We need to solve affordability issues for millennials

It is no secret young people, especially those just starting out, are struggling to buy a home they can afford or find a decent place to rent privately. 

“Unless something changes, under-35s could soon be locked out of social housing.”

This is especially true in the South East, where house prices have risen far faster than wages and private rents have often outpaced London.

But, unless something changes, under-35s could soon be locked out of social housing too.

The planned extension of the shared accommodation rate will mean they’ll no longer be able to afford a housing association home, even though the rent is far below the market level.

While this change will affect nine out of 10 young people, it’s the under-25s who find themselves out of work who will be hit the hardest. They’ll have an average of less than £3 a week to live on after covering the social rent.

But this is not just a problem for those looking for work; it’ll affect those in work too – from nursery nurses to shop workers, or those just starting out on an apprenticeship. It’s likely they’ll need some support from housing benefit too.

These were the findings in a report out today – Capping aspiration: the millennial housing challenge – by the Centre for Regional Economic and Social Research (CRESR). It was commissioned by the Consortium of Associations in the South East (CASE), a consortium of 10 housing associations responsible for a combined 145,000 homes across the South East.

As part of the project, the researchers spoke to a number of young people about their housing challenges and future aspirations. What struck me most from these conversations was their pragmatism – they know a home is something that needs to be earned. And they don’t want much, just a place to call their own.

It’s also true that the term ‘millennial’ or ‘under-35’ covers a broad range of people, from different backgrounds and at different stages of life.

A 21-year-old kick-starting their career on an apprenticeship has different needs and expectations to a 34-year-old who has recently separated from their partner and just wants a safe, decent place to bring their children home to at weekends.

Housing associations have always worked hard to meet housing need, wherever they find it. In the South East, 15,000 single under-35s already live in a housing association home. But this latest challenge requires a new approach – a new way of thinking about building and providing homes.

“Young people don’t want much, just a place to call their own.”

The shared accommodation rate extension is planned for April 2019 so we, the new government and local authorities have time to plan.

As well as looking at the problems, CRESR researched past and potential future solutions. Based on their findings, CASE members are making the following recommendations:

• Review: The government, in particular the Department for Work and Pensions and the Department for Communities and Local Government, needs to review the shared accommodation rate and consider its impact on people under 35, their lives and their ability to sustain work and independence.
• Exempt: While there are exemptions, there should be an exemption for any young person nominated by a local authority. If they’re vulnerable enough to be a priority, then they’re vulnerable enough to need the security of knowing their rent will be covered.
• Evolve lettings: Local authorities and housing associations need to evolve how homes are let and managed, in particular to accommodate groups of sharers.
• People first: Not surprisingly, people under 35 are a diverse group. Some of them – the more vulnerable, or separated parents perhaps – have a genuine need for self-contained accommodation. For housing associations to offer tenancies to this group, and invest with confidence, they need access to a guaranteed safety net, or to grant funding, to keep rents well below shared accommodation rate.

There are many benefits to taking a second look at the shared accommodation rate extension, or by balancing out the impact of a welfare policy with a housing-led response from government.

I believe it’s our responsibility to ensure the next generation has access to decent, affordable housing, giving them a solid foundation, and helping them achieve their aspirations.

Housing associations are absolutely ready to work with the next government, as well as our local authority colleagues, to make sure we’re there for these young people when they need it most. Ignoring the issue will just store up greater problems for the future. 

Ann Santry, chief executive, Sovereign; chair, CASE