There are many names for the people born between the mid-1980s and late-1990s. Whether you prefer Millennials or Gen Y or (more appropriate for this blog) Generation Rent, there are certain characteristics that broadly define them. They are the imaginative, artistic youngsters who grew up with the newest technology and computers. They’re aficionados of music festivals, gourmet pizzas, emojis, selfies and old-school nostalgia.
Millennials have also discovered that renting is a good choice for their shelter and accommodation needs without the hassle that comes from buying a home. Nonetheless, that is not the only reason they don’t buy property. When they should be concentrating on their profession, putting down roots and starting a family, Millennials are still going through the pressure and strain of student loan liabilities whilst, at the same time, finding it tough to pay rent.
The hot topic at the moment is the cost of renting, as both political sides of the political divide have seen mileage in wooing these Generation Renters. The average rent in Rotherham is currently £547 per month making this a big-ticket item on the monthly budget. I was therefore very interested to find out exactly how much Rotherham Millennials will spend on rent by the time they reach their mid 30s if things stay the same.
How much does a typical Rotherham Millenial spend on rent?
The average age people leave home in the UK is 22. Therefore, looking at a typical Rotherham Millennial who left home in 2005, between 2005 and now, that person will have shelled out £78,803 in rent!
It’s no wonder local Millennials can’t afford to buy a Rotherham home given their tremendous debt. This means younger Rotherham Millennials will probably carry on renting for the foreseeable future, simply because the prospect of buying a home is not yet achievable…
…that is until you look more deeply at the numbers!
Looking at the chart above, the average rent of a Rotherham property in 2005 was £458 per month. If this figure had risen by inflation than today that would be £645 each month. As I have already mentioned in the article, today it only stands at £547 per month. Looking over the last 12 years, adding up all the differences between what the average actual rent was compared to what it should have been if rent had gone up by inflation, the average Millennial tenant in Rotherham would have paid £86,628.
This means that an average 35-year-old tenant, who has been renting since 2005, is better off by £7,825 when comparing the actual rent paid compared to what it would have been if it had risen by inflation. In a nutshell, tenants have done well due to the sub-inflation growth in rents.
In fact, if you recall I mentioned in an article a few weeks ago, the older Rotherham Millennials are starting to use those savings and are gradually shifting towards home ownership. They are finally catching up with the British homeownership dream as Bank of Mum and Dad help with the deposit. Also, as the scrapping of Stamp Duty from the Government starts to kick in, together with the realisation that if the 5% mortgage deposit can be scrapped together (yes, 95% first time buyer mortgages have been available since 2009), it is still a lot cheaper to buy than rent. This will unquestionably drive demand for Rotherham homes for sale – good news for Rotherham homeowners.
… and what does this mean for Rotherham landlords?
Well the vast majority of younger Millennials are still renters and I foresee this to be the case for at least the next ten to fifteen years. Landlords will need to keep improving their properties to ensure they get the best tenants – but this will see a much higher rent achieved. Millennials will pay top dollar for a top dollar property. It is important to do things correctly as making money won’t be as easy as it has been over the last twenty years. With a greater number of properties on the market comes greater choice. Don’t buy the first thing you see, buy with your head as well as your heart… because, as I promised a few weeks ago, the first rule of buy-to-let investment is: “You are not going to live in the property yourself”