The private rented sector must undergo radical reforms to make it fit for millennials who face a lifetime of renting, according to a report by Resolution Foundation.

The think-tank warned that one in three millennials could still be renting by the time they collect their pensions and up to half may be renting, privately or socially, in their 40s.

Spending longer in rental accommodation has implications for families, the foundation argued, and said that with more children now being brought up in private rented sector, policy must catch up with the demographic changes in renters.

In its paper, Home Improvements, the foundation claimed that while some steps have been taken to support housebuilding, housing policy is not addressing the current problems faced by renters which range from insecure tenancies to poor-quality housing.

In 2003, the number of children in owner-occupied housing outnumbered those in the PRS by eight to one. That ratio has now fallen to two to one as a record 1.8 million families with children rent privately, up from just 600,000 15 years ago.

Lindsay Judge, senior policy analyst at the Resolution Foundation, said: “If we want to tackle Britain’s ‘here and now’ housing crisis we have to improve conditions for the millions of families living in private rented accommodation. That means raising standards and reducing the risks associated with renting through tenancy reform and light touch rent stabilisation.

“For any housing strategy to be relevant and effective for people of all ages, it must include this combination of support for renters, first-time buyers and ultimately a level of housebuilding that matches what the country needs.”

To improve the housing offer for renters, the Foundation is calling for:

  • The introduction of indeterminate tenancies as the sole form of contract in England and Wales, following the approach adopted in Scotland, Germany, the Netherlands, Sweden and Switzerland.
  • Fair balancing of the needs of tenants with the rights of landlords. A landlord could remove a tenant that fails to pay the rent or treat the property well, or if they wish to sell or reoccupy the home, but cannot end the tenancy at short notice without good cause.
  • Light-touch rent stabilisation that limits in-tenancy rent rises to CPI inflation for three-year periods.
  • A new housing tribunal, to ensure landlords and tenants can have disputes resolved swiftly.
  • David Smith-Milne, founder and managing director of Placefirst, the provider of private homes to rent said: “The Resolution Foundation report highlights the irony of successive governments focusing their housing policies on a paradigm of ownership. The irony being that the millennial generation is becoming increasingly locked out of ownership and relying instead on a poor quality, fragmented rental sector dominated by amateurs.”

Milne said households who want to establish families and put down roots in their communities have little choice in the private rented sector to find a home they feel secure and happy in.