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Sancho Panza

More renting than mortgaged households by 2024

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Some of the comments below the article are priceless.Deluded.

Property Industry Eye 22/9/17

'A major cultural shift in home ownership is on the horizon, with more private renters than mortgaged home owners within just a few years.

By 2025, the number of mortgaged households will be just under 6m, while the number of households in private rental accommodation will be a whisker more, at 6m.

The forecast comes from NatWest senior economist Sebastian Burnside, who says the cross-over will happen in late 2024.

He said: “We think it’s a fairly comfortable bet that by 2025 we will have more households renting privately than owning their homes with a mortgage, which is a big cultural shift for a country like the UK and something that’s being driven by those underlying demographics.”

There are already more people owning a home outright than people buying with a mortgage, and the number of outright home owners will continue to climb.

Since 2013, outright home ownership has been the biggest form of housing tenure in the UK. By 2024, about 9m households will own their homes outright.

The number of households in social rental accommodation will edge downwards, from 4m today to just under that figure.

Burnside said that fewer people are taking out mortgages because of the differences between their incomes and house prices.

However, baby boomers are increasingly able to pay off their mortgages.

Burnside said that as the private rented sector grows, lenders need to rethink their repossession strategies.

At the moment, lenders treat home owners who fall into mortgage arrears with more leniency than buy-to-let landlords unable to keep up payments. Defaulting landlords usually have their properties possessed within months.

However, Burnside said that possessing landlords’ properties swiftly was problematic for tenants with ties in the area, or children at school.'

Edited by Sancho Panza

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On 22/09/2017 at 9:53 PM, Sancho Panza said:

Some of the comments below the article are priceless.Deluded.

Property Industry Eye 22/9/17

'A major cultural shift in home ownership is on the horizon, with more private renters than mortgaged home owners within just a few years.

By 2025, the number of mortgaged households will be just under 6m, while the number of households in private rental accommodation will be a whisker more, at 6m.

The forecast comes from NatWest senior economist Sebastian Burnside, who says the cross-over will happen in late 2024.

He said: “We think it’s a fairly comfortable bet that by 2025 we will have more households renting privately than owning their homes with a mortgage, which is a big cultural shift for a country like the UK and something that’s being driven by those underlying demographics.”

There are already more people owning a home outright than people buying with a mortgage, and the number of outright home owners will continue to climb.

Since 2013, outright home ownership has been the biggest form of housing tenure in the UK. By 2024, about 9m households will own their homes outright.

The number of households in social rental accommodation will edge downwards, from 4m today to just under that figure.

Burnside said that fewer people are taking out mortgages because of the differences between their incomes and house prices.

However, baby boomers are increasingly able to pay off their mortgages.

Burnside said that as the private rented sector grows, lenders need to rethink their repossession strategies.

At the moment, lenders treat home owners who fall into mortgage arrears with more leniency than buy-to-let landlords unable to keep up payments. Defaulting landlords usually have their properties possessed within months.

However, Burnside said that possessing landlords’ properties swiftly was problematic for tenants with ties in the area, or children at school.'

The comment that this is a "cultural shift" is really quite annoying.  The implication is that people have decided that renting a home with only 6 months security of tenure is preferable to owning.  That's horseshit if you ask me.  This is an economic/demographic phenomena driven by a combination of low interest rates and the fact that the baby boomers (through a number of circumstances including rampant HPI, overly generous pension provision and their age) hold all the cards in the housing market - add this to a planning regime that constricts new build supply, a tax regime that favours over-investing in your principal private residence as a method of saving, and a series of governments all hellbent on ensuring that "property only goes up"  and you end up the situation where younger generations are being squeezed out of the housing market.

This is not a "cultural trend" - it is a very worrying consequence of years of government policy that favour the feckless over the prudent and the old over the young.  The implications for social cohesion, family stability and the mental and physical health of those stuck in rented accommodation should be matters of serious concern for all of us.

Once again however we see tenants being used as "human shields" to protect their over-leveraged landlords.  I agree that it is undesirable that people be asked to uproot themselves because their LL has gone bust, but that is the situation faced by anyone on an AST every six months in any event.  If it's such a concern to Burnside shouldn't he be arguing for long term security of tenure for all tenants who keep up with the rent; not just those  whose landlord can't pay the mortgage?

I'm almost a boomer, and own my own house - but self serving ****** like this sickens me.  I'm ashamed to be associated with a cohort that are quite happy to "pull the drawbridge up" on the next generation.

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15 minutes ago, Exiled Canadian said:

The comment that this is a "cultural shift" is really quite annoying.  

Exactly. It's not cultural change. It's economic change facilitated by the financial sector in the interest of the financial sector. It's just a grift.

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8 hours ago, Mr Banks said:

So we need to wait until 2025 untill it is politically prudent to favour renters and falling house prices over mortgagees and people who want hpi+.

 

The problem is most renters are only renters temporarily until they buy or get given a social house

I recall seeing a table that showed annual flows between the tenures. The one stand out feature which I found surprising was that a large number of renters are ex owners (iirc >20%). I don't know I'd that is divorced people or owners renting temporarily between owned homes perhaps a mixture of the two

 

Oh and a big factor is that most private renters are migrants and they don't have the ability to vote (am I talking nonsense here do EU migrants have a vote in GEs?)Something like 75% of recent migrants rent privately.

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1 hour ago, Exiled Canadian said:

The comment that this is a "cultural shift" is really quite annoying.

It's funny how the 'cultural shift' towards renting happened at exactly the same time it became really expensive to buy. Quite the coincidence.

I'm sure if average house prices went back to £80-90k all those Millennials who prefer renting would continue to stride haughtily past estate agent windows, knowing that with a wonderful assured shorthold tenancy on that chronically undermaintained rental they already have everything they could possibly want.

Edited by Dorkins

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1 hour ago, Exiled Canadian said:

The comment that this is a "cultural shift" is really quite annoying.  The implication is that people have decided that renting a home with only 6 months security of tenure is preferable to owning.  That's horseshit if you ask me.  This is an economic/demographic phenomena driven by a combination of low interest rates and the fact that the baby boomers (through a number of circumstances including rampant HPI, overly generous pension provision and their age) hold all the cards in the housing market - add this to a planning regime that constricts new build supply, a tax regime that favours over-investing in your principal private residence as a method of saving, and a series of governments all hellbent on ensuring that "property only goes up"  and you end up the situation where younger generations are being squeezed out of the housing market.

This is not a "cultural trend" - it is a very worrying consequence of years of government policy that favour the feckless over the prudent and the old over the young.  The implications for social cohesion, family stability and the mental and physical health of those stuck in rented accommodation should be matters of serious concern for all of us.

Once again however we see tenants being used as "human shields" to protect their over-leveraged landlords.  I agree that it is undesirable that people be asked to uproot themselves because their LL has gone bust, but that is the situation faced by anyone on an AST every six months in any event.  If it's such a concern to Burnside shouldn't he be arguing for long term security of tenure for all tenants who keep up with the rent; not just those  whose landlord can't pay the mortgage?

I'm almost a boomer, and own my own house - but self serving ****** like this sickens me.  I'm ashamed to be associated with a cohort that are quite happy to "pull the drawbridge up" on the next generation.

 

There has definitely been a cultural change in many aspects of life and this has impacted on tenures

For instance my father left school at 15 and started working at 15 he was married at 24 to my mother who was 22. Neither rented privately they just lived in their parents house until they married they managed to buy when they got married primarily because 1 they had been working a combined 16 years so had 16 years of savings and low/no costs as they lived with their parents and they also got small sums via wedding gifts but that wasn't a significant part of it. As far as the stats are concerned they were owners between ages 15-24 as they lived in a house that was owned but clearly they were not owners age 15-24 they were just living with their parents.

Compare that to someone aged 24 today. A man child just out of university with maybe 2-3 years work under their belt if they have a 22 year old girlfriend who is just out of university with no work.

Complaining that the young have it hard now is comparing apples to oranges. The same 24 and 22 year old couple today have worked just 3 years and spent big time compared to a generation ago when the same couple had 16 years work and lived a much less costly life often living with their parents until they got married.

My own view is that this is a self induced problem. Kids should be free to leave education age 15 and start working. 80% of kids should do that. If they have a reasonable relationship with their parents they should do as we did in the last which was to live with parents and save up. They can then get married in their mid 20s. If their partner also took the same path by age 25 even if they were just on min wage they would have a combined £300,000 in gross earned income and people on min wage are not taxed much. So they should easily be able to afford to buy a house and get married.

That's much better than forcing/conning kids to study crap until age 22 and then by 25 they are single have lots of debts little experience and their life cycles are messes up.

Anyway all I can say is things are definitely different.

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4 minutes ago, Dorkins said:

It's funny how the 'cultural shift' towards renting happened at exactly the same time it became really expensive to buy. Quite the coincidence.

 

There has been two distinct cultural shifts over the last 20 years. 1 university numbers have boomed meaning many more kids start life 3-4 years later than they did in the past and 2 many more migrants who have no choice (or prefer) but to rent privately

Both those have definitely increased the need/want for more private rentals.

How much of the increase on renting is down to that?

 

Also another shift was the removal of self cert mortgages. Like or loath self cert the fact remains that some types of people in the past could buy who can't buy now. For example 10% of the economy is the black economy always has been probably always will be. Pre 2007 these people could buy homes and I suspect many did via self cert. Post 2007 they have been locked out of the mortgage market and hence home ownership. That is another structural shift that has nooved the tenure needle

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1 hour ago, Electricity said:

Also another shift was the removal of self cert mortgages. Like or loath self cert the fact remains that some types of people in the past could buy who can't buy now. For example 10% of the economy is the black economy always has been probably always will be. Pre 2007 these people could buy homes and I suspect many did via self cert. Post 2007 they have been locked out of the mortgage market and hence home ownership. That is another structural shift that has nooved the tenure needle

I don't think that argument stacks up with the timings. Self cert volumes escalate from about 2003 and they essentially didn't exist prior to the 1997-2008 phase of the boom (again IIRC, so DYOR). Owner-occupation (in terms of the percentage of households in that tenure type) tops out in about 2002 IIRC. 

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5 minutes ago, Beary McBearface said:

I don't think that argument stacks up with the timings. Self cert volumes escalate from about 2003 and they essentially didn't exist prior to the 1997-2008 phase of the boom (again IIRC, so DYOR). Owner-occupation (in terms of the percentage of households in that tenure type) tops out in about 2002 IIRC. 

Nope.

Self cert existed for self employed who had very variable earnings, year to year. They were very expensive too.

What was 'novel' was having employed./PAYE people using self-cert to lie about their income.

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  • 297 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?


      • down 5% +
      • down 2.5%
      • Even
      • up 2.5%
      • up 5%



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