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New research reveals the rapid growth of the private rented sector in the UK
Over two million homes have changed tenure in the last decade when taking into account all property sales between owner occupiers and landlords, according to new research. Some 1,550,000 properties have gone from being lived in by their owner to being lived in by a tenant, while 550,000 have moved the other way, from the private rented sector into owner occupation. This has resulted in an extra million homes being occupied by a tenant rather than a home owner, equivalent to the number of households in the North East of England, says the research from property group Countrywide plc. Homes transferring from owner occupation into the private rented sector accounted for half of the growth in the number of privately rented homes over the same period. Most of the remaining growth in the private rented sector has come from landlords buying new build homes. The research also found that some 700,000 new homes built since 2005 have found their way into the private rented sector. The remaining homes changing tenure have come from social housing and residential conversions. Despite this, homes are only around half as likely to change tenure as people. First time buyers end up buying 65% of the homes that leave the private rented sector, and last year 45,000 first time buyers bought their home from a landlord, the highest number since the market downturn in 2008. This equates to 15% of all those who got onto the housing ladder for the first time. With first time buyers and landlords tending to look for homes which are smaller and cheaper than average, they often find themselves in competition. As a result, both groups are disproportionately likely to sell homes to one another. The research explains that given the private rented sector is largest in London and the South East, this is where first time buyers are mostly likely to buy their home from a landlord. One in five new buyers in London, and one in six in the South East, bought a home which had previously been rented out. It is in these two regions where the difference between what new buyers paid when buying from a landlord and those that didn’t is greatest. Those buying from a landlord paid on average 8% less than those that didn’t. ‘The rapid growth of the private rented sector has to come from somewhere, while the tenure may change, the physical home remains,’ said Johnny Morris, director of research at Countrywide. ‘The sector has been growing since 2005 but the number of home owners has fallen in each of the last 10 years. This scale of shift in tenure shows that the current push from the government to increase the number of homeowners is unlikely to be enough to reverse the decline,’ he explained. ‘Although landlords and first time buyers might not appear natural bedfellows, because they tend to look for similar types of homes they do end up selling to each… Continue reading
Fewer young people likely to be able to buy their own home in the future
Even if the current plan to build 220,000 new homes in England each year until 2031 is fulfilled young people aged 25 to 34 will still be less able to live in their own home that they did in 2011, according to new research. An analysis report from the Town and Country Planning Association says that currently only 54% of the number of homes needed are being built, putting pressure on prices and rents, and the housing crisis is worse in London and the wider south east where 55% of the homes required need to be located. Even if the homes required are actually built the latest government household projections suggest that young people across the country are struggling more than ever to live independently because of the cost of housing. The research says that the housing requirement to meet projected household formation until 2031 is actually lower than previously anticipated but this is because younger people are already finding they cannot afford to form independent households. Housing shortages and the resultant high prices and rents mean that young people are living with parents or in house shares for longer, rather than forming a household of their own. Rising student debt levels and potential future welfare reform are likely to make their position even more difficult. ‘This research shows that, while it looks as if the projected number of needed homes has dropped, this is because many people now can't afford their own home either to rent or buy and are living with parents or other people longer than they would like to,’ said Kate Henderson, TCPA chief executive. ‘The government needs to see this as a wakeup call. It has already fallen behind on their targets for house building, and this is now having a devastating effect on young people. More needs to be done to build the necessary number of high quality, affordable homes for people who need them,’ she added. Starting in 2011, a minimum of 220,000 homes are needed each year to 2031 if house building is to keep up with projected household growth and even this is not enough to enable couples aged between 25 and 34 to have the same chance of living in their own home as their counterparts in 2011. Of the new homes needed, over half, 55%, are needed in London and the surrounding area. In contrast, in the north east, the number of new households is expected to only rise by 11% over 20 years. Professor Christine Whitehead co-author of the research and Emeritus Professor at the London School of Economics it is a major concern that young people are likely to be less well housed in 2031 than their counterparts in 2011. ‘If house building cannot be increased at least to the projected levels other household groups will find themselves in the same boat,’ she added. The research also shows that the government is already falling short… Continue reading
First time buyers need average earnings of £50,000 to buy a home
First time buyers in the UK need to earn on average of £50,000 a year to get on the property ladder, new research reveals. However, in 51 out of 65 cities, the average salary is below the minimum required to buy a flat, according to the study from comparison website GoCompare. The most affordable place to buy in the UK is Blackburn where a salary of £14,000 a year could be enough to buy a flat but a minimum household income of £140,000 a year is needed to buy a flat in London. In the capital a minimum of £275,000 is needed to buy a detached house where the average price is at £869,415 yet the median average salary in the capital is just £30,338. So Blackburn is almost 10 times cheaper than London. The median average salary in the Lancashire town is £18,444, making it one of the few places in the UK that are affordable. After Blackburn, the cheapest places to buy property are Hull, Blackpool, Grimsby and Stoke-on-Trent where a salary of just £15,000 could be enough to purchase a flat. Outside of London it is Brighton, Edinburgh, Bristol and Oxford which are the most costly. Minimum salaries to get on the property ladder in these cities are £60,000, £60,000, £58,000 and £54,000 respectively. ‘Although owning a home may be achievable in places like Blackburn and Sunderland, in other parts of the country the rapid rise in property value and a growing urban population is pricing many of the British public out of home ownership,’ said Ben Wilson, home insurance expert at GoCompare. ‘London’s high prices are well documented, but it’s in other parts of the south of England that the gap between average salary and average house price is at its most alarming, with places like Brighton requiring a minimum household income of £180,000 to afford a detached house,’ he added. Continue reading
