Generation Rent
Perceptions of the first-time buyer
market
Authors: Curtis Jessop and Alun Humphrey
Date: April 2014
Prepared for: Halifax
At NatCen Social Research we believe
that social research has the power to
make life better. By really understanding
the complexity of people’s lives and what
they think about the issues that affect
them, we give the public a powerful and
influential role in shaping decisions and
services that can make a difference to
everyone. And as an independent, not for
profit organisation we’re able to put all
our time and energy into delivering social
research that works for society.
Shella Ali
Halifax Media Relations
0207 356 2017
07795611154
Shella.ali@lloydsbanking.com
Lauren Jones
Halifax Media Relations
0207 440 4579
07825584900
Lauren.jones@halifax.co.uk
NatCen Social Research
35 Northampton Square
London EC1V 0AX
T 020 7250 1866
www.natcen.ac.uk
A Company Limited by Guarantee
Registered in England No.4392418.
A Charity registered in England and Wales (1091768) and Scotland (SC038454)
Contents.
Executive Summary – Key findings .......................................... 1
1 Introduction .................................................................... 3
1.1
1.2
Who makes up the 20-45 housing market? .................................................................. 3
Is the UK’s homeownership profile changing? ............................................................... 6
2 Barriers to homeownership ............................................10
2.1
Is the first-time buyer market turning a corner? ........................................................... 10
2.1.1 Deposits ..................................................................................................................... 10
2.1.2 Getting a mortgage ..................................................................................................... 12
2.1.3 Affordability of housing ............................................................................................... 13
2.2
Possible impacts on the UK’s homeownership profile .................................................. 14
3 Overcoming barriers to homeownership ..........................17
3.1
3.2
3.3
Parental assistance ................................................................................................... 17
Government assistance .............................................................................................. 18
Possible impacts on the UK’s homeownership profile .................................................. 19
3.3.1 Parental assistance .................................................................................................... 19
3.3.2 Government assistance............................................................................................... 19
4 Attitudes to homeownership and renting ........................21
4.1
Possible impacts on the UK’s homeownership profile .................................................. 22
5 Social implications of a changing housing market ..........24
5.1
5.2
Is the UK’s homeownership profile changing? (2) ........................................................ 24
Implications ............................................................................................................ 25
5.2.1
5.2.2
5.2.3
5.2.4
5.3
A widening of the existing wealth gap between homeowners and non-homeowners ....... 25
Lack of financial resources to support during retirement .............................................. 25
A more transient population ........................................................................................ 26
A slowing down of the housing market ......................................................................... 26
The uneven impact of changes to the housing market .................................................. 27
5.3.1 The uneven distribution of non-homeownership ........................................................... 27
Appendix A: Homeownership profiles of Groups 1-4. .............31
Appendix B: Changes in perceived barriers to homeownership33
Tables & Figures
Table 1.1
Homeownership profile of 20-45-year-olds over time ......................................................... 6
Table 1.2
Table 2.1
Table 2.2
Table 5.1
Changing homeownership profile in one age group as it ages ............................................. 7
Perceived difficulty of obtaining a mortgage .....................................................................12
Top three perceived barriers to homeownership among potential first-time buyers ............15
Biggest reasons preventing you from buying a property at the moment by social
grade ..............................................................................................................................29
Appendix Table A.1
Appendix Table A.2
Appendix Table A.3
Appendix Table A.4
Appendix Table B.1
Appendix Table B.2
Homeownership profile of Group 1...................................................................31
Homeownership profile of Group 2...................................................................31
Homeownership profile of Group 3...................................................................32
Homeownership profile of Group 4...................................................................32
Top three barriers to homeownership, across time ............................................33
Biggest reasons preventing you from buying a property at the moment..............33
Figure 1.1
Figure 1.2
Figure 2.1
Figure 2.2
Figure 3.1
Figure 4.1
Figure 4.2
Figure 5.1
Proportion of age groups in ‘Generation Rent’; Scenario A .................................................. 8
Proportion of age groups in ‘Generation Rent’; Scenario B .................................................. 9
Strategies for saving for a deposit for a first home ............................................................11
Perceived deterrents to applying for a mortgage for first-time buyers.................................13
Funding parental assistance for first-time buyers .............................................................18
Attitudes towards renting ................................................................................................21
Proportion of age groups who do not want to own a home .................................................23
Social grade profile of parents by whether or not they have/expect to provide financial
support for their children..................................................................................................27
Figure 5.2 Social grade profile of parents by whether or not their child moved back home as they . could
not afford to buy their own property .......................................................................................................28
Figure 5.3 Perceptions of government initiatives by social grade ........................................................30
2
NatCen Social Research | Generation Rent
Executive Summary – Key findings
The global recession of 2008 has had a huge impact on the UK housing market,
particularly for younger first-time buyers who, facing a difficult mortgage market, high
deposits, poor job security and stagnating disposable income, have found it difficult to
muster the financial means get onto the property ladder. In this report we summarise
key findings from the fourth wave of Halifax’s annual research into perceptions of the
first-time buyer market. The research included interviews with 8026 20-45 year olds as
well as 1004 interviews with their parents’ generation. Key findings include:

Deposits, income and house prices remain the largest barriers to homeownership.
However, some evidence points towards improvements in the first-time buyer
market, with a slight drop in the proportion who mention 'up-front' barriers such as
deposits and getting a mortgage as being a key barrier to ownership. However,
concern about longer-term affordability through rising house prices and low income
is increasing.

This generation's non-homeowners are doing more than their predecessors, either
in their generation or their parents’, ever did in terms of cutting back to save for a
deposit. 69% of 20-45-year-old non-homeowners who would like to buy a home are
cutting back on their spending to save for a deposit compared to 56% of
homeowners in their generation and 54% in their parents’ generation that did the
same. However, for many, this is unlikely to be sufficient, and major changes such
as moving back to the parental home or borrowing money from friends/family may
be necessary (among those for whom this is an option).

Parental assistance for first-time buyers is becoming more common, but for some
parents it can have negative impacts on their financial security as they dip into their
own savings and retirement funds to pay for it. It also potentially has an uneven
social impact, with those from less wealthy backgrounds not necessarily being
given the same kinds of support as those with wealthier parents.

‘Help to Buy’ seeks to make it easier for people to purchase a property by assisting
with the deposit and by providing mortgage guarantees. The particular issues it
targets - deposit sizes and difficulty getting a mortgage - were less likely to be
perceived as a barrier than in the recent past. Difficulty raising a deposit was
relatively more likely to be cited by those already on the cusp of buying and those in
‘higher’ social grades Those from ‘lower’ social grades or further from the point of
purchase continue to face major challenges, in particular finding sufficient income.

Homeownership is still a preference for most people and is associated with positive
social outcomes such as 'taking a stake in society'. However, attitudes towards
renting as a lifestyle seem to have softened slightly, and the youngest participants
are significantly less likely to want to own a home than the generations that
preceded them.

These findings are inconclusive when it comes to predicting whether or not the
UK’s homeownership profile will move more towards renting. A revitalising market,
increased government/parental assistance, and a recovering economy will certainly
help potential first-time buyers to purchase a home. However, the way it will affect
the UK’s homeownership profile depends on who these changes help. If they
mainly assist those who were already likely to buy then the UK will continue to
increase its proportion of renters; if they assist those in ‘Generation Rent’ who
currently have no prospects of homeownership then rates of homeownership may
return to their previous historic levels. However, attitudinal shifts away from
homeownership among younger participants suggest that, unless their views
NatCen Social Research | Generation Rent
1
change as they get older, the UK may move towards higher levels of renting
irrespective of the economic circumstances.
2
NatCen Social Research | Generation Rent
1
Introduction
This report outlines the findings from the fourth wave of annual research commissioned
by Halifax to explore perceptions of the first-time buyer market.
Our first report in 2011 found that despite a strong desire for homeownership, a third
(35%) of 20-45-year-olds could be defined as ‘Generation Rent’ – a group with no
realistic prospect of owning their own home in the next five years. Three years later,
despite signs of economic recovery and the implementation of government initiatives
such as ‘Help to Buy’, this proportion has not changed, with 36% of today’s 20-45-yearolds either unable (21%) or unwilling (15%) to get on the property ladder.
This latest report looks back on the past four waves of data to see what, if anything,
has changed, and the impacts that it may have on the UK’s homeownership profile. It
focuses in particular on the following questions:

Have recent housing market difficulties had a longer-term impact on market
structure, or will younger potential buyers catch up with older groups?

As the economy recovers, how have the barriers to homeownership for 20-45-yearolds changed?

What support is there for those who want to buy a home, and who is it helping?

Have the public’s attitudes towards homeownership or renting changed?

Is there a gap between homeowners and non-homeowners, and how is it
changing?

What are the possible longer-term social outcomes of a division between
homeowners and non-homeowners?
1.1 Who makes up the 20-45 housing market?
Our survey participants can be divided into four groups. 44% are homeowners, and
20% are ‘likely first-time buyers’. This latter group would like to buy, and have a
‘realistic plan’ to do so in the next 5 years. Just over a fifth (21%) can be called
‘impeded first-time buyers’ – they would like to buy, but don’t think they will be able to
or have given up. 15% don’t’ want to buy a home at all.
NatCen Social Research | Generation Rent
3
These groups have different profiles to one another, both in terms of their sociodemographics, but also their attitudes towards homeownership. The following sections
summarise some of the key differences.
Homeowners
Homeowners tend to be slightly older and better off than the other groups. They tend to
be more likely to have a higher opinion of homeownership, and agree that it is socially
and economically important; 63% agree buying a home is one of the ways that people
take a stake in society, and 85% agree owning your own home is a good financial
investment for the future. As a result, they do not think that homeownership in the UK
should change – 66% agree that Britain should remain a nation of homeowners.
Homeowners are less sympathetic towards the plight of non-homeowners. 54% agree
that people aren’t willing to make the sacrifices necessary to buy their first property and
57% agree first-time buyers are guilty of not adjusting their expectations. They are
more likely than the other groups to agree the government is doing enough to support
people trying to buy their first home (33%), perhaps reflecting that they are also the
group most likely to agree that parents are expected to help young people buy their first
home (66%).
4
NatCen Social Research | Generation Rent
‘Likely first-time buyers’
‘Likely first-time buyers’ are similar to homeowners in that they are slightly better-off
than the other non-homeowner groups, but they are also younger. They are very
positive about the benefits of homeownership, but are more likely than homeowners to
think that levels of homeownership will change - 50% agree that Britain will become a
nation of renters in the next generation, compared with 41% of homeowners.
This group is the most concerned of all the non-homeowner groups about getting
‘stuck’ renting – 58% agree they are worried that if they rent all their life they won’t be
able to retire, 67% agree renting means they never get to feel like they’re fully settled,
and 55% don't want to have to raise children in a rented property.
‘Impeded first-time buyers’
The ‘impeded first-time buyers’ are the first of the two groups that make up ‘Generation
Rent’; they would like to own a home, but don’t think that they will ever be able to do
so. They are more likely to be less well-off, with lower incomes and from ‘lower’ social
grades. Like the ‘likely first-time buyers’, they are concerned about the financial
implications of long-term renting; 60% are worried that if they have to rent all their lives
they won't be able to retire. However, they are less likely to think of renting as
inherently bad. Relatively few (40%) think it is important for parents to bring up children
in a home that they own, and ‘only’ 52% think Britain should remain a nation of
homeowners.
They are far less likely to agree that first-time buyers aren't willing to make the
necessary sacrifices in order to buy their first property (37%), or that the government is
doing enough to support people trying to buy their first home (15%). As people who
want to own their own homes but can’t, they are also the most likely to feel a division
between homeowners and non-homeowners. 78% agree the country is in danger of
dividing into two, between those who can afford a house and those who will never be
able to, and 65% agree the division between people who can afford a house and those
who can't, will create long-term social problems.
NatCen Social Research | Generation Rent
5
Don’t want to own
Like the ‘impeded first-time buyers’, those that don’t want to own a home tend to be
less well off, with fewer savings and lower incomes. However, unlike the ‘impeded firsttime buyers’, they are also more likely to be younger and they tend to be less likely to
identify a social division between those that can/cannot buy homes; only 45% agree
the division between people who can afford a house and those who can't will create
long-term social problems, fewer than any of the other groups.
This group is the least positive about homeownership, and in general, view renting as
fine as a choice; only 23% agree it is important for parents to bring up children in a
home that they own, not rent, and only 39% agree buying a home is one of the ways
that people take a stake in society. They are the most likely to agree that Britain should
lose its obsession with homeownership (36%).
1.2 Is the UK’s homeownership profile changing?
The proportion of 20-45-year-olds who are likely to ever get on to the property ladder
(i.e. homeowners/likely first-time buyers) or remain part of ‘Generation Rent’ has not
changed significantly over the past 3/4 years (Table 1.1).
Table 1.1 – Homeownership profile of 20-45-year-olds over time
2011
2012
2013
2014
Homeowners
46%
44%
44%
44%
Likely first-time buyers
20%
19%
18%
20%
Impeded first-time buyers
22%
22%
22%
21%
Don't want to own
13%
14%
17%
15%
Unweighted base
8001
8042
8051
8026
Base: 20-45-year-olds
Obviously, 20-45 is a broad age range, and so these figures will clearly mask
differences by age (as the likelihood of homeownership increases with age). To better
understand whether or not we are seeing a long-term shift in levels of homeownership
in the UK, we can use the four Halifax surveys to track age groups across time (i.e. to
‘follow’ one age group as it gets older) to see whether or not their likely levels of
homeownership are different to that of older age groups when they were the same age.
Our approach to this is described in Appendix A and basically involves identifying four
key groups of young people, defined by their age in 2011, and following them as they
get older1
1
Group 1: Those aged 20-24 in 2011; Group 2: Those aged 25-29 in 2011; Group 3: Those aged 30-34 in 2011; Group
4: Those aged 35-39 in 2011.
6
NatCen Social Research | Generation Rent
Table 1.2 gives an example of how the homeownership profile of one age group (aged
25-29 in 2011, 26-30 in 2012, 27-31 in 2013 and 28-32 in 2014) has changed as it has
aged over the past 3/4 years2. Here we see more change than at the overall level with,
unsurprisingly, the proportion of homeowners in this age group increasing significantly
from 31% to 41% between 2011 and 2014.
Table 1.2 – Changing homeownership profile in one age group as it ages
2011
2012
2013
2014
25-29
26-30
27-31
28-32
Homeowners
31%
33%
37%
41%
Likely first-time buyers
31%
28%
25%
23%
Impeded first-time buyers
26%
28%
25%
23%
Age
Don't want to own
12%
11%
13%
13%
Unweighted base
1484
1548
1440
1585
Base: 25-29-year-olds (2011); 26-30-year-olds (2012); 27-31-year-olds (2013); 28-32-year-olds (2014).
However, to look forward and identify potential generational shifts, we need to go
beyond the actual proportion of homeowners and identify the total proportion likely to
ever get onto the property ladder. This is because levels of actual homeownership are
more likely to be affected by short-term circumstances, for example temporary
economic conditions; we want to see whether a group is likely to have fewer
homeowners in the longer-term, or more people likely to be renting their entire life.
Shifting focus to the total proportion of this age group that is likely or unlikely to ever
make it onto the property ladder (‘Generation Rent’) changes the picture. While the
proportion of homeowners in this group has increased significantly as they have aged,
the total proportion unlikely to be able to get onto the property ladder has not; 38%
were part of ‘Generation Rent’ in 2011, compared with 36% in 2014.
We do not currently have enough waves of data to see whether the proportions in
‘Generation Rent’ within younger groups match the proportions of older groups when
they were at the same age3. However, by using the existing data, we can project
possible scenarios for how these proportions might continue to change.
2
Homeownership profiles for the four groups can be found in Appendix A.
This is because our cohorts are five-year age bands but there are only three years between the first data point and the
latest data point.
3
NatCen Social Research | Generation Rent
7
Figure 1.1 and Figure 1.2 both show the proportion of four age ‘groups’ that are in
‘Generation Rent’ (those who would like to buy but are unable or do not want to) across
the four waves of the study. In each chart, we have added a line to indicate two
possible scenarios for how the percentages may continue to change.
Scenario A (Figure 1.1) projects that although younger age groups currently have a
higher proportion in ‘Generation Rent’ than the older age groups, individuals will move
into home ownership or develop a realistic plan of achieving this as they get older. In
this scenario we therefore would not see longer-term changes to the structure of the
housing market as the younger groups ‘catch up’ with the groups that preceded them.
Figure 1.1 – Proportion of age groups in ‘Generation Rent’; Scenario A
Base: Group 1 - 2011: 1187; 2012:1097; 2013: 1575; 2014: 1349. Group 2 – 2011: 1484; 2012: 1548; 2013: 1440;
2014: 1585. Group 3 – 2011: 1709; 2012: 1769; 2013: 1693; 2014: 1669. Group 4 – 2011: 1756; 2012: 1773; 2013:
1712; 2014: 1726.
8
NatCen Social Research | Generation Rent
In contrast, Scenario B (Figure 1.2) predicts that the proportion of individuals who will
ever be able to buy a home will remain stable as people get older, as individuals are
unable, or don’t want to, move out of ‘Generation Rent’ as they get older. This would
mean that each successive group will be made up of a smaller proportion of
homeowners, leading to longer-term changes to the UK’s homeownership profile.
Figure 1.2 – Proportion of age groups in ‘Generation Rent’; Scenario B
Base: Group 1 - 2011: 1187; 2012:1097; 2013: 1575; 2014: 1349. Group 2 – 2011: 1484; 2012: 1548; 2013: 1440;
2014: 1585. Group 3 – 2011: 1709; 2012: 1769; 2013: 1693; 2014: 1669. Group 4 – 2011: 1756; 2012: 1773; 2013:
1712; 2014: 1726.
These projections illustrate that key to whether or not the housing market will
experience long-term change is whether or not individuals move out of ‘Generation
Rent’ and into the pool of likely homeowners. In reality, what will happen will be
somewhere between these two scenarios; some people currently in ‘Generation Rent’
will eventually be able to move towards homeownership, and others will not. However,
the extent to which this is likely is not set and will depend on a number of factors:

Barriers to homeownership: how many and how high are the economic
barriers to someone getting onto the property ladder?

Support for first-time buyers: what support is there for potential homeowners,
and who does it help?

Attitudes to homeownership: do people want to own their own home?
In the subsequent chapters of this report we look at these three factors, where they
are, how they have changed, and their implications for the future homeownership
profile of the UK.
NatCen Social Research | Generation Rent
9
2
Barriers to homeownership
There are many potential barriers to homeownership, but the three largest perceived
barriers to buying a home among potential first-time buyers (non-homeowners who
would like to buy) are:

The size of the deposit required (62%)

High property prices (53%)

Low income (50%)
2.1 Is the first-time buyer market turning a corner?
In 2013, the estimated number of first-time buyers in the UK increased by 22% to
265,000, the highest number since 20074. This increase in the number of first-time
buyers is reflected in the survey data, which gives some tentative signs that the market
may be starting to turn a corner.
Tracing the responses of potential first-time buyers across the past four waves, there is
some indication that they are becoming less concerned about ‘up-front’ barriers such
as the size of deposits or getting a mortgage. However, at the same time, they are
more likely to mention issues to do with longer-term ‘affordability’ – such as low
incomes and growing house prices5 .
2.1.1 Deposits
In 2013, increasing house prices meant that the average deposit for first-time buyers in
the UK increased from £28,001 to £30,943. Although deposit sizes as a proportion of
the total house price have remained stable at around 20%, this is still 10 percentage
points higher than 2007 (10%)6 .
Despite this increase, the size of deposits is perceived as slightly less of a barrier to
potential first-time buyers than it has in the recent past:

The proportion of potential first-time buyers who view the size of the deposit as one
of the three most significant barriers to people buying their first home fell from 65%
in 2011 to 62% in 2014.

The proportion of potential first-time buyers who say ‘The size of the required
deposits are too high’ is one of the biggest reasons preventing them from
purchasing a home has fallen from 48% in 2013 to 43% in 2014.
4
Halifax first time buyer review, 2013 http://www.lloydsbankinggroup.com/globalassets/documents/media/pressreleases/halifax/2014/0401_first_time_buyers.pdf
5
For full information on how perceptions of the barriers to homeownership have changed, see Appendix B Table B.1
and Table B.2
6
Halifax first time buyer review, 2012, 2013 http://www.lloydsbankinggroup.com/globalassets/documents/media/pressreleases/halifax/2014/0401_first_time_buyers.pdf,
http://www.lloydsbankinggroup.com/globalassets/documents/media/press-releases/halifax/2012/2912_first.pdf
10
NatCen Social Research | Generation Rent
How do potential first-time buyers save for a deposit?
Despite this softening in perceptions of deposits being
a barrier for first-time buyers, saving for a deposit
remains one of the most significant barriers to
homeownership. Over half (57%) of those who would
like to buy a home admit that while they want to save
for a deposit, they don’t have the spare cash to do so.
57% of non-homeowners
who would like to buy do
not have the spare cash to
save for a deposit
For current potential first-time buyers, a major part of saving for a deposit is making
sacrifices, although only 23% of those who want to buy a home claim to be saving
every penny for a deposit and making sacrifices to do so.
However, comparing how potential first-time buyers aged 20-45 are saving for their first
home with what was done by homeowners of the same age or their parents’ generation
shows that 20-45-year-old non-homeowners who would like to buy are making bigger
sacrifices than current owners did (Figure 2.1).
Figure 2.1 – Strategies for saving for a deposit for a first home7
Base: Parents who have ever owned a home; all homeowners aged 20-45; non-homeowners aged 20-45 who would
like to buy a home and want to save for a deposit.
The previous generation of first-time buyers were less likely to do anything in order to
save money for the deposit for their first home; 32% did nothing compared to only
20%/22% of this generation who did/are not doing anything to save for a deposit.
One thing the previous generation’s homeowners were more likely to do to build up
savings for a deposit was to work an extra job (18% vs. 15%/13%). Perhaps this is an
option which has not been as readily available to today’s first-time buyers due to the
current economic climate. Indeed, for 20-45-year-old potential first-time buyers, lack of
job security is cited by 27% as one of the top 3 barriers to homeownership.
‘Cutting back on spending’ includes participants who are/have lived in lower quality accommodation to save on rent;
cut down on spending/stopped going out; spent less on clothes, toiletries or personal grooming; gone on fewer/cheaper
holidays; spent less on Christmas, birthdays, and other special events, or spent less on their hobby/hobbies.
‘Receiving help from friends/family’ includes participants who are/have borrowed money from friends or family or lived
with their parents.
7
NatCen Social Research | Generation Rent
11
Within the current generation, around four in five homeowners and potential first-time
buyers did/are doing something in order to save for a deposit for their first home.
However, the two groups report doing different things:

20-45 year-old homeowners are far more likely than potential first-time buyers to
have lived with their parents for longer (31% vs. 15%) or borrowed money from
friends/family (23% vs. 4%).

In contrast, those who are currently trying to put together a deposit are more likely
to be doing so by making sacrifices – cutting down on spending on hobbies (35%
vs. 26%); going out (49% vs. 39%); clothes, etc. (41% vs. 30%); or holidays (36%
vs. 32%)
This suggests that, for this generation, simply cutting down to save up may not be
sufficient to put together enough money for a deposit on a home, and more substantial
measures such as moving back home to save on rent or borrowing money may be
necessary, although those options are not be available to all.
2.1.2 Getting a mortgage
Increasing house prices have pushed up average UK mortgages for first-time buyers
from £111,937 in 2012 to £125,758 in 20138. However, as with views on getting a
deposit, data from this wave suggest that potential first-time buyers have slightly
softened their opinions on the difficulty of getting a mortgage:

The proportion of potential first-time buyers who view ‘not feeling able to apply for a
mortgage because they believe most applications are rejected in today's economic
climate’ as one of the three most significant barriers to homeownership has fallen
slightly from 20% in 2011 to 16% in 2014.

The proportion of potential homeowners who say they don't think they'd be given a
mortgage has fallen slightly from 26% in 2013 to 23% in 2014.
Obtaining a mortgage is still considered a major barrier for first-time buyers (91% of
those who want to own a home believe it is difficult) but it is increasingly being viewed
as only ‘hard’ to obtain, as opposed to ‘very hard’ or ‘virtually impossible’ (Table 2.1).
Table 2.1 – Perceived difficulty of obtaining a mortgage
How easy or hard is it for first-time buyers to
obtain a mortgage?
2011
2012
2013
2014
Very easy
2%
1%
0%
1%
Easy
7%
3%
8%
8%
Hard
30%
29%
33%
40%
Very Hard
39%
38%
36%
32%
Virtually impossible
22%
29%
23%
19%
Unweighted base
3173
3155
3116
3141
Base: Non-homeowners aged 20-45 who would like to buy a home
8
Halifax first time buyer review, 2012, 2013 http://www.lloydsbankinggroup.com/globalassets/documents/media/pressreleases/halifax/2014/0401_first_time_buyers.pdf,
http://www.lloydsbankinggroup.com/globalassets/documents/media/press-releases/halifax/2012/2912_first.pdf
12
NatCen Social Research | Generation Rent
Interestingly, this shift is not consistently reflected in people’s opinions of what is
putting people off applying for a mortgage. Although fears of a risky market, and the
belief that banks don’t want to lend have diminished, a higher proportion of potential
first-time buyers in 2014 than 2011 felt that perceptions of difficulty, fear of being turned
down, and the stress and anxiety of mortgage applications put first-time buyers off
applying for a mortgage a great deal or a fair amount (Figure 2.2).
Figure 2.2 – Perceived deterrents to applying for a mortgage for first-time
buyers.
Base: Non-homeowners aged 20-45 who would like to buy a home
2.1.3 Affordability of housing
Although the 2014 data show a very slight perceived easing of ‘up-front’ barriers for
first-time buyers of deposits/mortgage applications, there seems to have been a
corresponding increase in the barrier of longer-term ‘affordability’.
This concern comes from two sides – lower income (i.e. people’s ability to afford a
home), and higher prices/mortgage payments (i.e. the affordability of housing):

The proportion of potential first-time buyers that view high property prices as one of
three most significant barriers to home ownership has increased from 48% in 2013
to 53% in 2014.

The proportion of potential first-time buyers who see low income as one of three
most significant barriers to home ownership increased from 45% in 2013 to 50% in
2014.
NatCen Social Research | Generation Rent
13
That these have increased, while concern about getting a mortgage/deposit sizes
(which are themselves related to house prices) have declined, suggests that potential
first-time buyers are becoming more concerned about the affordability of housing in the
longer-run rather than just the ‘up-front’ hurdles.
This shifting emphasis may also reflect broader changes in the market and the
economy. As the housing market begins to recover, prices are starting to rise: the
average house price for first-time buyers increased from £139,921 in 2012 to £156,701
in 20139. Alongside this, while wages have/are expected to have increased in
2012/2013, they did so below the rate of inflation meaning real disposable income
actually fell for many10.
2.2 Possible impacts on the UK’s homeownership
profile
To see how these changes may affect the UK’s homeownership profile, it is worth
looking at the impact they may have on the ‘impeded first-time buyers’ in ‘Generation
Rent’ who would like to buy a home but are unable, in comparison with ‘likely first-time
buyers’ who have a plan to buy in the next five years.
There are some differences and some similarities between these two ‘would like to buy’
groups. Both are most likely to view ‘the size of the deposit required’ as one of the top
three barriers to homeownership (Table 2.2), and a reduction in this barrier would help
both groups. With slightly more ‘impeded first-time buyers’ identifying it as a key barrier
to homeownership, improvements in this area may be more likely to help them.
However, while it has the potential to help more ‘impeded first-time buyers’, it may
actually mostly be helpful to those who are already on cusp of finding deposits
affordable. How this shift affects the two groups depends on how short of being
considered affordable already deposit sizes are, and for whom.
Both groups are equally likely to identify ‘not feeling able to apply for a mortgage...’ as
a barrier to homeownership (Table 2.2), and continued improvements in the
accessibility of mortgages is likely to benefit both groups. However, with 31% of
‘impeded first-time buyers’ viewing it as ‘virtually impossible’ for first-time buyers to
obtain a mortgage, compared with just 6% of those with a plan to buy in the next 5
years, a higher proportion may benefit from perceptions of a softening of the mortgage
application process. However, as with deposits, it may be that although there is the
potential to help more people in ‘Generation Rent’ by lowering barriers of the mortgage
application process, it may only be by enough to help those who were close to being
able to apply anyway.
Although both deposit sizes and mortgage accessibility are important barriers, the
biggest difference between the two ‘would like to buy’ groups is in affordability.
Although those who plan to buy in the next five years are slightly more likely to view
property prices as a barrier (55% vs. 52%), those who are unable to buy are far more
likely to identify low income as one of the top three barriers to homeownership (60% vs.
39%) (Table 2.2); unsurprising given their household income is, on average, around
£10,000 lower. This suggests that if issues of ‘affordability’ continue to worsen, then
those in ‘Generation Rent’ may be more vulnerable to being permanently priced out of
the market. However, it also means that there is scope for more ‘likely first-time buyers’
9
Halifax first time buyer review, 2012, 2013 http://www.lloydsbankinggroup.com/globalassets/documents/media/pressreleases/halifax/2014/0401_first_time_buyers.pdf,
http://www.lloydsbankinggroup.com/globalassets/documents/media/press-releases/halifax/2012/2912_first.pdf
10
Economic and fiscal outlook, Office for Budget Responsibility, March 2014
http://cdn.budgetresponsibility.org.uk/37839-OBR-Cm-8820-accessible-web-v2.pdf (Table 3.6)
14
NatCen Social Research | Generation Rent
to be impacted by issues of affordability, and perhaps have homeownership moved out
of reach.
Low income is also especially important because it can have the knock-on effect of
building up other barriers. For example, when considering deposits, 82% of those who
are unable to buy a home said they want to save for a deposit but don’t have any spare
cash to do so; even if deposit sizes fall, this will not benefit those who are prevented
from saving due to low incomes. Likewise with mortgages, even as market conditions
improve, if individuals have low incomes it is less likely that banks will lend to them,
and any benefits of softening attitudes in this area may not reach them.
Table 2.2 – Top three perceived barriers to homeownership among potential
first-time buyers
Which three of the following do you think are the most
significant barriers preventing people who would like to buy
their first home from doing so?
Likely firsttime buyers
Impeded
first-time
buyers
The size of the deposit required
59%
65%
High property prices
55%
52%
Stamp duty
7%
3%
Low income
39%
60%
Lack of job security
27%
26%
Other debts
14%
16%
Extra fees (such as solicitors' fees or mortgage arrangement
fees)
17%
14%
Finding the right property
14%
6%
Not feeling able to apply for a mortgage because they believe
most applications are rejected in today's economic climate
16%
16%
8%
5%
Lenders having unrealistically high expectations of people's
credit histories
20%
23%
Higher repayments from mortgages that have been secured
with relatively small deposits
24%
16%
Unweighted base
1509
1632
Not knowing how to go about applying for a mortgage
Base: Non-homeowners aged 20-45 who would like to buy a home.
When asked what the biggest reasons are preventing them, personally, from buying a
home, there is again a large gap between ‘likely first-time buyers’ and ‘impeded firsttime buyers’ in citing income being a barrier (35% vs. 60% saying they don’t earn
enough money). As choice was not limited to the three most important in this question,
almost all of the answer options were more likely to be selected by ‘impeded first-time
buyers’ who picked, on average, three reasons preventing them from buying a property
compared with ‘likely first-time buyers’ who, on average, picked only two.
NatCen Social Research | Generation Rent
15
Summary
A continued perceived lowering of the ‘up-front’ barriers of deposit sizes or difficulty in
getting a mortgage will help move those who want to buy a home out of ‘Generation
Rent’ and into the pool of likely homeowners. However, as ‘impeded first-time buyers’
tended to have fewer existing savings for a deposit, and to identify multiple barriers to
homeownership (in particular low income), for many of these individuals this softening
of the market may prove to be necessary but not sufficient to move them out of
‘Generation Rent’. These barriers may need to be lowered further for this group than
those on the cusp of purchasing, and even if they were removed, many may still be
hindered by other barriers that may remain.
These changes to the housing market will therefore help move the homeownership
profile towards ‘Scenario A’ identified in the previous section by enabling some to move
out of ‘Generation Rent’. However, it is more likely to move those already likely to be
homeowners into homeownership, and it may not be sufficient for those in ‘Generation
Rent’ who perceive other barriers, in particular affordability.
Looking ahead, even the possible benefits for ‘likely first-time buyers’ may be shortlived as any softening barriers are counteracted by increasing house prices applying
upward pressure on both deposits and mortgages. However, recent projections of a
recovering economy also provide some cause for optimism. Wage rises are forecast to
out-strip inflation for the first time in several years11, and if this shift is felt by those in
‘Generation Rent’ it may diminish the impact of the ‘low income’ barrier, and push the
profile of 20-45-year-olds towards one of homeownership.
11
Economic and fiscal outlook, Office for Budget Responsibility, March 2014
http://cdn.budgetresponsibility.org.uk/37839-OBR-Cm-8820-accessible-web-v2.pdf (Table 3.6)
16
NatCen Social Research | Generation Rent
3
Overcoming barriers to homeownership
In order to overcome some of the barriers outlined in the previous chapter, many 2045-year-olds need help from external sources to help bridge the gap to
homeownership.
3.1 Parental assistance
Relying on parents or other family members and friends for support when getting on
the property ladder has become a well-covered phenomenon, with young people
relying on ‘the bank of mum and dad’ for help with a deposit, or the ‘Boomerang
Generation’ returning home to save money. Shelter estimates that parents contribute
around £2 billion a year to their children’s deposits on their first home12.
Our survey data show that only 37% of 20-45-year-old homeowners did not receive any
help from their parents when purchasing their home, and six in ten 20-45-year-olds
agree that ‘parents are now expected to help young people buy their first home’.
This is a marked generational shift; while both 20-45 yearold homeowners and their parents cut back and made
sacrifices in roughly equal measure (Figure 2.1, page 11),
this generation of homeowners is far more likely than the
preceding one to have lived with their parents for longer
(31% vs. 15%) or borrowed money from their friends/family
(23% vs. 9%) in order to pull together a deposit.
60% of 20-45-year-olds
agree that parents are
now expected to help
young people buy their
first home
57% of parents of 20-45-year-olds that we surveyed had
already done, or would expect to do, something to help their children onto the property
ladder. For the third (32%) who had already done something to help their children, this
assistance does not necessarily come without cost. While 22% did not have to do
anything to help fund assisting their child onto the property ladder, many did, including
11% who took money out of their own retirement fund, 5% who took out equity on their
own property, and 4% who took out a loan (Figure 3.1).
12
http://www.natcen.ac.uk/media/138184/natcen-support-for-first-time-buyers-report-final.pdf
NatCen Social Research | Generation Rent
17
Figure 3.1 – Funding parental assistance for first-time buyers
Base: Parents who had done something to help their child onto the property ladder (320)
These kinds of sacrifices can have real impact on parents’ futures, and a third (34%) of
those surveyed that had helped their children and had to do something to help fund
doing so are concerned or very concerned that it may affect their financial future in later
life/retirement. It can also have shorter-term impacts; a Scottish Widows report13 found
that 17% of parents and grandparents said they had to cut back on day-to-day living
costs due to family lending.
3.2 Government assistance
Since the last piece of research conducted in early 2013, the government has
introduced the ‘Help to Buy’ initiative to try to help first-time buyers onto the property
ladder either through equity loans or mortgage guarantees. 17,395 homes were bought
under the scheme in its first nine months, 88% of whom were for first-time buyers14.
When asked, approximately 3 in 10 20-45-year-olds thought that government initiatives
were working, but the same amount felt that it wasn’t, and more (4 in 10) didn’t know.
However, looking beyond direct questioning, decreasing concern about the size of
deposits or not being given a mortgage as barriers to homeownership (as outlined in
the previous chapter) are the positive effects we would expect to see from these
schemes:

Between 2013 & 2014 the proportion of non-homeowners (that want to buy) who
felt that the size of required deposits are too high fell from 48% to 43%

Between 2013 & 2014 the proportion of the same group they wouldn’t be given a
mortgage fell from 26% to 23%
13
14
http://reference.scottishwidows.co.uk/docs/2014-03-SavingsReport.pdf
https://www.gov.uk/government/news/pm-hails-help-to-buy-success
18
NatCen Social Research | Generation Rent
3.3 Possible impacts on the UK’s homeownership
profile
3.3.1 Parental assistance
Support from parents (or other family members) will only have a positive impact on
individuals’ ability to purchase a home and, as we have seen earlier, is a key step on
the path to homeownership for 20-45-year-olds, with 63% of 20-45-year-old
homeowners receiving some kind of support from their parents.
While approximately equal proportions of the two ‘would like to buy’ groups agreed that
parents are now expected to help young people buy their first home (61% and 58%),
50% of ‘likely first-time buyers’ expect to receive some kind of assistance if they buy
their first home, compared with just 27% of ‘impeded first-time buyers’.
It is difficult to separate out the direction of causality to interpret these figures. On the
one hand, it could be argued that those who have a plan to buy in the next five years
are in that position because they are more likely to receive parental support, in which
case if this continues to increase, it may well lift more individuals out of ‘Generation
Rent’. On the other hand, it could also be argued that those that are more likely to be in
a position to buy a home are also those who are more likely to receive parental
support. If this is the case, then continued assistance from parents is more likely to
help those already outside of ‘Generation Rent’ into homeownership, rather than those
who are currently unable to buy a home.
3.3.2 Government assistance
When looking at the impact of government assistance and ‘Help to Buy’, there are
again differences between ‘likely first-time buyers’ and ‘impeded first-time buyers’.
Research conducted by CML in 2013 suggested that ‘the benefit [of more low-deposit
mortgages] is more apparent to those who were nearest to buying in any event’, and
predicted that ‘no single policy action [...] is likely to remove all the obstacles identified
as blocking those who wish to buy a home’15.
This prediction is somewhat supported by our data; as discussed in the previous
chapter, even though it is a positive impact for all, the lowering of deposit sizes &
difficulty in getting a mortgage as barriers to homeownership (which ‘Help to by’
targets) may be more likely to help those already likely to buy a home move into
homeownership than it is those who feel unable to buy a home as they will continue to
face other barriers.
This is reflected by the attitudes towards government initiatives, with 36% of ‘likely firsttime buyers’ agreeing that government initiatives such as ‘Help to Buy’ are working
compared to just 17% of those who would like to buy, but are unable.
Critics of the ‘Help to Buy’ scheme also suggest that although it is likely to have a
positive impact on homeownership in the short-term it may have the opposite effect
further down the line16. If the demand for homes stimulated by ‘Help to Buy’ is not
matched by increases in supply, then it is likely that house prices will rise, increasing
barriers of ‘affordability’ for those who subsequently wish to get on the property ladder a more important barrier for those in ‘Generation Rent’.
15
16
http://www.cml.org.uk/cml/publications/newsandviews/134/508
http://england.shelter.org.uk/__data/assets/pdf_file/0004/721255/At_any_cost_final_int_FINAL.pdf
NatCen Social Research | Generation Rent
19
If ‘Help to Buy’ does create inflationary pressures, then its time-delayed nature (helping
those already in a position to buy a home at the cost of higher prices for those who are
not) could in fact hasten the move towards lower levels of homeownership in the UK as
those currently in ‘Generation Rent’ or in future groups face higher affordability barriers.
However, if the market reacts to a recovering economy and active housing market by
building more homes, then the opposite may happen with house prices remaining
stable and lower up-front barriers to homeownership making it easier for individuals to
get out of ‘Generation Rent’.
20
NatCen Social Research | Generation Rent
4
Attitudes to homeownership and renting
Although much of how the homeownership profile of the UK will change depends on
lowering the barriers to entry or providing support for people to move out of ‘Generation
Rent’, this will have little impact if the population doesn’t want to own their own home.
Overall, the majority of 20-45-year-olds (85%) would like to own their home, although
the 15% that wouldn’t is a significant minority. This preference for homeownership has
remained relatively stable over the past few years – 57% of 20-45-year-olds agree that
Britain should remain a nation of homeowners (from 58% in 2013), and 79% agree that
owning your own home is a good financial investment for the future (81% in 2013).
However, even if renting is still not a preference for most, there is evidence that
attitudes towards renting as a lifestyle option have softened, with fewer agreeing that
renting might mean you cannot retire or fully settle in an area, or that it is not as good
for raising children (Figure 4.1).
Figure 4.1 – Attitudes towards renting
Base: Non-homeowners: 2013 (4332); 2014 (4244).
NatCen Social Research | Generation Rent
21
4.1 Possible impacts on the UK’s homeownership
profile
Despite softening attitudes towards renting, the continued view of homeownership as
desirable suggests that, given the opportunity, most non-homeowners would prefer to
move out of ‘Generation Rent’.
This is supported when looking at the attitudes to homeownership and renting of the
‘impeded first-time buyers’ (those who would like to buy a home but are unable to).
Although slightly less positive towards homeownership than the ‘likely first-time buyers’,
and with slightly softer attitudes towards renting, they tend to lean towards
homeownership:

52% agree Britain should remain a nation of homeowners

57% agree renting is a waste of money

61% agree buying a home is one of the ways that people take a stake in society

81% agree owning your own home is a good financial investment for the future
However, although this section of non-homeowners is keen to move out of ‘Generation
Rent’, those who don’t want to buy a home hold very different attitudes towards
homeownership, with just 30% agreeing that Britain should remain a nation of
homeowners.
Over the past four waves, the proportion of those who do not want to own a home has
increased only slightly, from 13% in 2011 to 15% in 2014. However, as outlined in
Chapter 1.2, to better understand whether or not we are seeing long-term shifts we
need to track age groups across time (i.e. one age group as it gets older).
When looking at the proportion of the four age groups17 that do not want to own a home
across a different pattern emerges. Those in Group 1, whose experiences of the UK
economy would have been dominated by the recession and a time of housing market
instability, seem to have a higher proportion that do not want to purchase a home than
the groups that preceded them, which are fairly equal (Figure 4.2).
17
Group 1: Those aged 20-24 in 2011; Group 2: Those aged 25-29 in 2011; Group 3: Those aged 30-34 in 2011; Group
4: Those aged 35-39 in 2011.
22
NatCen Social Research | Generation Rent
Figure 4.2 – Proportion of age groups who do not want to own a home
Base: Group 1 - 2011: 1187; 2012:1097; 2013: 1575; 2014: 1349. Group 2 – 2011: 1484; 2012: 1548; 2013: 1440;
2014: 1585. Group 3 – 2011: 1709; 2012: 1769; 2013: 1693; 2014: 1669. Group 4 – 2011: 1756; 2012: 1773; 2013:
1712; 2014: 1726.
If this pattern were to continue, then this would suggest that the youngest people
entering the housing market are less likely to want to own a home, and are more likely
to remain in ‘Generation Rent’, irrespective of changing market conditions, leading to a
longer-term shift in the homeownership profile of the UK.
However, we do not know how this youngest group’s attitudes may change as they
continue to grow older. While the data so far looks like it will remain stable, a
recovering economy and housing market may encourage a more positive attitude
towards homeownership although, unlike the ‘impeded first-time buyers’, this group’s
attitudinal preferences means that they may not be so easily moved out of ‘Generation
Rent’ by a changing economic climate.
NatCen Social Research | Generation Rent
23
5
Social implications of a changing housing
market
5.1 Is the UK’s homeownership profile changing? (2)
Looking at how perceptions of the UK housing market have changed over the past
three to four years, it is not clear the route the market will take – will an increasing
proportion of the population be ‘stuck’ in ‘Generation Rent’ or simply not want to leave,
or will a recovering economy make homeownership a possibility again?
Certainly, the housing market itself seems to be turning a corner with numbers of firsttime buyers increasing to their highest levels since 2007. ‘Help to Buy’ and a changing
housing market have helped to lower the up-front barriers to homeownership making
homeownership easier.
However, there is some evidence to suggest that the lowering of these barriers may
have mostly aided those who were close to purchasing anyway, with those in
‘Generation Rent’ still held back by recent declines in real disposable income and other
barriers. There is also concern among critics of the ‘Help to Buy’ scheme that by
missing the benefits of ‘Help to Buy’ now, those in ‘Generation Rent’ may be locked out
of the housing market in the future if its resurgence continues to push up house prices.
How the ‘affordability’ of housing changes over the next few years may well be key to
whether or not people can move out of ‘Generation Rent’.
By looking at housing preferences by age group, data from our survey suggests that
the youngest age group, whose dominant experiences have been of a difficult
economy, are less likely than the preceding groups to want to own a home18. This
suggests that there may be an attitudinal shift towards homeownership, which may be
more difficult to reverse than an economic one.
How the housing market will change is therefore still undecided, but our data suggests
that, as it stands, it may be decided by the answers to three questions:

Will house prices continue to increase?

If, as projected, wage increases will begin to outstrip RPI in 2014, will that boost in
real income be felt by those in ‘Generation Rent’?

Can a recovering economy reverse a hardened attitude towards homeownership
among younger people?
With 36% of the population of 20-45-year-olds part of ‘Generation Rent’ and unlikely to
make it on to the property ladder (compared with their parents of whom only 22% don’t
own their own home), it is not necessarily surprising that many feel the winds of social
change:

48% agree that Britain will become a nation of renters within the next generation

46% agree that Britain is becoming more like Europe, where renting is ‘the norm’
18
This pattern was also found in CML research into homeownership in 2013:
http://www.cml.org.uk/cml/publications/newsandviews/134/508
24
NatCen Social Research | Generation Rent
5.2 Implications
This potential and perceived movement in the UK towards renting is not necessarily
viewed as a good thing (only 27% agree that Brits should lose their obsession with
home ownership), nor is it viewed as something that will affect everyone (68% of 20-45
year-olds think the country is in danger of dividing into those who can afford a house &
those that will never be able to).
Fifty-six per cent of participants agreed that the division between homeowners and
non-homeowners will create long-term social problems. In our 2011 report we identified
a number of possible implications of having an increasing proportion of people who
remain within the rental sector throughout their life which are still valid today:
5.2.1 A widening of the existing wealth gap between homeowners and
non-homeowners
Homeownership can be seen to offer a range of benefits; housing represents a large
proportion of Britain’s wealth, accounting for approximately 60% of the UK’s nonfinancial assets19 and 79% of 20-45-year-olds agree that owning your own home is a
good financial investment for the future. As a result, an increase in the proportion of
people who rent rather than owning their own homes could see a widening of an
existing wealth gap between homeowners and non-homeowners.
As the size of the private rented sector continues to increase20, analysis from the
Strategic Society Centre suggests that having a higher proportion of private renters
increases inequality as wealth is transferred from lower-income private renters to
higher income landlords21.
5.2.2 Lack of financial resources to support during retirement
Along with homeownership being viewed as a financial investment, many homeowners
view their home as a resource that they could potentially draw upon in retirement22. An
increasing rental sector would therefore mean a higher proportion of the population
would not have that resource to draw upon in their retirement.
Fifty-one per cent of non-homeowners aged 20-45 are worried that if they rent all their
lives they won’t be able to retire, and research by Friends Provident found that
pensioners who rent could face increasing levels of poverty if property prices increase
dramatically. They also found that renters will be less well off than home owners at
retirement as they will need a larger annual income to cover their rent, utility bills,
ground rent and service charges23.
19
http://www.ons.gov.uk/ons/dcp171778_323462.pdf
English Housing Survey, 2012-2013 https://www.gov.uk/government/collections/english-housing-survey#reports
21
http://www.strategicsociety.org.uk/wp-content/uploads/2013/07/Lloyd-J-2013-Whose-Home-Understanding-landlordsand-their-effect-on-public-policy.pdf
22
http://research.dwp.gov.uk/asd/asd5/rports2009-2010/rrep701.pdf
23
http://www.thisismoney.co.uk/money/pensions/article-1629809/Renting-is-costing-retirees-23bn-ayear.html#ixzz1MWcq8Gfx
20
NatCen Social Research | Generation Rent
25
5.2.3 A more transient population
An increase in the proportion of people who rent as opposed to own their homes poses
a number of challenges to society as a whole. Many of these reflect the fact that the UK
has more liberal tenancy law than other European countries. This lack of tenure
security in the UK has an impact on the mobility of renters and, in turn, can contribute
to social problems (53% of non-homeowners agree renting means they never get to
feel like they’re settled in an area).
Recent research by Reading University and the Joseph Rowntree Foundation found
the average tenancy length for a private renter was 1.7 years, compared to 12 years for
a homeowner24. An increase in the number of people renting could lead to a more
transient population, able to move geographical areas quickly and easily. Whilst this
has obvious advantages in terms of labour mobility and national economic growth (the
economist identifies the ability to move around for work as one of the reasons for
increased levels of renting25), it can also have a detrimental effect on the local area.
High levels of mobility do not encourage community cohesion, reflecting the fact that
people will not settle for sufficient time to embed themselves within, and contribute to,
their local community. High levels of mobility can also lead to void periods between
lettings which can disrupt neighbourhoods26. Landlords who fail to manage their stock
of property adequately can also contribute to neighbourhood problems.
5.2.4 A slowing down of the housing market
With current estimates of a housing shortfall and an estimated 250,000 new homes
required each year to meet demand27, the house building industry needs to continue to
supply new developments, in particular if house price inflation is to be contained within
reasonable levels. Changes in the proportion of people who rent, and the length of time
they rent for, are likely to affect the number and nature of new build properties, and
may lead to fewer homes being built than is necessary. As first-time buyers are
regarded as crucial to the housing market and house building industry to keep the
market moving, any decrease in the number of first-time buyers will have an impact on
the funding of new builds. It will also be important that, when planning any new
developments, the likelihood of some of it being privately rented is considered, to
ensure the stock is of high quality and well managed.
Any decrease in the numbers of first-time buyers will have an overall impact on the
future housing market. First-time buyers are viewed as the life blood of the housing
market and are key to getting the market moving. In order for the market to remain
sustainable, homeowners need to be able to move up the property ladder. Without a
first-time buyer, many people living in their first home will be unable to move up the
property ladder and, without this movement, the market will come to a standstill.
24
www.hcr.co.uk/?page=BlogandNews&article=133
http://www.economist.com/blogs/blighty/2014/03/home-ownership?fsrc=scn/tw/te/bl/ourhouse
26
http://www.smith-institute.org.uk/file/TheFutureofThePrivateRentedSector.pdf
27
http://england.shelter.org.uk/__data/assets/pdf_file/0011/689447/Solutions_for_the_housing_shortage_-_FINAL.pdf
25
26
NatCen Social Research | Generation Rent
5.3 The uneven impact of changes to the housing
market
5.3.1 The uneven distribution of non-homeownership
The division between homeowners or those likely to get on to the property ladder and
‘Generation Rent’ is already not an even one. The former group are more likely to
come from ‘higher’ social grades, with a mean income approximately £15,000 higher
than their counterparts in ‘Generation Rent’.
If we look at how the housing market has started to change, is not only the existing
division between homeownership and non-homeownership which is uneven, but also
who its changes have impacted on:
The uneven impact of parental assistance
Given the financial burden that this kind of assistance can be, it is perhaps unsurprising
that parents who have, or expect to, lend financial assistance to their offspring have a
distinct socio-economic profile to those that haven’t and don’t expect to.
Parents who have/expect to provide some form of financial support are far more likely
to come from a ‘higher’ social grade (Figure 5.1). They are also more likely to be
financially secure, with an average of £35,781 in savings compared with £19,736 for
those who have not/do not expect to financially support their children.
Figure 5.1 – Social grade profile of parents by whether or not they have/expect
to provide financial support for their children
Base: Parents of 20-45-year-olds. Have/expect to provide financial support (430); Have not/do not expect to provide
financial support (574)
NatCen Social Research | Generation Rent
27
We know from Figure 2.1 that parental support in putting together a deposit is one of
the key factors separating homeowners from non-homeowners who would like to buy a
home. Through financial support from their parents, 20-45-year-olds from ‘higher’ social
grade backgrounds are therefore more sheltered from any reduction in homeownership
in their generation.
It is worth noting, however, that when it comes to providing non-financial support, there
is little difference in terms of social grade between those parents who have let their
children move back home as a result of them not being able to afford their own
property and those that haven’t. This kind of parental support therefore seems to help
20-45-year-olds from all social grade backgrounds (Figure 5.2).
Figure 5.2– Social grade profile of parents by whether or not their child moved
back home as they could not afford to buy their own property
Base: Parents of 20-45-year-olds. Child has moved back home (253); Child has not moved back home (751)
28
NatCen Social Research | Generation Rent
The uneven impact of government assistance
The 2013 government ‘Help to Buy’ scheme aims to assist first-time buyers onto the
property ladder by lowering the initial financial barriers of large deposits and difficulty in
getting a mortgage by providing mortgage guarantees or an equity loan of up to 20% of
the value of the property.
Looking at our survey data from 2013 (before the scheme was put in place), the size of
required deposits was the largest barrier preventing those in social grades AB from
purchasing a property. However, this is not the case for all social grades – those is
social grades DE are more likely to view income as one of the biggest reasons
preventing them from buying a property. Indeed, it is the only barrier other than not
being able to find the right property or being self-employed more likely to be selected
by those in social grade AB than DE (Table 5.1).
Table 5.1 - Biggest reasons preventing you from buying a property at the
moment by social grade
What are the biggest reasons preventing you from
buying a property at the moment?
AB
C1
C2
DE
I can't afford the mortgage payments
17%
20%
21%
30%
The size of the required deposits are too high
51%
45%
51%
45%
Property is too expensive in my area
33%
26%
26%
20%
8%
9%
6%
7%
I don't earn enough money
34%
41%
44%
58%
Lack of job security
16%
18%
19%
20%
7%
7%
8%
4%
18%
18%
20%
22%
7%
7%
7%
7%
Extra fees (such as solicitors' fees or mortgage
arrangement fees)
17%
17%
20%
19%
Don't think I'd be given a mortgage
23%
22%
25%
33%
I have too much existing debt
20%
17%
21%
22%
I don't think I could find the right property
8%
5%
5%
4%
Other
5%
14%
5%
6%
Unweighted base
910
1037
473
696
Stamp duty
I'm self-employed
It is too hard to get approval for a mortgage
I don't know how to go about applying for a mortgage
Base: Non-homeowners who would like to own a home (2013 data).
NatCen Social Research | Generation Rent
29
A scheme which focuses on lowering deposits could therefore be seen as
disproportionately assisting those from higher social grades onto the housing ladder as
it targets a barrier that they are relatively more affected by, while those with lower
incomes are still blocked by other issues such as income, mortgage payments, and job
security. However, it should be noted that any scheme would be more likely to assist
those in higher social grades, as they are more likely to be closer to purchasing.
This potentially uneven impact of the ‘Help to Buy’ scheme is reflected by perceptions
of the government initiatives. Those in lower social grades are less likely to agree that
government initiatives such as ‘Help to Buy’ are working (Figure 5.3).
Figure 5.3– Perceptions of government initiatives by social grade
Base: Non-homeowners that would like to own a home. AB (929); C1 (952); C2 (473); DE (784)
30
NatCen Social Research | Generation Rent
Appendix A: Homeownership profiles of Groups 1-4.
In order to better understand whether or not we are seeing a long-term shift in levels of
homeownership in the UK, we used the four Halifax surveys to perform a form of
‘cohort analysis’ (tracking a particular age group as it gets older) to see how the
proportion of an age group in ‘Generation Rent’ compares to the proportion of an older
age group when it was the same age.
Four age groups were selected within the 2011 data (those aged 20-24, 25-29, 30-34,
and 35-39) and their homeownership profiles measured. The equivalent age groups
were then selected one year later using the 2012 data (those aged 21-25, 26-30, 3135, and 36-40), and then again in the 2013 and 2014 data. By taking the same
measurements of the equivalent age group as it gets older, we can therefore see
whether or not that age group is moving in/out of ‘Generation Rent’, or if that proportion
is remaining stable, and also whether or not that age group has a higher, lower or the
same proportion in ‘Generation Rent’ than those that preceded it when they were the
same age.
Appendix Table A.1 – Homeownership profile of Group 1.
2011
2012
2013
2014
20-24
21-25
22-26
23-27
Homeowners
16%
19%
17%
27%
Likely first-time buyers
38%
32%
33%
32%
Impeded first-time buyers
24%
28%
22%
24%
Don't want to own
22%
21%
28%
18%
Unweighted base
1187
1097
1575
1349
Age
Base: 25-29-year-olds (2011); 26-30-year-olds (2012); 27-31-year-olds (2013); 28-32-year-olds (2014).
Appendix Table A.2– Homeownership profile of Group 2.
Age
2011
2012
2013
2014
25-29
26-30
27-31
28-32
Homeowners
31%
33%
37%
41%
Likely first-time buyers
31%
28%
25%
23%
Impeded first-time buyers
26%
28%
25%
23%
Don't want to own
12%
11%
13%
13%
Unweighted base
1484
1548
1440
1585
Base: 25-29-year-olds (2011); 26-30-year-olds (2012); 27-31-year-olds (2013); 28-32-year-olds (2014).
NatCen Social Research | Generation Rent
31
Appendix Table A.3– Homeownership profile of Group 3.
2011
2012
2013
2014
30-34
31-35
32-36
33-37
Homeowners
47%
47%
50%
51%
Likely first-time buyers
19%
20%
15%
17%
Impeded first-time buyers
25%
22%
23%
20%
Don't want to own
10%
10%
12%
13%
Unweighted base
1709
1769
1693
1669
Age
Base: 25-29-year-olds (2011); 26-30-year-olds (2012); 27-31-year-olds (2013); 28-32-year-olds (2014).
Appendix Table A.4 – Homeownership profile of Group 4.
2011
2012
2013
2014
35-39
36-40
37-41
38-42
Homeowners
62%
57%
58%
57%
Likely first-time buyers
11%
11%
9%
11%
Impeded first-time buyers
18%
18%
19%
19%
Don't want to own
9%
14%
14%
13%
Unweighted base
1756
1773
1712
1726
Age
Base: 25-29-year-olds (2011); 26-30-year-olds (2012); 27-31-year-olds (2013); 28-32-year-olds (2014).
32
NatCen Social Research | Generation Rent
Appendix B: Changes in perceived barriers to
homeownership
Appendix Table B.1 – Top three barriers to homeownership, across time
Which three of the following do you think are the most significant
barriers preventing people who would like to buy their first home
from doing so?
The size of the deposit required
2011
2012
2013
2014
65%
64%
64%
62%
51%
50%
48%
53%
Stamp duty
3%
4%
8%
5%
Low income
45%
46%
45%
50%
Lack of job security
29%
29%
27%
27%
Other debts
16%
16%
12%
15%
Extra fees (such as solicitors' fees or mortgage arrangement fees)
12%
13%
15%
16%
Finding the right property
Not feeling able to apply for a mortgage because they believe
most applications are rejected in today's economic climate
Not knowing how to go about applying for a mortgage
Lenders having unrealistically high expectations of people's credit
histories
Higher repayments from mortgages that have been secured with
relatively small deposits
Unweighted base
11%
8%
12%
10%
20%
20%
18%
16%
6%
7%
6%
7%
22%
24%
26%
21%
20%
19%
18%
20%
3173
3155
3116
3141
High property prices
Base: Non-homeowners aged 20-45 who would like to buy a home.
Appendix Table B.2- Biggest reasons preventing you from buying a
property at the moment
What are the biggest reasons preventing you from buying a
property at the moment?
2013
2014
I can't afford the mortgage payments
22%
24%
The size of the required deposits are too high
48%
43%
Property is too expensive in my area
26%
28%
7%
6%
I don't earn enough money
45%
48%
Lack of job security
19%
18%
6%
5%
19%
18%
7%
7%
Extra fees (such as solicitors' fees or mortgage arrangement fees)
18%
16%
Don't think I'd be given a mortgage
26%
23%
I have too much existing debt
20%
18%
I don't think I could find the right property
5%
7%
Other
8%
6%
3116
3141
Stamp duty
I'm self-employed
It is too hard to get approval for a mortgage
I don't know how to go about applying for a mortgage
Unweighted base
Base: Non-homeowners aged 20-45 who would like to buy a home.
NatCen Social Research | Generation Rent
33