UK set to become more like Europe in terms of renting homes, new research suggests

UK set to become more like Europe in terms of renting homes, new research suggests

 

One in five of 23 to 27 year olds in the UK have no desire to own a home, suggesting that the country will become a nation of renters within the next generation, according to a new report. The attitudes of younger people are changing towards home ownership with 46% believing that the UK is becoming more like Europe where renting is the norm as fewer people are prepared to make the financial sacrifices needed to become a home owner.

The research from leading lender, the Halifax, also shows that 86% of potential home owners refuse to sacrifice the quality of accommodation they currently live in to reduce the amount of rent they pay in order to save for a deposit.

The report, produced for the Halifax by the National Centre for Social Research, shows that since 2011 attitudes towards renting have changes and the majority of current 20 to 45 year olds renting are unable, or choose not to buy. This means that the profile of the housing market will change significantly in the longer time with home ownership reducing as fewer and fewer people make their way onto the property ladder.

‘With attitudes softening towards the social implications of renting, and the number of people who say they will never own a property increasing, we may be heading towards the point where the aspiration to own a nice home will be replaced by the aspiration simply to live in one,’ said Craig McKinlay, mortgages director at the Halifax.

‘It seems that people are now beginning to accept a lifetime of renting and this would not only change the way the property ladder looks in the future, it could even bring into question whether or not it will exist at all for some people,’ he added.

The proportion of people who don’t want to raise children in a rented property has reduced by 10%, with the proportion of people worried about renting having a negative impact on their retirement also decreasing by 10%.

The cycle of renting is also perpetuated by the fact people who predominantly grow up in rented accommodation are themselves more likely to rent than buy.

Some 49% of people that don’t want to own have grown up in rented accommodation. Of those who don’t want to own, 36% think that the nation should lose its obsession with homeownership and that people would be happier as a result.

While unemployment has reduced and the availability of higher LTV mortgages has significantly increased over the last year, low incomes and saving for a deposit remain among the greatest barriers to ownership, the research suggests.

For those who choose to rent before they buy, rather than living longer in the family home, saving for a deposit can be an even greater feat. The cost of renting a home in the UK is now on average £1,488 a year higher that owning, with the gap between these costs being driven by average annual rents increasing by over £1,200 since 2009, while the cost of owning has remained relatively unchanged over the same period.

Craig McKinlay says ‘For those who do want to own, consideration needs to be given to set realistic timescales and ways in which this can be achieved. Researching the market and accessing the support that is available for first time buyers could make a real difference in realising the dream of owning your own home,’ he added.

An increase in the number of people renting could also lead to a more transient population, able to move geographical areas quickly and easily. While this has advantages in terms of labour mobility and national economic growth, instability in being able to project longer term demand is likely to affect the number and nature of new build properties.

This could lead to fewer homes being built than is necessary, exacerbating the current housing shortfall which can only be addressed by a continued supply of new homes. Developers will also need to adapt their models to reflect the changing shape of the housing market. If we see an increase in renting, we could also see more focus on build to rent developments.

Alun Humphrey, National Centre for Social Research senior research director says ‘The home ownership profile of the UK is currently in a transient phase. If an increased supply of housing keeps prices stable and any economic recovery is felt, in real terms, by those for whom homeownership is currently out of reach, then we may see levels of homeownership start to catch up with those of previous generations’

 


Published in: Property Update

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