Young people today are half as likely to own a home compared with 20 years ago, while existing homeowners encounter difficulties in moving, according to a new LGA report.
The analysis reveals 11% of people born in 1996 own their home, compared with 21% of those born in 1976 who owned a home by the time they were 22.
The LGA’s report, Understanding the Local Housing Market, warns that many young people face renting into retirement, as the high cost of the private rental sector is preventing households from being able to save for a deposit.
Council leaders are calling for the powers and funding to fix Britain’s “broken” housing ladder by building new social rented homes to help give all people access to high-quality affordable homes and give more families the opportunity to save for a deposit for a new home.
The calls come as figures show:
- On average, households in England are spending 33% of their income on private rent, compared with homeowners spending 17% of their income on mortgage repayments
- In many London boroughs average rents are over 50% of household earnings
- The average deposit in England is 72% of an individual’s gross salary, rising to 137% in London and dropping to 56.7% in the North West
- The number of homes bought and sold last year is a third lower than before 2008, as more people stay put, reducing the opportunity for people to move up the ladder
As local government marks the centenary of the Housing and Planning Act 1919, also known as the Addison Act, council leaders warn that the current one-size-fits-all approach to national housing policy is failing to meet the complex and multiple housing challenges of the country.
The LGA says the government has not given enough consideration to a household’s ability to continue climbing the housing ladder when circumstances change, despite looking to encourage first-time buyers into home-ownership.
The report also reveals that many homeowners struggle to climb the ladder once on it, with the number of mortgaged movers currently 50% below 2006/07 levels.
Low turnover of existing housing has been stuck at around 1.2 million a year for the past five years, which equates to around 4.2% of total stock selling each year compared with a pre-2008 average of 6.8%.
The LGA is calling on the government to use the Spending Review to devolve the Right To Buy scheme so that councils can set discounts locally and retain 100% of their receipts to invest in more homes locally, as well as to invest in supporting all councils to build more homes.
Cllr Martin Tett, the LGA’s housing spokesman, said: “Home ownership remains a distant dream for most young people, with the high cost of the private rental sector meaning many are unable to save for a deposit to get on to the property ladder and face the prospect of being stuck renting into retirement.
“However, what is now becoming apparent, is once on the ladder, those other rungs are becoming increasingly out of reach.
“Typically, a homeowner may want to move from first-time buyer, through to a family home, followed by downsizing for empty-nesters.
“But for too many households, our national housing ladder is broken, as they face being unable to move as their circumstances change.”
Tett continued: “Homes for affordable and social rent are desperately needed across the country. Councils must be able to ensure a mix of homes that are affordable for those who need them and that are crucial for enabling people to save money toward a deposit.
“By scrapping the housing borrowing cap, the government showed it had heard our argument that councils must be part of the solution to our chronic housing shortage.
“The government needs to use the Spending Review to build on this by introducing further measures to spark a genuine renaissance in council housebuilding in all areas.”