Over one in 10 people across Britain own second homes, buy to let and overseas properties worth £941 billion, according to new research.
A report funded by the Nuffield Foundation and published by the Resolution Foundation shows that rising additional property wealth since 2001 has been the flipside of falling home ownership.
The most up to date data, covering for 2014 to 2016, reveals that 5.5 million people reported additional property wealth, up 535 from 2001. The value of additional property wealth has increased from around £610 billion in 2001 to £941 billion over the same period.
The report says that like most other forms of wealth, additional property wealth is accumulated over time, and is therefore most common among the older generations. Around one in six people born in the 1950s report additional property wealth, the highest of any cohort.
The report notes that younger generations are failing to match the home ownership rates of previous generations, with 37% of people born in the 1980s having property wealth at age 29, compared to 50% of people born in the 1960s.
However, it finds that younger generations are matching the additional property ownership rates of previous generations, with 7% of those born in the 1960s and 1980s having additional property wealth by the age of 29. This suggests that millennial property wealth is being increasingly concentrated among rich households, says the Foundation.
Looking at the kinds of additional property wealth that people own, the report shows that buy to let property is now by far the most common form, having grown by 58% since 2006/2008. Some 1.9 million people have buy to let property wealth compared to 970,000 people owning overseas property which hasn’t grown since 2008.
The Resolution Foundation says that big income transfers in the buy to let market are currently taking place between generations. Younger private renters tend to transfer money to older landlords, with baby boomers receiving 52% of all rental income in the UK.
However, the increasing concentration of additional property wealth among rich households means that in future we could see more income transfers within generations as poorer, middle aged, millennial renters pay their rich, millennial landlords.
The Resolution Foundation says that the trend of rising multiple property ownership and falling home ownership, particularly among young people, reinforces the need for policy makers to encourage a more equitable distribution of housing wealth across the country. It urges the Government to build on welcome reforms to buy to let, in order to rebalance the housing market back towards first time buyers.
‘Multiple property wealth has grown rapidly over the last two decades. The rise of additional property wealth, particularly among buy to let properties, is the flipside of falling home ownership. But while young people in particular are less likely to own their own home than previous generations, those that do own are more likely to have more than one property,’ he pointed out.
‘The sheer scale of additional property wealth is an important driver of rising wealth gaps across Britain. And as the huge stock of second homes, buy to let and overseas properties starts to be passed on to younger generations, Britain risks becoming a country where getting ahead in life depends as much on what you inherit, as what you earn,’ he added.
