House deposit? Not for renters

Home ownership in England has fallen to its lowest levels for 30 years, while nearly 90 per cent of renters in Britain do not have enough savings to cover even a quarter of the deposit needed to buy an average first home, two shocking separate reports released this week have found.

English home ownership has dropped to 1986 levels, a Resolution Foundation (RF) report based on the latest Labour Force Survey showed, with Greater Manchester, South and West Yorkshire and the metropolitan area of the West Midlands suffering double digit drops since their peak in the early 2000s.

Having peaked at 71 per cent in 2003 the proportion of people owning their home in England has fallen by 8 per cent. Greater Manchester has seen the greatest drop, falling 14 per cent from 72 percent in 2003 to 58 per cent last year.

Households in Greater Manchester are now just as unlikely to own their homes as those in outer London, the RF noted.

The report also drew attention to the sharp declines in other areas outside of London since the early 2000s, pointing out that people in private rentals nearly doubled in England during the same period – from 11 per cent in 2003 to 19 per cent in 2015.

Problem

RF policy analyst Stephen Clarke said, “London has a well-known and fully blown housing crisis, but the struggle to buy a home is just as big a problem in cities across the North of England.

“These drops are more than a simple source of frustration for the millions of people who aspire to own their home. The shift to renting privately can reduce current living standards and future wealth, with implications for individuals and the state.”

The RF went on to say that on average UK households in the private rented sector spend 30 per cent of their income on housing compared to 23 per cent for those who have a mortgage, and that the share of income that households spend on accommodation across the UK has increased by around a quarter since 2003.

In London ballooning house prices mean people spend an average of 60 per cent of their income on rent.

The RF analysis came as the Equality Trust charity found that 86 percent of renters – more than 6m households – have less than a quarter of the £8,838 required for a 5 per cent deposit on an average home. Eight of 10 cannot even afford a quarter of the £3,629 needed for a 5 percent deposit on Britain’s cheapest homes.

A combination of low incomes and high rents – an average of £1,543 a month in London and £764 throughout the rest of the UK – mean that a minority of families are able to save for a deposit, despite historically low mortgage interest rates, the Equality Trust said.

Unite assistant general secretary Steve Turner said the reports were further evidence of how Conservative led policies of recent years have failed.

“Rather than austerity we could have had investment in large scale council house building programmes, creating homes and decent work,” Turner said.

“Rather than leaving a basic necessity – homes – to a broken market we could have had rent controls and regulations on private landlords. Instead of a lost decade on pay we could have had rising living standards.

“The combination of these positive policies would have gone a long way to addressing the unfolding housing crisis we have now,” he added.