Generation rent is rising - problem or solution?

Well after a decent break and a long overdue holiday it feels a little bit gloomy in the world of housing (even more so than usual). I’m often one to point out the issues around supply of new houses but the effects of this are clearly becoming more prominent now with home ownership falling to levels last seen in the UK in 1986, a major new report has revealed - and it's not just in the capital where it's hitting hardest. It certainly would appear we are becoming a nation of renters – “Generation Rent”. Basically most first time buyers now need the bank of mum and dad! 

The report, by think tank the Resolution Foundation, showed the proportion of Britons owning their own home has fallen eight percentage points since it peaked at 71 per cent in 2003.

And while much of the focus on the problem of falling home ownership has been on London, double-digit falls have been experienced in Greater Manchester, South and West Yorkshire and the West Midlands - aka. Leeds, Manchester and Birmingham. It is clear, the trouble with buying a house is wide spread – so it brings us full circle back to supply and resolving the housing deficit. So will councils build again like the good old days?

A local authority can borrow money to build a swimming pool but not invest in housing stock – what an odd concept and world we live in. I’m not old enough to remember the days that councils were the nation’s housebuilder but I certainly see the sprawling estates they created around Sheffield. Yes they are outdated and yes they need replenishing but the scale of them shows it could be done. Relaxing lending and budgetary rules should allow social housing to rise again.

I work in a corporate world and therefore do not hold against large developers for large land banks and a steady supply of housing that serves to meet profit margins rather than volumes – after all they have to answer to their shareholders, a lot of whom are our pension schemes. The scale must come from other sources. Though allowing councils to borrow so they can build out their own assets is not a silver bullet. The government should focus on releasing more public sector land to increase the financial viability of council-led schemes – and also reflecting that to achieve this successfully is likely to be delivered through public private partnerships as seen in Sheffield, Manchester and London.

Feel free to contact me 0113 288 2276 or lee.a.wilkinson@uk.pwc.com if you wish to discuss this blog or anything relevant to property and construction.

Enjoy your week

Lee