The private rented sector will increase significantly in proportion to owner occupier in the next few years, an industry panel predicted at the Paragon Great Buy to Let Market Debate yesterday.
Currently the homeownership rate stands at around 63% and the private rented sector 19%, up from 14% 10 years ago.
But Professor David Miles of Imperial College London expected the owner occupied sector to fall to 50%.
Meanwhile David Cox, managing director of the Association of Residential Letting Agents, reckoned the high levels of homeownership in the late 20th Century may prove to be a “blip in history”.
Miles said: “The owner occupation rate will fall quite substantially over the next few years. We may be heading for 50/50.
“If that’s where we get to that in itself is not a problem.”
Cox said: “We have got a generation of people coming out of university that will never be able to afford to buy, but if we look back a century that’s exactly the situation we had then.
“If you go back to the 1910s 90% of the British population were private renters. It was almost a blip in history in the latter parts of the 20th century which saw high levels of homeownership.
“We will start to see a higher percentage of private renters in owner occupation and I expect that in the next few years private renting will hit 25% and then 35% as we go into the next decade.”
Jeff Prestridge, personal finance editor of the Mail on Sunday, agreed that government tinkering in the form of the Help to Buy ISA and Lifetime ISA won’t alter the way the market is moving – away from owner occupiers.
He said: “The fact is it is impossible for most people unless they’ve got fantastic mums and dads to buy in their 20s and 30s.
“They have got other issues to deal with such as university debt.
“That is irrespective of whatever government measures are thrown out of Number 10 like the Lifetime ISA starting in April.
“You’ve already got Help to Buy ISA. I think their impact is going to be pretty marginal.
“As a society we have to accept that the rental sector is here to stay and is going to play an increasingly important part in the housing market.
“In the next five years homeownership will drop to around 60%.”
