Most of young people can agree on one thing: house prices are too high. But as those with wealthy parents begin to inherit substantial wealth, is this all about to change?
The term ‘Generation Rent’ was first coined 12 years ago by the Halifax Building Society, to describe the growing numbers of young people who were priced out of home ownership. “Two-thirds of potential first-time buyers have no realistic prospect of owning their own home in the next five years,” the Guardian reported in 2011. Fast forward to today, and the housing crisis remains one of the biggest concerns for young people in the UK.
New research from the Financial Times has found that 40 per cent of 18- to 34-year-olds are living at home with their parents, a stark contrast to the landscape 40 years ago when the most common living arrangement for young adults was to be living independently with their own children. In 2022, homeowners younger than 35 made up just 10 per cent of all homeowners in England.
The reasons for this are, by now, familiar. Demand for homes is greater than the supply of homes, causing prices to spike while wages remain stagnant. Today, it takes 13 years to save a deposit for the average UK property (up from three years in the 90s), rising to 30 years in London (up from four years in the 90s). The last time house prices were as unaffordable as they are today was when Queen Victoria was still on the throne, in 1876.
House prices have risen to such an extent that only mega-rich (or mega-frugal) young people are able to buy houses anymore. The vast majority of young people are presently united by a shared feeling of being ‘trapped’ in the rental market. Case in point: polling commissioned by the Adam Smith Institute found that over 80 per cent of 18- to 34-year-olds believe there is a housing crisis, compared to just 56 per cent of over 65s. Late last year, former housing minister Sir Brandon Lewis went as far as telling Sky News that he believed there was a real risk of the Conservative party alienating young Tory voters if they didn’t muster up a decent housing policy. “I think there is a real risk,” he said. “Because why would a young person look to the Conservative Party? What is the economic offer?”
“The narrative of intergenerational conflict – that pitches generation rent against baby boomers, for example – is problematic and unhelpful” – Kim McKee
The hope, for progressives, is that Lewis is right. The hope is that young people – and particularly upper-middle class young people – realise the Tories’ implicit ‘pull yourself up by the bootstraps’ ethos is a fallacy. The hope is that swathes of young people, who work and work and work and still can’t scrape together a deposit, wise up to the fact that meritocracy is a myth. Right now, there’s enormous potential for Gen Z and Millennials to collectively realise the absolute need for rent controls, more social housing, an end to no-fault evictions, and crackdowns on rogue landlords (or, maybe, the abolition of private landlords entirely).
But is Lewis right? Is there really a risk of an entire generation of voters swearing off the Tories forever because of their open contempt for renters? Because while many young people across different social classes may share similar views on housing at the moment, circumstances can – and will – change. Some stand to inherit vast sums and valuable assets. Others don’t.
The oldest boomers are now 78, meaning this ‘great wealth transfer’ is gathering pace. According to Treasury figures, inheritance tax reached a record £6.1 billion in the 2021-22 period, only to smash that record in the most recent tax year, when £7.1 billion was collected in inheritance tax. In addition, many wealthy parents, in a bid to dodge inheritance tax, are gifting their children money while they’re still alive. According to data from financial services group Legal & General, a total of £8.1 billion passed from elder relatives down to children was used to buy property in the UK last year.
In the UK, homeowners were more likely to vote Conservative in the 2019 election, which begs the question: will middle-class young people follow suit when they inherit? Will they then close ranks and vote Tory? Will they want house prices to soar and expect their poorer counterparts to continue to tough it out on the rental market? Will inequality become even more entrenched?
NEW: we don’t reflect enough on how severe the housing crisis is, and how it has completely broken the promise society made to young adults.
— John Burn-Murdoch (@jburnmurdoch) January 14, 2024
The situation is especially severe in the UK, where the last time house prices were this unaffordable was in ... 1876. pic.twitter.com/M6WbXKE1SL
It seems possible, given the proliferation of reductive narratives about the housing crisis. “The narrative of intergenerational conflict – that pitches generation rent against baby boomers, for example – is problematic and unhelpful,” explains Kim McKee, senior lecturer in housing studies at the University of Stirling. “It deflects attention from the structural and political underpinnings of these inequalities, which need government attention.”
The common emphasis on intergenerational conflict is leading to this misconception that ‘all young people are in the same boat’. Granted, your privately-educated friend who works at a ‘Big Four’ accounting firm is probably renting, subject to the whims of a landlord who could hike up their rent or evict them at any moment, just like your friend who’s earning minimum wage doing insecure gig work. But we’re at risk of forgetting that these situations aren’t the same at all.
It’s obvious but it bears repeating that young people with wealthy parents not only have the ‘bank of mum and dad’ to fall back on when needed for deposit payments or unexpected rent hikes, but they also stand to inherit assets which will set them up for life. So while your Big Four friend may join you in complaining about the impossibility of buying even a modest one-bedroom flat for now, one day in the not-so-distant future they’ll inherit their parents’ wealth, and all of a sudden buying a property will no longer be a far-flung fantasy for them.
The good news is there is a chance that the next generation of homeowners will be more aware of the unfairness of the system, and less likely to claim their newly-changed luck is purely the result of their own hard graft. “These are critical years for the voters of tomorrow,” wrote Emily Badger and Claire Cain Miller in the New York Times back in 2019. “Political science research shows that a generation of voters is shaped for life by what happens during the teenage years and early 20s: whether the country is at war, how the economy is doing, whether the president is popular.”
This tallies with McKee’s own research. “In my previous research, young people recognised intragenerational inequalities and that some young people had access to family support while others did not,” adds McKee. “Equally, they did not necessarily feel entitled to their parents’ wealth.” So, perhaps today’s young renters will be impacted forever by their firsthand experience of the housing crisis – even those who are set to inherit substantial estates.
It will be interesting to see if, in years to come, Gen Z and Millennials stick to projections that they’re set to buck convention and become more left-wing as they age, and if this sense of ‘generational solidarity’ will remain when large, real sums of money are involved. It’s all well and good for the young upper-middle classes to wax lyrical about housing and unfairness today, but will they remain as committed to these ideals tomorrow, when they find their fortunes changed? Will they soon forget what it was like to receive a Section 21 notice or beg for your deposit back? Will they duck into polling stations in 20 years’ time, guiltily vote Conservative, and quietly pull the ladder up behind them? Or will they continue to champion renters’ issues? Only time will tell.