Baby-boomers who have benefited from rising house prices are fuelling the housing crisis by buying up properties to rent out to young people who cannot afford to purchase, a new report warns today.
Britain’s stark housing divide is no longer based on class and income but is largely between the generations, according to the Chartered Institute of Housing.
A dramatic collapse in levels of home ownership among the young has been mirrored by a rise among older people. In England, the proportion of 25-34-year-olds who were homeowners dropped from 66.5 per cent to 36 per cent in 2013. Meanwhile, the number of 65-74-year-olds who own their own home rose from 62.3 per cent to 77.1 per cent.
The report warns that a “perfect storm” has left young people and those on lower incomes paying the price for the UK’s “broken housing market”.
The study found that rising house prices mean that net housing wealth in the UK has grown by £1.22 trillion (58 per cent) since 2003. More than a third of property-based wealth is in homes where the head of the household is 65 or older.
“This increase in wealth for older people has fuelled the growth of the buy-to-let market – with older households looking to supplement their pension income by buying more property, aided by access to interest-only mortgages which are denied to most first-time buyers,” said the institute. “This is creating a perfect storm, with older and already privileged homeowners buying more homes to rent out to those who are unable to compete in the housing market.”
According to the study, the housing market is driving inequality and disadvantage. Across Great Britain, lone parents or single people under pension age are the least likely to own a home, while more than 80 per cent of couples with no dependent children or over pension age are homeowners.
“The problem is not just about access to homeownership – after housing costs are taken into account, rates of absolute poverty are rising for working age people, both with and without children,” said the report.
The institute calls on all political parties to commit at the May general election to end the housing crisis within a generation. It proposes a fundamental review of policy, with co-ordinated, sustained action over at least a decade including targets and incentives for all types of housing – for ownership, shared ownership, private rent and social rent.
Gavin Smart, the institute’s interim chief executive, said: “The review is a stark demonstration of the divides that housing is opening up in our society. For decades, we have failed to build enough new homes to keep up with our growing population, and the gap between the ‘haves’ and ‘have nots’ is getting bigger all the time. For many young people, a home of their own is a distant dream – and in the meantime they find themselves renting in a sector where, in many places, rents are equally unaffordable.”Reuse content