Millennials are spending more on housing and have to live in less space than their grandparents did, according to a report by the think tank The Resolution Foundation.
The research also found they have longer commutes and will more than likely buy their first home in their 40s, as opposed to the generation before, who typically bought in their 30s.
Young people, so those in their 20s and 30s, spend just under a quarter of their earnings on housing costs, compared to baby-boomers who spend around 17% of income, while those in their 70s and 80s spent just 7%. It also found that by the time millennials are 40, they will spend on average an extra 64 hours a year commuting, compared to their parents.
The Resolution Foundation, which works for higher living standards, has been calling on the Government to address the growing housing crisis.
In property, new buy-to-let rules, which are set to come in at the end of this month, will make it tougher for portfolio landlords to get a mortgage.
From September 30th, buy-to-let landlords with four or more properties, will be subject to viability checks on all of their properties, not just the one they are lending on.
The Bank of England’s Prudential Regulation Authority (PRA) has told lenders they must carry out special affordability checks on portfolio landlords. The tests will complicate the lending process for lenders, brokers and borrowers. Portfolio landlords will have to provide details of mortgages, tax records and cash flows for all of their properties.
In investments, it has been reported that the Treasury is considering cracking down on Enterprise Investment Schemes (EIS). These schemes allow people to invest in new businesses and offer attractive tax breaks.
The announcement on EIS’s is likely to be made in the budget on November 22nd.
At the moment, someone investing in an EIS gets 30% income tax relief, therefore anyone investing around £100,000 in a start-up will get £30,000 back as a tax return, as well as capital gains tax savings.
It is understood that the Treasury is keen to clampdown on the schemes in light of claims that they are being used to avoid tax.