Millennials and money Banking in the age of the...

Millennials and money

Banking in the age of the renter

Millennials and Money: Banking in the age of the renter

M I L L E N N I A L L A B S

About• The Millennials and Money project seeks to understand millennial money habits, behaviours and what younger generations need to become more financially resilient. Through extensive literature reviews, polling of 2000 adults, online focus groups and qualitative interviews, Common Vision (CoVi) has been examining what millennials want and need from personal banking products, financial providers, and the wider market in order to manage their money and make informed financial decisions, and how these attitudes differ from other generations.

• This project is supported by the Current Account Switch Service (CASS), the UK’s sole designated current account switch service. CASS is working with Common Vision to seek to understand how younger people navigate an increasingly complex market and what they identify as the key components of a convenient, useful and reliable banking product. This research will help CASS to ensure it continues to deliver successfully in the future.

• Banking in the age of the renter is the fourth in a series of trends papers which investigate social and economic contextual factors that are influencing millennials’ engagement with the financial system. It looks at how the housing crisis has influenced millennial spending and savings behaviours, and how the financial markets are responding with products and services.

• In response to this paper we invite policymakers and sector leaders to join the conversation around the views, needs and preferences of younger customers and citizens. Contact details for CASS and Common Vision are provided at the end of the paper.

Millennials and money

Banking in the age of the renter

Summary of key points • A combination of economic factors means that the millennial generation face more acute housing challenges than previous generations. The average age of homeowners has increased and a third of millennials could become “cradle to grave” renters. Although many of the millennials who participated in our research aspire to become homeowners one day, they cited the uncertainty of rising property prices, increased living costs, and low interest rates as barriers to saving for a deposit. Home ownership has become delayed to later life, and it is not until age 34 that more than 50% of people own a home, whereas in 1997 the average age was 26.1

• Targeted financial support to encourage active consideration and switching of utility providers and financial products may help young renters build up their savings and become more financially resilient. Meanwhile, support is also needed for new millennial homeowners who continue to face financial security concerns alongside longer mortgage terms and paying off debt late into older adulthood and even retirement.2

Financial providers and market enablers including the Current Account Switch Service (CASS), which supports those who wish to move their current account to a new provider that better meets their needs, have opportunities to tailor their products and services to these needs.

• More millennials are living at home for longer to save money, with some groups relying on parental wealth, the ‘Bank of Mum and Dad’, to make it onto the property ladder – potentially compromising the financial security of other generations. Financial providers are responding with products which leverage, or are underwritten by, the wealth of older relatives, but further innovation is needed for those who cannot access familial support.

• The term ‘Generation Rent’ aptly captures a significant and urgent challenge more acutely experienced by young adults today than any previous generation. But in many ways it also risks homogenising the millennial cohort, within which there is notable variation and economic inequality, and different financial experiences and aspirations of individuals. Responding to the age of the renter requires a concerted effort from the financial market as a whole, not just mortgage providers, to enable and empower the millennial generation to make sound financial choices and decisions.

M i l l e n n i a l s a n d M o n e y : B a n k i n g i n t h e a g e o f t h e r e n t e r2

1. IntroductionThe housing crisis has become symbolic of the UK’s economic challenges over the last two decades. Limited available housing stock has contributed to rising property prices, well above the rate of inflation, which has not been matched by the same proportion of earnings growth. First-time buyers today are faced with a widespread affordability challenge and the resulting decrease in mortgage applications has been further exacerbated by stricter regulations for mortgage products since the 2008 financial crash. These challenges combined means that the millennial generation is more acutely ‘priced out’ of home ownership that previous generations: demonstrated through an increase in the average age of homeowners, and a growing proportion of millennials finding themselves ‘trapped’ in the rental market.

Home ownership remains an important life aspiration for many millennials (who we define as the generation born from the early 1980s until just before the year 2000, therefore aged around 20 to 38 today). But there is a growing gap between aspiration and reality. The moniker ‘Generation Rent’ has come to be used for a generation within which many individuals and young families find private renting to be their only option. At age 30, millennials today are only half as likely to own their own home as baby boomers when they were the same age.3 In 2017, 25 to 34s represented a third of the private rented sector, or 1.5 million households.4 While under-35s have historically made up large proportions of the private rented sector, over the last decade this proportion has increased. When young adults do make the transition to owning a home, this happens later in life; it’s not until age 34 that more than 50% of people own a home, whereas in 1997 the average age was 26.5

Lower levels of home ownership among younger generations underpin a more complex picture of short and longer-term financial challenges. Those who end up in rented accommodation for longer but aspire to own a home are often unable to save for a house deposit due to a higher cost of living than that experienced by previous generations. A third of millennials could become “cradle to grave” renters, while those that do get onto the

In 1987, 49% of 25-34 year olds owned their own home.In 2017, 25% of 25-34 year olds are home owners- Resolution Foundation analysis of Labour Force Survey (LFS), conducted by the Office for National Statistics6

Between 2006/7 and 2016/17 the proportion of the 25-34 cohort living in the private sector increased from 27% to 46%, while those in owner occupation decreased from 57% to 37%.- English Housing Survey 2016-177

At the age of 30, baby boomer renters spent one-fifth of their income on housing costs.At the age of 30, millennials spend one-third of their income on housing costs.- Resolution Foundation9

3M i l l e n n i a l s a n d M o n e y : B a n k i n g i n t h e a g e o f t h e r e n t e r

property ladder face longer mortgage terms and paying off debt late into older adulthood and even retirement.8 Increasing numbers of millennials are living with their parents for longer to save money, with relying on parental wealth, the so-called ‘Bank of Mum and Dad’, to make it onto the property ladder, and others unable to do so.

It is the cumulative impact of these compounding factors that has complex and lasting effects on the wider financial journeys of the millennial generation beyond simply their propensity to rent or purchase a home. Using insights from a series of focus groups and semi-structured insights with millennials, this paper explores how the different financial needs and experiences of young adults are affected by their current living circumstances and future aspirations, and how financial providers and others in the market such as the Current Account Switching Service (CASS) can respond to the ways they make spending and savings decisions and what they need in terms of choice and provision of financial products and services.

2. The financial experiences of Generation Rent

Many of the millennials who participated in our research were keen to become homeowners one day but cited challenges including rising property prices, increased living costs inhibiting the ability to save, and low interest rates slowing rates of savings accumulation, as barriers to doing so. Some do not view home ownership as a realistic prospect for the foreseeable future, citing these same barriers or other financial priorities as reasons. We also found commonalities between these groups in terms of how they are responding to squeezed living costs and making broader financial decisions.

Aspiring to buy... or priced out forever?

Home ownership remains an important life aspiration for millennials, and many of those we spoke with identified this as a current or future financial goal. But saving for a deposit remains the biggest barrier to home ownership, particularly given increasingly tight regulations on the mortgage market.10 Over a fifth (22%) of millennials told us they are saving for a deposit for their first home, well over the national average of 9%.11

Yet even with the desire and ability to save, housing affordability is prohibitive for millennials because housing prices have risen disproportionately to earnings levels. At the end of 2019 the average house price for first time buyers was five times the average gross salary (closer to ten times in London).12 This has resulting consequences for the deposit required. UK first-time buyers are putting down an average deposit of £32,841, while those in London average a staggering £110,656.13 Research by specialist bank Aldermore found that it would take the average young adult 23 years to save enough for a £50,000 deposit.14


In recent years a number of government schemes have sought to address these affordability challenges experienced by first-time buyers. The Help to Buy scheme has featured initiatives such as an equity loan for new builds to reduce the cash deposit required, shared ownership and a Help to Buy ISA whereby savers receive a government bonus of up to £3,000 for purchasing their first home. However, Help to Buy has been criticised as only helping more capable and financially resilient buyers including those with higher incomes and deposits. The average first time buyer using the Help to Buy equity loan earns £50,000, which is 85% more than the typical private renter household.15 Shelter analysis found that only 4,142 households with incomes of £30,000 or less used Help to Buy in 2018-19, representing fewer than 0.2% of England’s private renting households in this income bracket.16

The most recent English Housing Survey shows that after more than a decade of decline, the proportion of 25-34 year olds in owner occupation has increased slightly. In 2018-19, 41% of those aged 25-34 were owner occupiers, matching the 41% of this age group living in the private rented sector.17 This is still much lower than the 59% of 25-34s living in owner occupation in 2003-04 however.

From our interviews and focus groups there was a notable number of millennials who have decided they are ‘priced out’ of the housing market, at least in the short to medium term, and therefore not planning their finances around saving for home ownership. Although these preferences may change in future along the life course, this also has implications for ‘delayed transitions to adulthood’ (see below) and financial security in later life. Here there is an opportunity for financial providers to focus on other ways of supporting the long-term resilience of renters, as well as providing products for those who aspire to become homeowners.

“ I save every month: I budget to put a third of my salary into rent, a third into savings and the other third for living costs like food and petrol. I’ve worked since I was in my teens and have got into the habit. My main savings goal is to get on the property ladder – it won’t be much, just a small flat. It’s been more difficult to save since I moved out of my parents but dipping into my savings have allowed me to live independently.- Gina, 23

“ I don’t want to buy a house. But I do want to set aside more money for travelling. At a certain point I will need to settle down somewhere but I’m not thinking about that at the moment.- Vicky, 26


Financial vulnerability within the renting cycle

Rising property prices mean that more millennials find themselves stuck in a vicious cycle of spending high proportions of their income on rent and living costs, with less discretionary income to put towards saving for a house deposit. On average nearly a quarter of under 30-year-old’s monthly outgoings are on rent.18

Research by the London School of Economics exploring reality of tenant experiences in London has highlighted the transactional costs of renting itself, such as fees for holding properties, renewing tenancies, and checking references19, while a study commissioned by Which?20 found that the high cost and burden of administrative processes is often felt to be confusing and disproportionately costly by renters. Unexpected or unfair deposit deductions also add to financial anxiety for renters at the end of a tenancy.

Many of the millennials who participated in our focus group view meeting living expenses and paying down debt as a priority over building up savings for the future. This reflects wider research on financial insecurity and precarious living for many millennials. The FCA’s 2017 Financial Lives study found that one in nine of 18 to 24 year olds (11%) are already in financial difficulty and two in five (41%) are only ‘surviving’. Amongst 25 to 34s, 23% are in financial difficulty and 44% are ‘surviving’. The FCA’s analysis highlights that just small increases in rents or mortgage payments would mean that many more would struggle.21

The negative consequences of the rent trap are more acutely felt by low to middle income millennial earners who make up the majority of renters. The UK Collaborative Centre for Housing Evidence reports that young people in low-paid and insecure work are often concentrated at the bottom end of the private-rented sector facing poor living conditions.

37% of millennials aged 22 to 36 feel nervous about checking their balance, particularly after direct debits go out each month.- Barclays22

“ For me, financial satisfaction means being able to afford something beyond just paying my rent. I’m living at home because I don’t think I’d be able to do that right now.- James, 24

“ My living costs are expensive and I don’t really have anything leftover to save. Once I got a payday loan and I learned very quickly not to get into that situation again. One day I would like to buy a house, but for now if I need to save for short-term things like a holiday I tighten my belt for a couple of months.- Harper, 21


Growing intergenerational dependencies

It is not just rising property costs, but also the increased cost of living, that has led to more young adults turning to their parents for support at various points of their financial lives. Increasing numbers of millennials are living at home for longer to save money in the face of high rental costs and the challenges of saving for a deposit. Here there are intra-generational differences, for example, more young men are staying at home than young women (37% compared to 26% of 18-34s).23

Parental or family support is becoming an increasing necessity for those millennials who do eventually get on the housing ladder. Research from Halifax found that over half of parents of 20 to 45 year olds had already done or would expect to do something to help their children onto the property ladder: 67% of those surveyed had dipped into their own savings and 25% had given their children some or all of their inheritance early.26 Almost a quarter of first time buyers will receive equity released from their parents’ property, while 19% of parents are expected to downsize to support their children.27 This may have effects on the financial security of older generations in later life, as well as the inheritance received by millennials in future. There are important implications for how financial providers target the interrelated needs and dependencies of different generations.

Growing dependence on parental wealth by some millennials contributes to inequality within the generation as a whole. Research by the Resolution Foundation found that at the age

“ I feel as though I am financially independent, even though I live with my parents, which makes sense so I get a good financial footing for the future. Living at home is a sacrifice now, for more stability in the future. - Joe, 23

In 2018, one in four young adults (3.4 million) aged 20 to 34 years were living with their parents, a 26% increase since 1996.– ONS24

In 2017, prospective first time buyers living at home were costing their parents an average of £4,996 a year for food and drink, petrol and utility bills.– Aldermore25

“ I’m in the process of buying a house, which I see as bringing me some financial stability and more financial satisfaction as the money I pay towards a mortgage will be going back into my pocket rather than to a landlord. I have been really fortunate that my grandparents have gifted me a deposit and that I am buying with my partner, otherwise I wouldn’t have been in this position.- Remi, 22

62% of under-35s say they received help with their most recent home purchase. - Legal and General28


of 30, those without parental property wealth are approximately 60% less likely to be homeowners than people whose parents are homeowners. Just 13% of people whose parents have not accumulated any wealth owned their own home at the age of 30. This leapt to 35% for children whose parents are in the highest third of the parental wealth distribution.29 The resulting challenge for financial providers is the extent to which existing products cater for young adults without parental support and whether more targeted interventions are needed to build financial resilience for this group.

Delayed transitions to adulthood/ financial independence

UK Finance has calculated that the average age for owning a home is 31 years old30, and it is not until age 34 that more than 50% of people own a home, whereas in 1997 the average age was 26.31 But this may be a cause and/or an effect of corresponding delays with social life transitions. As discussed in our previous trends paper, Banking in the Age of the 100 year old,32 the average age of leaving education, first-time marriage, having a child, and purchasing a home have all increased over the last few decades - leading some commentators to describe millennials as experiencing ‘delayed adulthood’ – with knock on effects on cultural norms around financial responsibility, planning for later life, and building up assets.

Many of the millennials who participated in our focus groups and interviews perceive a ‘path dependency’ of financial priorities whereby they seek to accomplish one discreet financial goal – such as paying off debt or achieving a certain quality of life – before moving onto another financial goal, such as saving for a mortgage or a pension. Delayed life transitions therefore have key implications for financial responsibilities, choices and related products and services. FCA research finds that without home ownership as a ‘trigger’ for more complex financial products, there is an emerging protection gap amongst young adults – for example only 19% of 25 34 year old renters have home contents insurance and 88% have no form of protection cover.

“ In the next 2-5 years, I think my financial situation will improve slightly along with my career progression. My first priority is achieving a better quality of life, I’d like to live [rent] somewhere better, with a second bedroom, maybe a garden so I can get a dog, and have a more balanced lifestyle.- Alex, 29


3. Responding to the age of the renterOur qualitative research has identified a number of gaps in which financial products and services could tailor their offer to the living circumstances of millennial renters, aspiring home owners, and in response to the intergenerational dependencies which arise as a result of millennials’ financial needs. Financial providers and services, including the Current Account Switch Service (CASS), who want to enable and empower this age cohort to make sound financial choices and decisions, should bear in mind that different millennials experience different challenges depending on their life stage and future goals, and responding to the age of the renter requires a concerted effort from the financial market as a whole, not just mortgage providers.

The immediate needs of the renter

More and more young adults are now living in rented properties. One in five (21%) of 18-24s have moved house in the last 12 months. In 2017/18 the total number of private renters aged 25-34 had increased to 1.4 million (31.5% of all private renters), up from 1 million in 2008/9 (14.6% of all private renters), an increase of 44%.33

While younger millennials are more likely to be living in multiple occupancy households, with 56% of 18-24 renters are living in households with three or more

In practice...

Splitwise is an app that allows renters to track and share bill payments in multiple occupancy households. Those with access add utility bills, council tax payments and other household expenses, and can record payments and IOUs.

Migrate is one example of an auto-switching service for household bills, aiming to combat customer inertia in switching utilities, often prevalent within transient renter groups.

Request to Pay is a new service being driven by Pay.UK, designed to offer people more control and flexibility when making payments and managing their outgoings. Via a secure messaging channel, the service allows billers to request payment and customers to respond by paying in full or requesting to pay in chunks over more flexible timeframes in order, for example, to avoid going into debt or resorting to high cost credit.

Halifax’s ‘Renters Insurance’ product is tailored to tenants that wish to receive cover on a monthly basis instead of the yearly cover term offered by their contents insurance package. The new cover also enables total online access over the previously phone-based system.

Dlighted is one example of a deposit replacement scheme, which costs £129 to the letting agent or landlord and provides them with protection against any potential breaches of the tenancy agreement, instead of charging the traditional deposit of five or six weeks’ rent. Similarly, Reposit is a scheme where the tenant owns the insurance policy, paying a one-off fee for end-of-tenancy costs while remaining responsible for paying rent and fulfilling the terms of the tenancy agreement.


adults34, more couples and families are also renting. 63% of 24-34 year olds renting are living in a couple35 and more children are starting their lives in rented accommodation; almost half of the babies born in the UK are starting their lives in rented accommodation.36 There is potential demand for products and services which support:

Active budgeting and money management

Digital tools and products are emerging which help track and split bills and shared outgoings in multiple occupancy households. As discussed in our previous trends paper Banking in the Age of the Robot,37 digital banking services have been found to help build financial capability with functionality which assists with tracking spending, financial planning, actively saving, and gaining confidence in money management.

Financial vulnerability

Smoothing products could help millennials who are grappling with the rent cycle better balance irregular incomes, multiple bills and save more consistently and effectively. Pay.UK is currently piloting a Request to Pay service, backed by the payments industry, which allows people to meet their bill payments over more flexible timeframes [see ‘In practice’.]

Direct costs of renting

Moving house is the most common life event for younger millennials – potentially an expensive undertaking but also an opportunity to achieve more consumer consideration of switching products and services. Analysis by Citizens Advice38 found that people could be overpaying by as much as £987 per year as a result of remaining with existing contracts in essential services markets. Targeted financial support and education for renters could help address customer inertia and potentially double the average yearly savings of millennials. Transactional costs associated with renting and moving could be alleviated through new products.


In practice...

Legal & General has piloted what it describes as a first protection product for private rental tenants, which pays out a monthly benefit that can be used for rent, bills or other financial commitments. The scheme offers three possible plans: rental income protection benefit, rental life insurance and rental life insurance with critical illness cover. There is also an option for clients who eventually take out a mortgage to switch the policy to an income protection benefit plan.

Canopy is a digital service which uses Open Banking data to verify and monitor rental payments and use these to boost credit ratings accordingly. Partnering with Experian, it seeks to help improve renters’ access to financial products and services.

Longer term resilience of cradle-to-grave renters

As discussed previously 41% of current 25-34s are owner occupiers, compared to 58% of 25-34s in 2003-4.39 The Resolution Foundation has predicted that if the current trends of declining home ownership continue, up to a third of millennials will be “cradle to grave” renters.40 Meanwhile an inquiry by the All-Party Parliamentary Group on housing and care for older people warns that more than 630,000 millennials will be unable to afford their rent when they retire, and will need lower-cost rented accommodation.41

Clearly, declining levels of home ownership have knock-on effects in terms of the longer term financial resilience of individuals and families. But beyond owning a home, financial security in later life is also affected by savings, pensions, and other financial protections. These other elements are also being eroded, unveiling an even more urgent need for financial products and services which:

Incentivise additional pension paymentsAlthough automatic enrolment in pensions has proved successful in engaging more people, current levels will not provide enough for many millennials to live comfortably in later life. Employer incentivised savings schemes and lifelong financial education initiatives may help generate awareness.

Balance present day money management with longer term savings and financial planning

These include microsavings tools, products which enable auto-save payments, or combination payments (e.g. paying off student debt at the same time as pensions).financial planning, actively saving, and gaining confidence in money management.

Encourage take up of financial protection productsAs identified above, there is a general protection gap for millennials who may not have experienced a life event ‘trigger’ for more complex insurance products; but this is more acute amongst renters with 88% of 25-34 renters without any form of protection cover42 for themselves or their families.


In practice...

Barclays’ Family Springboard Mortgage enables family members or even friends to supply financial security by putting 10% of the house purchase price into a different savings product, offering in return a zero deposit start to the mortgage.

Canada’s Home Buyers’ Plan (HBP) allow Canadians to withdraw up to $35,000 per person from their retirement savings plans to buy or build a home. A key benefit is that the withdrawal is not taxable, so long as it is repaid within a 15 year period.

New Zealand’s KiwiSaver is a workplace pensions scheme which allows first-time buyers toaccess their savings to put towards a home. KiwiSavers can also access grants to help with purchasing or self-building a home.

The UK’s Lifetime ISA allows savers to save up to £4,000 each tax year, matched by up to £1,000 in government bonus payments. Savings (in the form of cash or stocks and shares) can be accessed by first-time buyers for a home worth up to £450,000, even outside of London. If individuals make a withdrawal before they reach the age of 60 that is not to purchase a first home, a 25% government charge will normally apply. However there are only currently 14 accounts on the market, compared with the 24 Help to Buy ISAs that were available until the scheme closed to new applications in December 2019.45

Needs of aspiring home owners

Saving for a deposit remains the key barrier for prospective millennial home owners, despite the fact that 69% of 20-45-year-old aspiring home owners are cutting back on their spending to save for a deposit compared to 54% in their parents’ generation that did the same.43 In the late 1990s it took people on average 3 years to save for a home by saving 5% of income each year. Now the average is 18 years. Here there are opportunities for:

Hybrid savings productsProducts which allow individuals to save simultaneously for a home deposit and a pension, or make withdrawals from their superannuation funds, allowing a degree of flexibility in terms of savings targets and product choices.

Products which leverage the wealth of older relatives

Parental wealth is not just helping more millennial home owners get on the property ladder, but it is also helping them get on the ladder earlier. The Bank of Mum and Dad has been described as the 10th largest bank in the UK gifting over £6 billion in 2018.44 Some products have emerged which allow parental assets to underwrite mortgages so that parents don’t have to release equity or sell assets.

Support and products tailored to co-owners

Young adults who aren’t in the position of receiving parental support may not be able to afford a deposit or mortgage unless they purchase in a couple. Tailored support for co-purchasers of two or more people may help address inequality between millennials in terms of reliance on familial wealth.


M i l l e n n i a l s a n d M o n e y : B a n k i n g i n t h e a g e o f t h e r e n t e r

4. Conclusion

The term ‘Generation Rent’ aptly captures a significant and urgent challenge more acutely experienced by young adults today than any previous generation. But in many ways it also risks homogenising the millennial cohort, within which there is notable variation and economic inequality, and different financial experiences and aspirations of individuals. Examining each of the compounding factors that stem from the millennial experience of living in the rental market, and in some cases transitioning to home ownership, provides insights for how financial providers can cater for the needs of younger customers.

Understandably, the prospect of saving for a deposit that is higher than the average annual salary and then entering into long-term debt for 20 to 30 years or even a lifetime is leading many to abandon or lower expectations to own a home. For this group it is crucial that the market responds with other ways to plan and build long term financial security. For other millennials, owning a home continues to offer appeal. But those millennials that do secure a mortgage are likely faced with longer borrowing terms than previous generations. Mortgage term lengths have increased significantly from a mean of 26.8 years in 2009 to a mean of 29 years in 2018, according to UK Finance.46 This may mean they are borrowing into later life and even their prospective retirement before they pay off their mortgage.

The current financial pressures on young renters or aspiring owners will have a ‘long tail’ in terms of lasting residual effects, as well as consequences for other generations. Parents of millennials are using their assets to fund not only their own living costs but the aspirations of their children too, with future consequences for inheritance levels and meeting the costs of living in old age.

Of course, there are a number of policy and structural innovations and interventions which may help young adults get onto the housing ladder, but which fall outside the scope of the financial sector. But products and services which more appropriately reflect the financial needs of different millennial circumstances can begin to alleviate short-term and longer-term pressures for individual renters, aspiring home owners and their older relatives and younger dependents. In some cases, there is a clear need for more product innovation in the form of provision and protection for renters, and flexible savings products which aid long term financial security. In others, products exist which aren’t matched by demand because of a lack of awareness and financial literacy on the part of young adults. Our previous trends paper, Banking in the Age of Fake News,47 looks at how information and advice can be tailored to millennial needs. Encouraging active consideration and decision making across the financial market is key.

*Names of research participants have been changed.


References

1Office for National Statistics (ONS) (2019) Milestones: Journeying into adulthood, https://www.ons.gov.uk/peoplepopulationandcommunity/populationandmigration/populationestimates/articles/milestonesjourneyingintoadulthood/2019-02-182NatCen and Halifax (2014) The reality of generation rent, https://natcen.ac.uk/our-research/research/the-reality-of-generation-rent/ 3Resolution Foundation (2017) Home Affront: Housing across the generations, https://www.resolutionfoundation.org/publications/home-affront-housing-across-the-generations/ 4Ministry of Housing, Communities & Local Government (2019) English Housing Survey 2016-17, https://www.gov.uk/government/collections/english-housing-survey 5Office for National Statistics (ONS) (2019) Milestones: Journeying into adulthood, https://www.ons.gov.uk/peoplepopulationandcommunity/populationandmigration/populationestimates/articles/milestonesjourneyingintoadulthood/2019-02-186Resolution Foundation (2019) using data from the Labour Force Survey (LFS), conducted by the Office for National Statistics, https://www.resolutionfoundation.org/data/housing/7Ministry of Housing, Communities & Local Government (2018) English Housing Survey 2016-2017, https://www.gov.uk/government/collections/english-housing-survey#2016-to-2017 8NatCen and Halifax (2014) The reality of generation rent, http://natcen.ac.uk/our-research/research/the-reality-of-generation-rent/9Resolution Foundation (2017) Home Affront: Housing across the generations, https://www.resolutionfoundation.org/app/uploads/2017/09/Home-Affront.pdf10Building Societies Association (2018) Intergenerational mortgages: Building on the Bank of Mum and Dad, https://www.bsa.org.uk/information/consumer-factsheets/mortgages/building-on-the-bank-of-mum-and-dad11Opinium Research/ Common Vision carried out a survey of 2003 UK adults, weighted to be nationally representative, between 16th and 19th July 201912Nationwide (2020) House prices and affordability through the decades, https://www.nationwide.co.uk/-/media/MainSite/documents/about/house-price-index/2020/Decades_special_report_Jan_2020.pdf13Halifax (2019) First-time buyers make up biggest part of property market for first time in 23 years, https://www.lloydsbankinggroup.com/globalassets/documents/media/press-releases/halifax/2019/190223-halifax-first-time-buyer-review_final.pdf 14Aldermore (2018) Majority of the UK has set a saving goal, but it could take years to reach as people save less than 2017, https://www.aldermore.co.uk/about-us/newsroom/2018/12/majority-of-the-uk-has-set-a-saving-goal-but-it-could-take-years-to-reach-as-people-save-less-than-2017/ 15Ministry of Housing, Communities & Local Government (2018) Evaluation of the Help to Buy Equity Loan Scheme 2017, https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/751359/Evaluation_of_the_Help_to_Buy_equity_loan_scheme_2017.pdf16Shelter (2019) No Help to Buy for England’s average renters, https://england.shelter.org.uk/media/press_releases/articles/no_help_to_buy_for_englands_average_renters


17Ministry of Housing, Communities & Local Government (2019) English Housing Survey Headline Report, 2018-19, https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/860076/2018-19_EHS_Headline_Report.pdf18Financial Times (2016) Best of Money: Why millennials go on holiday instead of saving, https://www.ft.com/content/94e97eee-ce9a-11e5-831d-09f7778e7377?segid=0100320#axzz40LI4ilpv19London School of Economics (2015) PRS Profiles: Learning from tenants’ experiences to improve private renting in London, http://eprints.lse.ac.uk/83398/1/PRS%20Profiles_%20Learning%20from%20tenants%E2%80%99%20experiences%20to%20improve%20private%20renting%20in%20London%20_%20Accelerating%20housing%20production%20in%20London.pdf20Which? (2018) Private Renters’ customer journeys, https://www.which.co.uk/policy/housing/2910/private-renters-customer-journeys21 Financial Conduct Authority (FCA) (2017) Understanding the financial lives of UK adults Findings from the FCA’s Financial Lives Survey 2017, https://www.fca.org.uk/publication/research/financial-lives-survey-2017.pdf22Barclays/ SWNS carried out research in September 2018, surveying 2,000 UK adults23Office for National Statistics (ONS) (2019) Milestones: Journeying into adulthood, https://www.ons.gov.uk/peoplepopulationandcommunity/populationandmigration/populationestimates/articles/milestonesjourneyingintoadulthood/2019-02-1824Office for National Statistics (ONS) (2016) Why are more young people living with their parents, https://www.ons.gov.uk/peoplepopulationandcommunity/birthsdeathsandmarriages/families/articles/whyaremoreyoungpeoplelivingwiththeirparents/2016-02-2225Aldermore (2019) Aldermore’s first time buyer index reveals the lengths parents are going to help their children get on the housing ladder, https://www.aldermore.co.uk/about-us/newsroom/2019/03/aldermores-first-time-buyer-index-reveals-the-lengths-parents-are-going-to-help-their-children-get-on-the-housing-ladder/26NatCen and Halifax (2014) The reality of generation rent, http://natcen.ac.uk/our-research/research/the-reality-of-generation-rent/ 27Aldermore (2019) Aldermore’s first time buyer index reveals the lengths parents are going to help their children get on the housing ladder, https://www.aldermore.co.uk/about-us/newsroom/2019/03/aldermores-first-time-buyer-index-reveals-the-lengths-parents-are-going-to-help-their-children-get-on-the-housing-ladder/28Legal and General (2019) Bank of Mum and Dad, https://www.legalandgeneralgroup.com/media/17339/bank-of-mum-and-dad-2019-a4-20pp.pdf29Resolution Foundation (2018) House of the rising son (or daughter): The impact of parental wealth on their children’s homeownership, https://www.resolutionfoundation.org/publications/house-of-the-rising-son-or-daughter/30UK Finance (2019) DP19/2: Intergenerational Differences, https://www.ukfinance.org.uk/system/files/UK%20Finance%20Response%20to%20DP192_Final.pdf31Office for National Statistics (ONS) (2019) Milestones: Journeying into adulthood, https://www.ons.gov.uk/peoplepopulationandcommunity/populationandmigration/populationestimates/articles/milestonesjourneyingintoadulthood/2019-02-18


32Common Vision (2019) Banking in the age of the 100 year old, http://covi.org.uk/dev4/wp-content/uploads/2019/11/Millennials-and-Money-Banking-in-the-age-of-the-100-year-old-FINAL.pdf33Ministry of Housing, Communities & Local Government (2019) English Housing Survey 2017-18, https://www.gov.uk/government/collections/english-housing-survey34Financial Conduct Authority (FCA) (2017) Understanding the financial lives of UK adults Findings from the FCA’s Financial Lives Survey 2017, https://www.fca.org.uk/publication/research/financial-lives-survey-2017.pdf35_ibid36Royal London (2019) The Parent Rent Trap, https://www.royallondon.com/media/press-releases/2019/march/half-of-all-babies-now-born-in-rented-accommodation/37Common Vision (2019) Banking in the age of the robot, http://www.covi.org.uk/wp-content/uploads/2019/10/Millennials-and-Money-Banking-in-the-age-of-the-robot-FINAL2.pdf38Citizens Advice (2018) The Cost of Loyalty, https://www.citizensadvice.org.uk/Global/CitizensAdvice/Consumer%20publications/Citizens%20Advice%20-%20The%20cost%20of%20loyalty.pdf 39Ministry of Housing, Communities & Local Government (2019) English Housing Survey Headline Report, 2018-19, https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/860076/2018-19_EHS_Headline_Report.pdf40Resolution Foundation (2018) Home improvements: Action to address the housing challenges faced by young people, https://www.resolutionfoundation.org/publications/home-improvements-action-to-address-the-housing-challenges-faced-by-young-people/41All Party Parliamentary Group for Housing and Care for Older People (2019) Rental Housing For An Ageing Population, https://www.housinglin.org.uk/_assets/Resources/Housing/Support_materials/Other_reports_and_guidance/HAPPI-5-Rental-Housing.pdf42Financial Conduct Authority (FCA) (2017) Understanding the financial lives of UK adults Findings from the FCA’s Financial Lives Survey 2017, https://www.fca.org.uk/publication/research/financial-lives-survey-2017.pdf43NatCen and Halifax (2014) The reality of generation rent, http://natcen.ac.uk/our-research/research/the-reality-of-generation-rent/44Legal and General (2019) Bank of Mum and Dad, https://www.legalandgeneralgroup.com/media/17339/bank-of-mum-and-dad-2019-a4-20pp.pdf45Which? (2019) Help to Buy Isa closes: What next for first-time buyers?, https://www.which.co.uk/news/2019/12/help-to-buy-isa-closes-what-next-for-first-time-buyers/46UK Finance (2019) DP19/2: Intergenerational Differences, https://www.ukfinance.org.uk/system/files/UK%20Finance%20Response%20to%20DP192_Final.pdf47Common Vision (2019) Banking in the age of fake news, http://covi.org.uk/dev4/wp-content/uploads/2019/12/Millennials-and-Money-Banking-in-the-age-of-fake-news-FINAL.pdfAll sources last accessed at time of publication, February 2020.


The Millennials and Money project seeks to understand millennial money habits, behaviours and what younger generations need to become more financially resilient. Through extensive literature reviews, polling of 2000 adults, online focus groups and qualitative interviews, the project examines what millennials want and need from personal banking products, financial providers, and the wider market in order to manage their money and make informed financial decisions, and how these attitudes differ from other generations.Further details at: www.covi.org.uk/millennials-money

Banking in the age of the renter is the fourth in a series of trends papers which investigate social and economic contextual factors that are influencing millennials’ engagement with the financial system. It looks at how the housing crisis has influenced millennial spending and savings behaviours, and how the financial markets are responding with products and services.

We invite policymakers and sector leaders to join the conversation around the views, needs and preferences of younger customers and citizens, and consider what the financial sector needs to do to contribute towards a positive financial future for the millennial generation.

Millennials and Money

About

Common Vision

Common Vision (CoVi) is a think tank working to change the narrative around our shared future. We use the power of positive ideas to detoxify angry, binary debates and unite people around long-term intergenerational goals. We aim to revitalise public diplomacy by championing deliberative dialogue and encouraging established and new leaders to work together to turn collective social challenges into opportunities. Millennial Labs is our programme of research, consultation and leadership development initiatives designed to engage and inform millennials and build bridges with other generations.

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CASS

The Current Account Switch Service (CASS) is the UK’s sole designated current account switch service. CASS is working with Common Vision to seek to understand how younger people navigate an increasingly complex market and what they identify as the key components of a convenient, useful and reliable banking product. This research will help CASS to ensure it continues to deliver successfully in the future.

[email protected]

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