The number of householders who own their homes outright outstripped the number of people buying with mortgages for the first time in more than three decades in 2013-14, according to official data.



Housing groups warned of a “priced-out generation”, as the English Housing Survey showed the homeownership levels had fallen to a 29-year low and the proportion of 25-34 year olds who were owner occupiers had dropped from 59% to 36% over the past 10 years.

Low interest rates that have allowed borrowers to pay off their home loans quickly, combined with a squeeze on the availability of new mortgages to first-time buyers, have tipped the balance of ownership in England.

Owner occupiers remained the biggest sector, with 14.3 million households, or just under two-thirds of the 22.6 million total, owning outright or with a mortgage.



However, for the first time since the early 1980s, more households were living mortgage-free. While 7.4 million households were outright owners, the figures for mortgaged-owners was 6.9 million. The majority of outright owners, 4.5 million households, had a resident aged 65 and over.

Trends in tenure from English Housing Survey

The mortgage market picked up in 2014, and lenders became more willing to offer mortgages to people with small deposits. Those who already had a foot on the housing ladder have continued to benefit from low rates.

Neal Hudson, associate director residential research at property firm Savills, said the change in tenures was probably “a combination of both market and demographic factors with fewer first time buyers entering the market and more baby boomers approaching retirement and paying off their mortgage, helped by low mortgage rates”.

He added: “The recent pick-up in first time buyer numbers will perhaps slightly slow the trend but will not be sufficient to reverse it. While house prices remain high relative to incomes and housing delivery remains below required levels, we will continue to see the private rented sector expand.”

The proportion of owner-occupier households rose steadily from 1980s to 2003 when it reached a peak of 71%, but since then it has fallen every year.

The decline has been greatest amongst younger people, who are increasingly likely to be found in private rented accommodation. Among people aged 16 to 34, just under half were renting from private landlords.

The survey showed that in London, tenure is very different to the rest of the country, where private renters make up 30% of households. This sector overtook the proportion of households buying with a mortgage in 2013-14 and is now the biggest type of tenure in the capital.

This has changed markedly since 2003-04 when 14% of London households rented and the biggest group was buyers with a mortgage. In the capital, the average private rent was £281 a week, compared with £145 outside London.

Trends in tenure in London from English Housing Survey

The private rented sector has grown in recent years, and it had already overtaken the social rented sector. In 2013-14, 19% of households were renting privately, up from 18% in 2012-13, while the proportion of social housing remained steady at 17%.

However, the need for help with housing affordability was underlined by a marked increase in the number of employed renters who were receiving housing benefit. In the social rented sector this was up from 19% in 2008-09 to 32%, while in the private rented sector it doubled to 14% over the same period.

The National Housing Federation said the figures showed how the younger “priced-out” generation had been hit by the rising market.

Its chief executive, David Orr, said: “As house prices continue to rise we’re in danger of winding back the clock on homeownership, with only the privileged few having any hope of affording it.

“At the moment people who can’t buy a home have little or no choice but to rent privately, going from one short-term let to another at an ever escalating cost. We believe that everyone should have a home they can afford, which means having more affordable homes to rent or buy through shared ownership and a private rental market that’s fit for purpose.”

The housing charity Shelter said that for millions of people “a home of their own has become a distant dream, no matter how hard they work or save”.

Chief executive, Campbell Robb, said: “This can’t go on. After successive governments have failed to build the homes we need, politicians must commit to tackling the housing shortage once and for all. If they don’t, young people across the country will continue to watch their dreams of a stable future slip out of reach.”

The government recently consulted on measures to cut the cost of producing the survey, including a suggestion that it be produced less often.

