A think tank says it would take a major policy change to fulfil Boris Johnson’s goal to turn generation rent into generation buy.
That policy shift is so big, however, the government would be advised to improve the private rental sector as so many tenants will be remaining there.
The Resolution Foundation says helping renters buy could be achieved by reducing demand for housing by limiting the purchasing power of second-home owners, shifting the risk of lending to more first time buyers to government, or providing substantially larger subsidies to FTBs.
“This means that as well as supporting home ownership, the government should also focus its efforts on improving conditions in the private rental sector, so that everyone has access to a secure and high-quality home” says the foundation.
It says 80 per cent of non-home owning 25 to 34-years-olds completely lack the required savings and earnings levels to be able to buy a typical first-time buyer home in their region, although windfalls, major lifestyle compromises or pooling resources with a partner does bring them closer to owning.
The report – written with Lloyds Banking Group – shows that youth home ownership has fallen massively since its 51 per cent peak in 1989, halving to just 25 per cent in 2016 before rising to 28 per cent before the pandemic in 2019 – equivalent to 1.3m people missing out on home ownership.
The biggest falls between 1989 and 2019 have taken place among those who have consistently been the least likely to own homes: single people (from 24 to 11 per cent) and low-income households (from 26 to 12 per cent). Black young people have also seen their rates of home ownership more than halve, from 19 per cent in 2001 to eight per cent in 2019.
These falls are not, as some have claimed, down to changing preferences or demographic shifts, claims the report.
Four-in-five renters would still prefer to own a home, and increasing numbers of full-time students, immigrants and single young people explains just 13 per cent of the drop.
Instead, the report notes that financial barriers – including greater deposit requirements and house price to earnings ratios – are the main drivers of this fall. Four-in-five young non-home owners have neither the savings nor the earnings to buy a typical first-time buyer home in their region.