Millennials can expect to pay more than £1 million in rent during their lifetime if they fail to get onto the property ladder, it has been revealed.
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Millennials spend £273,210 on rent before buying – if they buy at all
New research found that millennials who began renting at 21-years-old and live in an average-sized property outside of London will spend an average of £110,830 in rent before buying their first property at an average age of 32.
For those living in the capital, the amount reaches £273,210 by the time they take their first step on the property ladder.
However, 41 per cent of millennials don’t expect to ever buy a home of their own, relying on renting to support them into old age.
Lifetime renters spell £1 million for landlords
For this emerging generation of lifetime renters, the total amount they can expect to spend on rent in their lifetime is £1.1 million on average for those living outside of London.
For those living in the capital, they will spend 2.5 times that amount at £2.6 million on average.
Even millennials who are able to buy their first house at the age of 32 will spend 34 per cent of their post-tax income on rent throughout their 20s and 30s. With post-tax income during that period averaging £330,234 a household, this works out as £110,830.
Are long-term tenancies on the horizon?
John Goodball, chief executive of Landbay - which carried out the research - said: “While younger people have always been overrepresented in the private rented sector, over the last decade there has been a marked increase in the proportion of younger households relying on the buy-to-let market.
“The Government is giving off strong signals that it is ready to tackle the supply shortages gripping the nation, while also improving standards, affordability and the institutional supply of rental properties in particular. This can only be good news if it becomes a reality, but with so many of the issues being systemic, only time will tell if these measures will have the desired effect.”
The Government plans to review whether landlords should be offered incentives to give tenants the option to lock into tenancy agreements for more than 12 months. Industry insiders have suggested this could take the form of tax incentives following the tax clampdown on the buy-to-let sector in recent years.