Up to a third of millennials 'face renting their entire life'

[Rektsanwalt]

This topic is so depressing…boomers hoarding the wealth and keep charging more and more for rent. There’s a solution but it usually requires making compromises: stop living in big cities. It really is the easiest solution I know, at least for Germany and I think in most part of the world it’s the same. I know a person earning 150.000€ per year, which is quite an income, top 1% in this country. But he insists on living in the city, so he pays 2.500€ rent per month for a 80 m2 flat in an okay-ish location. Which is 300.000€ in 10 years assuming rent doesn’t go up, which is unlikely. Man, I‘d never burn that amount of money for such a flat. I mean every time we work, we trade our own time of living for money, which should then lead to an increased quality of life. Generally, this isn’t the case though. People get jobs in bigger cities, requiring them to be close to said city, yet the quality of life is far lower compared to someone earning half but living in a more rural area.
After law school and working for a big law firm, I moved from cologne to a far more rural area of Germany. I earn about half compared to my former job, yet my quality of life is better. I was able to buy property for an okay rate and renovate a house with three flats for the 4 people I provide for.

 

[Red_toad]

So if up to 1/3 of Milenials will never buy a house that means 66.6% will

Currently 64% of people buy their own house
https://www.ethnicity-facts-figures.service.gov.uk/housing/owning-and-renting/home-ownership/latest

So is the problem for milenials that only 2 and a bit percent more of them will own a house and that's unfair because they feel entitled to more

Or that it's bad that more people will own their own house because property is theft or summat?

Maybe they need to murder their parents to rush the inheritance along?

 

[OleBoiii]

There’s a solution but it usually requires making compromises: stop living in big cities. It really is the easiest solution I know, at least for Germany and I think in most part of the world it’s the same.

This isn't really a solution. The house prices have also risen significantly faster than inflation/salary levels outside the big cities. Popular areas have always been more expensive. It's not really a new phenomenon, although it has perhaps gotten worse than ever.

The only good thing that comes from de-urbanisation(in terms of the housing market), is that the difference in prices between cities and more "rural" areas become less significant. This is good for the people who insist on living an urban lifestyle, but bad for people who always wanted to remain/return to their small hometown.

We need to rethink private wealth and ownership entirely.

 

[11101]

Maybe they need to murder their parents to rush the inheritance along?

I have long thought this might be a minor solution, the inheritance, not the murdering part.

Soon the boomers are going to be dying off, leaving their estates and the taxes that come with it to their offspring. For a 500k average house in London, how many millenial kids are going to have 200k/40% lying around to pay the inheritance tax bill? They will have to sell, and an increase in supply as thousands of kids are forced to sell would cool the market. It just depends how much the IHT allowances will be in the next 10-20 years.

 

[Bosws87]

I have long thought this might be a minor solution, the inheritance, not the murdering part.

Soon the boomers are going to be dying off, leaving their estates and the taxes that come with it to their offspring. For a 500k average house in London, how many millenial kids are going to have 200k/40% lying around to pay the inheritance tax bill? They will have to sell, and an increase in supply as thousands of kids are forced to sell would cool the market. It just depends how much the IHT allowances will be in the next 10-20 years.

In the UK they will avoid it if they plan it well, 500k is the threshold if handed over to children obviously you have to do this 7 years in advance before you demise.

 

[OleBoiii]

Soon the boomers are going to be dying off, leaving their estates and the taxes that come with it to their offspring.

Boomers are between 56 and 76 years old, so it might still take some time. Also, both parents typically have to pass away before the kids get the insurance(if both parents are still together that is. Boomers love their late divorces ). Not to mention the average boomer has 2-3 kids, often with several partners. 4(or more) kids is not that uncommon, even in the West.

So while the average boomer might have a fortune somewhere between 500k and 1 million dollars, that could very well have to be split between 3-4 children. Oh, and the average age of the children getting the inheritance is going to be around 55. I feel really sorry for my fellow Millennials who haven't managed to establish themselves by that point

 

[Red_toad]

I have long thought this might be a minor solution, the inheritance, not the murdering part.

Soon the boomers are going to be dying off, leaving their estates and the taxes that come with it to their offspring. For a 500k average house in London, how many millenial kids are going to have 200k/40% lying around to pay the inheritance tax bill? They will have to sell, and an increase in supply as thousands of kids are forced to sell would cool the market. It just depends how much the IHT allowances will be in the next 10-20 years.

Sell to get money they never earned! Then end up with a good deposit. Sounds like a good deal.
I had to work incredibly hard to get deposit for my first house in Aus in my early 40’s. Now it’s a race to be mortgage free long before I hit 60, I doubt I’ll make it but who knows…

 

[sullydnl]

Currently part of the issue in Ireland is the rapid increase of prices in rural areas (at twice the rate in some areas as in the capital) as people bolstered with pandemic saving and desparation are indeed leaving the city, as @Rektsanwalt suggests. However, that hasn't stopped prices in the capital rising as well.

Because even if people decide to live in rural areas, that won't change supply-side issues either in construction (exacerbated by the slow in construction due to the pandemic), the second-hand market, the rental market, etc. It's more complicated than just opting not to live in a big city (even ignoring access to work issues that still exist in rural areas).

 

[Red_toad]

Boomers are between 56 and 76 years old, so it might still take some time. Also, both parents typically have to pass away before the kids get the insurance(if both parents are still together that is. Boomers love their late divorces ). Not to mention the average boomer has 2-3 kids, often with several partners. 4(or more) kids is not that uncommon, even in the West. So while the average boomer might have a fortune of close to 1 million dollars, that could very well have to be split between 3-4 children. Oh, and the average age of the children getting the inheritance is going to be around 55. I feel really sorry for my fellow Millennials who haven't managed to establish themselves by that point

And their children earned none of the inheritance, so it’s free cash.
Bit shite that tax is due on it, but such is life.

 

[WI_Red]

The explosion over just the last 18 months of prices is insane. I don't think we could afford to buy our house now and we just purchased it 2 years ago!

 

[OleBoiii]

And their children earned none of the inheritance, so it’s free cash.

I agree. And it's not like a few hundred thousands doesn't taste good, even for a 50-60 year old. But for most people that age it's not gonna be completely life-changing.

Perhaps many Milliennials will pass on their parents' inheritance directly to their children?

 

[Classical Mechanic]

The obvious answer is better rent controls so renting isn't a burden or a source of insecurity.

 

[bosnian_red]

I'm pretty lucky in that I'm an engineer and the fiancée just graduated to be a dentist (and both debt free), so we were never too worried about it but we probably should've bought something sooner. Both still living with our parents so we took our time thinking we'd save up so we had a good amount for a downpayment, but the prices started running away. Prices exploded like crazy where I live in Ontario 2 years ago, but we decided to lock in to build a house in January (should be done by the new year). Ended up coming to 620k, last November they were at mid-high 500's, but half a year later and the same model is going for 800k+. It's crazy. Had we waited a bit longer and we really would've been stuck paying a fortune for something that wouldn't have been worth 200k just a few years ago, and at that point i think we would've just preferred to rent.

But the fact that minimum wage people can't even afford rent anymore is fecked. I personally don't like the logic of investing and buying purely to rent. Impossible to implement but for me, just make a rule where people can own 1 or a max of 2 places (if they want a vacation cottage) and ensure that people can live in homes if they want to buy them rather than being forced to rent constantly.
a few very rich people hoarding homes and upcharging rental prices like crazy is just very immoral IMO.

 

[OleBoiii]

Impossible to implement but for me, just make a rule where people can own 1 or a max of 2 places (if they want a vacation cottage) and ensure that people can live in homes if they want to buy them rather than being forced to rent constantly.

I agree with this.

I'm not sure if it's actually impossible to implement(though I'm sure that some libertarian with a degree in macro economics will claim that it is), but it's not gonna happen anyways. Whether you live in a successful social democracy or in the US, the idea of a free market and no limit when it comes to private ownership is still holy. We lack imagination. The solution is always "just raise the taxes a bit". We need more ballsy solutions than that!

 

[bosnian_red]

I agree with this.

I'm not sure if it's actually impossible to implement(though I'm sure that some libertarian with a degree in macro economics will claim that it is), but it's not gonna happen anyways. Whether you live in a successful social democracy or in the US, the idea of a free market and no limit when it comes to private ownership is still holy. We lack imagination. The solution is always "just raise the taxes a bit". We need more ballsy solutions than that!

Yeah. Like what use comes out of someone owning tons of properties in cities or towns other than just making that one already wealthy person much wealthier? Make some exceptions in for vacation properties and leave those for rent. Make all normal housing, living areas limited so people can only own 1. Live in what you have, let others buy and it'll help keep prices under control too. Maybe designate a very small number/type to be rental properties as they're needed still, but just have it controlled through different types of ownership and not just individuals looking to make money. Never going to happen, but there is no "good/pure/wholesome" reason other than pure profit for someone owning multiple properties and just charging out rent.

 

[Drainy]

Just cut down on the avocado toast. It's easy. Obviously

 

[Tibs]

I'm a millenial and own my own home - paid my mortgage off a few months ago.

Next step is to get a second property, and wack that on rent.

But from within people I know within my age group...only a handful own - either outright or mortgage. Majority are all out renting, and to be honest, most of them wouldn't give up anything about their way of life to get a deposit together to buy eg holidays, going out, fancy restaurants, designer clothes and so on.

 

[Heardy]

@bosnian_red @OleBoiii

How would you propose this cap on number of homes works in reality, what happens to the 1,000s of people that have property portfolios?

There would always be a loophole with people setting up businesses / PropCos which retain asset ownership.

Not saying I disagree with your idea in principle but surely that ship sailed long ago.

 

[bosnian_red]

@bosnian_red @OleBoiii

How would you propose this cap on number of homes works in reality, what happens to the 1,000s of people that have property portfolios?

There would always be a loophole with people setting up businesses / PropCos which retain asset ownership.

Not saying I disagree with your idea in principle but surely that ship sailed long ago.

Oh it definitely sailed a long time ago, no idea how it'd actually work and how to compensate the people with multiple property. Definitely seems like one of those things that should've been controlled much better a long time ago before things exploded and now it's about disaster control essentially, but I'm not even sure what can be done to help people as more and more won't be able to afford rent let alone buying homes.

 

[OleBoiii]

@Heardy

I have some ideas, but since I don't have the proper education I don't really know if this would work. I'm approaching the problem on the following basis: a wealthy and democratic country with universal healthcare and "free"(people always get triggered by this word) education. You need a certain level of wealth, infrastructure and social mobility for this system to be semi-realistic.

___________________________

First of all, not everyone can/should own property(imo). Students, people who just started working and people who have been unemployed for pretty much their entire life(for various reasons) will not be in a position where home-ownership is realistic. I'm imagining a system where roughly 20% of the adult population rents. Keep in mind that your rights as a renter will be much stronger and that you will have an option to buy later(see below).

So if up to 20% of the population rents but no one owns secondary homes and there are no vulture companies buying up property, who is going to rent out apartments/houses? The government. I can hear people screaming already, but I think this could work.

How would it work? The same way we have systems to calculate tax rates and salary levels(+ salary adjustments based on inflation) in the public sector, we could have a system to calculate what the rent and public housing prices should be. Sure, it would take a lot of manpower to manage this, but keep in mind that all the rent that is payed will go straight back to the government the same way taxes would.

So how would we get to the point where everyone owns maximum 1 house/apartment + a cabin(if they can afford it)? This would of course not happen overnight. I imagine it would take 10 years or so to make it work. But simply put: everyone who owns more than one home would have 10 years to sell their secondary property. If they have been unable to sell it on the market, they have the opportunity to sell the property directly to the government at a fair price. In order for property owners to not spend those 10 years squeezing out as much money as possible through rent, we'd have to immediately enforce a maximum allowed rent(based on property size, standard and location) with an annual increase/decrease based on inflation. This would ensure that no property owner loses money, while also protecting the renters.

There is a genuine chance that private owners wont be able to sell their property within the 10 year deadline and thus have to sell directly to the government, which in return could lead to a feckton(30% or more) of public houses/apartments. But it's important to remember that all public housing should come with a clause that allows you to buy it once you've earned enough money to qualify for a loan. So over time we would still end up with 20% of adults renting(which was my initial goal). And even if we're not, the new system would probably have a much lower rent and stronger renters' rights, so some people would probably choose not to buy even if they could.

____________________________

I realize that this might not be feasible, but I do think something along the lines of what I've suggested could be possible for wealthy nations with a decent infrastructure, provided we find good mathematical formulas(to calculate rent and reasonable housing prices) and give it enough time, rather than kick down the doors of the bourgeois immeditately, which admittedly sounds like a lot of fun

 

[Wumminator]

I'm a millenial and own my own home - paid my mortgage off a few months ago.

Next step is to get a second property, and wack that on rent.

But from within people I know within my age group...only a handful own - either outright or mortgage. Majority are all out renting, and to be honest, most of them wouldn't give up anything about their way of life to get a deposit together to buy eg holidays, going out, fancy restaurants, designer clothes and so on.

I wonder… I wonder if in any way you benefited from help from your parents….

 

[nimic]

I wonder… I wonder if in any way you benefited from help from your parents….

If he's a millennial who already paid off his mortage, he'd have to have an amzingly well-paying job to do that on his own.

 

[Wumminator]

If he's a millennial who already paid off his mortage, he'd have to have an amzingly well-paying job to do that on his own.

https://www.redcafe.net/threads/need-advice-please.383130/

Six years ago he was struggling to find a job he cared for after bouncing around industry to industry…. But he was financially secure.

now aged 34 he’s able to finally pay off his mortgage…. And going to get a second house. If only others would… stop buying designer clothes they could have done what Tibs has done!

https://www.redcafe.net/threads/nice-areas-to-live.385000/

from buying in a nice area to paying off a full mortgage in six years. What a dream. All through not going to restaurants.

 

[George Owen]

I can see the big corporations in the US, like Amazon and Google, to start building their own cities. Housing will be offered by them in exchange for you to work and live there, or to spend your credits (When UBI is implemented) there. I don't think they will let you own it though.

 

[Pexbo]

https://www.redcafe.net/threads/need-advice-please.383130/

Six years ago he was struggling to find a job he cared for after bouncing around industry to industry…. But he was financially secure.

now aged 34 he’s able to finally pay off his mortgage…. And going to get a second house. If only others would… stop buying designer clothes they could have done what Tibs has done!

https://www.redcafe.net/threads/nice-areas-to-live.385000/

from buying in a nice area to paying off a full mortgage in six years. What a dream. All through not going to restaurants.

 

[nimic]

https://www.redcafe.net/threads/need-advice-please.383130/

Six years ago he was struggling to find a job he cared for after bouncing around industry to industry…. But he was financially secure.

now aged 34 he’s able to finally pay off his mortgage…. And going to get a second house. If only others would… stop buying designer clothes they could have done what Tibs has done!

https://www.redcafe.net/threads/nice-areas-to-live.385000/

from buying in a nice area to paying off a full mortgage in six years. What a dream. All through not going to restaurants.

 

[OleBoiii]

https://www.redcafe.net/threads/need-advice-please.383130/

Six years ago he was struggling to find a job he cared for after bouncing around industry to industry…. But he was financially secure.

now aged 34 he’s able to finally pay off his mortgage…. And going to get a second house. If only others would… stop buying designer clothes they could have done what Tibs has done!

https://www.redcafe.net/threads/nice-areas-to-live.385000/

from buying in a nice area to paying off a full mortgage in six years. What a dream. All through not going to restaurants.

 

[Mr Pigeon]

I used to think that the system was rigged against people like me, until I inherited my parents' vast lands and titles. Now I realise that the system is fine and those that moan didn't work hard enough to be born into a wealthy family.

 

[fergieisold]

House prices in saddleworth are going through the roof at the moment, 3 bed terraces 220-250k atleast...not as bad as places like didsbury (400k) but still really a pain for lower earners trying to save to live somewhere nice.

the solution is as someone said to buy somewhere shit and cheap...but if I had the choice between renting somewhere nice and buying somewhere shit I think I’d choose renting.

 

[sullydnl]

Not to pile in on @Tibs but....

I spent 7 months living in Chelsea (company paid)

I used to live in Chelsea...my old company used to pay my rent/bills/food and travel.

Whatever about holidays, going out, fancy restaurants, designer clothes and so on, I'd certainly like to give up paying for rent, bills and food for 7 months. Hell, even just the rent would be great, 6k towards a deposit straight away.

But tbf he might have also sacrificed going out, fancy restaurants, shopping and so on while he was in London.....

There is no comparison, London is a billion times better than up here....nothing wrong with Manchester...but if you like exploring, food, art, shopping, culture, going on, then London is a country mile ahead

*cough*

 

[Heardy]

@Tibs come on them mate, enlighten us how you’ve managed to buy and pay for a house in full in six years.

Have you been earning £100,000 in London and bought a house for £150,000 or are you just stupidly wealthy?

 

[Heardy]

@Heardy

I have some ideas, but since I don't have the proper education I don't really know if this would work. I'm approaching the problem on the following basis: a wealthy and democratic country with universal healthcare and "free"(people always get triggered by this word) education. You need a certain level of wealth, infrastructure and social mobility for this system to be semi-realistic.

___________________________

First of all, not everyone can/should own property(imo). Students, people who just started working and people who have been unemployed for pretty much their entire life(for various reasons) will not be in a position where home-ownership is realistic. I'm imagining a system where roughly 20% of the adult population rents. Keep in mind that your rights as a renter will be much stronger and that you will have an option to buy later(see below).

So if up to 20% of the population rents but no one owns secondary homes and there are no vulture companies buying up property, who is going to rent out apartments/houses? The government. I can hear people screaming already, but I think this could work.

How would it work? The same way we have systems to calculate tax rates and salary levels(+ salary adjustments based on inflation) in the public sector, we could have a system to calculate what the rent and public housing prices should be. Sure, it would take a lot of manpower to manage this, but keep in mind that all the rent that is payed will go straight back to the government the same way taxes would.

So how would we get to the point where everyone owns maximum 1 house/apartment + a cabin(if they can afford it)? This would of course not happen overnight. I imagine it would take 10 years or so to make it work. But simply put: everyone who owns more than one home would have 10 years to sell their secondary property. If they have been unable to sell it on the market, they have the opportunity to sell the property directly to the government at a fair price. In order for property owners to not spend those 10 years squeezing out as much money as possible through rent, we'd have to immediately enforce a maximum allowed rent(based on property size, standard and location) with an annual increase/decrease based on inflation. This would ensure that no property owner loses money, while also protecting the renters.

There is a genuine chance that private owners wont be able to sell their property within the 10 year deadline and thus have to sell directly to the government, which in return could lead to a feckton(30% or more) of public houses/apartments. But it's important to remember that all public housing should come with a clause that allows you to buy it once you've earned enough money to qualify for a loan. So over time we would still end up with 20% of adults renting(which was my initial goal). And even if we're not, the new system would probably have a much lower rent and stronger renters' rights, so some people would probably choose not to buy even if they could.

____________________________

I realize that this might not be feasible, but I do think something along the lines of what I've suggested could be possible for wealthy nations with a decent infrastructure, provided we find good mathematical formulas(to calculate rent and reasonable housing prices) and give it enough time, rather than kick down the doors of the bourgeois immeditately, which admittedly sounds like a lot of fun

Some good points and I think it would be great to achieve that, but sadly, so many MPs etc own multiple homes it’d just never pass - they’d get screwed on Capital Gains Tax too, so they’d double down against it.

It is sickening though that people can “afford” rent of £1,000 a month due to having no choice, but can’t be given a mortgage for £800 a month without a massive deposit!

 

[Bosws87]

I spent a couple of years back with the parents to save up 30k, i should of just not eaten out instead.

 

[Green_Red]

https://www.redcafe.net/threads/need-advice-please.383130/

Six years ago he was struggling to find a job he cared for after bouncing around industry to industry…. But he was financially secure.

now aged 34 he’s able to finally pay off his mortgage…. And going to get a second house. If only others would… stop buying designer clothes they could have done what Tibs has done!

https://www.redcafe.net/threads/nice-areas-to-live.385000/

from buying in a nice area to paying off a full mortgage in six years. What a dream. All through not going to restaurants.

Finishing the Klarna payments on a massive tent from gooutdoors is often confused with a £350K, 25 year mortgage by millennials.

 

[Green_Red]

I used to think that the system was rigged against people like me, until I inherited my parents' vast lands and titles. Now I realise that the system is fine and those that moan didn't work hard enough to be born into a wealthy family.

Trafalgar Square?

 

[Tibs]

For those asking how I managed it.

Multiple jobs, saving, not spending money on things I didn't need, not doing things I would love to do because I wanted to get it paid off, eg 2 holidays in ten years, living at home until 30, and more.

I'm not saying it's an easy thing to do, it wasn't for me, and I know its even more difficult for others.

However, having better financial control would help a lot of people, you may or may not agree, that's your choice

 

[Pexbo]

For those asking how I managed it.

Multiple jobs, saving, not spending money on things I didn't need, not doing things I would love to do because I wanted to get it paid off, eg 2 holidays in ten years, living at home until 30, and more.

I'm not saying it's an easy thing to do, it wasn't for me, and I know its even more difficult for others.

However, having better financial control would help a lot of people, you may or may not agree, that's your choice

Your parents let you live with them until you were 30? Did you pay rent? Bills?

 

[Tibs]

Your parents let you live with them until you were 30? Did you pay rent? Bills?

I chipped in with money but it wasn't a fixed monthly thing. It would qualify as parental help in hindsight

 

[Pexbo]

I chipped in with money but it wasn't a fixed monthly thing. It would qualify as parental help in hindsight

If we assumed you were sharing rented accommodation outside London it’s fair to say that rent, bills and food for one person would be around £750 per month.

Lets count it from 18 to 30.

£750 x 12 x 12 = £108,000

Im going to agree with you and say that qualifies as parental help.

 

[Havak]

This isn't really a solution. The house prices have also risen significantly faster than inflation/salary levels outside the big cities. Popular areas have always been more expensive. It's not really a new phenomenon, although it has perhaps gotten worse than ever.

This.

I bought my house in June last year in quite a popular area (Swinton, Salford, Greater Manchester), but it's far from 'posh' or anything like that.

My house has an extension and the end terrace on my street just sold for £20,000 more than what I paid literally 13 months ago! That house, realistically, should have sold for less than mine.