Press Article
METRO - 1 September, 2011
An Englishman's home is no longer his castle
By Jo Eccles
There has been much debate in the last week following research commissioned by The National Housing Federation (NHF) that has found that the proportion of home ownership in England has been falling steadily over the past 10 years and is expected to continue to fall from its current rate of 67% to 63.8% over the next decade if affordability continues to fall and wages don’t increase in line with house price growth.
This has raised serious concerns - the NFH called the UK housing market ‘totally dysfunctional’ due to the lack of available and affordable housing. London is likely to be particularly affected by falling ownership. By the end of 2012, the number of people renting is expected to overtake the number of people who own their home. This will be the first time this has happened in recent history. With the shortage of homes available, particularly at the lower end of the market, more and more people are turning to the rented sector. However, rents are also rising and Oxford Economics, who carried out the research for the NFH, predict that rents will increase by nearly 20% over the next 20 years.
To try to ease this, there have been urgent calls for more homes to be built. In 2011 only 105,000 homes were built in England. This is the lowest level since the 1920s. The major house builders are reportedly currently hold planning permission for at least 188,000 new homes but they are restricting development as they’re concerned they won’t be able to sell them, particularly the more affordable homes, as buyers can’t get the funds to purchase in the first place. Housing Minister, Grant Shapps, has pledged £4.5bn from the government for an affordable homes programme which will deliver up to 170,000 lower cost homes over the next 4 years, but alone this isn’t enough.
It seems without drastic action, the future generations of England will fall more in line with other countries in Europe such as Germany and France, which have low levels of ownership and more of a rental culture. So, perhaps we will see an end to the ‘Thatcher-era’ of home ownership – renting has certainly become the norm to many of those in their 20’s and 30’s and it is no longer frowned upon. But if this is going to be the case, then the private rental sector needs to adapt accordingly; rental property and tenancy agreements are largely designed with a ‘short term’ view in mind. If we do see such changes and the pressure of ownership is taken off the younger generations, then perhaps it’s not all bad – people can start exploring different locations/types of housing and it may take the heat out of the market a little as there isn’t that fight for ownership.