Britain set to become a nation of renters rather than property owners, research reveals
Britain is home to a generation of renters who are giving up on buying their own home, a trend that could fundamentally change the shape of the property market, according to new research.
Unlike her continental neighbours, Britain has been a nation of home owners in recent decades but the sheer cost of saving for a deposit and lack of finance is changing attitudes, the report commissioned by the Halifax from the National Centre for Social Research suggests.
The study, the most in depth research into the attitudes and behaviour of young people toward home ownership since the credit crunch, some 77% of all non home owners still aspire to owning their own home. However, despite this aspiration, nearly half of 20 to 45 year olds say Britain is becoming more like Europe where renting is seen as the norm and predict Britain will become a nation of renters within the next generation.
The perception that banks are not lending, the size of mortgage deposits necessary, and a fear of the application process has prevented them from making any significant attempts to buy a home. Longer term, only 5% of this group are making sacrifices to save for a deposit. Some 95% say they have no spare cash, no interest in saving for a deposit or were trying to save but failing to do so.
‘Our research indicates just how many potential first time buyers are not making it to the application stage because of a fear of being declined,’ said Stephen Noakes, commercial director, Halifax Mortgages.
Indeed, the report revealed widespread pessimism about lenders and the mortgage application process. Some 84% say first time buyers are put off by a belief that banks do not want to lend to them and find excuses to turn them down while 92% see it as hard for first time buyers to get a mortgage, with 60% seeing it as very hard or virtually impossible.
It also found that 67% believe there is a general perception that everyone is rejected by lenders so there is little point in applying and 61% say that first time buyers do not want to go through the stress and anxiety of applying for a mortgage.
According to Alison Blackwell, the reports author, there are major socio economic implications. ‘It would mean fewer homeowners being able to buy and therefore fund the construction of the new homes required in the UK to meet demand, resulting in a slowing down in the housing market. It could open up a widening of the wealth gap that already exists between home owners and non home owners,’ she said.
As a direct response to the research findings, Halifax will be launching its First Time Buyer Pledge, a set of four commitments to First Time Buyers, which aims to provide ‘them with clearer information about the mortgage application process and to detail what they can expect from the lender.
‘Of course, not everyone wants to get on the housing ladder. However, 77% of people in our research expressed a real desire to own their own home, but for two thirds of non homeowners it's an impossible aim. We therefore want people to be aware of the opportunities available to them, and dispel any myths about the mortgage process,’ said Noakes.
‘It has never been a simple matter to buy your first home, but this research has demonstrated that it is not just a matter of a lack of available income which is daunting today's first time buyers. As part of our Pledge, we will publish a more detailed overview of our lending criteria than ever before, which will be available online and in branch in July,’ he added.