Exclusive: Home ownership at lowest level since 1988
Record numbers of people are renting in the private sector as the younger generation fails to get on the property ladder
Britain's pursuit of the "property-owning democracy" has come grinding to a halt amid the debris of the credit crunch, with the proportion of people owning their own houses slumping to the lowest level in a generation.
A new government report into the state of housing in England shows that the proportion of owner-occupiers has fallen to 66 per cent, its lowest level since 1988 – when Margaret Thatcher was freely declaring her ambition "to create one nation by creating a property-owning democracy".
The anaemic housing market is expected to suffer another major blow next month, with the ending of the stamp duty holiday for first-time buyers on properties worth less than £250,000. The 24 March deadline has triggered a minor flurry of sales. It could explain why the number of first-time buyer mortgages rose in December, up 14 per cent year on year to 18,700.
Most lenders have withdrawn 95 per cent mortgages, which helped many first-time buyers. The rate of owner-occupation in the housing market has fallen for the sixth consecutive year, official figures have revealed – but three-quarters of all non-homeowners still aspire to owning their own property. The financial meltdown has made new mortgages harder to get and existing ones harder to pay off, and the knock-on effects have exposed long-term failures to provide new homes to buy or rent.
Many existing borrowers are being forced into giving up homes they can no longer afford. The average age of a first-time buyer, which fell to about 25 in the 1980s, is now up to 37 – and the National Housing Federation has warned that it could soon reach 43.
While those already on the property ladder have relished the seemingly remorseless rise in property prices, for the next generation it has meant the dream of home ownership has never seemed further from becoming a reality. Even recent house price falls have done little to help would-be first-time buyers. At 2011 prices, the average house price in 1975 was £80,280. At the end of last year it reached £164,785, having peaked at £212,319 in 2007. Since the mid-1990s the ratio of house price to earnings for first-time buyers has doubled to 4.4 times salary.
Anna Wesson is one of the lucky ones. The 30-year-old probation officer bought her first one-bedroom flat in Stockwell, south London, 18 months ago. "My parents bought their first home when they were much younger than me, about 25," she said. "I wanted to buy a house so I could stop paying so much rent and could have something to show for the money I was spending on it before."
But with house-buying increasingly out of reach, millions are forced to rent instead, at the mercy of private landlords. The English Housing Survey reveals that the proportion of householders renting from private landlords has risen for the 12th year in a row. But in Scotland, home ownership levels have remained stable after a sharp rise from 55 to 63 per cent in the 1990s.
Housing is at least becoming a big political issue once again. The housing minister, Grant Shapps, insists the Government is trying to help the "incredibly high" numbers of people who still want to own their own homes. The NewBuy Guarantee scheme will underwrite 95 per cent mortgages on properties worth up to £500,000, which ministers hope will assist 100,000 potential buyers who have struggled to get on the housing ladder.
The crisis provoked the Government into producing a housing strategy, with a series of controversial schemes for tackling problem areas. Where houses are "under-occupied", Mr Shapps would like homeowners – typically older people – to rent rooms to people who cannot find accommodation elsewhere.
He is also considering freeing developers from promises made before the financial crisis, as a condition of gaining planning consent, in order to get stalled housing projects started. The move would be controversial as the "planning gain" agreements, which include pledges to build free community facilities, were often critical to the developments being granted planning permission in the first place.
The National Planning Policy Framework caused a storm of protest last year, with campaigners including the National Trust warning it would unleash a wave of new developments in the countryside. With experts pointing to a growing shortage of housing, Mr Shapps has already identified plots for 80,000 homes on publicly owned land which he wants to release for construction to begin. "We need housing growth," he said. "We need it to happen in the right places but we need communities to get something back in return."
But, for some experts, the Government has neither identified the real problems nor come up with workable solutions. The homeless charity Shelter claimed the failure to build enough new homes had led to the growth in the private rented sector, which now accounts for 3.6 million people a year. Shelter's chief executive, Campbell Robb, said: "Some of the most vulnerable have no other choice than to live in overcrowded and hazardous conditions at the hands of rogue landlords. A huge opportunity was missed in the recent housing strategy to set out what the Government will do to help the rising numbers in private rented housing."
Labour said rents in the private sector had risen by 4.3 per cent in the past year, and claimed this contradicted previous assurances from Mr Shapps and the Prime Minister. The shadow housing minister, Jack Dromey, said: "David Cameron and Grant Shapps are simply out of touch with the everyday lives of millions of people who hand over rent each month."
Peter Tutton, a Citizens Advice debt and credit policy officer and author of Set Up to Fail, the charity's 2007 report on sub-prime lending, said the key issue in the housing debate was not "whether home ownership is a good or bad thing per se". He added: "The real questions, whether you're looking at home ownership or the rented sector, are around affordability and what there is by way of a safety net. If more people on low incomes are encouraged to become homeowners, how do you make sure home ownership is sustainable and what support is there if things go wrong?"
A report into attitudes towards housing last year found that 77 per cent of all non-homeowners still aspired to owning their own home – but many younger people expected renting to become the norm. The study, produced for the Halifax by the National Centre for Social Research also found two-thirds of non-homeowners believed they had no prospect whatsoever of buying a home. The report found that 95 per cent of 20- to 45-year-olds questioned said they had no spare cash, no interest in saving for a deposit or were trying to save but failing to do so.
More people are choosing to rent – with the idea of buying a home a distant dream. The average house price for a first-time buyer at the end of 2011 was £139,471, 4.4 times average earnings. In London it is £256,035, or 6.4 times earnings. In Scotland it is £100,952, or 3.3 times earnings.
Nicola Perkins, 31
The writer, director and producer left the house she co-owned in central London, along with a finance and project management career, to work in film. She now rents in Oxford
"I owned my own flat in 2008, but left it when my husband and I separated in 2010. Now I rent a house near to central Oxford, with two friends who are fellow film-makers, and I love it. I would buy a home again, possibly in the future, but I'm happy renting now, as it represents better value. Cost-wise, the actual mortgage is on a par with renting, but the associated costs are what really put the costs up. There's also a greater freedom with renting, as you can move around more, and live with different people. If I were to stop renting, these friendships might suffer. That can happen when you live in your own house. Family members have certainly encouraged me to buy. My younger sister was 19 when she bought a flat, and my parents bought a house when they got married – they were 21 and 23. Times are different now."
There are more than 3.4 million households in privately rented homes in England, up 90 per cent in 30 years. The National Landlords Association represents 1.2 million landlords. Of 86,600 complaints about landlords last year, 270 were successfully prosecuted. Two in five complaints were over damp and disrepair.
Richard Blanco, 45
Rents out three houses, two shops and five flats in east and south-east London
"In the late 1990s I went abroad for a year and rented out my flat. I was lucky because I bought a two-bedroom flat in Hackney which went up a lot in value. I remortgaged that and bought several properties. I get very frustrated about the bad reputation of landlords. Rachman was in 1950-something. There is a small minority of rogue landlords and I would like to get rid of them as much as anyone. It's not all about money and grubby capitalism. It's about running a business and providing decent homes. Rents have been rising over the past year or so, suggesting people who would otherwise be buying are holding off and renting instead. My business model is about getting good tenants, having a good relationship and getting them to stay for a long time. I find I have very positive experiences with the tenants. I was invited around for Sunday lunch by one the other day."
Since 1980, 2.5 million council properties out of an original stock of five million have been sold through the Right-to-Buy scheme. Since 1997, households on council waiting lists have risen from 1.02 million to 1.75 million, and the amount of "social housing" declined.
Jean Bartlett, 60
Chair of the Aylesbury Estate Tenants and Residents Association
"I first moved into a council property at the age of 12. My family and I had been virtually living in the slums prior to that. Three families shared the place we lived in. We had to go to the local baths to wash, and my mum and dad used to sleep in the living room. Once we moved, we had much more space, with three bedrooms just for us.
"Perhaps because of my age I have a different perception of the opportunities council housing can provide, but I still think the Government should be investing in it. I'm comfortable, but I worry for young people trying to get on the property ladder. Why should they feel they have to take on a mortgage? The Government's plan to scrap council homes "for life" and bring in five- to 10-year contracts is appalling. Do they really think people's circumstances are going to change in that time? If anything, there should be more council properties being built, and not just for ones for market rent."
Construction levels have dropped. In 2011, 109,010 homes were completed, well below the 176,240 completions in 2007. Building industry bodies predict 45,000 skilled workers will be lost in 2012. Last year there were 250,000 plots granted planning permission in England where work had not started.
Julian Weightman, 32
Runs Border Craft Homes, a family firm based in Hexham, Northumberland, established in 1976
"Pre-recession we were probably building 15 houses a year, medium-sized properties, whereas now we are probably building speculatively two houses a year. We have gone from having 28 staff to eight. It has had a huge impact on us. We used to have apprentices every year – a joiner and a bricklayer. Now we are training nobody. We need a new approach and some sort of housing that is still good quality but isn't the traditional way of building, maybe using more timber and being more creative to make it more affordable. Owning a property is aspirational. Everybody likes their little bit of England. There has been a huge increase in people dealing in cash. It does make it very difficult for the legitimate trade. Cutting VAT to 5 per cent on construction would make the Treasury more money than the standard rate, because it would bring in the black market. This year is going to be incredibly tough. I think next year will be a lot better."
Homelessness has risen for the first time in eight years, with 65,000 households accepted by councils as homeless in 2010/11. About 50,000 households are in temporary accommodation. Officials estimate 1,768 people sleep rough on any one night, but charities claim the figure is much higher.
Classed as having "no fixed abode", Bruce has spent the past 27 nights at the Winchester Churches Nightshelter
"I had to leave my home when the mother of my children decided she wanted her independence. I had to move away. It knocked me for six. I came back to the South-east and I was sofa-surfing for four years until my luck ran out. I couldn't depend on friends and family any more. I needed help and it was getting colder; the night shelter scooped me up. I had lost a lot of confidence. I wasn't really expecting the whole thing to fall apart.
"There are two ways I can go from here: stepping up into my own accommodation, or there's dropping further. I don't want to do that. I don't know where the bottom is. I don't think anyone ever expects to end up homeless. Four years ago I was a father living in a lovely house, but I have ended up here. I lost my home and my identity. But I am not ashamed of the situation I'm in: it could happen to anybody."
* Bruce preferred not to give his full name
More than 800,000 borrowers are in negative equity, mainly people who bought a home in 2006, 2007 and 2008 – and first-time buyers who typically put down small deposits. The number of UK homes being repossessed fell slightly last year to 36,200, but experts expect the figure to rise sharply this year.
Melissa Lynch, 27
Lives in a one-bedroom flat with her daughter and her mother in Birmingham
"When I moved from Manchester to Birmingham to live with my fiancé in 2005, my mother wanted to live closer to my daughter and me. Together we took out a £70,000 mortgage in 2006. But after my relationship with my partner broke down, we had to move in with my mum as I couldn't afford to rent or buy elsewhere.
"In December 2010, we put the property on the market, but it was valued at only £51,950. My contract ended in 2010, and since then I've not been able to find another job and pay the mortgage. I now owe the lender £3,000 in late fees and payments, and we're facing eviction next month. We've been deemed as statutory homeless, and I have no idea where we're going to go.
"My mother and I bought the property thinking that it would be a good investment and source of security for her, but I now completely regret taking out the mortgage. I would never buy again."
Interviews by Brian Brady, Matt Chorley, Claire Ramtuhul and Sophia Satchell Baeza
Independent Partners: Get fee-free expert mortgage advice and find the right mortgage deal for you.
Debt in Britain: Numbers seeking help on how to cope with mounting bills goes up by more than half in three years
General election 2015: David Cameron's promise brings uncertainty to investors
Bargain Hunter: BT improves its mobile reception with 'incredibly competitive' deals
Have a happy new financial year
Simon Read: 'It went below the radar but you could be eligible for a tax break on your savings'
- 2 Katie Hopkins attacked me on Twitter — so I reported her to the police for inciting racial hatred
- 3 Tidal: Jay Z's Spotify rival streaming service criticised for making wealthy artists even richer
- 4 Brixton squat flats now costing up to £3k per month show how out of control rent is in London
- 5 A new (old) cure for MRSA? Revolting recipe from the Dark Ages may be key to defeat infection
Ukip supporters are 55 or older, white and socially conservative, finds British Social Attitudes Report
Street preacher quoting from the Bible fined for calling homosexuality an 'abomination'
Jeremy Clarkson sacked live: Alan Yentob 'wouldn't rule out' ex Top Gear host's BBC return
Woman filmed launching racist tirade against men on the Tube for speaking in 'own lingo'
The West has it totally wrong on Lee Kuan Yew
David Cameron calls Labour 'hopeless, sneering socialists' while announcing 7-day NHS plans
iJobs Money & Business
£45000 - £50000 per annum + benefits : Ashdown Group: A highly successful, glo...
£50,000 - £55,000: Neil Pavier: Are you a professionally qualified commercial ...
£45,000 - £55,000: Loren Hughes: Are you looking for a new opportunity that wi...
Circa £45,000-£50,000 + benefits: Sheridan Maine: Are you a newly qualified ac...
Day In a Page
This four-bedroom detached home comes with grounds that span to approximately 2.5 acres, as well as two large patio areas and a double garage.
This four-bedroom cottage is a Grade II-listed town house, well-located for the thriving market town of Nailsworth.
A four-bedroom apartment on the ground floor of a stunning period property in North Yorkshire, with two kitchens and a large south-west facing garden.
This high-spec two-bedroom home is part of a smart collection of new flats at Beaufort Park and has a large decked balcony that's perfect for summer drinks.
Capitalise on the fabulous views of Trevone Bay by taking two homes and creating one spacious boutique B&B. Just a cliff-top walk from Padstow.
Overlooking a golf course, this six-bedroom Edwardian detached home spans four storeys and retains many period features including the original, operational servants' bells...
On the edge of the city, this six-bedroom home comes with an outdoor swimming pool and a large garage block that has annexe potential.
In a Grade II-listed manor just outside of Bath, this three-bedroom home is arranged on two floors with a skylight in a vaulted roof line.
Open the living room's bi-fold wooden doors to reveal a retro-style kitchen, and a conservatory leading to a paved garden at this three-bedroom home.
A Grade II-listed, four-bedroom home, in a charming Somerset village, with a two-storey studio that could be converted into a holiday cottage
A modern four-bedroom Victorian home, within walking distance to the high street
A luxury apartment in the Gothic mansion of Wyfold Court in Kingwood, offers six bedrooms spread over three floors and a turret
This school conversion, near Stockwell Tube, oozes New York loft style. The one-bedroom flat features double height ceilings and exposed brick work
This six-bedroom Georgian home is on three floors with open fireplaces, a two-oven Aga, an annexe, and cottage gardens with outbuildings and a car barn
High Crest House covers an impressive 9384sq ft, with almost three acres of grounds including a tennis court and summer house enclosed by electric gates
A six-bedroom farmhouse with separate accommodation in converted stables. Situated in the village of Church Aston, within walking distance to the market town
A two-bedroom flat with under-heated walnut floors and bespoke built-in storage. The Tube and Clapham Common are a short stroll away
A refurbished seven-bedroom townhouse with staff quarters, cinema room, superb gym, steam room and plunge pool
A minimnalist four-bedroom home designed to the highest spec, featuring glass walls and a kitchen space lit by a glass roof
Hibernate during winter and make your living during the summer at this busy guesthouse with panoramic sea views, in the village of Lynton
A four-bedroom penthouse next to the Tate with direct views of St Paul's from two floors of luxurious living space
A four-bedroom detached home surrounded by spacious gardens and woodland, close to New Pudsey
An 18th-century, three-bedroom home near Langstone Harbour built from ships beams with vaulted ceilings and wood burning stoves
A five-bedroom semi-detached home with a mix of period and modern features in a popular and convenient location
This five-bedroom red-brick beauty overlooks the village green and sits in just under two acres of land
A three-bedroom villa with self-contained flat, minutes from Lake Windermere
A five-bedroom Victorian home with four receptions, superb gardens and paddock in Pembury
An eight-bedroom house on the south side of the The Green with cinema, wine cellars and summer house
This 17th century beauty is full of rustic cosiness, while the detached home office means you can also run a business
Four exclusive apartments in a Grade II-listed former medical school with 2,275 sq ft of living space and 18ft ceilings
A five-bedroom terraced house on the popular Peterborough Estate, ideally located for both Eel Brook Common and South Park
A state-of-the-art farm-building conversion on the former Cliveden Estate, with 11,420sq ft of internal space, cinema and wine cellar
Windsor Castle overlooks this three-bedroom Victorian cottage located on one of Windsor's smartest roads
A boutique mews house, set around a central courtyard, with three bedrooms and a private roof terrace
A four-bedroom farm-conversion with three bathrooms and two reception rooms
A two-bedroom detached house with ensuite bathrooms and a sun-drenched decked terrace, £750,000
A modern and spacious two-bedroom, penthouse flat with two bathrooms in a prestigious development
A beautifully renovated five-bedroom terrace with three reception rooms and a courtyard garden, £700,000
A four-bedroom period house which has been extended to provide almost 2,500sq ft of living space, £675,000
A pretty three-bedroom Georgian home with a 22ft drawing room and a master suite with a balcony, £525,000
A substanstial family home with five bedrooms and landscaped gardens in the much sought-after Branksome Park area
A well-presented three-bedroom house with front and rear gardens, close to White City station, £475,000
A handsome five-bedroom house in a sought-after location close to the city centre
A five-bedroom country home with valley views, equestrian stables and 27 acres of land, £725,000
A six-bedroom farm house with separate, detached cottages and 371 acres of land
A two-bedroom cottage with parquet floors, chunky beams and an open fireplace
A three-bedrrom flat with 2,733sq feet of living space, a beautiful private garden and 15 acres of communal grounds
A four-bedroom chalet bungalow with three bathrooms and a spacious garden, £525,000