Resolution Foundation says within a decade nine out of 10 Britons on modest incomes under the age of 35 will not afford home ownership

Nine out of 10 Britons on modest incomes under the age of 35 will be frozen out of home ownership within a decade, according to a study from a leading thinktank that lays bare the impact of surging property prices on the young.

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As a backbench all-party committee of MPs warned that housing policy was “a mess”, the Resolution Foundation said those aged 18 to 34 faced the prospect of being permanent renters and that home ownership was increasingly becoming the preserve of the well-off and the elderly.



The thinktank, chaired by the former Conservative cabinet minister David Willetts, said that in 1998 more than half of people aged 16-34 living in households with incomes between 10% and 50% of the national average were buying their own homes. The percentage had dropped to 25% in 2013-14 and was on course to be 10% across the UK as a whole by 2025. In London it is forecast to be just 5% .

Matt Whittaker, chief economist at the Resolution Foundation, said: “With the average modest income household having to spend 22 years to raise the money needed for a typical first time buyer deposit – up from just three years in the mid-1990s – it’s no surprise that owning looks so out of reach.”

George Osborne promised bold action to tackle Britain’s housing crisis in last November’s autumn statement, including a doubling of interest-free loans in London, a tougher tax regime for buy-to-let landlords and a pledge to build more affordable homes.

But in its report on the autumn statement, the Treasury select committee was scathing about the chancellor’s approach, saying that the restrictions on buy-to-let posed a threat to labour mobility and growth.

“The chancellor’s attempts to resolve what he calls a ‘home ownership crisis’ should not come at the expense of the private rented sector”, MPs said. “Housing policy in the UK has been in a mess for a long time – caused by the policies of successive governments over decades, and, often, their unintended consequences. Sooner or later, more thoroughgoing reform will be essential.”

The report comes amid signs that housing is moving up the political agenda, with the subject dominating this week’s clash between David Cameron and Jeremy Corbyn at prime minister’s questions.

Whittaker said ministers were failing to get to the root of the problem: the need for a house-building programme that would increase the supply of new homes to meet growing demand.

“If we want to see an increase in working families being able to afford to buy, it is essential that the housing shortage is tackled by the government.” He said schemes such as Help to Buy, which offer state subsidised mortgages, only helped a minority and often assisted those who would eventually climb on to the housing ladder anyway.

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“More than half of those benefiting from Help to Buy to date have household incomes in excess of £40,000. It is hard to imagine any way out of the home ownership crisis facing those on low to middle incomes that doesn’t involve significantly boosting supply,” Whittaker said.

The Resolution Foundation study used data from the family resources survey conducted by the Department of Work and Pensions. It found that a general decline in home ownership and a more than doubling in private renting among young people had been particularly evident for those on low to middle incomes, nine out of ten of whom were working. In 1998, 22% of those under-35 on modest incomes were renting, a figure that has now risen to 53%.



A separate study by the Residential Landlords Association has found that new government benefit changes to be introduced in April could result in young people unable to get a home of their own also finding themselves squeezed out of rented property.

The survey found that 76% of landlords said they would be reluctant to let property to those aged 18-to-21 as a result of the decision to prevent this age group from claiming housing benefit. Landlords said they were unsure whether 18- to 21-year-olds would have enough money to pay the rent.

The RLA said those aged under-35 may also face problems accessing rented accommodation. Under new rules, they are only able to claim benefit for a room in a shared house and 53% of landlords said they did not intend to renew such tenancies because of fear about payments not being made.

Chris Town, the RLA vice chairman, said: “The results confirm that reforms to housing benefit are making it increasingly risky for landlords to rent to those receiving it.”

The Resolution Foundation analysis found that those aged 65 and over now account for almost one-third of all homeowners, up from less than one-quarter in 1998.

By contrast, the under-35 age bracket accounts for just 10% of homeowners, down from 19% in 1998. The typical 30-year-old is 30% less likely to own a home than was the case 15 years ago.

Torsten Bell, Resolution Foundation director, said ministers were “trying to push water uphill. What they need to do is build more houses.”