In 2015, Eurostat reported that homeownership among Brits dropped to an all-time low of just 64%.
Fast forward a year and the latest figures released by the National Association of Estate Agents (NAEA) have shown that the number of registered buyers in the UK decreased by 22% between March and April 2016.
The drop has marked the lowest number of buyers since March 2014.
What’s more, NAEA reported that the number of first-time buyer sales decreased by 2% in the same time period.
Is the decline in homeownership levels simply a result of generation rent turning its back on the property market, or is it because modern society prefers renting?
Rental property is big business in the UK and with around 4.5 million tenancies in place across the country, it has created a prime market for landlords.
After all, a third of people in the UK rent a property and the average age of a first-time buyer has now crept up to 35-years-old, according to research from Post Office Mortgages.
Renting has emerged as a popular choice and many people prefer to rent over buying. Renting can provide a certain level of freedom. For example, it can allow people to rent closer their work or to live in higher quality housing which they may not be able to afford if they bought a property.
However, many renters have become trapped in the ‘rental-rat-race’. Despite saving to buy a property, rising rents and rising property prices have left them with no other choice but to rent.
The latest numbers from the HomeLet Rental Index have shown that average rents in the UK increased by 5.1% over the year.
The government’s Help to Buy scheme and its promise to deliver 200,000 new homes per year may help some renters to climb the first runs of the property ladder however, 1 in 10 millennials (those born between 1980 and 2000) do not believe they will ever be able to afford a property.
“There are lots of first-time buyer products and government-backed schemes like the help to buy mortgage guarantee scheme and help to buy equity loan scheme. These make it easier for people with smaller deposits, typically 5 per cent of the purchase price, to get on the ladder,” Mr Emerson a London-based mortgage adviser at Caplon recently told the FT.
Changes to the buy-to-let industry
2016 has emerged as the host of a new era for the UK’s buy-to-let industry.
As of April 2016, a 3% levy was introduced on purchases of buy-to-let property and second-homes.
Many landlords rushed to beat the Stamp Duty increase. This led to an increased amount of activity in the market in March.
The changes have been introduced by the government who wish to make UK property less appealing to landlords. This strategy, in theory, should make room for first-time buyers.
Critics of the increased rate of stamp duty have warned that penalising landlords will not help first-time buyers or renters. It is thought that the increase will be passed on to renters through landlords who have been forced to increase rents to cover costs.
Brexit, Brexit, Brexit. It is the words on the lips of the nation however, it could be one of the largest contributors towards a lull in first-time buyer activity.
Warnings of price crashes and rising interest rates have cooled the market in the run up to the EU referendum, which will take place on 23rd June 2016.
Buyers and investors alike have taken a backseat in the weeks before the vote – a phenomenon which is generally seen before elections or in times of political uncertainty.
Click here to read an in-depth analysis about how leaving the EU will affect the UK’s property market.
Potential interest rates have forced many buyers to wait until they are sure about the outcome of the vote. Equally, those who hope prices will drop are waiting with baited breath to see what affect the result will have on the UK’s property market.
What is clear is that the UK’s housing market doesn’t fulfil the needs of everyone.
While the nation is spoilt for choice in the variety of housing which is available, many renters may feel pushed out of the market which has, in turn, forced them to fall out of love with the idea of buying a home.
This article was provided by Experience Invest.