Just one in four households will own with a mortgage by 2025 if the economy continues to stagnate, pushing record numbers into the private rented sector, new research says today.
A new report commissioned by the Resolution Foundation and Shelter from Cambridge University looks at how the housing market will change if current economic trends continue, including low levels of house building, constrained mortgage finance and low income growth.
It found that while Britain’s economy remains weak the proportion of households owning with a mortgage will decrease to one in four (27%) by 2025, down from 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.
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 homeownership 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 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 says: “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.”
Notes to Editors
1. For a copy of the report summary please contact Julia or Felicity on the numbers below.
Shelter: Julia Pitman on 0207 505 2058 or out of hours on 07850 901142
Resolution Foundation: Felicity Dennistoun on 0203 372 2957 or 0772 5560 654
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