Only one quarter of households will be home owners with a mortgage by 2025 if the economy continues to stagnate, while record numbers – 22% of the population – will be living in the private rented sector.
The forecasts are in a report commissioned by the Resolution Foundation and Shelter from Cambridge University.
It looks at how the housing market will change if current economic trends continue. Such trends include low levels of house building, constrained mortgage finance and low income growth – and the combination would mean that only 27% of households would be mortgaged home owners by 2025, compared with a peak of 43% in the early ’90s.
Meanwhile, the proportion of people renting their homes privately will continue to expand, rising from just 7% in 1994 to 22% by 2025. In London, more than a third (36%) of households will be renting by 2025, says the report.
The report also projects that more families with children will be renting than ever before. The past five years have seen a massive 86% increase in families with children renting their homes – growth which looks set to continue, particularly in London where renting will overtake mortgaged home ownership among families by 2020.
With renting set to become the norm for more and more people, Shelter and Resolution Foundation are warning that the Government can no longer afford to ignore a sector which growing numbers will call home.
Shelter’s chief executive Campbell Robb says: “This report shows what is fast becoming the new reality of our housing market in the current economic climate: home ownership continuing to fall while renting becomes a way of life for British families.
“Yet despite the growing pressure on the rental market, the government’s recent Housing Strategy virtually ignored the sector and did little to address the issues of affordability, stability and quality that so many renters face.
“It’s time the Government woke up to the fact that Rental Britain is here to stay. With more and more families renting than ever before, we need to make renting fit for purpose for the growing cohort who want a stable and secure home to raise their children in.”
Vidhya Alakeson, director of research at the Resolution Foundation, said: “This report is further evidence of the urgent need for more and better-quality rented accommodation that meets the needs of families with children.
“It’s encouraging that the Government has launched a review of institutional investment in the private rented sector, but this report reveals the true nature of the future challenge and thus the scale of the response needed.”