Many people think the British obsession with owning your own
home started with Thatcher in the early 1980s, when she allowed council tenants
to buy their council houses under the right to buy scheme. However, the growth
actually started just after the Second World War. Looking at the country as a
whole in 1951 30% of residential property was owner occupied then, every ten
years that rose incrementally to 39% by 1961; 51% by 1971; 58% by 1981 and 68.07%
by 2001, by 2013/14 the figures dropped to 63% and continue to drop today.
Young adults tend to start to think about settling down and
moving out of the family home in their early-mid twenties. After a couple of years, they will have a
choice of either buying their first house (albeit with a mortgage) or decide to
privately rent for the long term (the Council House waiting list is measured in
decades at the moment!). The ratio of people owning a house with a mortgage
verses privately renting is an extremely important guide as to the behaviour of
people in respect of their housing needs and what their attitude to renting vs
buying is. With that in mind, within the
next ten years, I predict that more people will privately rent in Nottingham compared
to those who purchase a property with a mortgage, meaning that the British love
affair of property ownership will wane as the decades roll on.
This is a really important change in attitude to the way we
live. Understanding where the demand of
tenants is going to come from in the coming decade is just as important as
understanding the supply side of the buy to let equation, such as the number of
properties built in the town, Nottingham property prices and Nottingham rental
prices.
In the Nottingham City Council area as a whole there are 27,300
households that are privately rented via a landlord or letting agency and there
are 32,501 households that are owned with a mortgage, so my prediction appears
to be outrageous. However, when we look deeper 15,109 of those 32,501 households
are 35 to 49 year olds and 8,328 are households of 50 to 64 year olds. I would expect
all the 50+ years to be paying their mortgage off as they enter retirement as I
would with some of the people in their mid/late 40’s.
Meanwhile in the 25 to 34 age range (the age group most
people bought their first home in the 1970s/80s/90s) only 6,600 of the 16,542 households
occupied by those 25 to 34 year olds are owner occupiers with mortgages, 9,942
households are privately rented. This means only 39.8% of 25 to 34 year olds
have bought their house (with a mortgage). Twenty years ago, that would have a
much higher percentage of between 75% and 85%.
It can be concluded therefore that as the older generation approach
retirement and pay their mortgages off, the younger generation; aren’t jumping
on the property ladder like they were 20 or 30 years ago. The private rental
sector will take up the slack as more and more people need a roof over their
head and will rent rather than buy a property. With the new build by local authorities
and housing associations nowhere near the number of houses they were building in
the 1950s, 60s and 70s, the private landlord appears to have good demand for
their rental properties for many decades to come.
This will create a polarisation in the housing market
between those, mostly older householders, who own outright and those, mostly
younger householders, who rent. Our housing market is very much turning into
the European model. However, all is not lost the younger generation will
inherit their parents properties, which in turn will enable them to buy albeit
later on in life.
If you are a landlord or thinking of become a landlord, and
would like advice please email me, Jaclyn.bartlett@centrickproperty.co.uk
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