A new report claims that more than a million young people will find themselves locked out of the mortgage market in the next eight years.
A study carried out by the Joseph Rowntree Foundation has forecast that another 1.5 million more 18-30 year olds will be pushed into living in the private rental sector by 2020.
It would take the total number of 18-30 year olds living in privately rented accommodation to 3.7 million.
It is feared that a three tier system could developed, with those that can afford to privately rent, a squeezed middle and a lower rung where people could be completely excluded from the sector.
It means that up to 81,000 more 18-24 year olds could find themselves homeless by 2020
As a result, the charity is calling on the Government to ensure that more affordable housing is built, and tax breaks be given to incentivise landlords to agree to longer term tenancies.
In addition, the number of young people who find themselves unable to leave their family home is also expected to rise.
It is thought that in the next eight years, the number of 18-30 year olds forced to live in the family property will increase by 550,000 to 3.7 million.
The increasing trend of youngsters being locked out of the mortgage market is predicted to see the number of 18-30 year old homeowners falling from 2.4 million to 1.3 million.
"Our badly functioning housing system will see those on the lowest incomes really struggling to compete in the competitive rental market of 2020," said Kathleen Kelly of the foundation.
"Renting is likely to be the only game in town and young people are facing fierce competition to secure a home in what is an already diminished supply of housing."
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