EXCLUSIVE: Future generations may never own
In response to statistics documenting the trend of multiple families living in the same household in England and Wales experts have expressed grave doubts about the future of home ownership.
Research from the Office for National Statistics has documented the rise of so called “concealed families” following analysis of census data from 2011.
The research revealed a 70% increase in concealed families, i.e. a couple or lone parent living with another family, between 2001 and 2011. As such the number of such families in England and Wales reached a staggering 289,000.
Matthew Wyles, senior adviser of Castle Trust, attributed the increase to recent economic problems which resulted in house prices rising above earnings.
Wyles said: “Over the last 10 or 15 years house prices have decoupled from earnings growth and it’s getting harder and harder for young people to become first-time buyers.
“During the recession certain groups of people also got themselves into financial difficulties and have elected to live with their parents again to get back on their feet financially.”
But Ray Boulger, senior technical director at John Charcol felt that immigration was one of the key reasons behind the rise in such families.
He said: “An increase in 70% is rather surprising, but there has been quite a lot of immigration in the last 10 years.
“My understanding with Asian families it is more common for generations to live together, so I think it’s due to immigration and peoples choices.”
Boulger also laid the blame on the last Labour government’s policies under the stewardship of Tony Blair which led to a massive increase in the number of young people going to university.
He said: “Clearly if a higher proportion of people go to university they are not going to be able to buy in three to five years and they live with their parents in the holidays.
“When they come out of university they have to come out with debt but if they started work at 18 or 16 they would have been able to build up some savings.”
But Wyles felt the issue could stem from the other end of the age spectrum with people living longer.
In West Devon 44% of concealed families lived with a family member aged over 65.
He said: “As life expectancy is increasing there isn’t the cascade of wealth from inheritance coming early enough, so increasingly younger and even middle aged people are finding it hard to get onto the housing ladder.”
Gemma Harle, managing director of TenetLime, argued that young families staying in their family home to save, due to house and rental prices had become a trend.
She said: “If you go and rent you’ve got no chance of saving. It’s really hard to save so you can’t buy even with the government backed schemes.
“It used to be you got married, you live together and you had kids. This now it seems to be the other way round. I don’t see this trend changing.”
But with schemes such as Help to Buy for first-time buyers it could be suggested young people are now being given more of an opportunity to become independent.
Boulger said: “The fact that 95% loan to value mortgages are freely available is going to have an impact.
“What is fairly different is that if you had a slightly dodgy credit profile in 2007 you could get a mortgage so there will be some people that will be excluded.”
He also said that a growing rental market was inevitable despite the economic crisis as the proportion of the population who own their home had fallen since 2003.
But Wyles was concerned by the trend of young people not being able to afford to buy.
He said: “If we’re not careful we’re going to be dealing with future where our children never afford a home.
“The fact is that home ownership is an Anglo-Saxon tradition and it is deeply engrained in the psychology of British people and to say none of this matters and we’ll adopt a European model is plastering over the cracks.”
With problems of housing supply boosting the buy-to-let market Harle raised concerns about landlords using demand as an excuse to raise rents.
She said: “I think you’ve got you’re amateur landlords that see it as a financial investment and then you’ve got the commercial landlords that control it.”
“I think there should be more regulation to a certain extent as if we carry on the way we’re going then renters need more protection.”
And David Whittaker, managing director of Mortgages for Business, agreed that landlords look to raise rents. However he felt that lenders would ensure that tenants had some protection from rouge landlords.
He said: “Buy-to-let landlords will always look to maximise their rental return from a property. However a buy-to-let lender will not allow landlords to break the law.”