'Nation Rent' could become a reality
Within another generation, half of the UK population may be living in rented accommodation, a study has revealed.
Only 65 per cent of UK homes are currently owned by the occupier, a six per cent fall from the 71 per cent peak in 2003 and demonstrates a worrying trend that is set to continue, with the report predicting that by 2041 private renting could outstrip the number of owned homes.
The report, titled ‘Nation rent,’ predicts that in 25 years, those in rented housing will have little prospect of owning a home and attributes it to the buy-to-let mortgage boom and the failure of house-building to keep pace with a continuously rising population.
Buy-to-let mortgages now make up 13 per cent of nearly all mortgage lending in a decade, up by 4.3 percent, as amateur landlords seize the opportunity to hold on to property as an investment and to benefit from capital growth, signaling bad news for conveyancers, as these properties are less likely to change hands than properties bought by occupiers.
The idea of a ‘nation rent’ is already being seen as more people turn to private landlords for housing, which has seen the private rented sector experience accelerated relative growth.
This growth, the report warns, could produce a permanent structural change in the UK housing market and based on the current trend there could be 55%-60% owner occupation and 40-45% rented housing in 2033.
Contrary to the growth in the private rented sector, the findings of the report showed that the population still has a strong desire to own their own home, with over three-quarters of current private renters wanting to own their own home within a decade, while only three per cent wish to live in rented housing as a long-term choice.
Based on these worrying trends that are in direct opposition to the desires of the UK society, the writers of Nation Rent have produced a ‘toolkit’ to provide solutions to what could spiral into a home-ownership crisis for the next generation.
Produced by housing experts Natalie Elphicke and Calum Mercer of Million Homes, Million Lives, the Million Homes Toolkit has been tested on 12 case study sites in a range of locations across the UK.
It calls for a "revolution" in how house building is financed, with changes that will encourage big investors to finance "long term property portfolios that actively promote and enable people to buy the homes that they live in."
The results from the case studies provided a calculation that these portfolios could produce a return of at least 5% in real terms over periods of 40-50 years and that returns could be as high as 15% in the medium term.
Co-author Natalie Elphicke said: “By setting out a whole of market solution, the Million Homes approach will ensure a steady supply of privately rented and social housing so that people will be able to match their housing needs at different stages in their lives to their circumstances."
Calum Mercer added: “The solution lies in overhauling housing markets so that they attract far more investment from big financial institutions and create mixed portfolios of housing spread across owner occupation, private renting and social housing."