A report indicating that home ownership has plummeted in England shows the growing importance of the rental sector and need for more homes, says a lender.
English home ownership levels have fallen to the lowest levels since 1986, according to a report released by the think tank Resolution Foundation yesterday. It said that home ownership levels are now 64%, compared with the peak of 71% in 2003.
Charles Haresnape, of challenger bank Aldermore, reacted saying it showed “the important role that private landlords play in meeting the needs of tenants”.
But he added that the Government must “meet and exceed” house-building targets if it really wants to improve home-ownership levels.
“Progress has been made in recent years around updating the planning laws and regeneration of brownfield sites, but we need to also look at issues such as access to finance for small developers and building on areas of the Green Belt,” he said.
The Resolution Foundation report stated that home ownership in England had gone down 8% in the past decade after a peak of 71% in 2003.
Greater Manchester recorded the sharpest fall in home ownership of any major city area in the last decade, the think tank concluded, with the number of people owing their own homes in that metropolitan county slipping from 72% in 2003 to 58% last year.
The report also said this fall in home ownership corresponded to a near doubling in the proportion of private renters across England, up from 11% in 2003 to 19% in 2015.
But the Residential Landlords Association hit back at the claim in the research that renters are also more likely to face the greater insecurity associated with short-term contracts.
The RLA said a recent English Housing Survey showed that private sector tenants are spending an average of four years in a current property.
Alan Ward, chairman of the RLA, said: “The evidence shows that tenants in the private rented sector are staying in their homes for longer.
“No landlord ever wants to lose a well-behaved tenant who pays their rent on time.”
Developers suggested the report placed too much emphasis on ownership and suggested the Government should focus on attracting institutional investment into the private rented sector.
Dominic Martin, operations and strategy director at developer Westrock, said: “It makes far more sense to offer a range of tenures, and attracting private investment will depend on a mix of policies capturing the wealth of institutional investment currently seeking income returns.”
Tony Brooks, joint managing director at Moda Living, a developer specialising in private rented sector communities, said: “Resolution Foundation’s research highlights an important issue, but to ensure city centre economies can thrive, we have to have a functioning rental market offering flexibility and a level of convenience that fits with the way people now live.”
Comments (3)
Two major points missed by the report.
1.The world has changed.
Millennials cannot survive without their iPhone, iPad, Fitbit, Netflix and a variety of internet services.
All these items cost money and come before saving for a deposit, paying a mortgage and doing your own repairs.
Until someone picks up on this, we will be trying to solve modern problems with last century remedies.
2. We cannot build the houses we need as the building industry is working flat out and it produces around 140,000 units per year.
If we commence with training the bricklayers, joiners, plumbers, electricians and roofers we will then be able to increase the output to 200,000 (43% increase), we might get somewhere.
Sadly all governments for the last 25 years have made the same pious noises about solving the housing shortage, but do nothing about it.
3 to 4 times salary! I think with the potential increase in £100k a year self employed LPEs about to hit the streets, as long as the mortgage companies bring back Self Assessment mortgages there will be a demand for buying soon!
Well that’s all pretty fairly balanced. Every single sector with an agenda has a quote.
Once we all get past the fact that we don’t build enough houses and frankly never ever will. How do we get to a place that prospective buyers can buy? Lend them the money.
How can it be right that I could borrow at three times earnings in the early 90’s while paying 14% interest? Meanwhile kids todays are restricted at to 3 or 4 times earnings with interest rates at 2%. If we ignore the relationship between multiples and interest rates then these kids will never be able to buy a home. Before everyone jumps on my case I am going to suggest that outside of London banks have contributed to no capital growth by withholding mortgage lending to people who can easily afford the repayments. We all know tenants that pay way in excess of the equivalent mortgage payment. but they cant get a mortgage.
Have the banks created an inverse bubble by withholding lending. Are prices outside of London lower than they should be? No growth for almost a decade.
Meanwhile everyone is pointing to houses being too expensive as the reason for the fall in ownership. Not sure I buy into that. Imagine the fall in new car ownership if tomorrow you could only borrow three times your monthly income. These guys got innovative. Contract hire, PCP, business lease purchase, personal lease purchase, HP.
Time for our governments and financial sector to get innovative if they want to see increased ownership levels because houses are not coming down in price long term on our little island. And I don’t mean a help to buy that just pushes the issue five tears down the line when the equity can’t repay the loan.