The long-term consequences of falling home ownership

A report today from Generation Rent predicts that the number of pensioner private renters will increase by 169% in England over the next 20 years at a cost of an extra £3.5bn in housing benefit.

The increase will come as a result of trends already hard-baked into the housing system and they have nothing to do with the people in their 20s and 30s that we are used to thinking of as Generation Rent.

Successive editions of the English Housing Survey (EHS) have shown that falls in home ownership are rippling up through the age bands as existing private renters get older and find themselves unable to buy.

The report by David Adler of Oxford University and Dan Wilson-Craw of Generation Rent looks at the current EHS, Office for National Statistics and housing benefit data to forecast what will happen by 2035/36.

There are currently 1.1 million private renter households aged between 45 and 64 who will reach retirement age in the next 20 years. Some of them will still be able to buy but on current trends 947,000 will be private renters into retirement.

Add another 50,000 current retiree households who will live into their 80s and you have a million who could be reliant on insecure short-term tenancies and potentially dependent on housing benefit. That could translate into an extra £3.5bn on top of the current housing benefit bill.

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Under new ownership

Originally posted on October 7 on Inside Edge 2, my blog for Inside Housing

Forget social housing, any kind of affordable rented housing is living on borrowed time in the wake of this year’s Conservative conference.

In his speech on Wednesday David Cameron announced ‘a national crusade to get homes built’ and go from ‘Generation Rent into Generation Buy’.

The headline policy of starter homes does not look any better than it did the first two times he announced it (in December 2014 and again when he doubled the target in March). The original policy had potential because it offered the prospect of additional homes on sites that would not have got planning permission before. Though there were potential problems, what would amount to urban exception sites looked like a good idea, especially if the uplift in land values could be captured to pay for infrastructure.

But the idea has looked worse and worse the more it has evolved. Research by Shelter has shown that even at a 20 per cent discount the homes will not be affordable in most of the country. Despite an advisory committee on design, there’s not much to stop housebuilders cutting costs by making them starter hutches rather than homes and no mechanism has been suggested so far to check that the discount really is a discount. And even if there is a deal to be had for Generation Rent some of the benefits will go to people who could have afforded to buy at the undiscounted price.

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The tenure trap

New official figures show stunning changes in housing in England. Here are a dozen examples of what’s happening. We already knew that the number of people who own their own home has shrunk rapidly, that the number of private renters has soared and created Generation Rent and that private renting has overtaken social renting. However, the first results from the English Housing Survey 2013/14 show that these trends are not just continuing: they are accelerating. Everywhere you look in the report and the accompanying tables there are stunning new comparisons to be made:

  • More people now own their home outright than are buying one with a mortgage. The split between them is not available going back very far but I reckon this must be for the first time since the 1930s, when the inter-war mortgage boom was in full flight. Here are the main tenure trends since 1980:

Tenure

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The return of rent control?

An idea that was supposedly buried a generation ago is rising rapidly up the housing policy agenda.

Last year saw modest proposals by Labour for rent regulation within three-year tenancies in the private rented sector. Now there are calls for something that goes much further.

The conjunction of two news items last Friday put the issue into sharp relief. The first was an opinion poll for the private tenants campaign Generation Rent that asked ‘would you support or oppose proposals for the government to introduce a “rent control” system in the UK’. The result was 59 per cent to support, 6.8 per cent to oppose and 34 per cent with no opinion. Levels of support rose to 77 per cent among private renters, 69 per cent of Labour voters and 64.5 per cent of Londoners. However, rent control also had the support of a majority of Conservatives (55 per cent) and homeowners (56 per cent).

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Fresh ideas

A new manifesto for private renters published today highlights the new thinking on housing emerging ahead of the general election.

This is the first of two manifestos being launched this week by new organisations with different priorities and constituencies to the existing ones. We’ll hear from SHOUT, the campaign for social housing, tomorrow but today it’s the turn of Generation Rent.

And it’s about time. Since the creation of the assured shorthold tenancy and the invention of buy to let, the private rented sector has more than doubled in size. That’s great news for landlords and letting agents but not so great for tenants with minimal security of tenure and consumer rights.

To illustrate my point, here are three recent bits of news.

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Why registration is the key for private renters

Can the votes of private renters swing the next election and move their concerns up the political agenda in the process?

The huge shift in housing tenure seen this century suggests they can. In 2000 just two million households in England were private tenants. According to the English Housing Survey, that had doubled to almost four million by 2012/13. Add another 500,000 in Wales and Scotland, allow for another two years of growth and, with 1.8 people of voting age per household, you have nine million potential private rented votes at the next election.

Polling by Generation Rent, the recently relaunched National Private Tenants Organisation, suggests that the votes of private renters could be decisive in 86 seats in England. Of these, 38 are currently held by the Conservatives, 32 by Labour, 15 by the Lib Dems and one by the Greens. The results here could be enough to deliver an overall majority for David Cameron, make Ed Miliband the leader of the largest party or give Nick Clegg a major say in a new coalition.

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