Falling homeownership won’t be stopped by current schemes

Home-ownership is now at its lowest for 30 years, according to new analysis by the Resolution Foundation. This matters because the vast majority of people want the security of owning – both financially and because it gives longer term stability for families than private renting.

Homeownership looks likely to keep falling when you dig below the numbers and look at the proportion of buyers with mortgages, versus those who are mortgage free. The majority of homeowners are now older households who’ve got to the point of paying off their mortgage, rather than younger households who are coming onto the property ladder with a mortgage. This suggests a slow death for homeownership in England as Generation Mortgage gives way to Generation Rent.

Housing tenures % England (excluding social rent)

tenure shift


However for decades governments of all stripes have been responding to public concern about buying homes with a variety of ownership schemes. We started with huge discounts (now up to over £100,000) for social tenants to buy their council home and have now gone on to many more, such as Help to Buy.

At Shelter, we’ve supported these schemes where they are more affordable for ordinary families (shared ownership) and had concerns about others where they are not (Starter Homes). However perhaps it’s time to recognise that these schemes alone can’t reverse the tide of falling ownership.

Why not? Because as house prices have risen above earnings the range of people that these schemes can help is narrowing. Increasingly, all the ownership schemes are bunching towards helping roughly the same group of people – two earner couples on mid-high incomes with savings in the bank.

This excludes most renters including single earners, low earners, families with kids and those without help from the Bank of Mum and Dad. This becomes clearer when you consider how hard most renters are finding it to save.

Even access to the cheapest home-ownership schemes requires money in the bank to pay for a deposit, conveyancing fees, surveys, mortgage fees, moving costs and (depending on the area and price) stamp duty. All this combined will very rarely be below £10,000, even when using homeownership schemes.

However recent Shelter and YouGov research found that a big majority of private renters who want to buy a home were unable to save more than £100 per month after their rent, bills and other costs. Around half were unable to save anything at all.

Deposit savings of private renters who want to buy a home[1]

yougov savings

This makes it unrealistic to expect homeownership schemes to ride to the rescue of homeownership on their own. Renters need the time and opportunity to pay off debts and start building up savings, if they are ever going to access ownership. That means that what we need most to boost homeownership is a new generation of low cost rented homes.

While this might sound a bit counter-intuitive – it really isn’t. The boom in homeownership through the 1970s, 80s and 90s followed the biggest period of low rent house building the country has ever seen. Millions of families had the financial security and savings to be able to enter homeownership for the first time. Equally, the existing of a low rent alternative meant there was much less pressure on market rents and prices.

If our new government really wants homeownership to rise, then we need more than homeownership schemes – we need genuinely affordable homes to rent, to help people save.




[1] Question: Thinking about saving money towards a deposit to buy a home…Approximately how much, if anything, do you personally save during an average month? Source: YouGov survey of 3792 private renters in England, July 2015, weighted, online. Base: 3043 who know that they want to buy a home. Figures don’t sum to 100 as further categories not presented.