that in 2023-24, the number of under 45’s renting privately rose by 149,000 – the fastest growth in a decade.
In the last ten years, lower mortgage rates and schemes such as Help to Buy helped some renters to get on the housing ladder, which saw the number of under-45s renting reduce by 1 per cent over the last 10 years from 3.45m to 3.43m.
The share of rent paid by those aged under 45 in the UK fell from close to 73 per cent in 2012/13 to a low of 64 per cent in 2022/23.
Total annual rent: The amount of rent paid by under 45s each year rose by £3.5bn between 2023 and 2024, to a record total of £56.2bn
The withdrawal of Help to Buy in March 2023 and rising mortgage rates have seen more younger people entering the rental market, however.
In 2023-24 under 45s were paying 66 per cent of the total rent in Britain, up from 64 per cent in 2022-2023.
Mortgage rates rose significantly over the course of 2022, when inflation started to rise, resulting in the Bank of England increasing the base rate to try and combat it.
Rates spiked even further after the Liz Truss-Kwasi Kwarteng mini-Budget in late September 2022.
Aneisha Beveridge, head of research at Hamptons said: ‘Higher mortgage rates have clipped the wings of many young aspiring homeowners in the last couple of years, meaning Millennials increasingly outnumber older generations in the rental market.
‘Just like rapidly rising house prices, higher interest rates will keep younger generations of tenants renting for longer.
‘For most of the last decade, the government’s flagship Help to Buy scheme played an important role in transferring tenants from the rental market into homeownership.
‘The record rise in the number of younger renters over the last year highlights the impact of higher mortgage rates and the need for a similar scheme if the Government wants to achieve its ambition to help more people become homeowners.’
Share of rent: The proportion paid by those aged under 45 was falling until interest rates spiked in 2022/23. They now pay 66% of all rent, up from 64% in 2023
Older renters decline in number
Despite rising rents, the over 45s are now collectively paying £716m less in rent than they were a year ago, according to Hamptons.
This is predominantly due to the fall in the number of older renters, it said.
The number of over-45s renting privately decreased by 79,000 over the last 12 months.
Hamptons said this was because these older households, generally with larger savings, are more likely to be able to buy in a world of higher interest rates.
Over the course of the last decade, the total amount of rent paid by those over 45 has almost doubled, rising from £14.7bn to £29.1bn.
While renting has been a choice for some, others will have found themselves locked out of homeownership due to the stricter mortgage stress-testing implemented after the financial crisis.
It’s likely that elevated interest rates and rising rents will slow or even reverse the growth of over-45 homeowners.
