More people will rent properties than own their own homes in just eight years’ time, according to one economist.
More People will Rent than Own their Homes in 8 Years, Economist Believes
Sebastian Burnside, a Senior Economist at NatWest, believes that a major cultural shift in homeownership is on the horizon, with more private tenants than mortgaged homeowners in just a few years.
By 2025, Burnside claims that the number of mortgaged households will be just under six million, while the amount of households in private rental accommodation will be slightly more, at six million. This crossover is expected to happen in late 2024.
Burnside says: “We think it’s a fairly comfortable bet that, by 2025, we will have more households renting privately than owning their homes with a mortgage, which is a big cultural shift for a country like the UK and something that’s being driven by those underlying demographics.”
There are already more people owning their homes outright than people buying with a mortgage, and the number of outright homeowners is expected to continue climbing.
Since 2013, outright homeownership has been the largest form of housing tenure in the UK. By 2024, Burnside says that around nine million households will own their homes outright.
The amount of households in social rental housing is forecast to edge downwards, from four million today to just under that figure.
Burnside reports that fewer people are taking out mortgages because of the differences between their incomes and house prices. However, baby boomers are increasingly able to pay off their mortgages.
He insists that, as the private rental sector grows, lenders need to rethink their repossession strategies.
At present, lenders tend to treat homeowners who fall into mortgage arrears with more leniency than buy-to-let landlords; defaulting landlords typically have their properties possessed within months.
However, Burnside notes that possessing landlords’ properties quickly is problematic to their tenants, who often develop ties to the area they’re living in.
How quickly do you expect renting to overtake homeownership?