Number of young people owning a home in England has fallen steeply

Overall the number of people owning a home in England has remained unchanged for the fifth year in a row, but the number of young owners has fallen by a third in a decade, the latest official figures show.

Of the estimated 23.2 million households in England, some 14.8 million or 64% were owner occupiers in 2017/2018, according to the data from the English Housing Survey, which points out that owner occupation has not changed since 2013/2014.

But when the figures are broken down to look at the age of people buying a home they show that only 38% of 25 to 34 years olds own a property, down from 55% a decade ago and the overall number renting in the private sector has increased from 28% to 44%.

The survey report, published by the Ministry of Housing, Communities and Local Government (MHCLG), reveals that the proportion of households in owner occupation increased steadily from the 1980s to 2003 when it reached its peak of 71%. Since then, owner occupation gradually declined to its current level.

While among owner occupiers, there remain more outright owners than households buying with a mortgage, the gap between the two groups has narrowed. Since 2013/2014, there have been more outright owners than mortgagors. In 2017/2018 some 34% of households were outright owners while 30% were buying with a mortgage. In 2016/2017 some 34% of households were outright owners while 28% were buying with a mortgage.

After more than a decade of decline, the proportion of 35- to 44-year-old owners has increased up to 57% from 52% in 2016/2017, following a long period of decline from a peak of 71% in 2007/2008.

At the same time there has been a considerable increase in the proportion of 35- to 44-year-olds in the private rented sector, up from 13% in 2007/2008 to 28% in 2017/2018, the figures also show.

In 2017/2018, the private rented sector accounted for 4.5 million or 19% of households. Throughout the 1980s and 1990s, the proportion of private rented households was steady at around 10%. While the sector has doubled in size since 2002, the rate has hovered around 19% to 20% since 2013/2014.

The survey also looked at whether those renting intend to buy in the future. In 2017/2018 some 25% of social renters expected to buy a property at some point in the future, down from 30% in 2016/2017 while in the private rented sector it was 58%, unchanged from 2016/2017.

The figures show that a large number of people still cannot get on the housing ladder, according to Kate Davies, executive director of the Intermediary Mortgage Lenders Association (IMLA).

Kate Davies said:

‘As owner occupation rates show little change for the fifth year in a row, we continue to see the effects of the affordability issues facing borrowers looking to move onto and up the housing ladder. Although mortgage rates remain low, which should support borrower affordability, high house prices and regulatory constraints on lending continue to represent barriers for borrowers wanting to move onto or up through the housing ladder. As such, the IMLA expects a relatively flat year for mortgage lending growth in 2019.

‘While the overall rate of owner occupation is static, the Housing Survey found that the number of outright owners is now much higher than that of households buying with a mortgage. This is symptomatic of a market which is undergoing a profound structural shift, with a larger share of the funds used to purchase property coming from cash and injecting equity into the housing stock, an unusual occurrence in a non-recessionary period.

‘In this continued subdued period, more than a decade on from the financial crisis, perhaps it’s an opportune moment for policy makers and regulators to reassess the costs and benefits of the present regulatory structure. We must recognise that the costs for those who continue to be locked out of homeownership can be considerable and lasting.’

The higher number of 25- to 44-year-olds renting is a sign that some are not able to afford the first step onto the property ladder, but also of others actively choosing to rent, according to John Goodall, chief executive officer of lender Landbay.

John Goodall said:

‘The lifestyle that renting can offer is much more attractive to many people who may choose to sample many locations, work in different places, or spend time abroad. The flexibility that comes from having a lease, the support when things go wrong and the lack of responsibility of owning a property all add up.

‘Now more than ever, all eyes are on the Government to encourage meaningful investment in the sector, and to stop penalising landlords with extortionate stamp duty. In these turbulent economic times, the sector needs to be encouraged to grow rather than stifled.’

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