Property paupers will rent for life, predicts think tank

by Property118.com News Team

15:13 PM, 13th June 2011
About 9 years ago

Property paupers will rent for life, predicts think tank

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Property paupers will rent for life, predicts think tank

Millions of would-be householders will turn in to a generation of property paupers as all hope of buying a home slips away from them, according to a new study.

The research says the property door will shut on around 2 million people who will have to rent instead of buy.

The scenario is part of a report by the influential policy think tank the Smith Institute.

The findings of a report looking at the future of the housing market claims home ownership will drop to 60% of the population from the current trend of around 67%.

In figures, that means the number of home owners will decrease between now and 2025.

The projected figure at today’s rate of ownership is 17.4 million home owners – but economic factors following the recession and sluggish recovery are likely to pressure the number down to 15.5 million households.

This is good news for buy to let landlords investing for the long-term and is yet another in a series of recent studies suggesting the UK is shifting towards the European model of more people renting homes for life than buying.

Paul Hackett, the institute director, says many would-be homebuyers will just not have enough cash to step on to the property ladder.

“There is every reason to believe that home ownership levels will continue to decline and the private rented sector continue to grow. An increasingly large proportion of households will in effect be excluded from the benefits and risks of home ownership. Wealth will be painstakingly acquired through personal saving,” he told The Guardian newspaper.

The study reveals that the number of mortgages for home buyers has collapsed by 50% in the past three years, leaving prospective borrowers with bad credit histories or low incomes stranded in rental property because they cannot raise deposits or loans.

The institute predicts mortgage finance is “most unlikely” to return to the levels of earlier this decade due to credit restrictions and tighter consumer regulation.

This ties in with short-term forecasts by the Council of Mortgage Lenders, the trade body for the UK’s main banks and building societies lending to buy homes.



Comments

14:29 PM, 14th June 2011
About 9 years ago

Hardly paupers. To have a roof over one's head and food to eat is still achievable by the majority. The expectation of ownership of that roof is a relatively recent one.
And actually, given the costs and risks associated with it, perhaps a shift to a different set of expectations, particularly for young people, would be no bad thing?

8:57 AM, 19th June 2011
About 9 years ago

I think the savy renter will live for today & !!! tomorrow.In the "take culture" the last government have installed in them & my children as well have been "educated" by there friends & the "system".As my children work hard while many of the friends are "gifted" homes etc by the system.
Think about it. 1 monthly payment with full Maintenance .They pay for no plumbing, leaks, call outs repairs or Maintenance to fences doors heating cookers etc.No onward costs to speak of. So a disposable in come is left over...??The only question is, when all us landlords mortgage terms on our buy to let finish in 20 + years
1, will there be a glut of portfilo's for sale all at once,Depressing the market ?.As alone in my area there is over 8,000 homes being built in the next 8 years alone.
2 Who have the funds available to buy them
3 Where will all the tenant(s) a) go to live b) if nearing retirement themselves get the money to pay the rent at a true market rate..
Answers would be most welcome.
PS at the moment I doing OK with my small portfilo, but I can not figure out in anyway how it might pan out......
Regards Willy

Barry Hayden

10:27 AM, 19th June 2011
About 9 years ago

Here in Torbay there is a lot of new house-building, and it is selling to a mix of private sellers/but-to-let.

You can't tell which-is-which - until the For Sale/For Let boards go up!

I consider the properties will switch between private ownership/but-to-let during their life, reflecting the trend of the moment, but while they are in the hands of responsible Landlords (and dutiful Tenants) you will always see a seamless estate.

Barry C. Hayden

21:48 PM, 19th June 2011
About 9 years ago

I agree that a more balanced housing scenario - as between renting and buying - is something that makes good economic for the UK
Like many others, Isuspect that I came into Buy-to-Let as an important part of my own retirement. having now retired, I can say just how positive this move has proved to be. Even where the stock market (and property values) have been very volatile, the rental flow has been very steady.

Some few years back, the the Chancellor(G.Brown) came close to allowing private pension funds to invest in the buy-to-let market., but was quashed at the last minute by political 'lefties' who cannot see beyond own policies of spite and envy.
Had it happened ,it would have freed up much more of UK housing for private rental and indeed made our pension funds a much more favourable place to invest our hard-won cash.

Mark Alexander

22:02 PM, 19th June 2011
About 9 years ago

Too true Richard. The 11th hour u-turn on pension A-Day cost financial services businesses a fortune in both time and money but more importantly I think it was one of the worst decisions, nearly as bad as the one to sell the UK Gold bullion which at todays prices would have gone a long way to solving the National debt problem.

20:26 PM, 21st June 2011
About 9 years ago

I think home ownership as a 'right of passage' so to speak is going to fizzle out.
With my credit generation wanting to take gap years, change careers like outfits, and with more people wanting to work from 'home' (i.e. anywhere but a fixed location), I think we will see a big shift in our society and communities.
My prediction is that the high street of the future will be filled purely with services, rather than products/goods, which will be manufactured, stored, and distributed from 'out of town'. With geoarbitrage and the freedom to work from anywhere, people will move around more and more.

Therefore, ownership remains only that of investors and landlords - something which seems fairer all round in my humble opinion (with the correct regulation and legislation obviously...)


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