Should you be helping employees with housing?
The poor, beleaguered millennial. Headlines ricochet around them lamenting how it was all so much easier for their parents. We Gen X folk were burdened with a lighter load of student debt when we started those first jobs, we luxuriated in both genuinely tempting interest rates on savings accounts and stronger wage growth.
But the most dispiriting financial roadblock for this generation of employees is, without doubt, the housing market spiralling out of their reach. It really is that much harder for the millennial first-time buyer to get on the UK property ladder.
And you can’t blame them for despairing about the roof over their millennial head. Think tanks proclaim that a third of the UK’s 14 million millennials will never own their own home; that private renting will be their fate well into their 40s (some forever) and that living with Mum and Dad into adulthood is now a growing norm. And this gloom and doom is all the more vexing with mortgage rates at current historical lows – especially when compared to the 15 per cent highs we saw in the 1990s.
Encouraging and motivating your millennial employee to prepare for buying their own home (and stop paying their landlord’s mortgage) can help foster loyalty at a key stage in their lives. Become a firm who demonstrates a commitment to their financial welfare, above and beyond the pay cheque. It could be a benefit strategy worth more than its weight in (the millennial currency of) smashed avocado and turmeric lattes.
The many-headed housing monster
The seemingly inescapable housing crisis looms large today – but what exactly do we mean? We believe we face concurrent regional crises - snowballing into one handy UK blanket term. We are vainly battling the Hydra heads of affordability and sky-rocketing house prices (studies state that since 2000, average property prices have grown 7 times faster than young adult incomes); the metropolitan housing supply shortage whilst homes lie empty in other regions; shrinking numbers of available mortgages, and so on.
The data stares us in the face: home ownership for our key 25-34 age group has plummeted over recent decades. Government charts show over 65 per cent of this age bracket were homeowners in 1991, compared to a dismal 28 per cent by the end of 2018. Worse still, barely 10 per cent of 16-24 year-olds now own their homes, collapsing from 35 per cent in the 1990s. And thus, the property-owning dreams of your millennial staff could be dashed before they’ve even looked longingly in the estate agent’s window.
Property deposit saving is an uphill struggle
In our view, the single, universal barrier to entry into home ownership across the UK - be you a millennial in Leeds or Hackney - remains the challenge of saving for your property deposit. There has been limited creativity and innovation around the home-buying process for decades and the timescale is badly skewed: eight to ten years saving, then the buying process and mortgage hunting all happen within months.
It is the shared struggle we see daily across the UK. This entire generation is weighed down by cumbersome student loans, soaring rental and living costs, childcare expenditure for some. And all while they suffer real wage growth stagnation.
How on earth are Gen Y expected to save a 10 per cent deposit, not to mention legal and moving fees, with all this on their plate?
And the upshot? You, as an employer, are dealing with a monumental challenge around poor financial wellbeing amongst your Generation Rent staff.
Financial worries: the last workplace taboo?
Financial anxiety is hardly determined by which Wikipedia generation category you qualify for. The correlation between mental stress and financial worries is undeniable and widely documented. It is 2019: all age groups are finally talking openly about mental health and challenging the status quo on inequality on all levels - but our personal money worries remain the final taboo and deeply closeted. Why?
We freely admit over a cuppa in the office kitchen our Brexit views or how great our therapist is, but we would never mention that we’re worried about not making the rent this month. The stigma remains.
The cult of celebrity oversharing helps you in this instance. The increasing openness to discuss mental and physical health is paving a way for reducing the shame of admitting financial worries. “Spend less than you earn” should in reality become an Instagrammable life hack as easy to post as “Eat healthily, exercise more”.
Basically, it’s good to talk. So, get talking.
Help millennial employees tackle saving
Financial resilience of staff is increasingly high on the agenda and is fast becoming a lynchpin of workplace mental wellbeing programmes. But part of the menu of solutions and guidance you offer should acknowledge the long-term property goals of employees.
For the millennial employee, that means championing improved financial confidence: helping them control their day to day finances and making ends meet, paying off debts but also the ability to absorb unforeseen cash shocks.
Education, education, education: it can deliver measurable outcomes for your workforce. Many firms outsource to independent financial advisers and platforms who offer confidential, face-to-face advice, free workshops, webinars and external, unbiased financial coaching. But are they being used?
Don’t fear over-communicating: despite your efforts, many will be unaware of the financial guidance they’re eligible to receive as an employee benefit above and beyond the discounts at the local pizzeria. Try slicing up the advisory pie on offer into manageable subjects, such as saving for a house deposit, salary sacrifice schemes, budgeting or debt consolidation advice, or pension planning.
Company culture can tackle financial worries
Nurture a strong savings culture and motivate self-discipline, beginning with an honest review of their personal finances. Support staff to talk openly about personal financial stress with you - bizarrely very few of us know exactly how much we’re spending every month. Trusted financial advice from you as their employer will go a long way, guiding them through what is readily available online. Advise on savings vehicles, tax saving allowances, how to budget, and money-saving discounts you offer to staff.
From this more stable base, encourage the saver to set a goal and explore the myriad of today’s options to support them on their journey – say, the example of that crucial property deposit. Serious first-time buyers should look at all Government support schemes such as the Lifetime ISA and the Help to Buy initiatives. In this instance, shared ownership is also a legitimate way forward and is working to help fix a broken system. If a possible option, the Bank of Mum and Dad has become a bona fide route to accelerate property deposit goals and should be investigated, no matter how small a contribution.
Education sorted, it’s essential to follow up and equip them with the tools to change their financial wellbeing. Your suite of firm-provided solutions on offer will be your greatest headache - but worth it. Plenty to recommend that’s freely available too: millennials will revel in the slew of budgeting/financial planning/savings gizmos out there on the App Store. Let them download away to their hearts’ content to stay on track, plan goals and assess the ability to achieve them. Even at the expense of those overpriced turmeric lattes.