Affordable housing provider SO Resi, part of Metropolitan Thames Valley Housing (MTVH), one of the UK’s largest housing associations, has unveiled its second annual report into the status of shared ownership in England.
The report reveals the housing aspirations of the next generation of homebuyers, and a crucial need for greater education on housing options for young people.
From the 2,000 18–30-year-olds who were surveyed by phone across the UK, 70% of respondents said they would prefer to own their own home – yet despite significant interest, two-thirds said they knew nothing about the process of buying. Furthermore, less than a fifth of young people today are even aware of affordable housing options such as shared ownership. Once explained, interest in using such schemes jumped to as much 50%. Of those surveyed, one in two said they relied on advice from their parents to get on the housing ladder.
Kush Rawal, Director of Residential Investment at SO Resi, comments: “What this research has uncovered is that young people are heavily relying on their parents or grandparents for information about homeownership. For an older generation, buying a house meant paying a deposit and securing a mortgage. The problem with this is that it fails to give confidence to young people who can’t afford a mortgage in the traditional sense.
“They are not aware of schemes such as shared ownership which have been designed for a new generation of priced-out buyers. The housing market has changed beyond recognition in the last 40 years and young people need to be able to access reliable information about all tenures of homeownership.”
The in-depth research is designed to undercover attitudes towards homeownership annually and understand the housing ambitions of young people. Important details about attitudes towards housing, and aspirations of young people, were unveiled including:
- More than half of those questioned were living in rented accommodation, with only 16% currently owning their own home.
- Renting was seen as a necessity, with 60% saying it was all they could afford, whilst 47% of 25–30-year-olds felt they had no choice but to rent as they couldn’t get a mortgage due to either not earning enough or having an insufficient credit rating.
- 70% of respondents said they would prefer to own their own home – yet despite significant interest, two-thirds said they knew nothing about the process of buying a home.
- Affordability is seen as the biggest barrier to homeownership and was cited by 61% of 18-24-year-olds and 53% of 25-30-year-olds as the main reason for not buying.
- Homeownership was second on the list of priorities for young people after getting a good job.
Despite being seen as a necessity by the majority, the research revealed that there were several frustrations with renting. The most common was the perception that renting is ‘dead money’ followed by a frustration of not being able to personalise the accommodation by decorating, for example. There was further dissatisfaction with the speed at which landlords deal with repairs and concerns amongst the older cohort about the security of renting if a landlord changes their mind. Renting was generally seen as a temporary situation, with owning a home viewed as the ultimate goal.
Those surveyed were asked specifically on their attitudes towards shared ownership, a tenure that helps address the affordability barrier to homeownership by allowing the purchase of a leasehold property for a lower deposit with a rent paid on the remainder. Despite the tenure helping to tackle the issue of affordability head on, there was a worrying lack of awareness of the product, with only 18% of 18-24s and 32% of 25-30s aware of shared ownership as an option – and just 19% considering it. However, once the tenure was explained, interest jumped to 47% for the younger cohort and 42% for the older, with the ability to pay a lower deposit making this form of buying most attractive.
This report is not alone in its warning regarding concerns over a lack of education of the housing industry and follows a series of investigations more broadly looking at money management. The Centre for Social Justice’s recent paper, ‘On the Money – A Roadmap for Lifelong Financial Learning’ revealed that 14 million adults experiencing financial problems attribute this to low money management skills, with only one in three children currently receiving any form of financial education in primary school.
Looking at both reports together, Dr Samuel Bruce, Head of Housing & Communities, at the Centre for Social Justice, comments: “We found in our research that two thirds of 18–34-year-olds believe their personal situation would improve with more financial education. High prices relative to incomes mean far fewer young people are homeowners compared to a generation ago. SO Resi’s welcome research addresses both issues. It shows that developing affordable housing options is only part of the solution; we must also raise awareness and enable understanding of the different routes to homeownership that are available in today’s market.”
Kush Rawal adds: “Our research shows a severe lack of education around housing options for young people, and as an industry we must take action now to ensure that we take a proactive approach to delivering education on the subject of homeownership, whatever their future housing tenure may be. If we don’t, a whole generation may miss out.”