Many people think the British obsession with owning your own
home started with Thatcher in the early 1980’s, when she allowed council
tenants to buy their council houses under the right to buy scheme. However, the
growth actually started just after the Second World War. Looking at the country
as a whole in 1951 30% of residential property was owner occupied then, every
ten years that rose incrementally to 39% by 1961; 51% by 1971; 58% by 1981 and 68.07%
by 2001 but after that, it dropped to 63.4% by 2011 and continues to drop
today.
Young adults tend to start to think about settling down and
moving out of the family home in their early-mid twenties. After a couple of years, they will have a
choice of either buying their first house (albeit with a mortgage) or decide to
privately rent for the long term (because the Council House waiting list is
measured in decades at the moment!). The ratio of people owning a house with a
mortgage verses privately renting is an extremely important guide to what
people are doing about their housing needs and what their attitude to renting
vs buying is. With that in mind, within
the next ten years, I am predicting there will be more people renting privately
in Royal Tunbridge Wells than own a property with a mortgage and that the
British love affair of property ownership will fade as the decades roll on.
This is a really important change in the way we live, as I
explained to a local Royal Tunbridge Wells landlord the other day, knowing when
and where the demand of tenants is going to come from in the coming decade is
just as important as knowing the supply side of the buy to let equation, in
relation to the number of properties built in the town; Royal Tunbridge Wells property
prices and Royal Tunbridge Wells rents.
In the Tunbridge Wells Borough Council area as a
whole there are 7,412 households that are privately rented via a landlord or
letting agency verses 16,264 households that are owned with a mortgage, so my
prediction appears to be outrageous. However, when we look deeper (as the devil
is always in the detail), 7,986 of those 16,264 households are 35 to 49 year
olds and 5,055 are households of 50 to 64 year olds. I would expect all the 50+
years to be paying their mortgage off as they enter retirement as I would with
some of the people in their mid/late 40’s.
Meanwhile, at the other end, in the 25 to 34 age range (the
age most people bought their first home in the 1970’s/80’s/90’s) only 2,100
of the 4,433 households occupied by those 25 to 34 year olds are owner occupiers
with mortgages, because 2,333 households are privately rented. This means only 47.3%
of 25 to 34 year olds have bought their house (with a mortgage). Twenty years
ago, that would have a much higher percentage of homeowners (between 75% to
85%).
It can be seen that as the older generation pay their
mortgages off as they start to get to retirement and the younger generation
aren’t jumping on the property ladder like they were 20 or 30 years ago, the
private rental sector will take up the slack as more and more people will want
a roof over their head, but won’t buy one but rent one. With Local Authorities
and Housing Associations not building houses anywhere near like the number of
houses they were building in the 1950’s, 60’ and 70’s, the private landlord appears
to have good demand for their rental properties for many decades to come.
This will create a polarisation in the housing market
between those, mostly older, households who own outright and those, mostly
younger, households who rent. Our housing market is very much turning into the
European model. However, all is not lost, the younger generation will inherit
their parents properties, which in turn will enable them to buy, albeit later
in life.
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