04 January 2017

Tuesday, January 03, 2017 Article from the National Association of Estate Agents

Number of 25-year-old Homeowners has Halved in Last 20 Years

Home ownership amongst 25-year-olds has plummeted by more than half in the last 20 years according to new analysis for the Local Government Association (LGA).

On average, private renters now spend 34 per cent of their total household income on rent and social and affordable renters pay 29 per cent. In comparison, homeowners pay an average of 18 per cent of their total household income on their mortgage.

Average house prices are now at 7.9 times average earnings. The average size of a deposit needed to get a mortgage is 62 per cent of annual incomes; in London, it is 131 per cent.

Cllr Martin Tett, LGA housing spokesman, said:

“Our figures show just how wide the generational home ownership gap is in this country. A shortage of houses is a top concern for people as homes are too often unavailable, unaffordable and not appropriate for the different needs in our communities.”

The LGA’s Housing Commission have heard from over 100 partners and received submissions from a range of organisations. Over 30 recommendations have been put forward to central government within the LGA’s final Housing Commission final report, ‘Building our homes, communities and future’, these include:

  • Freeing councils from restrictions on their borrowing to build more affordable homes - the number of affordable homes built in 2015/16 fell by 52 per cent and was the lowest number in 24 years.
  • Giving councils powers making it easier to compulsory purchase land that has planning permission for homes but which is not being built out – previous research for the LGA found there are up to 475,000 homes with planning permission but are yet to be built.
  • Local discretion on the number of Starter Homes required in new developments - discounted Starter Homes prices will be out of reach for all people in need of affordable housing in 220 council areas (67 per cent).
  • Allowing councils to set planning fees locally to cover costs - councils are approving nine in 10 planning applications but local taxpayers have been forced to spend in excess of £450 million covering a third of the cost of all planning applications in the past three years.
  • Give councils tools to ensure effective land markets and to capture increases in land values to fund infrastructure - OECD found that UK infrastructure has suffered from under-investment compared with some competitor countries since the 1980s.
  • Pilot ways to financially reward housing providers who successfully support tenants into work and increase their earnings - 48 per cent of working age tenants are in work (compared to 72 per cent nationally) while 33 per cent have no qualifications (compared to 15 per cent nationally).
  • Ensure funding is available to enable older people to modify their own homes– only 7 per cent of current homes in England include the four basic accessibility features (level access to entrance, a flush threshold, sufficiently wide doors and a toilet at entrance level).
  • Build more new homes that support healthy ageing and reduce costs pressures on health and social care - housing specifically for older people accounts for just 6 per cent of existing stock and of just 7,000 of the 155,000 homes built in 2014/15.

All of this comes in advance of the Government's Housing White Paper which is due this month. The LGA are hoping that the recommendations will help local and national government work together to solve the nation’s housing challenges.

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