Fitzrovia – More people rent than have a mortgage

Many people think the British obsession with owning your 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 were owner occupied, then every ten years that rose incrementally to 39% by 1961, 51% by 1971, 58% by 1981, 68.07% by 2001 but after that, it dropped to 63.4% by 2011 and continues to drop today.

After leaving home, early/mid twenties young adults tend to start to settle down and move out of the family home into their own home.  After a couple of years, they will have a choice of either buying their first house (albeit with 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.

This is a really important change in the way we live, as I explained to a local Fitzrovia 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 the knowing supply side of the buy to let equation, in relation to number of properties built in the district, Fitzrovia property prices and Fitzrovia rents.

In the Westminster City and Camden Council areas as whole, there are 69,438 households that are privately rented via a landlord or letting agency verses 29,878 households that are owned with a mortgage.  However, when we look deeper (as the devil is always in the detail), 13,462 of those 29,878 households are 35 to 49 year old’s and 7,583 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 5,849 of the 34,771 households occupied by those 25 and 34 year olds are owner occupiers with mortgages, because 28,922 households are privately rented. This means only 16.8% of 25 to 34 years have bought their house (with a mortgage). Twenty years ago, that would have a much higher percentage of homeowners (between 75% to 85%).

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. With Local Authorities and Housing Associations not building houses anywhere near like they the number of houses that they were 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 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 become a landlord, and would like to read more articles like this and other information on the Fitzrovia Property Market, then please visit the Fitzrovia Property Blog  Fitzroviapropertynews.com