YOUNG people today are only half as likely to get on the nation’s broken housing ladder than they were 20 years ago, according to research for the Local Government Association (LGA).
What’s more, those who already own their own home are likely to find themselves stuck; unable to move to a more suitable property as their needs and circumstances change.
The LGA’s report, ‘Understanding Local Housing Markets’, warns that many young people face renting into retirement, as the high cost of the private rental sector is preventing households from being able to save for a deposit.
In its analysis, the LGA reveals just 11% of people born in 1996 own their home today, compared with 21% of those born in 1976 who owned their own home by the time they were 22.
Faced with this, council leaders are calling for the powers and funding to fix Britain’s broken housing ladder by building new social rented homes to help give all people access to high quality affordable homes, and give more families the opportunity to save for a deposit needed to buy a new home.
“Home ownership remains a distant dream for most young people, with the high cost of the private rental sector meaning many are unable to save for a deposit to get on to the property ladder and face the prospect of being stuck renting into retirement,” said Councillor Martin Tett, the LGA’s housing spokesperson.
“However what is now becoming apparent is once on the ladder, those other rungs are becoming increasingly out of reach.
“Typically a home owner may want to move from first-time buyer, through to a family home, followed by downsizing for empty-nesters. But for too many households, our national housing ladder is broken, as they face being unable to move as their circumstances change.
“Homes for affordable and social rent are desperately needed across the country. Councils must be able to ensure a mix of homes – to rent and buy — which are affordable for those people that need them and that are crucial for enabling people to save money towards a deposit.”
The LGA cites figures that show:
- On average households in England are now spending 33% of their income on private rent, compared with home owners spending 17% of their income on mortgage repayments. In many London boroughs average rents are over 50 per cent of household earnings
- The average deposit in England is 72% of an individual’s gross salary, rising to 137% per cent in London and dropping to 56.7% in the North West
- The number of homes bought and sold last year is a third lower than before 2008 as more people stay put and so reducing the opportunity for people to move up the ladder
Council leaders warn that the current “one-size-fits-all approach” to national housing policy is failing to meet the complex and multiple housing challenges faced in different areas across the country.
While the Government has looked to encourage first-time buyers into home ownership, the LGA says this has not given enough consideration to a household’s ability to continue climbing the housing ladder when their circumstances change.
Its report also reveals how many homeowners are finding themselves unable to climb up the housing ladder once on it, with the number of mortgaged movers 50% below 2006/07 levels and showing no sign of improving.
Low turnover of existing housing has been stuck at around 1.2 million a year for the past five years, which equates to around 4.2% of total stock selling each year compared to a pre-2008 average of 6.8%.
The LGA said this is down to varying factors including lending conditions, income growth, housing equity growth and house price affordability.
The LGA is calling on the Government to use the Spending Review to devolve the Right to Buy scheme so that councils can set discounts locally and retain 100% of their receipts to invest in more homes locally, and to invest in supporting all councils to build more homes.
Tett added: “By scrapping the housing borrowing cap, the Government showed it had heard our argument that councils must be part of the solution to our chronic housing shortage. The Government needs to use the Spending Review to build on this by introducing further measures to spark a genuine renaissance in council housebuilding in all areas.”