Younger households

The census tells us that in 2011 private renters accounted for 46% of all households under the age of 35 across England and Wales, a figure that rose to 54% in London. Among 35-49 year olds the level of private renting almost doubled between 2001 and 2011, to account for one in five households nationally.

Initiatives such as Help to Buy can only limit the flow of households into the private rented sector to a degree. When the cost of servicing a mortgage rises as interest rates eventually climb, mortgaged owner occupation will continue to fall, while limited accessibility to mortgages means that the bulk of new households will be private renters.

As a result, we are forecasting the number of private rented households in England and Wales will increase by 1.2m over the next five years and levels of owner occupation will fall by 202,000 households. This would mean that by the end of 2019, over 24% of all households across the UK would be in the private rented sector.

Among the under 35s, the proportion of households in the private rented sector would increase to 66%, with homeownership falling to just 16% of the total. Even in the next age band (35-49), homeownership would fall to just 55% of all households, with private renting accounting for 28% of households – rising to 38% in London.

This trend will present opportunities for investors and major challenges for government. More fundamentally, it has the potential to change the way we look at housing in the UK and the role of homeownership in particular.

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