Europeans embrace renting for life: its time young Brits do the same

With the Renters’ Rights Bill entering its final stages, Henry Kauntze argues legal changes to protect renters won’t be enough to soothe the dying dream of home ownership in Britain. 

A cultural shift that makes renting more desirable – such as in Europe – needs to take place as the dream of home ownership becomes ever more distant for millions of young people in Britain. 

In the summer, I found myself in a friend’s garden on a warm night, nursing one last beer as we compared British and continental European attitudes to homeownership. 

Now I admit, nothing says life of the party quite like debating mortgages on a Saturday night. But the conversation did make it clear to me just how differently we see housing here in the UK compared to those across the Channel. 

The friend in question, Jacques, is French. In France, as in other European countries such as Germany and Austria, homeownership is not the financial milestone it is in Britain. 

To put it in numbers, more than half of Germans (54%) rent their homes, compared with 47% in Austria and 37% in France, according to data from the Organisation for Economic Co-operation and Development. 

The UK, by contrast, has a lower rental rate at 31%, with figures from the OECD showing it to top all three countries in ownership with just under 40% having bought their homes outright.

Much of the continent it seems doesn’t share our fixation with ownership, and I felt compelled to go into bat for that very British obsession. A little like in this year’s Cricket Test series against India though, I fell somewhat short of the mark. 

Jacques made some good points that begged the question: might our obsession with home ownership be what’s really squeezing younger generations today?

The continental mindset 

Flexibility, according to Jacques, was chief among the reasons why Europeans like renting.

Not being shackled to a postcode and a thirty-year mortgage, to the continental mind, makes a lot of sense. When work or life changes, you can up sticks at the drop of a hat. 

The headaches of fixing a roof, replacing a boiler, or handling EPC compliance, fall squarely on the landlord’s shoulders, not yours. 

What’s more, many European countries ensure the security of long-term leases, such as in Germany where tenancies last an average of 11 years, compared to just two and a half years in England, according to the Institute for Public Policy Research (IPPR). 

The University of Bremen’s Tenlaw project also found stronger legal protections and better regulation of rent increases allowed people to build more stable lives in rental properties.

In the UK, shorter leases demonstrate how, culturally, renting is often seen as a temporary stopgap along the path to ownership. 

Rising prices, stagnant wages

That path today, however, especially for first-time buyers, isn’t straightforward. 

Average UK house prices increased by 2.8% to £270,000 in the 12 months to July this year, according to the latest figures from the Office for National Statistics (ONS). The average price tag in London is over £561,300, likewise up – albeit slightly – from last year, according to estate agents Purplebricks. 

We’re past the all-time highs of average homes costing over eight times the average income in 2022. But the 7.12 figure as it currently stands still dwarfs the approximately 3.9 times average income that homes cost in the mid-1990s when, for example, my parents were first buying. 

High prices and stagnant wages have meant under 35s now constitute just 6% of the UK’s owner-occupiers, according to Savills. 

I can’t help but feel, as I wince at the price of what’s on sale in estate agents’ windows, whether we might be better off by embracing a more continental approach. 

How we got here, and where to next?

As I trundled home that evening, what concerned me (aside from whether the kebab shop I like would still be open) was what changes the UK would need to see to make renting a secure and financially sensible long-term choice and a viable alternative to ownership. 

It’s no mean feat. The way in which we think of ownership and renting today, as a country, is deeply rooted. After World War II a heavy focus was placed on council housing as a solution to severe shortages, with millions of homes built to provide secure and affordable accommodation. 

At the same time though, restrictive planning laws such as the 1947 Town and Country Planning Act and the expansion of the Green Belt limited the scope of new supply. 

In the 80s, Margret Thatcher’s Right to Buy policy encouraged many to purchase their council homes, cementing homeownership as a national ideal – and whilst greatly increasing the paper wealth of the buyers in time, severely reducing social housing availability. There are now 1.4 million fewer households in social housing than there were in 1980, according to Shelter. 

These policy shifts, combined with chronic underinvestment in new affordable housing and a cultural obsession with property ownership, have contributed to today’s affordability crisis.

It’s one that weighs heavily on younger generations who now face a double bind: homeownership remains out of reach, yet the PRS offers little relief. Average rents now sit at £1,348 a month across the UK, rising to around £2,253 in London, according to the ONS.

The antidote to the affordability issue is still unclear – especially as given for all the talk of building more homes by consecutive governments, little new supply is forthcoming. 

So could embracing a European mindset to renting provide at least some relief? 

Making renting work

If renting is to become a genuine long-term alternative to the increasingly elusive prospect of ownership for young people, we need both a cultural shift and meaningful policy reform.

Renting must be thought of differently as viable and respectable, as it is on the continent, not as a stepping stone as it is here. 

But the only reason Europeans find that so straightforward is because they have the protections and procedures in place in the form of policy. 

We are starting to see change here, however. The Renters’ Rights Bill, now in its final stages, seeks to abolish no-fault evictions, cap rent increases and enforce basic property standards. 

But it must also strike a careful balance. If landlords feel squeezed too hard, many may simply leave the PRS altogether, which will sting renters facing a further limited supply. 

In the meantime, build-to-rent schemes and renewed social housing investment could ease pressures on the sector and push it further towards offering the style of tenancies European renters enjoy and help constitute an overall more flexible housing ecosystem.

Ultimately the Government needs to ensure more houses get built too, whether they are for ownership or rental. 

The problem of equity 

There lies one huge drawback of renting for life, though: the absence of equity accumulation. 

After decades of mortgage payments, homeowners build equity that can be unlocked upon selling their property, whereas renters’ monthly payments go to landlords meaning the flexibility they gain comes at the cost of long-term savings. 

This was the crux of my argument in Jacques’ garden and why his viewpoint, while compelling, often meets scepticism.

His rebuttal was that although it’s true homeowners build wealth through their property, that doesn’t account for the substantial financial burden ownership entails. 

Maintenance, property taxes, insurance, and exposure to market risks can all chip away at overall gains. Many homeowners find themselves therefore ‘house rich, cash poor,’ tied up in an illiquid asset that can hamper their financial freedom.

Renters, meanwhile, can invest funds that would otherwise be used for mortgage deposits, fees, and upkeep into a diversified set of assets, building wealth in other ways and using tax-efficient vehicles such as pensions and ISAs.

A way out? 

Put simply, Britain’s younger generation of would-be homeowners face a crisis. 

We’ve grown up with the aspiration of ownership only to find it increasingly unaffordable, coupled with a PRS that to many lacks security and social legitimacy. 

But Europe shows a path forward. 

If renting isn’t framed so much as a stopgap and instead made a flexible and secure choice, the dilemma of being priced out of ownership might feel less acute. 

Europe proves that renting can be a destination, not just a detour. Until we fully grasp that, we’ll remain stuck between a dream we can’t afford and a reality we might find tough to rely on.

If nothing else, it’s a conversation worth having.