‘A major cultural shift in home ownership is on the horizon, with more private renters than mortgaged home owners within just a few years.
By 2025, the number of mortgaged households will be just under 6m, while the number of households in private rental accommodation will be a whisker more, at 6m.
The forecast comes from NatWest senior economist Sebastian Burnside, who says the cross-over will happen in late 2024.
He said: “We think it’s a fairly comfortable bet that by 2025 we will have more households renting privately than owning their homes with a mortgage, which is a big cultural shift for a country like the UK and something that’s being driven by those underlying demographics.”
There are already more people owning a home outright than people buying with a mortgage, and the number of outright home owners will continue to climb.
Since 2013, outright home ownership has been the biggest form of housing tenure in the UK. By 2024, about 9m households will own their homes outright.
The number of households in social rental accommodation will edge downwards, from 4m today to just under that figure.
Burnside said that fewer people are taking out mortgages because of the differences between their incomes and house prices.
However, baby boomers are increasingly able to pay off their mortgages.
Burnside said that as the private rented sector grows, lenders need to rethink their repossession strategies.
At the moment, lenders treat home owners who fall into mortgage arrears with more leniency than buy-to-let landlords unable to keep up payments. Defaulting landlords usually have their properties possessed within months.
However, Burnside said that possessing landlords’ properties swiftly was problematic for tenants with ties in the area, or children at school.
The government housing budget must surely be heading for disaster with so many people renting. At the moment many baby boomers reaching retirement only have to make their pensions stretch to living expenses, but they don’t have to worry about housing costs as most will have paid off their mortgages. If this generation are only ever renting not buying, not only are their pensions often much worse than the last generation, but they will have to pay rent out of it all through their retirement!! How are they going to manage unless they all apply for housing benefit!
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Some of this is down to choice. Rents are often close to the amount of mortgage payments. There is often an unwillingness to compromise where a couple might have the choice of renting a 3 bedroom house or buying a 1 bedroom flat. The current culture often means many choose the bigger more impressive rental option. The same culture applies to cars, they take a rental contract so they have a new car every other year as opposed to buying something older and less desirable. The baby boomers did not have the choice as there was virtually no rental market and it was largely buy or a council property. The cultural influences were also very different for the baby boomers who were less concerned with self gratification and trying to impress their mates and everyone else. Government (Local and Central) have been asset stripping for years so there is less social housing increasing the PRS. Statistics do not reflect the social changes and legislative changes, past or future are are therefore unreliable other than journalism hype of course.
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Whilst I agree with you about some people making lifestyle choices to get the bigger or more impressive option, It is not always the case. My son pays less for his mortgage on a three bed semi than tenants of ours do on a two bed flat, so you are also right about the mortgages being less than the rent, but unless tenants have a job with a salary which multiplied up would give them that mortgage option, and then have a deposit saved, which is also hard unless you live in a low house value area, then sometimes it is virtually impossible unless you have parents or grandparents giving you the deposit.
Once you are then on the rental route, saving for a deposit unless you move back in with parents is also extremely hard. It seems a shame that if you have proven over a number of years that you can afford X amount monthly for a rental and never defaulted then you could be offered that amount on a mortgage irrespective of your actual multiple of earnings. I believe this is something which is being looked into but not sure if it will happen.
A new housing estate around here says ‘buy here for £550 per month’ clearly far less than the flats would be to rent, (approx £800) but they are about £225 to buy so even with a 20k deposit you would need a mortgage of £200 so would probably need to be earning around £40-50k I think. So young people end up having to rent for £800 rather than buy for £550!!
it seems such a shame.
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With landlords leaving the sector in droves due to Section 24, licensing, and other onerous legislation, I wonder who is going to provide accommodation for all these people forced into the PRS, or who choose to rent?
As we saw recently, here, in 2017, councils are desperate for private landlords to assist with their housing waiting lists.
https://www.propertytribes.com/croydon-council-courting-south-east-landlords-t-127631015.html
It really is a ticking time bomb of a disaster and the people most affected by this lack of cohesive housing policy will sadly be tenants.
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For the next generation, children of the baby boomers will benefit from the property legacy – their inheritance may provide them either with the chance to buy into property at a later stage of life, continue their hedonistic self-indulgence or provide HM Treasury with the biggest ever cash grab from increased death duties which the mandarins are probably even-now inventing.
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Ahem, this relies totally on stock and unless government and other bodies stop assuming every landlord is a Rachman (look it up if you are one of the younger readers) and every letting agent is the scum of the earth this will never happen.
The B2L enquiries iwe get now have dropped off a cliff thanks to taxation including stamp duty and suggestions of longer term tenancies and rent caps.
How does that work for a landlord, fixed income but with no control over expenditure with mortgage rates set to rise and a stalling housing market unlikely to see much if any capital growth?
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