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Research by VeriSmart, the letting compliance specialists, has looked at what point in the future the UK could lose its homeowner status as the scales tip towards a greater number of rental sector occupants compared to owner-occupiers.
The UK is a nation of aspirational homeowners, but the high cost of property has seen many remain resigned to the rental sector. In fact, when it comes to the percentage of homeowners, the UK currently ranks as the 24th lowest of all 28 EU nations at just 65%.
In contrast, the UK is home to the fifth highest percentage of tenant occupiers of all EU nations, behind just Germany, Austria, Denmark and France.
The latest data shows that since 2010, the percentage of owner-occupant homeowners has fallen by -5% while the percentage of occupants in the rental sector has grown by 5%.
Despite this, homeowners still account for 65% of the market as we remain a nation driven by the goal of owning our own home. However, should this seven-year trend persist we could start to see this change as more and more of us remain in the rental sector.
Based on the previous decline in homeownership levels, the scales would tip in favour of tenants by 2039 with 50.7% of us renting to 49.3% owning our own home. By 2045 this will have grown to 55% of the nation living in the rental sector to 45% classes as owner occupants.
This isn’t a trend driven out of necessity but rather people choosing to rent within the private sector, as during this time the number of us in social rental accommodation has also dropped.
Founder and CEO of VeriSmart, Jonathan Senior, commented:
“We are currently seeing a shifting mentality in the way we choose to live our lives and for Generation Rent, in particular, there is no longer that urgency to make it out of the rental sector and secure their own ‘piece’ of bricks and mortar.
This was initially driven by consistently buoyant house price growth coupled with stagnant wage growth providing no other option but to rent, however, social rental numbers are falling, Build-to-Rent is growing in prominence, and there has been a number of tenant-friendly changes to the sector.
All of these changes are making the rental sector a more attractive place to be and as a result, we are seeing more of us opt for it and stay there for much longer than we may have traditionally.”
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Vanessa Warwick Landlord and Co-Founder of PropertyTribes.com **If you have got value from Property Tribes, find out how you can support it in remaining a free to use community resource**
It's interesting thought and note that we are a weird country where most of us own homes. A lot of other countires dont have ownership on the scale we do.I think it would be a loss if we became a nation of renters. Any government would want to make the shift the other way with more and more punishing acts.This here is why Conservatives wanted to give First Time Buyers a greater advantage over the PRS, with the extra SDLT and changes to Taxation.
Im not sure the study will hold up, we will see in coming years if the changes have led to a decline in the Private Rented Sector as some poll's make out.
_________________________________________________________________________My posts are not financial advice but often me rambling - passing time on a coffee break.Our team at Bespoke Finance offers Limited Company Buy-to-Let and Cheap Life Insurance._________________________________________________________________________
We have a scenario where this government bowed to pressure from the rental lobby to destroy the PRS (primarily us greedy 'small' landlords!), and the result is thousands are leaving the PRS. But the properties they are selling are not necessarily going back to the PRS.I sold a flat in London which was bought by an older couple who downsized to a country cottage and wanted a London pied a terre. Double whammy... one less potential rental property available outside London and one less in London!
At the same time, the trend among younger people is to rent because it allows them the flexibility to move between jobs and cities, and most would rather spend what they have left than save for a deposit.
I note what you say about the government giving FTBs an advantage e.g through 'Help-to-Buy', but this scheme is actually worse than renting because it has been used by developers since it was introduced to inflate the price of houses and make billions in profits (which they never saw before), sell them as Leasehold, then sell on the Freehold to Ground Rent investors (the real greedy landlords!) who apply punitive charges for everything from wanting to buy a new carpet to keeping a guinea pig.The catch comes when they need to sell; families grow and jobs move, but they find they can't sell because the mortgage companies realise the houses are worth what was originally paid, so the owners find themselves in instant negative equity; still with all the costs and responsibilities of an 'owner' but with none of the benefits. #NationalLeaseholdCampaign
THIS IS THE NEW PPI!
Once this really hits the media, rental will seem like a huge benefit. Unfortunately, the government will have ensured that there is nothing for them to rent where they want/need to be!
Oops! "...the mortgage companies realise the houses are worth what was originally paid". I meant to say "not worth...". Rather changes things!
Yes I agree, its outrageous that this freehold gravy train is allowed to go unchecked. But people are not aware of it yet. Politicians seem to turn a blind eye, they only deal with raging fires and I guess this scandal is not in the papers yet.
Also, I suspect some very rich and influential people are in on it. Why doesn't demagog Jeremy go after this?
Such an interesting read Vanessa. If the trend keeps up, then property would be a great investment. Especially as renters will more likely stay in a place they like for longer and therefore more security is guaranteed for the Landlords.
I’d still say there is urgency for people to secure their own ‘piece’ of bricks and mortar, but it is not as prevalent as it was in previous generations.
I’d agree with Adam that we will have to see in the coming years as to whether to study actually holds up.
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The data in the article shows that the long term trend they are writing about went into sharp reverse between 2 and 3 years ago.
Exactly. Extrapolate the last 4 years in the chart above and it goes the other way! Did these researchers get beyond GCSE maths? My 15 year old son grew about 3 inches this year, so by 2050 he will have grown about another 8 feet.