Five big housing trends that should worry you

Today, the government has published its annual headline report on the state of housing in England. This gives us a chance to spot the big trends and how they might link to one another. Here’s five trends that have big implications for us all:

1. If you’re under 35, then you’re now more likely to rent privately than be buying with a mortgage…

The proportion of 25 – 34 year olds who rent privately has overtaken those buying with a mortgage in England. The same trend of falling ownership and rising renting exists for 35 – 44 year olds and without any intervention those lines will cross too.

Proportion renting privately vs. buying with a mortgage: age 25-34

2. …meanwhile, a growing group of older home-owners has no housing costs at all

While more young adults rent than own, there’s a growing group of around 7m households in England who have paid off their mortgage and have no housing costs. Unsurprisingly, more than half of these households are aged over 65 with very few under the age of 45.

This isn’t a simple intergeneration issue though. Many of these households will have children and grandchildren who can’t afford a home of their own. While some will be able to help their children, the majority won’t have enough spare cash to make up the gap with rising house prices.

Equally, within this older generation more than a million households are renting privately. The wealth and income gap within the generation between renters and outright owners will grow if rents and house prices continue to rise. This will have further consequences for the next generation’s chances of becoming a home-owner or renting for life, as housing assets are passed on within families.

Number of households who own outright

3.  For those stuck renting, there’s a premium. Renting costs more than owning…

Despite not owning their home, private renters pay more each month to keep a roof over their head than owners do. This is both in proportional and absolute terms. In other words there’s a ‘renters’ premium’ – if you’re stuck renting then not only do you not have a financial asset but you also have to pay more for the privilege. Again, this has major consequences for pensions policy, financial security and the wider economy, which will suffer from lower consumer demand if more people have to pay higher housing costs.

Proportion of income spent on rent/mortgage by tenure

…so fewer renters can afford the rent…

An important medium term trend for government is that along with a growing private rented sector, fewer of those renting from a private landlord can afford to pay the rent. This is despite the fact that a bigger proportion of private renters are in full or part time work than in any other tenure. According to today’s EHS, a quarter of private renters in England receive support because they cannot afford to pay their rent up from 19% in 2008/09. More detailed claimant data from DWP shows that this rise has peaked and fallen slightly over recent months. With rents not getting any cheaper and wages still stagnant, this is one to watch.

This medium term trend presents a stark choice for policy-makers: (1) allow the bill for social security to keep growing, (2) cut the safety net and see pressure on renters increase, (3) intervene to take action to reduce housing costs by building more affordable homes.

Number of private renters receiving housing benefit (DWP data)

5. … and now the loss of a private rented home is the leading cause of homelessness

The leading cause of homelessness in England is now the loss of a private rented contract (AST).

Today, Shelter and Crisis published a major report on private renting and homelessness based on two years of in depth interviews with homeless families placed into the private rented sector. You can read more about it here. Given the trends shown by the annual report out today this research couldn’t be more timely or important.

 

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3 Comments
  1. I and possibly a few others in my situation, take OFFENCE at this article written by someone who has no idea of what living through the 50/60/70/80/90/00 ‘s was like. I WORKED AND PAID MY STAMPS AND TAXES FROM THE AGE OF 14, a Saturday Girl in Woollies, until my GCE’s needed my entire attention. Then I walked into 4 jobs on the same day!!! Who can say that, these days? I paid my stamps, taxes etc., and someone to take care of my house while I had 2 jobs. By day, in the recording studios – PA to the MD, session-singer / lyricist ad hoc – and by night, Danceband singer, (Strictly Come Dancing style) with nanny living in to care for my child, housekeeper to care for the home, laundry etc., and a driver/body-guard to get me safely from A to B and home again!!
    I then went into hotels. And worked 2 jobs to provide a house after my divorce, for 2 children, by myself, with the staff to assist me.
    I retired at 61, 2 years ago, in protest. I wanted to continue working but nobody would offer me another pub. So many hit the wall during the hell of 2006/9 and there were so many with more money, and track records
    longer and better than me, that I had to just accept defeat and quit.
    DO NOT RUN AWAY WITH THE IDEA THAT BECAUSE WE ARE OLD YOU CAN BLAME US FOR LIVING LONGER….some of us do not ever go near the NHS; some of us pay for private medical care if and when we need it. Some of us even have private pensions!
    Which we paid into, during our working lives.
    How many of your precious 35-40 age group are doing that?
    I started mine in 1972, when my first child was born. I wanted to ensure I was not a burden to her, in my later years.
    I am absolutely disgusted with the tone at the top of this blog article.

  2. I remember when I was a child people of my grandparents generation would tell us that, because of them, we would never know what real poverty was.
    By the time I was born it was unthinkable that a family would live anywhere but a house, with a back and front garden and a car on the drive. I had many friends whose fathers got on the train every day to work in the city and others whose dads worked in factories, every one of them lived in a proper house, not an overcrowded flat or bed-sit among any of them.
    The idea it would ever be any other way just wouldn’t have been tolerated by anyone rich or poor.
    My grandparents were all in their early 20’s during WW2, three of them were born into families that lived in single room lodgings. It was the life that many people lived in those days. It was the world their parents had been born into, and their grandparents too. It was the norm.
    Their lives straddled the period when ordinary families moved out of overcrowded slums and into real homes, they were given security of tenure as well. Homes for life.
    This was the world most of us were born in, unlike our grandparents we have no direct experience of slum landlords and damp, mouldy overcrowded rooms housing whole families.
    Could it be that the period between ’45 and ’85 was just a brief window of housing for all?
    Why aren’t any government policies from any party aimed at building homes that people on average incomes can afford to either rent or buy?
    Seems to me the whole ‘property owning democracy’ line was a lie to cover the short period while they moved people from lifelong affordable secure tenancies in proper homes back to the long term historical norm of living as families in single rooms again.

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