Recent government figures suggest that the number of people renting has doubled over the last decade, with more than 10 million homes in the UK now rented rather than owned.
With the British economy on a knife edge – rises in the cost of living outpacing wage increases, soaring post-Brexit inflation, and the subsequent first interest rate rise in a decade – this is a pattern that will likely continue going forward.
Estimates suggest that by 2025 just 26% of people aged 20-39 will own their own home.
Are they relevant?
But how important is generation rent – are they relevant to brokers?
Research conducted by Countrywide just in February showed the stark reality that the total amount of rent paid by tenants in Britain soared to more than £50bn in 2017.
That’s more than double the level of a decade ago and may soon eclipse the entire sum paid out by homeowners for their mortgages.
With such a dramatic reshaping of the property market in recent years as home ownership levels have gone into reverse, this is a trend that clearly will present its challenges but also its opportunities for the broking market.
There are many misconceptions about Millenials, but fundamentally they still have the same aspirations as that of the first-time home owner of 20 years ago – they want stability in terms of home, employment and personal finance.
However, a study by Aviva has recently found that generation renters have on average just £156 to spare at the end of the month after essential living costs, and that they have little or no savings.
What would happen if they became sick or suffered an injury? How long could they pay their rent? How long could they survive before they really lost their home and the little bit of security they actually do have?
Generation rent is highly exposed should they become ill or lose an income.
A colleague of mine recently attended an event at which, among other things, they discussed the current state of the market and opportunities.
Attendees suggested that up to 40% of UK renters have no contents insurance.
Likewise, when times are tough and money is tight, income or accident, sickness and unemployment protection are probably the last thing our Millenials are considering investing in.
We have a responsibility as an industry to start looking after young renters and ensuring they are informed about building good financial protection habits – what their insurance needs, responsibilities and options are.
Many are simply unaware of the risks they face or the options that exist to manage them.
This is of course also an opportunity for brokers to attract and engage with a new base of clients – look after young people now and they could be with you for the long term.