in wondering what this generation of enforced renters are going to do

[mustbetimeforacreamtea]

When they reach retirement and can't afford commercial rents on a pension? What happens then?

mijas everyone's situation is different, you can't just make sweeping generalisations such as two people on the minimum wage could afford a £60K house.

Minimum wage annual salary is around £10K, so double that you have £20K. Let's say the couple have to spend as follows:
Childcare - £7,549 (this is the average cost given by British Family and Childcare Trust Annual Report and obviously necessary in this scenario so two minimum wages come in, not just one).
So family disposable income down already to £12,500.
At the moment the couple are renting whilst they save for deposit to buy, so say they pay £840 pcm, this is the figure given by HomeLet as average rent paid for tenancy begun in UK in May 2014.
£12,500 - 12x£840 = £2420.
At this point it looks unrealistic that the couple would actually survive on their income at all, as £2,420 is obviously not enough for all other outgoings throughout the year - £200 per month for bills, food, etc. impossible.
But they are likely to get Tax Credits towards childcare given their relatively low income. I don't know exactly what figure they would get but just say they received the maximum 70% of childcare costs paid.
Thus £20K - 30%(7549) = £17736
Take away the rent, leaves £7683.
Take away average travel costs (according to a recent survey - £118 pcm in London is average, £63 in Birmingham / cardiff) . Leaves £6267. Say they want to save a little for the children's birthdays - let's say a low cost of £50 for each family member so that's £400 off, and let's say they spend very little on school uniform, beauty and clothes but, with the basics alone including children's shoes / haircuts for adults, this would amount to £100 per person annually. So we are down another £400 to a figure of
£5467 left.
This is £450 per month.
Factor in electricity / gas bill, small house average figure from UK power is £57. £393 left. Putting in a very conservative estimate for food, say £40 per week, this is £173 pcm. Down to £220 per month. Most people need the phone and internet in this day and age - could children actually do homework without the internet? - so say standard £30 per month for both, down to £190.
At this point, you realise that if the couple needs anything over the course of the year - birthday presents for childrens' friends / items replacing that have worn out e.g. home computer / hoover / iron etc. or to travel anywhere, e.g. to see relatives or visit friends, let alone have any kind of day trips or holiday, it will have to come out of this money. Say they managed to limit spending on these other things to a conservative £90 per month over the year AND HAVE NO DEBTS / HIRE PURCHASE AGREEMENTS OF ANY KIND (which is unlikely in reality) and that they do not have a car (travel above on public transport) - this leaves £100 pcm.
So, at best they can save £6,000 over 5 years. this puts them in the market for, at the very best with a 10% deposit, a mortgage of £60K. What can you actually buy for that? A family home for a family of four??
It's just not that easy.
I find myself doing these calculations all the time, as I am trying to save for a deposit as a single, full-time employed, mum of 2 on an income of around £12K. It is very, very difficult to find anything I can afford and I started to save late as I was busy building my career prior to this and only paid of student loans and career development loans a couple of years ago. I was earning £35K for about a year but then had my children! I am happy enough with my choices in life, but I just don't see why the government cannot build much, much more affordable housing around the £50K mark for the thousands like me.

Johnny totally agree - I have had to move 5 times since my 5 year old was born in rented accommodation.
1st move: highly anti-social behaviour next door to the tune of attempted murder and domestic violence
2nd move: house freezing and damp in winter, landlady would not fix hearth fire chimney flue and other heating insufficient on its own
3rd move: constant building work began in the adjacent flat, including taking the roof off, roof extension, constant mess in our joint access
4th move: we lived above a hairdressers which closed down and became a nosiy bar!
5th move: sharp dip in income and more heating issues meant we couldn't keep up with a relatively high rent...
Not unusual as I know from many others, my BF has just been given 1 month notice to move her family of 4 out of the home they have lived in for 6 years as he wants to sell the property.

Just out of interest I went looking locally, to see what there si for about £130K and how much it would cost, mortgage etc.

www.rightmove.co.uk/property-for-sale/property-43480432.html

£125K We looked at this 2 bed house, it is gorgeous and you could easily bring up a family in it - as many people along the walk are doing.

www.rightmove.co.uk/property-for-sale/property-45129302.html
Listed and lovely,

With a £10K deposit the mortgage would be about £700 per month, rentals for similar houses are £500 - 650.

There are others, some cheaper and bigger, but not in town, near schools and centres with good employment. Lots of people move to these 2 small market towns.

But it is really odd that not many people from the nearby city will even consider moving to either as they are, apparently, too far out, too isolated - both have very good bus routes to city, rail network etc. Even if 2 people earn half the national average these houses are purchasable, the deposit could be saved, even if living in a similar property.

And parts of this area are high in the national indices of deprivation.

Being from a highly deprived area/background myself I know how hard it is to get started. At these prices, with our wages from way back then, bar maid and brickie, we may have bought one (imagine how cheap they would have been back then - aaaaaaaaaaaaaaaaargh). But we couldn't have though, as the 3 times the first wage plus 1 of the second rule would have prevented us from doing so.

So with these figures and the fact that we saved a whole house price whilst renting, I am not sure how I take the 'we can' afford to save the deposit' claims.

I have rented since I was 17/18 and my mum died (so no option to live at home and save up!). DH and I have saved up a sum of money twice for a deposit but each time something has eaten it away before it has been large enough (the first was a serious illness the second was a dh losing his job). We dont have anyone to support us and so anytime anything happens the only help we get is paid for (childcare, emergency travel and accommodation etc etc). This has been out major issue rather than house prices themselves, we can afford the mortgage its just the deposit we struggle with - we can afford to save up but not if life keeps getting in the way. We are now saving again so hopefully in a couple of years we will be able to try and find something.

Other common sayings that also can get my goat. 'Renting was common not long ago', with the implication of 'put up and shut up'. Yes. It was. Usually with bad overcrowdng with no sewers or piped water in rat-infested slums which were cleared in that brief period of solidarity post-war. They existed in the same time period as those lovely single-family palaces, the stately homes, where there were separate passages for us lowly servants (my grandma was in service) and tunnels for the gardeners so the rich wouldn't even have to see us. I will fight before we see those days come back. As in revolution. I hope and expect I will not be alone.

'renting is common on the continent' so it's ok here. Actually it isn't that much more common than it is in the uk anymore. Our impressions of other countries seem to be 50 years or so out of date. In fact home ownership has been encouraged in some places for precisely the reason in the op, so you don't have to pay rent out of a meagre state pension. Germany has lots of tenants true but it has seriously strong rent controls, to the extent that it is really hard to find a tenancy. en.m.wikipedia.org/wiki/List_of_countries_by_home_ownership_rate

I think you have to be wilfully myopic to believe that the housing problem in this country would be resolved if only all those wasteful renters could budget a bit better and save deposits.

Idealist you will not be alone!

I agree that the cost of housing is having a destructive effect on society generally.
A place to live is a basic need and it's irrational to have a situation where the cost of a place to live is out of the reach of most people.

But I dont see how the govt can build affordable housing for people to buy.
Surely any housing which is built will ultimately be sold at the general market value?

I can see the need for a correction in house prices but then again that would also have a huge destructive effect on the financial system

Correction in house prices comes from bringing back the regulations that were discarded by Thatcher's admirable attempts to get the working class to buy.

Trouble is, deregulation lead to over lending then inflated prices. Worse still the money made from selling off social housing wasn't reinvested in replacing the social housing just sold off. Now urban areas struggle to find land to build new homes.

I an see that it would be possible Joysmum, but it would surely take commitment to a long term plan, and that doesn't seem likely?

Backofbourke's post upthread about the situation in Australia is very depressing :(

Renting was common when I was young. But families only really rented council houses. Private rents were shabby and for students and young single people. The problem is that all the council houses were sold off.

To be honest, buying a house on a low wage is a real gamble. You don't just need to cover the mortgage, there is always expensive maintenance to be done. When I was young, low paid people had the security of their council tenancies without maintenance worries. And council estates, on the whole, were much nicer places to live than they are now.

How is it 'landlord bashing' to say that tenants have had their rights taken away from them? It is absolutely the truth. Without security of tenure, which was removed by the 1988 Housing Act, all regulation (and there is little enough of it in England and Wales at least) is meaningless, because landlords can and do just evict tenants who complain.

It would take major political balls to actually do anything meaningful about the situation, because it would go against the immediate interests of a huge portion of the electorate (with high voter turnout too). Not to mention it would take years to start seeing some benefits. Doubt any of them have the aforementioned political balls of steel.

To answer the OP's question though, I wonder if people will not end up having to live with their children in retirement. It's what used to happen, back when home ownership wasn't so common.

Back to the nineteenth century, yay!

Oh, and can we please stop talking about the 'average wage' as though it was something that people typically earn? There is a massive difference between average and typical. The typical wage is a lot less than the average wage and if you are on the average wage then you are in the top third of earners in the UK. This article explains things well, I think:

news.bbc.co.uk/1/hi/magazine/7581120.stm

From it:

chachah - I have wondered this, my grandmother lived with her mother all her life, the house was essentially split in two with my great grandmother having the largest part until my grandmother had a family and then them swapping, my uncle who never married also lived in the home his whole life sharing the smaller part with my grandmother. It was a small house (it was a 3 bedroom terrace in a mining town!) but creatively managed. I dont have parents to live with but I often wonder that if I am lucky enough to manage to buy a house - do my children have much hope in 20 years?

well what happens now? presumably pensioners have some level of means tested housing benefits once they get to retirement age if their pension income is low.

sorry but renting is not new, 64% of english and welsh people own their own home according to the ONS- that means that 36% don't. thats dropped by 5% in 13 years. who knows if that trend will continue? i live in a bog standard town in beds. you can get a 2 bed flat for £120k, a small house for £180k. Therefore, my kids could theoretically get on the housing ladder with a £12.5k deposit if they and their partner were earning £20k each. They could not live closer to London,but that is no different to us 20 years ago.

we have done a range of different things, but the only thing that compelled us to buy was our experience of shit landlords.

when i started work, my state and occupational pension age was 60- its currently 68, my dad died at 63.

Ages late, ''mrsW - As far as I know they made it so that tenants did not have to reveal their benefit status to Landlords at all.''

We had to provide bank statements to prove the origins of our in-comings. Big bold 'X District Council' next to one of our monthly incomings would have been a giveaway sadly.

I've not heard anything contrary to the fact that most LL house insurance is null and void if they accept tenants on benefits. The excuse for this is that people on benefits are statistically more likely to smash the place up. Apparently. We've been renting for 7 years now. The property we are in now is our second one. We left the first in a better state than we found it (garden and general state of repair inside) and the house we are in now is 'looking better than it has for years - like someone cares about it' according to the neighbors.

When we took out our first tenancy we weren't on HB, we didn't know we qualified! (DH works FT, me PT) We didn't tell LL when we started to claim because we didn't know we should.

When we took on this tenancy the agents were very slack and i think we slipped through a loop hole. I was terrified we wouldn't find anywhere to live for the 5 of us, even though our reference was gold plated.

We're scum basically :(

Housing benefit isn't the answer though, greenfolder. As I said upthread, we are currently spunking £22bn a year, every year, on housing benefit. As more people rent, this is only going to get higher. Also because rents always go up - they never come down. Shunting the provision of housing into the private market has, quite frankly, become an unaffordable disaster for this country, and if in the future more pensioners are renting in the private sector and facilitating an even bigger transfer of public funds into the hands of private landlords ... well, the sky's the limit really. Plus, as Idealist says, housing benefit never actually covers the full rent, so the pensioner tenants themselves will struggle financially. Just saying 'oh well housing benefit will cover it' is the kind of short-term thinking that has got us into the mess that we're in now.

any solution that basically helps people keep up with the sky-high prices (whether it's subsidised rent, or the current help to buy scheme) will only drive the prices further up in the end, it's a race to nowhere.

Also, the psychological effects of relying on benefits shouldn't be underestimated. I hate the fact that I have to claim housing benefit. Don't get me wrong, I know that I'm lucky we have a home. But I would much rather be able to pay my own way, quite apart from the fact that benefits can be stopped, policies can be changed etc. It actually really gets me down that however hard I work, I can't afford to house us without state help.

And how wrong is that! That rent costs more than a mortgage! it shuold be the other way round

Oh. My. God. How do people have such a total lack of understanding about basic economics?

It's not just the life long renters that may have issues in their retirement. But home "owners" like my mother, who have gone down the equity release route. Because of the interest charged on a sum which has no repayments, she won't own any of her house in 2 years time. I was fucking horrified when I found the paperwork. Apparently she can still live there when the company owns it all....they say they won't kick her out, but I've a feeling that at that point they'll invoke the clause about keeping the house in a good state of repair.

She won't have to pay care home fees as she has no house, but then has no choice where she goes.......or comes and lives with me.

Equity release was for £60k, she house currently is worth £550k...if only she'd downsized.

DH and I are just shy of 31 and own a house outright.
We've been able to achieve this by spending 6 years living in a caravan, eating toast and never going on holiday (oh, and working very fucking hard with no such thing as weekends).
Yes, it's been trying at times, but fun in a strange way too, and obviously it all feels worth it now.

I don't like to generalise but I have SO many friends renting houses beyond their means, having a foreign holiday every year, buying new cars etc etc and then whining that they can't afford to buy a house because of The Government.

We've had a few snidey comments over the years about our living arrangements, but now that we have the house the same people are saying things like 'oh, you're so lucky to have been able to buy a house funny how the harder you work the luckier you get? WE would never be able to do that'
Er, yes you would. You just don't want to.

I do appreciate however that there must be lots of people genuinely trapped in the cycle of renting, which must be very hard.

What's happening in my bit of the South is that all the cheap starter homes/ flats are brought as investments.
All the second homeowners in proper houses couldn't afford to move up to the forever house - so they have improved and extended. Their houses are now worth much more.
There is a suddenly a massive gap between renting and buying in my neck of the woods.

What about the statistic that 25% of children live in single parent homes. So basically if you brought with your ex you might be able to keep up the mortage or at least get a deposit. If not, you are pretty much stuck.

Yes yes to the cost of moving its £3000-£5000 a time for us to move (not inc deposit). That's a lot of money 'wasted'.

I still believe social housing is the answer. People would feel settled, part of a community. Housing benefit would stay in the system, there would be fewer buy to let landlords (not knocking it) so houses would eventually become cheaper. Certainly small starter homes which are being bought up as lets, these would be more affordable, which then would have a knock on affect.