'Cradle to grave' millennial renters should have German-style tenancy protections, says think tank

Millennials who face the prospect of renting for their entire lives should be given German-style long-term security of tenure and limits on hikes in their rent, a leading think tank has argued.

In its latest report, the Resolution Foundation estimates that if the decline in UK home ownership rates seen since 2000 continues, a third of people currently in their twenties and thirties will still be renting their homes by the time they retire.

Lifetime renting is unremarkable in countries such as Germany and Switzerland, which have home ownership rates far below the UK’s current 63 per cent level.

But those countries have much stronger rights for tenants compared to the UK, where tenants can usually be ejected by landlords at just two months’ notice, making long-term renting on the Continent a much more attractive proposition.

Resolution therefore recommends that England and Wales introduce a continental-style form of “indeterminate tenancy” as the sole form of rental contract. Scotland introduced such open-ended contracts for renters last year.

Most tenancies in Germany are indefinite and they last, on average, for 11 years, compared to 2.5 years in the UK.

Resolution also advocates an inflation cap on three-year rent increases, similar to the policy proposed last year by the Labour Party.

“While there have been some steps recently to support housebuilding and first-time buyers, up to a third of millennials still face the prospect of renting from cradle to grave,” said Lindsay Judge of Resolution.

“If we want to tackle Britain’s ‘here and now’ housing crisis we have to improve conditions for the millions of families living in private rented accommodation. That means raising standards and reducing the risks associating with renting through tenancy reform and light-touch rent stabilisation.”

The ability for landlords to eject tenants for no reason other than wishing to take back possession of the property with just two months’ notice was introduced by Margaret Thatcher’s government in the Housing Act 1988.

The think tank is particularly concerned about the increasing number of children being brought up in insecure private rented homes, as millennials start to have families of their own.

Fifteen years ago the number of families renting privately with children was 600,000. Today the figure has risen to 1.8 million.

Resolution also notes that large increases in the numbers of retirees in private renting will likely put upward pressure on housing benefit payments for the elderly, resulting in the total bill for the government doubling to £16bn by 2060.