Latest Survey Shows Decline In Home Ownership In England Has Halted

A decade long decline in home ownership in England has been halted with the latest figures showing that more than 14 million people owned their home in 2015.

The data from the English Housing Survey reveals that out of the 22.5 million households in England in 2014 to 2015, the number of people owning their own home in the past year has remained static the first time this has happened since 2003.

It also shows that more than half of local authority tenants and a third of housing association tenants expect to buy their current home and there has been an increase in better homes with the number of properties failing to meet the government’s Decent Homes Standard continuing to fall and down by 3.1 million on 2006.

‘In 2010 there was a housing market where buyers couldn’t buy, builders couldn’t build and lenders couldn’t lend. Our efforts are turning that around with more than 270,000 families helped into home ownership through government backed schemes since 2010, while the number of new homes is up 25% over the last year,’ said Housing Minister Brandon Lewis.

‘And we’ve set out the boldest ambition for housing in a generation, doubling the budget so we can help a million more people into home ownership, while delivering a bigger, and better private rental sector,’ he added.

Lewis said that the survey also provides evidence that the government’s decision to reinvigorate and extend its flagship Right to Buy scheme has boosted the aspiration of social housing tenants with those expecting to buy their current home rising from 35% in 2010/2011 to 42% in 2014/2015.

More than 46,000 people have taken up the chance to buy their home through the reinvigorated scheme since 2012 with councils delivering replacement properties on a one to one basis ahead of schedule.

Lewis added that house building is at the heart of the government’s long term economic plan with more than £20 billion committed over the next five years to help meet its ambition to deliver one million new homes.

Details from the survey show that among owner occupiers, the proportion of households who owned outright remained larger than the proportion buying with a mortgage, although not in London.

In 2014/2015, there were more outright owners at 33% than ‘mortgagors’ at 30%, a continuation of the trend first identified in 2013/2014. This was not the case in London where there were more mortgagors at 27% than outright owners at 23%, which the report says is most likely as a result of the younger age profile of the population in London.

The private rented sector remained larger than the social rented sector. In 2014/2015 some 19% or 4.3 million of households were renting privately, while 17% or 3.9 million of households lived in the social rented sector. There was no change in the size of either sector between 2013/2014 and 2014/2015.

There has been an increase in the number of families with dependent children in the private rented sector. Over the last 10 years, the proportion of households in the private rented sector with dependent children increased from 30% in 2004/2005 to 37% in 2014/2015. With considerable growth in the overall number of private renters over this period, this seven percentage point increase equates to about 912,000 more households with children in the private rented sector.

Over the last decade the average age of first time buyers increased. In 2014/2015, the average age of first time buyers was 33, up from 31 in 2004/2005. Younger people aged 25 to 34 are more likely to rent privately than to be buying with a mortgage.

Over the last 10 years there has been a significant increase in the proportion of younger households in the private rented sector. In 2004/2005 some 24% of those aged 25 to 34 lived in the private rented sector. By 2014/2015 this had increased to 46%.

Over the same period, the proportion of 25 to 34 year olds buying with a mortgage decreased from 54% to 34%. In other words, younger households aged 25 to 34 are more likely to be renting privately than buying their own home, a continuation of a trend first identified in 2012/2013. Over the same 10 year period, rates of younger households in the social rented sector remained stable.

However, Kevin Purvey, chairman of Intermediary Mortgage Lenders Association (IMLA), said that the survey should not gloss over the fact that serious thought needs to be given to the direction of UK housing policy.

‘The fact that the private rental sector is supporting more families with dependent children shows the vital role it plays in today’s society and how much it is being relied on to house our growing population. Policy measures in this area must not overstep the mark by undermining the sector’s growth and disadvantaging tenants by pushing up rental costs following a period where rents outside of London have remained stable,’ he explained.

‘At the same time the report is more evidence that delayed home ownership is a reality for many of today’s 20 to 30 somethings, who appear to be losing hope of following their parents footsteps onto the housing ladder at a young age,’ he pointed out.

‘As IMLA’s report this week on the prospects for the housing and mortgage markets in 2016/2017 showed, record low mortgage rates are currently keeping the first time buyer market treading water at best while cash remains the driving force behind house purchases. There needs to be a broader, bolder rethink across all tenures in order to bring long-term stability back to the UK housing market,’ he added.

According to Lucian Cook, head of Savills UK residential research, the ‘short term trends’ shown in the latest English Housing Survey need to be treated with caution, given the reported fall in private renting in 2014/2015 following a particularly large increase in the preceding year.

‘Nonetheless it is a good indicator of longer term trends, such as the widening generational divide of the housing market. Behind the short term volatility, levels of private renting among under 35s are still up by over one million in the past decade. Yet in contrast, the number of owner occupiers over the age of 65 who own their own home outright rose by over 900,000,’ he added.

Steve Bolton, founder of Platinum Property Partners, said that the number of households in the private rented sector is on the rise, and it is more important than ever that these properties are high quality and affordable. ‘One in five households now rent privately, including a growing number of families with children,’ he pointed out.

‘It is encouraging to see that over the past decade, the number of low standard homes in the private rented sector has fallen at a far greater rate than in any other, illustrating the level of investment most landlords are willing to make in improving their properties,’ he explained.

‘But it is therefore alarming that the Government is risking driving down standards in the sector through its attack on buy to let investors. Ending landlords’ tax relief and levying a higher rate of stamp duty will raise costs significantly, which could ultimately be passed on to tenants through higher rents. Landlords struggling to make a profit after growing tax bills are also less likely to make improvements to their investment, or could even be forced to sell, further limiting supply,’ he added.

‘There was a significant drop in the number of tenants in the private rented sector expecting to become homeowners between 2014 and 2015, and an increase in rental prices will only exacerbate this fall. The biggest barrier to home ownership is a lack of adequate supply, and discouraging buy to let investment will do nothing to alleviate this,’ he concluded.

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