A new nation of renters? Homeowners decline while private renting sees a sharp increase

Published 06th Jul 2011

The property slump and recession has taken its toll on our love affair with home ownership, with the number of owner-occupied homes falling four per cent in five years.

Official figures show that home ownership has continued to slip, having peaked in 2005 after climbing steadily for 25 years.

In 2005, 14.8million houses in the UK (71 per cent) were owner-occupied. But, in the latest data released today from the Department for Communities and Local Government in its English Housing Survey, 14.5million (67 per cent) were owner-occupied last year.

Tough mortgage availability and lenders' demands for big deposits are putting home ownership out of reach for many, despite Land Registry figures showing the average house price dipping by 12%, or £21,000, since hitting a peak of £183,000 in November 2007.

The number of private renters has increased significantly - 1million more households are now renting privately since 2005, up to 3.4million last year. This figure is now almost on par with social renters - those who are living in local authority and housing association homes.

The average weekly rent rose to £156 for private renters last year, compared with £75 for social renters.

Further statistics show that in recent years the number of private renters has boomed. Over two-thirds (68 per cent) of new households formed between 2008-2010 were living in the private rented sector.

David Hollingworth, of London & Country Mortgages, said: ‘Tighter lending conditions have led to a need for bigger deposits and tougher criteria that has certainly made life harder for mortgage borrowers and prospective buyers.

‘Consumer confidence in the housing market and economy more generally remains fragile, which is bound to result in more holding off from any property purchase.

‘That is backed up by the first time buyer numbers and of course has been good news for landlords as the number of private renters has increased.

‘The longer that first time buyers stay away from the market the stronger the expected demand for quality rented stock is likely to be.’

Those study showed that those who rent privately were also far more likely to move and much less likely to live in the same property for a long time - 33 per cent of private renters had lived in their home for less than a year, compared to two per cent of owner-occupiers and 8 per cent of social renters.

Only 10% of private renters had lived in their home for over ten years, but more than half of owner occupiers and 43% of social renters had lived in their homes for ten years or more.

Over the past decade the number of homeowners living mortgage free, has risen substantially. The number of households that own their home outright rose from 5.6million in 1999 to 6.8million in 2009-10.

Worryingly for first-time buyers, only four per cent of owner-occupiers were recent first-time buyers (bought within the previous three years), with 61 per cent being aged between 25 and 34.

Regionally, the highest levels of owner-occupation were in the South West (73 per cent), South East and East Midlands (72 per cent).

In comparison, London had the lowest level of owner occupation (53 per cent) but the highest level of private renting (23 per cent) and the second highest level of social renting (23 per cent).

All the northern regions had higher than the national average level of social renting – 24 per cent in the North East, 19 per cent in the North West and 18 per cent in Yorkshire and the Humber. The lowest level of social renting was in the South West where only 11 per cent of households were social renters.

In contrast, the southern regions had a higher level private renting (17 per cent) compared to Midland (14 per cent) and Northern (13 per cent) regions.
Tenure by region, 2009-10

Tenure by region, 2009-10

London: most expensive and most overcrowded

The overall rate of overcrowding in England in 2009-10 was 2.9 per cent, with 630,000 households living in overcrowded conditions.

There were considerable differences in overcrowding rates by tenure: 1.4 per cent of owner occupiers (204,000 households); 7.1 per cent of social renters (273,000); and 5.1 per cent of private renters (152,000).

London had the highest rate of overcrowding of all regions in England, 7.8 per cent, with over a third of all overcrowded households in England living in London. London also had the lowest rate of under-occupation, at 24.7 per cent.

The average London home cost £344,819 in May, compared to the cheapest region the North East's £102,231 average, according to the most recent Land Registry figures.

The measure of a household being overcrowded is an ‘bedroom standard’ indicator that the English Housing Survey uses - A standard number of bedrooms is calculated for each household in accordance with its age/sex/marital status composition and the relationship of the members to one another.

A separate bedroom is allowed for each married or cohabiting couple, any other person aged 21 or over, each pair of adolescents aged 10-20 of the same sex, and each pair of children under 10. Any unpaired person aged 10-20 is notionally paired, if possible, with a child under 10 of the same sex, or, if that is not possible, he or she is counted as requiring a separate bedroom, as is any unpaired child under 10.

Households are said to be overcrowded if they have fewer bedrooms available than the notional number needed.

Source: ' ThisIsMoney '

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