Property paupers will rent for life, predicts think tankMake Text Bigger
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.
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