Landlord housing takes over mortgage owner occupiers

Hello all,


The total value of UK landlord owned housing has now overtaken that held by mortgaged owner-occupiers, that’s according to a recent survey carried out by international property consultants Savills.
Savills calculations show that around £1,077bn of net equity, that is the proportion of the home owned as opposed to mortgaged, is held in those homes owned by private landlords.

This compares with just under that figure; £1,067bn in mortgage owned owner-occupied homes, according to a recent report published in the Financial Times. It shows the true scale of the problem facing the government with its priority home ownership policy.

The “Baby Boom” generation of owner-occupiers, those born just after WW2 and either retired our retiring now, are the real beneficiaries of the housing boom, with around £2,097bn of equity held mortgage-free. They are the real winners in what Savills claims is a 300% increase in average property values over 20 years, while the younger “Generation Rent” is struggling to get onto the housing ladder.

It is no secret that the government's key initiative is to boost housing ownership but in light of these figures it may prove to be a tough nut to crack even with recent incentives such as 'Help to Buy'.

The shift in housing ownership is also reflected in how money is now spent on housing, with more spent on rents that on mortgage payments by home-owners. £74.8bn combined is...

now spent on private and social rents, which just exceeds that spent on mortgage payments at 73.2bn. An interest rate rise could easily alter that balance though.

With housing shortages, rising rents and home ownership declining in most Western economies, the trend really does seem structural and the various UK government schemes, such as “Help-to-buy”, could struggle against this.

I would think that the various government initiatives will help the buyer market to a certain extent but whilst the Bank of England continues to guard against a debt ridden housing market I am not sure we will see an about turn in the short term. No doubt you will recall my most recent comments regarding 2016 forecasts for investor buyers in light of the recent Autumn announcements and these figures support the theory entirely.

Best regards