Hundreds of thousands of millennials are stuck living with their parents unable to afford to rent a property.
Never mind climbing the housing ladder, for an estimated 700,000 young people, even getting enough money together to rent a flat is out of reach.
Rising deposits and rents, as well as landlords filtering out those with poor credit scores, are taking their toll on young people’s ambitions to move out of home.
A study by free-for-life credit report provider Noddle.co.uk shows average rental deposits across the UK now sit at £970, and average rental payments are £927 per month.
In London, the average deposit is £1,831, with the average rent hitting £1,593.
Typically, those who make it into a rented property have had to save for four months for the deposit required and still often need to rely on guarantors, such as parents, to secure the deal.
Many others have had to give up on several preferred properties after being rejected because of their credit score.
It’s a particular problem in London, with over one in six (16%) young people being rejected for a property based on poor credit scores.
Jacqueline Dewey, MD of Noddle, said: “Our latest research suggests that it’s not just buying property that’s become increasingly difficult for young people today; renting is also out of reach for many, too.
“As demand for rentals becomes greater, especially in the big cities, landlords can pick and choose who they want in their properties.
“Credit checks are becoming more and more important in the tenant selection process.”
Data released by the Office for National Statistics last month shows that the percentage of young adults living with their parents in the UK has risen from just over a fifth (21%) in 1996 to 26% in 2017, rising from 2.7 million to 3.4 million in the past two decades.
Noddle’s top tips for getting your credit history in shape:
- Make sure you have some bills or sources of credit in your name (not your parent’s name), such as mobile phone contracts or a credit card. A potential landlord can’t assess your credit worthiness if you’ve never had credit
- Check your credit score and report regularly. Ensure that you recognise all searches and all financial products tied to your name so that you recognise anything fraudulent
- Pay your bills on time. Missing a payment can significantly impact your credit score – even if it’s only by a day or two
- Get on the electoral roll – this provides proof of address and that you have stable living arrangements
- Keep your credit balances low, but do use some credit every month. Pay off in full, on time, to show landlords that you are good at managing your money