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The Chartered Institute of Housing is the independent voice for housing and the home of professional standards

Young people and people on lower incomes paying the price for our broken housing market

09/03/2015


Young people and people on lower incomes are paying the price for the UK’s broken housing market according to a new report.

Gavin SmartThe extent to which housing is driving inequality and disadvantage is laid bare by the UK Housing Review 2015, published today (Monday 9 March) by the Chartered Institute of Housing (CIH).

Levels of homeownership are collapsing among young people but increasing among older people.  In England, 66.5% of 25-34 year olds were homeowners in 1991 – a figure that dropped to 36% in 2013-14.  Over the same period, the percentage of 65-74 year olds that own their own home has risen from 62.3% to 77.1%.

There is also an extraordinary gap between homeownership rates for different groups of people.  Across Great Britain, lone parents or single people under pension age are least likely to own a home, while more than 80% of couples with no dependent children or over pension age are homeowners.

Rising house prices mean that net housing wealth in the UK has grown by £1.22 trillion (58 per cent) since 2003 – and more than a third of property-based wealth is held by households where the household reference person 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.

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.  In 2013-14 almost half (48%) of all households aged 25-34 in England were living in private rented homes – a proportion that has more than doubled from 21% in 2003-4. The trend looks set to continue, with some 1.5 million extra people aged 30 or under ‘pushed into renting’ by 2020.

And 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.  As the Social Mobility and Child Poverty Commission has pointed out, during 2010 to 2015 rising rents and mortgage costs have pulled an extra 1.4 million children into relative poverty.

CIH interim chief executive Gavin Smart said successive governments have failed to put in place a joined-up, long-term strategy to tackle the housing crisis. The review makes the case for a fundamental review of housing policy. It calls for co-ordinated, sustained action over at least a decade – including putting targets and incentives in place for new house building of all tenures (ownership, shared ownership, private rent and social rent).

Gavin Smart said: “The UK Housing 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.

“People on low incomes are being dragged into poverty because rents and mortgage costs are rising, wages are failing to keep pace and benefits are being cut through welfare reform.”  

Mr Smart added that the government should take a more active role in boosting housing supply, and ahead of the general election in May called on all political parties to accept the scale of the problem and commit to tackling it within a generation.

He said: “Making housing more affordable means building more homes of all tenures – for ownership, shared ownership, private rent and social rent.  To do this we need political will, commitment and leadership. We want all political parties to commit to ending the housing crisis within a generation.”

  • The UK Housing Review, which has been published annually for the last 23 years, brings together evidence from a range of sources to assess the health of the UK’s housing system. The breadth of the report’s analysis makes it essential reading for housing professionals from every part of the industry, providing an assessment of both the home ownership and rented housing markets as well as separately considering the picture in England, Northern Ireland, Scotland and Wales. This year’s review was written by CIH policy adviser John Perry, Steve Wilcox, former professor of housing policy at the University of York, and Peter Williams, departmental fellow at the Cambridge Centre for Housing and Planning Research.  It has been sponsored by Affinity Sutton, Crisis, Home Group, HouseMark, L&Q, the Northern Ireland Housing Executive, Orbit Housing Group, the Scottish Government, Southern Housing Group and the Welsh Government.


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