Many people think the British obsession
with owning your own home started with Thatcher in the early 1980’s, when she
allowed council tenants to buy their council houses under the right to buy
scheme. However, the growth actually started just after the Second World War.
Looking at the country as a whole in 1951 30% of residential property was owner
occupied then, every ten years that rose incrementally to 39% by 1961; 51% by
1971; 58% by 1981 and 68.1% by 2001 but after that, it dropped to 63.4% by 2011
and continues to drop today.
Young adults tend to start to think about
settling down and moving out of the family home in their early-mid
twenties. After a couple of years, they will have a choice of either
buying their first house (albeit with a mortgage) or decide to privately rent
for the long term (because the Council House waiting list is measured in
decades at the moment!). The ratio of people owning a house with a mortgage
verses privately renting is an extremely important guide to what people are
doing about their housing needs and what their attitude to renting vs buying
is. With that in mind, within the next 20 years, I am predicting there
will be more people renting privately in Penicuik than own a property with a
mortgage and that the British love affair of property ownership will fade as
the decades roll on.
This is a really important change in the
way we live, as I explained to a local Penicuik landlord the other day, knowing
when and where the demand of tenants is going to come from in the coming decade
is just as important as knowing the supply side of the buy to let equation, in
relation to the number of properties built in the town; Penicuik property
prices and Penicuik rents.
In the Midlothian area as a whole there
are 2,938 households that are privately rented via a landlord or letting agency
verses 13,069 households that are owned with a mortgage, so my prediction
appears to be outrageous. However, when we look deeper (as the devil is always
in the detail), 6,093 or 47% of those 13,069 households are 35 to 49 year olds
and 4,169 or 32% are households of 50 to 64 year olds. I would expect all the
50+ years to be paying their mortgage off as they enter retirement as I would
with some of the people in their mid/late 40’s.
Meanwhile, at the other end, in the 25 to
34 age range (the age most people bought their first home in the
1970’s/80’s/90’s) only 1,861 or 46% of the 4,003 households occupied by those
25 to 34 year olds are owner occupiers with mortgages, because of the higher
number of properties that are now being rented. This means 46% of 25 to 34 year
olds have bought their house (with a mortgage). Twenty years ago, that would
have a much higher percentage of homeowners (over 60%).
It can be seen that as the older
generation pay their mortgages off as they start to get to retirement and the
younger generation aren’t jumping on the property ladder like they were 20 or
30 years ago, the private rental sector will take up the slack as more and more
people will want a roof over their head, but won’t buy one but rent one
instead. With Local Authorities and Housing Associations not building houses
anywhere near like the number of houses they were building in the 1950’s, 60’
and 70’s, the private landlord appears to have good demand for their rental
properties for many decades to come.
This will create a polarisation in the
housing market between those, mostly older, households who own outright and
those, mostly younger, households who rent. Our housing market is very much
turning into the European model. However, all is not lost; the younger
generation will inherit their parents properties, which in turn will enable
them to buy, albeit later in life.
If you are a landlord or thinking of becoming a landlord, why not pop in and see us at out office at 6 Bank Street.
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