This is Home Front with Vicky Spratt, a subscriber-only newsletter from i. If you’d like to get this direct to your inbox, every single week, you can sign up here.

Good afternoon and welcome to this week’s Home Front.

At 36, I regularly make big decisions that will shape the rest of my life, such as overpaying my mortgage or contemplating whether to have a baby. But, while I’m doing that, I’m also constantly being exposed to harsh existential truths: some mistakes are irrevocable, not everybody gets to see their dreams become a reality and perfection is a myth.

But this – let’s call it living – is not all that Millennials (some of whom are now in their forties) and Gen Z have to contend with. Increasingly, they are also being forced to make brutal choices about what they can and cannot afford to do.

According to analysis from the Joseph Rowntree Foundation, an independent organisation which researches poverty, more than four fifths (82 per cent) of low-income adults aged between 18 and 24 have gone without essentials in the past year. A low-income household is one where the combined income of all people is less than £29,500 a year.

Things are not necessarily easier for those who are in their twenties and thirties on what are deemed “middle incomes”, either. This includes households where everyone is earning between £30,000 and £60,000 a year. These are the people you’d expect to be doing OK, to be financially secure, to be able to enjoy treats such as dinners out.

However, according to a report conducted by the Financial Fairness Trust (FFT) 20 per cent of people in this demographic are now struggling to pay for food and other essentials.

The reason? Many of them are caught in the private rent trap and have unaffordable rents which suck up more than a third of their take-home pay.

A major factor in for is that owning a home was far more common for previous generations. According to the Homeowners Alliance, the peak of homeownership in the UK was 2002, when 69.7 per cent of households were owner-occupied. Since then, the number has plummeted. This is because average house prices have gone up by 173 per cent (adjusting for inflation) across the country and 253 per cent in London since 1997. As a result, the Institute of Fiscal Studies (IFS) has found that while 55 per cent of 25–34-year-olds owned their home in 1997, in 2017 it was just 35 per cent. Among Generation Z, the proportion will likely be even lower once they reach their thirties.

Where once your thirties was a time of life defined by settling down and relative financial security, nowadays people in their thirties are likely to face financial insecurity and high housing costs.

The FTT notes that even those who own their homes are likely to struggle because higher interest rates could mean that the proportion of homeowners with unaffordable mortgages nearly doubles from 10 per cent to 19 per if rates remain around 4 or 5 per cent. That’s not unlikely. The chances of a summer interest rate cut from the Bank of England have diminished for two reasons. One, the general election means that the Bank’s economist is likely to want to see where the chips fall with a new government. The second is that in both the US and the Eurozone, the rate of inflation rose after falling back towards 2 per cent. The Bank will want to avoid cutting rates too soon here to avoid the same thing happening.

The financial hardship being endured by young adults at a time when they should be saving and accruing wealth to give them security in older age should be at the top of the political agenda, it should be the framing for every single policy announcement along the trail of this election campaign.

And yet, so far both Labour and the Conservatives have offered nothing for young adults in their election pledges (unless you think the Tories’ proposal of national service is good for young people. I explain why it’s not here). They have merely made a play for the votes of older people by promising things like keeping the “triple lock” on pensions.

On Monday, I was in conversation with Dame Kate Barker. For the uninitiated, she’s a former Bank of England economist who authored a seminal review on the UK’s housing supply for Tony Blair’s Labour government in 2004.

During our conversation (which you can watch here), Dame Kate talked of how the next government will face tough decisions about how to fund public spending to increase the supply of affordable homes. She also spoke of how rising housing costs will mean that younger people will have to make difficult choices – like paying for their home or dining out.

This brutal realism is a far cry from the criticism that used to be levelled at my generation: millennials would all own homes if they stopped going out for brunch or spending money on gym memberships etc.

As Dame Kate spoke, it dawned on me that there is a new economic reality that no policymakers want to openly acknowledge. It’s one where young adults are paying historically high housing costs, whether they own or rent and they’ll probably be working longer to pay for the care of their elders (as I wrote here).

Things show no sign of letting up for the young. Today the JRF has released new analysis warning that 3.2 million people across the UK are teetering on the edge of poverty. This figure is equivalent to the entire population of Wales and includes 1.5 million working-age adults and 700,000 children.

Rachelle Earwaker is a senior economist at the JRF. I spoke to her this morning as the JRF’s new “proximity to poverty” research was published.

She explained that since the global financial crisis in 2008, young adults have lived through two major economic shocks: the Coronavirus pandemic and the subsequent inflation crisis. There will be more shocks in the future, she warned. So policymakers need to ensure the state can support people with affordable housing and income support.

“Everyone’s costs have been rising,” she explained. “And earnings are not keeping up. Rents are rising at record levels, mortgage rates are higher and everything is more expensive than it was three years ago.”

“Older generations benefitted from a higher level of public services and for today’s young adults, being able to achieve major life milestones like buying a house is further and further out of reach.”

For Earwaker the answer is a “more progressive tax system which taxes wealth and not just income” as well as investment in public services such as health and social housing.

The taxes that could be reformed include stamp duty (every economist’s pet hate), council tax, income tax and capital gains tax (as I’ve previously discussed with Earwaker’s colleague, Darren Baxter).

As things stand, the major investment needed to deliver this is on neither of the main party’s policy list. Perhaps that’s because of an awkward truth: it would have to be funded by either tax rises or yet more cuts to some public services.

Forget avocado brunches or tropical holidays, as Rishi Sunak and Sir Keir Starmer prepare for their first live TV debate this evening, young adults across the country are debating whether they pay their rent/mortgage or do a food shop. I really hope someone, somewhere has a plan.

Key housing

I continue to eagerly await housing policy announcements from both Labour and the Conservatives. While we wait, I’d encourage you to read my interview with Dame Kate Barker. In it she reflects on how “nobody” in 2004 imagined that the housing crisis could be as bad as it is today. She also talks at length about how social housing has become “too residualised”, meaning it should be available to more people, not just those in the most dire straits.

Nigel Farage has announced that he is now the leader of the Conservative challenger party, Reform UK. He will also run to be the MP for Clacton in Essex. In 2019, I visited Clacton to speak to people about Farage, Ukip and Brexit. You may remember that the area previously had a Ukip MP in Douglas Carswell.

Jaywick is a seaside neighbourhood in Clacton. It consistently tops the UK’s deprivation charts – surely the most harrowing record of all time. If you’d like to revisit my report, you can read it here.

Let’s see what Labour, the Tories and Reform UK have to say about improving the life chances of people in Clacton.

Other than that, it’s worth looking at the Bank of England’s latest mortgage approvals data. In April, 61,000 UK mortgages were approved. This means that the number of people being approved to buy homes has stabilised. It’s 26 per cent higher than in April last year when rates were more volatile. However, the overall number of homes being sold is still low, which suggests that our housing market is still very much stalled.

Ask me anything

This week’s question comes from one of my dear friends. She has a well-paid job at a university but, at 36, is still renting a flat with two other people. We sat in my flat drinking cocktails and eating Mexican food and she said: “Will I ever be able to buy a house?”

Find me a young adult who has never let out this cry!

“Maybe,” I said. I pointed out that shared ownership (flawed as it might be) can be available to would-be homeowners, particularly local education workers like my friend, with deposits as low as a few thousand pounds. I also said that she might be able to get a mortgage on a home more easily than she realises (even though rates are still much higher than we are used to).

One week later, guess what? My friend has a mortgage in principal with a major lender and has had an offer accepted on a studio flat in her chosen part of south London.

The moral of the story? If homeownership is really what you want, talk to a mortgage broker and investigate your options before ruling anything out.

Please keep your questions coming there @Victoria_Spratt, on X, formerly Twitter, @vicky.spratt on Instagram or via email [email protected].

Vicky’s pick 

I am currently reading a brilliant new book which I’ve been waiting for since it was first announced. Mother State, a political history of motherhood is written by the indomitable Helen Charman. It will be published by Penguin’s Allen Lane in August. It strikes me that care – particularly mothering – is essential infrastructure and, yet it is always treated as a “woman’s problem”. That needs to change, and I think Charman’s book which argues that mothering – which can be done by anyone, including men, is an inherently political act, could make it happen.  

This is Home Front with Vicky Spratt, a subscriber-only newsletter from i. If you’d like to get this direct to your inbox, every single week, you can sign up here.

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