Pulling up the ladder? A new report reflects the growing divide between the “haves” and the “have nots” in the housing sector. Good news for portfolio landlords perhaps but arguably the report reveals more worrying trends in British Society as home ownership becomes unaffordable for millions.
The Cambridge University report reveals that we are rapidly becoming a society where private renting will be the norm, particularly for families and younger people.
The researchers attribute the changes to several factors: a growing and ageing population, difficulties of accessing mortgage finance, past housing policies and the increasing costs of housing. Millions of young families will never be able to afford to buy their own home and will be renting privately for life if present trends continue. As usual, London bucks the trend a little – social, particularly council, renting is still very important in the capital and is expected to remain so, with more than half of low to middle income families expected to rent socially in 2025 if the tenure remains available to them.
The study, commissioned jointly by the housing charity, Shelter, and the independent Resolution Foundation, argues that the state of the economy will be critical to any change. If the economy starts to recover, a proportion of the estimated one million households who are currently excluded from home ownership may find their way onto the housing ladder. Without a recovery, mortgaged home ownership is expected to plummet to just 27% of households by 2025.
The change is not new. Between 1994 and 2010, the proportion of English households renting privately increased from 8 to 13% (19% in London). Over the same period “mortgaged ownership” fell from 43 to 35%.
One further interesting fact emerging from the report is the huge increase in the number of people owning their property outright, without a mortgage. Between 1994 and 2010 outright ownership increased from 25 to 34% of all households. Even in London, a quarter of homes are now owned outright.
A summary of the report, Housing in Transition, is available on the Resolution Foundation’s website.