You are here: Home - Mortgages - First Time Buyer - News -

A third of millennials unlikely to ever own their own home

Written by: Paloma Kubiak
One in three millennials could continue to rent for the rest of their lives which is likely to push up the government’s housing benefit spend, according to a leading thinktank.

The majority of current retirees own their own homes but around a quarter rent, with many helped with housing costs by the state.

Last year 1.3 million pensioners claimed housing benefit, amounting to £6.3bn.

But given the challenges faced by the younger generation in buying their own homes, the Resolution Foundation suggests many more millennials will live in rented accommodation during their retirement.

The thinktank’s estimates suggest that if the current conditions continue, 47% of millennials (those born between 1981 and 2000) may own their own home by the time they reach the age of 45.

The remaining 53% may inherit property wealth but even in this optimistic light, this will only increase homeownership rates to 66%.

In comparison, homeownership rates for current retirees stands at 77%, showing that millennials fall short on the property front, and it solidifies the ‘generation rent’ status.

The Resolution Foundation examined how millennial renters in retirement could impact the housing benefit bill.

It assumed an optimistic 73% of millennials would own their own home in retirement while on pessimistic grounds, 66% would. The table below shows the impact on housing benefit spend in 2060:


Stephen Clarke, author of the report, said that the ageing of the population has a significant impact, raising spending on housing benefit by approximately 70%.

“Our pessimistic scenario shows that, stripping out the impact of an ageing population, tenure changes will still raise the housing benefit bill by around 50%. A similar magnitude as that caused by the demographic shifts.

“The above should provide a sense of the impact that a rise in the share of pensioners renting in retirement could have on public spending. Though our estimates are only illustrative it is worth pointing out that a number of factors could boost or shrink these numbers.

“First, we assume a relatively high proportion of pensioners (18%) rent in the social sector. Current trends suggest that an increasingly small share of millennials rent socially, and should a higher proportion of pensioners rent privately in retirement then this would – under current policy – push costs up.

“On the other hand, we do not take account of the fact that – in a world in which the proportion of pensioners renting is far higher – the marginal ‘renting’ pensioner is likely to be wealthier and so perhaps qualify for less housing benefit. There are clearly both upside and downside risks to our estimate.”

There are 0 Comment(s)

If you wish to comment without signing in, click your cursor in the top box and tick the 'Sign in as a guest' box at the bottom.

Flight cancelled or delayed? Your rights explained

With no sign of the problems in UK aviation easing over the peak summer period, many will worry whether holida...

Rail strikes: Your travel and refund rights

Thousands of railway workers will strike across three days this week, grinding much of the transport system to...

How your monthly bills could rise as the base rate reaches 1.25%

The Bank of England has raised the base rate to 1.25% as predicted – the fifth consecutive rise in just six ...

What will happen if rates change

How your finances will be impacted by a rise in interest rates.

Regular Savings Calculator

Small regular contributions can build up nicely over time.

Online Savings Calculator

Work out how your online savings can build over time.

DIY investors: 10 common mistakes to avoid

For those without the help and experience of an adviser, here are 10 common DIY investor mistakes to avoid.

Mortgage down-valuations: Tips to avoid pulling out of a house sale

Down-valuations are on the rise. So, what does it mean for home buyers, and what can you do?

Five tips for surviving a bear market mauling

The S&P 500 has slipped into bear market territory and for UK investors, the FTSE 250 is also on the edge. Her...

Money Tips of the Week