Young people can no longer afford to move to cities where wages are higher, says Resolution Foundation

One of the defining patterns of English life in which young people move from small towns with limited prospects to bigger cities to seek their fortune is in dramatic decline, research has revealed.

More young people are getting stuck where they grew up or went to university because they cannot afford rents in places where they can earn more money, according to the Resolution Foundation thinktank. It found the number of people aged 25 to 34 starting a new job and moving home in the last year had fallen 40% over the last two decades.

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Whereas previous generations were able to move to big cities such as London and Manchester or regional hubs like Leeds and Bristol to develop their careers, the current millennial generation is enduring a slump in mobility caused by rising rents, which can wipe out the financial gains of a move.

Even moves over short distances were barely worth making, the data showed. A person on average earnings in Scarborough paying average rent would have been 29% better off if they had moved to Leeds in 1997 and paid average rent and earned average money. In 2018, rising rents and stagnant wages means the benefit after taking into account rent was just 4%.

Moving from Sunderland to York in 1997 would have been worth a 6% rise in earnings after rent, but would now result in a 24% fall. Private rents have risen fastest in higher-paying areas of the country – rising by almost 90% in the highest paying areas, compared to just over 70% in the lowest paying.

Because moving jobs is the best way of increasing pay and being geographically mobile is the best way of finding those jobs, the thinktank said the trend could “stunt young people’s pay and career prospects”.

“Young people today are often stereotyped as being footloose when it comes to work,” said Lindsay Judge, senior policy analyst at Resolution. “But in fact they are moving around for new job opportunities far less frequently than they used to. A key reason why people move around for work is the lure of a bigger salary. But increasingly those pay gains are being swallowed up by high housing costs.”

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Hannah Wilde, 30, from Sunderland, said she scrapped a plan to move to London to pursue a career in publishing when she looked at rents in the capital.

“Some rooms in London were the same price as my full monthly wage from my first job in digital marketing in Sunderland,” she said. “Initially I was frustrated because I felt like I was missing out on some fantastic opportunities in the bigger cities due to rising rent. However, I have had some brilliant opportunities with companies in the north-east and have just recently secured a social media manager role for a rapidly growing skincare company in Durham.”

Milo, 25, a video producer from Totnes in Devon, said he decided to move to London anyway, but recognises the financial risks.

“The big cities don’t give you that safety net,” he said. “If you’re short on rent it’s by quite a lot. A hard living forces you to be vigilant and consistently reassess your place there so you’d better be making the most of it.”

The phenomenon is not just affecting the young. Someone working in a school in Cornwall, for example, would be considerably poorer moving to a similar job in Bristol.

A move from east Devon to Bristol in 1997 would have delivered a 19% uplift in earnings after rent but rising property costs there meant that by 2018 the financial benefit was worth just a 1% increase.

Someone moving from Corby in Northamptonshire to Barnet in north London would stand to lose 22% of their income after rent now, whereas they would have enjoyed a 6% rise in 1997.

John Healey, the shadow housing secretary, seized on the findings, which span both Labour and Conservative administrations, as proof that Tory policies have “failed private renters”.

He said Labour was “committed to giving renters the rights they deserve” on issues such as efficiency, design and safety, “including control on rents, indefinite tenancies and new legal minimum standards”.

Landlords blamed the government for failing to sufficiently increase the supply of new homes. The Residential Landlords Association (RLA) also criticised measures which appear to be encouraging landlords to sell up, including reduction in mortgage interest relief for landlords and an increase in stamp duty.

“The biggest threat to rent levels are the policies being pursued by the government which are choking off the supply of homes for private rent as demand is increasing,” said the RLA policy director, David Smith.

The findings came as the affordable housing commission released research found 43% of all renters were now facing affordability problems and that 5.5 million renters were unable to buy a home of their own.

The commission, which was established by the Smith Institute thinktank and chaired by the crossbench peer Richard Best, said that when rents or purchase costs exceeded a third of household income for those in work, it could lead to financial difficulties and these problems became critical where housing costs were 40% or more of household income.