Many people think the British obsession with owning your
home started in the early 1980’s, when Mrs Thatcher allowed
council tenants to but their council houses, under the first Right To Buy scheme
The growth actually started just after the Second World War
Looking at the country as a whole, in 1951, 30% of
residential properties were owner occupied, then every ten years that rose
incrementally to 39% by 1961, 51% by 1971, 58% by 1981, 68% by 2001
After
that it dropped to 63.4% by 2011 and continues to drop today
After leaving home, early to mid-twenties young adults tend
to start to settle down and move out of the family home into their own home.
They have a choice of either buying their first house, albeit with a mortgage,
or decide to privately rent for the long term – bearing in mind that 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 to what people are doing
about their housing needs and their prevailing attitude to renting vs buying
With that in mind, within the next 10 years, I am
predicting it’s entirely possible that there will be more people renting
privately in Sunderland than own a property with a mortgage and that the
British love affair of property ownership will fade as the decades roll on
This is a really important change in the way we live, as I
explained to a local Sunderland Landlord the other day, knowing when and where
tenant demand is going to come from in the coming decade is just as important
as the knowing the supply side of the buy to let equation, in relation to
number of properties built in the city, Sunderland property prices and Sunderland
rental values
In the Sunderland area as whole, there are 14,552 households
that are privately rented via a Landlord or letting agent versus 25,611
households that are owned outright and 33,525 owned with a mortgage
Based
on this my prediction of the private rented sector exceeding the number of
owned properties in 10 years appears to be outrageous!
However, when we look deeper, 84% of Sunderland properties
that are owned outright are owned by the over 55’s and 75% of those 59,136
Sunderland households which are either own either outright or with a mortgage
are now over 45
I would expect the over 55’s who own with a mortgage 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, at the other end, in the under 35 age range – the
age when most people bought their first home in the 1970’s, 80’s and 90’s –
only 9% of the 20,018 Sunderland households occupied by the under 35’s are
owned by occupiers with mortgages, with 52% of that age group privately renting
(the remainder are mainly living with parents)
If that trend continues with under 35 renters continuing to
rent as they grow older it is entirely feasible for the number of privately
rented properties in Sunderland to exceed the number of properties owned with mortgages
It can be seen that as the older generation pay their
mortgages off as they start to get to retirement and the younger generation
aren’t jumping on the property ladder like they were 20 or 30 years ago, it’s
likely that the private rental sector will be required to take up the slack, as
more and more people will want a roof over their head but will choose (or be
forced) to rent rather than buy
This will create a polarization in the housing market
between those, mostly older, households who own outright and those, mostly younger,
households who rent
With Local Authorities and Housing Associations not anything like the same quantity of houses that they were in the 1950’s,
60’ and 70’s (despite the government's recent promise to build 1 million new homes by 2020), Landlords appear to have good demand for their rental properties
for many decades to come
The recent anti-Landlord measures imposed by the government,
such as the changes to mortgage interest tax relief, should clearly be of
concern to private Landlords, as is the commonly held fear that this government
would prefer the Private Rented Sector to be run by a handful of large
institutional Landlords, each with thousands of properties rather than having
the industry made up of many private Landlords with small portfolios
If you are a Landlord or thinking of become a Landlord, and
would like to read more articles like this or discuss any aspect of the Sunderland
Property Market, then please contact me on 0191 567 8577 or email
neil.whitfield@belvoirlettings.com
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