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40-plus generation may never own their own home (10 November 2014)

Date: 10/11/2014
Duncan Lewis, Legal News Solicitors, 40-plus generation may never own their own home

The shortage in affordable housing has led to many people aged 35 to 40-plus getting trapped in the rental market instead of owning their own homes.

The Telegraph reports that housing experts predict the number of people aged 40-plus who are forced to rent a home is likely to jump by 30% in the next five years. Assetless 40-somethings (ALF)s have been robbed of the chance to build up a savings pot or retirement funds as a result of owning property, according to figures from estate agent Savills.

Head of residential research at Savills, Lucian Cook, said:

“There is an increasing number of forty-somethings unable to get on the housing ladder in the current mortgage environment.”

Rising house prices have led to a shortage of new homes as the result of a combination of factors, including the impact of the economic downturn after 2007 on the building sector.

House building stagnated during the credit crunch and is only just beginning to return to normal. However, in the last quarter, housebuilding has again slowed.

Foreign investment in the UK property market has also led to shortages in housing, with overseas syndicates snapping up new-build homes and existing properties as buy-to-let investments. Some high-end homes bought by foreign investors are simply left empty after being bought as an investment.

The UK population also continues to swell, with young adults and families desperate to get on the property ladder, many of whom compete for affordable housing or rely on parental help with a property purchase.

However, renters over the age of 40 have also increased since 2001, with number of those renting in the 40-plus age group having doubled since 2001. It is estimated that one-fifth of those renting homes now comprises a tenant in this age bracket.

The problem is especially pronounced in London, because house prices in the capital are 30% higher than they were before the economic crisis hit. Many people in their forties will never be able to afford their own home – and therefore will not have a chance to build up a pot of equity to help them in retirement or pass on to their children or other family.

High rents also mean that renters aged 40-plus are unlikely to have savings, as rental tenants now spend on average 40% of their income on rental bills, whereas only 5% of homeowners spend 40% of their income on mortgage repayments.

Unlike today’s over-60s, those in the 40-plus age bracket are now unlikely to be able to afford their own home by the time they reach 60 – however, by 2019, five million homes will be owned by homeowners who are 65-plus.

In September 2013, The Migration Observatory at the University of Oxford estimated that various buy-to-let investors – including overseas investors – had purchased 61% of newly built homes in London, leaving owner occupiers in London with just 39% of the market. In London, however, both UK nationals and migrants have smaller rates of home ownership and are more likely to rent in the private sector or live in social housing.

Across Britain an estimated 14% of UK-born people rent homes, compared with 38% of migrants.

In October this year, research showed that across the UK, 43% of migrants in the UK were home owners, compared with 69% of the British-born population.

Duncan Lewis Housing Solicitors

Duncan Lewis Housing Solicitors offer competitively priced conveyancing services to homebuyers – and can also advise homeowners on issues such as debt consolidation and mortgage repossession.

Duncan Lewis is a leading firm of Legal Aid solicitors and can also advise rental tenants and social housing tenants on:

• Disrepair of rented property
• Housing Benefit
• Landlord & Tenant disputes
• Local Authority housing
• Unlawful eviction.

For expert legal advice on housing law call Duncan Lewis Housing Solicitors on 020 7923 4020.

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