A new report – the Chartered Institute of Housing’s (CIH) UK Housing Review 2015 – shows that young people and those on lower incomes are being priced out of the UK’s housing market. In 1991, 66.5% of 25-34 year olds in England were homeowners, a figure that had dropped to 36% by 2013-14.
Left: Fewer young people wil own their own front door
In 2013-14, almost half (48%) of all households aged 25-34 in England were living in private rented homes – a proportion that has more than doubled from 21% in 2003-4. The trend looks set to continue, with some 1.5 million extra people aged 30 or under ‘pushed into renting’ by 2020.
But home ownership among the older retired age group shows that over the same period, the percentage of 65-74 year olds that own their own home has risen from 62.3% to 77.1%.
And there is a huge gap between homeownership rates for different groups of people. Across Great Britain, lone parents or single people under pension age are least likely to own a home, while more than 80% of couples with no dependent children or over pension age are homeowners.
Rising house prices have led to the UK’s net housing wealth grow by £1.22 trillion (58%) since 2003, and more than a third of property-based wealth is held by households where the household reference person is 65 or older.
The increase in wealth for older people has fuelled the growth of the buy-to-let market – with older households looking to supplement their pension income by buying more property, aided by access to interest-only mortgages which are denied to most first time buyers.
According to the CIH, these conditions are creating a “perfect storm”, with older and already privileged homeowners buying more homes to rent out to those who are unable to compete in the housing market.
And the report reveals that the problem is not just about access to homeownership. After housing costs are taken into account, rates of absolute poverty are rising for working age people, both with and without children. During 2010 to 2015, rising rents and mortgage costs have pulled an extra 1.4 million children into relative poverty.
According to CIH interim chief executive Gavin Smart, successive governments have failed to put in place a joined-up, long-term strategy to tackle the housing crisis. The review makes the case for a fundamental review of housing policy, and calls for co-ordinated, sustained action over at least a decade,– including putting targets and incentives in place for new housebuilding of all tenures.
Mr Smart said:
“The UK Housing Review is a stark demonstration of the divides that housing is opening up in our society. For decades, we have failed to build enough new homes to keep up with our growing population, and the gap between the haves and have nots is getting bigger all the time. For many young people, a home of their own is a distant dream – and in the meantime they find themselves renting in a sector where, in many places, rents are equally unaffordable. People on low incomes are being dragged into poverty because rents and mortgage costs are rising, wages are failing to keep pace and benefits are being cut through welfare reform.
“Making housing more affordable means building more homes of all tenures – for ownership, shared ownership, private rent and social rent. To do this we need political will, commitment and leadership. We want all political parties to commit to ending the housing crisis within a generation.”