It's not just struggling singletons or professional couples in their 20s or 30s finding it hard to get on the property ladder. A new generation of parental renters is emerging, with nearly a quarter either renting, or still living with their children's grandparents, reveals Alliance & Leicester Mortgages' movingimproving index.
* Nearly a quarter of parents still rent or live with their own parents
* Four in ten renting parents cannot afford their own home
Of those parents who do not own their own home, 42% hope to buy, but can't afford it. Just 3% are actively looking to buy their first home, compared to 55% who are not even thinking about trying to get on the property ladder at the moment.
And separate research commissioned by the Centre for Future Studies for Alliance & Leicester Mortgages adds further weight to the predicament by forecasting that the number of parental renters is likely to increase. With the increase in divorce rates - set to double by the year 2021 - and the increase in one parent households, the traditional family household will change beyond recognition - becoming more fragmented with families living in two or more households. As more parents are divorcing, and some moving to live in rented accommodation, this could help explain the forecasted increase in the private rental market - set to rise by 39% by the year 2014.
Stephen Leonard, Director of Mortgages at Alliance & Leicester comments: "We are currently seeing a shift in our society which will affect the housing market over the next twenty years or so. The decrease in the number of nuclear families as a result of divorce could mean an increase in the number of rented households with children as our research indicate. It seems that the trend for parents choosing to rent rather than buy is set to continue with six per cent of prospective first time buyers thinking it makes financial sense to have a child before attempting to get on the property ladder. With reports showing that the cost of raising a child to the age of 21 is approximately £164,000, compared to the average first time buyer property of £143,7483 the perception of the expense of getting on the property ladder could be overestimated. Although parental renters might be put off looking into buying a home because of the expense they shouldn't think that it is always out of their reach. More and more lenders are using affordability based lending which allows them to assess how much an individual can afford to put towards monthly mortgage payments based on their personal financial circumstances, which is a more realistic and accurate way to calculate what they can borrow."
