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Councils warn of 'generational shift' in homeownership

Councils warn of 'generational shift' in homeownership

Analysis for the Local Government Association has revealed a “generational shift” in which only 20 per cent of 25-year-olds are on the housing ladder.

This compares with 20 years ago when almost half – 46 per cent – of 25-year-olds owned their home.

The LGA has called for affordable and social rents to allow people to save for a deposit.

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On average, after deducting state financial support, private renters now pay 51.5 per cent of their total household income on rent while this is 41.7 per cent for social renters.

In comparison, homeowners pay an average of 18 per cent of their total household income on their mortgage.

Councillor Martin Tett, LGA housing spokesman, said: “Our figures show just how wide the generational home ownership gap is in this country.

“A shortage of houses is a top concern for people as homes are too often unavailable, unaffordable and not appropriate for the different needs in our communities.

“The housing crisis is complex and is forcing difficult choices on families, distorting places, and hampering growth.

“But there is a huge opportunity, as investment in building the right homes in the right places has massive wider benefits for people and places.”

Analysis for the LGA by estate agents Savills showed 6,550 social rented homes were built in 2015/16.

This was a drop of 88 per cent from 20 years ago when 56,950 were built in 1995/96.

Average house prices are now at 7.9 times average earnings. The average size of a deposit needed to get a mortgage is 62 per cent of annual incomes, in London it is 131 per cent.

Alongside building more social rented homes to boost home ownership, and a renewed effort to increase the incomes of those in need of affordable homes, council leaders say there is also an urgent need to better provide housing for older people.

Cllr Tett said: “There is no silver bullet and everyone must come together to meet the diverse housing needs in our villages, towns and cities.

“The Government's Housing White Paper is an opportunity to boost housing supply and affordability.

“It must recognise that a renaissance in housebuilding by councils will be crucial to helping ensure the mix of homes to rent and buy that are affordable for those people that need them.”