ONS: Working-age adults three times more likely to rent than in 1997
According to figures released by the ONS, people between the ages of 34 and 44 are increasingly unable to move onto the property ladder, with a third of this demographic renting from a private landlord in 2017. In 1997, among the same demographic, fewer than one in ten were renters.
This trend continues in the next age demographic, with 15.8 per cent of 45-54-year olds renting from private landlords, an increase from 5.6 per cent in 1997.
The concentration of home-ownership is highest in the oldest age bracket, with almost 75 per cent of people over the age of 65 owning their home outright. According to the ONS, the introduction of the right-to-buy initiative, under Margaret Thatcher’s government, is a key reason for this current trend.
The most elderly demographic is the only bracket to see a reduction in the number of people in the social rental sector, with rates halving since the early 1990s. For the private rental sector, the figure has remained fairly stable at six per cent.
This again corresponds to the introduction of the right-to-buy initiative: in 1979, social housing made up 33.2 per cent of all properties in the UK; it is now only 17.6 per cent, the lowest rate since records began.
Analysing these figures, the ONS offered projections of the housing market as the population ages. Key to these projections was the falling rate of individuals with mortgages.
In 1997, 68 per cent of people aged between 35 and 44 had a mortgage; in 2017, this had fallen to 50 per cent.
Addressing this issue, the ONS said: “Owning a home outright by retirement requires taking out a mortgage by mid-life”, adding that “people are still likely to need to take out a mortgage by their 50s in order to own outright in retirement.”
If the rate of those with mortgages continues to fall, these trends are liable to change going forward. For instance, if the proportion of those in the private rental sector continues to increase, it is likely the make-up of the over-65 age bracket will change.
“While only 6 per cent of people aged 65 years and over rent privately today, this is likely to increase in the future if people who are currently in their 30s, 40s, and 50s in the private rental sector remain so into older ages,” the ONS said. If this were to happen, individuals pensions would have to be significantly higher to be able to support themselves.
According to research conducted by Royal London, someone who owns their property outright can expect to maintain their living standards on a pension of £260,000; if they rent privately, this would need to almost double to £445,000.