The number of adults living with parents in the UK increased by 300,000 during the pandemic, then fell by the same number following lifting of pandemic restrictions, Generation Rent analysis has found.
This fall and subsequent rapid growth in demand for private rented accommodation has been a significant factor in the record rent inflation figures in the past two years.
Tenancy deposit data show a similar trend, with the number of protected deposits growing at twice the rate in the past two years as they did in 2020-21. The tenancy deposit data also indicate that rising rents are discouraging tenants from moving, which is contributing to the fall in the number of homes being listed for rent.
Generation Rent is calling on the government to increase Local Housing Allowance so that renters getting benefits can cover market rents, increase building of new social housing to meet demand for homes, and place limits on in-tenancy rent rises so that tenants do not face rent increases they cannot afford.
Generation Rent looked at ONS figures for adults living with their parents. In Q2 2019, there were 6.66m 15-34 year olds living with their parents – 40.1% of the total. As offices and universities closed and many people started working from home, many young adults took the opportunity to move out of rented homes and spend time with their families. As a result, in the two years to Q2 2021, the number living with parents increased by 314,000 to 6.97m (42.3%).
From summer 2021, as offices and universities reopened, many young adults moved back to cities, and back to the rental market. In the 12 months to summer 2022, the number of young adults living with parents fell by 307,000.
Freedom of Information data obtained by Generation Rent indicates that these young adults predominantly moved into private rented homes. The size of the deposit protection system increased by 101,000 deposits in the 2020-21 financial year, a 50% fall on the pre-pandemic average annual growth of 150,000. But in 2021-22, the number of deposits protected increased by 217,000, and increased again in 2022-23 by 226,000.
This adds to an existing body of evidence that indicates the private rented sector grew during this period and contradicts concerns that rents have risen because the sector has shrunk. The English Housing Survey recorded an increase of 178,000 private renter households in England between 2020-21 and 2021-22.
The fall in demand in 2020-21 for rented accommodation caused rents to fall, particularly in London, with rents on new tenancies recorded by Zoopla falling 1.2% in the UK and 9.4% in London in the year to March 2021.
This trend reversed in 2021-22 with market rent inflation hitting 12.3% in the UK in the 12 months to July 2022, and 17.8% in London.
The tenancy deposit data also suggest that fewer existing tenants have been moving since the pandemic, initially because of restrictions and uncertainty, but more recently because rents are rising so rapidly. The number of tenancy deposits returned to tenants as a proportion of the total at 31 March 2022 was 31% in the year to March 2023, down from 40% in 2019, though slightly up on 2021-22’s figure of 28%. This lack of churn leads to fewer vacant properties coming to market and more competition for those that do.
Dan Wilson Craw, acting director, Generation Rent, said: “In many ways the pandemic is long behind us, but its reverberations are still making life miserable for private renters, who are not just facing fierce competition for new tenancies, but are also vulnerable to unaffordable rent increases imposed by landlords who want to cash in on rising market rents.
“The failure to build enough homes in recent decades has left the country unprepared for the huge spike in demand since the end of restrictions. The failure of the welfare system to respond to rising rents has left renters on low incomes even more exposed to the cost-of-living crisis.”