The number of people owning more than one house is booming – so what does that mean for Generation Rent?
We often talk about Generation Rent, and the problems young people face getting on the property ladder. However, a new briefing from the Resolution Foundation – Game of Homes – has found that there has been a recent boom in multiple property wealth, and this is not something that is only benefiting older generations.
While it is the case that younger generations have failed to match the property wealth accumulation of previous generations, it transpires that when it comes to acquiring additional property, they are actually matching the ownership rates of previous generations. Despite younger generations being less likely to own homes than their predecessors, it seems that if they do own a home, they are more likely to own several of them.Despite younger generations being less likely to own homes than their predecessors, it seems that if they do own a home, they are more likely to own several of them. Click To Tweet
This is a boom that is benefiting everyone – but why has it come about?
Additional property wealth was worth £941bn in 2014-16, which translates as 5.5million adults, or 11.2% of the population, owning multiple properties. The Resolution Foundation briefing states that there are three main motivations for people buying additional property. The first is to pass on wealth to younger relatives, and the second is to have security in retirement.
However, the main reason is to generate income, and the biggest section of additional property wealth is in buy-to-let houses, which are owned by 1.9million people. In fact, the number of people owning buy-to-let properties rose by more than 50% over the period from 2008-10 to 2014-16, and the number of buy-to-let mortgages outstanding in 2018 was 15 times greater than in 2000.
A closer look at additional property wealth reveals that it has grown for all generations since 1940, although people born in the 1950s have the highest prevalence, and those born since 1980 are falling behind their predecessors.
Perhaps unsurprisingly, the briefing also concludes that the ownership of buy-to-let properties and second homes is in general skewed towards wealthy, high-income households. As well as intending to enjoy those properties, and perhaps holiday or spend time in them, it is a move that is made in order to grow wealth, or preserve it for future generations.
So why does this matter?
The briefing asserts that rising additional property ownership has been the flip side of falling main property ownership, but that policy makers have made changes in recent years to tax reliefs available to people who own multiple properties, which has had a dampening effect on the sector.
However, the market remains unbalanced and unless there are further changes to policy, first-time buyers will still be struggling to get on the property ladder for years to come. This means that we may be in an era experiencing the highest ever levels of property wealth, but Generation Rent’s predicament is unlikely to change.
The good news is that all properties, both primary and additional, need to be renovated. However, when renovating properties, landlords have very different requirements to people who live in their homes. And at this rate a growing number of people will be renting until much later in their lives.