A report by affordable housing provider SO Resi found that interest in schemes such as shared ownership jumped by as much as 50 per cent once it was explained to 18-30 year olds.
The research, which looked into the status of shared ownership in England, revealed the housing aspirations of the next generation of homebuyers, and highlighted a need for greater education on housing options for young people.
Some 70 per cent of those surveyed said they would prefer to own their own home, but despite this significant interest, two-thirds said they knew nothing about the process of buying a house.
SO Resi warned more needs to be done to educate young people around housing options as half relied on advice from their parents to get on the housing ladder.
“For an older generation, buying a house meant paying a deposit and securing a mortgage,” SO Resi director of residential investment, Kush Rawal said.
“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.”
Problems with renting
Of those surveyed, only 16 per cent owned their own homes with the majority renting.
Despite being seen as a necessity by the majority, there were several frustrations with renting, with the most common being the perception that renting is ‘dead money’.
Respondents also expressed frustration over not being able to personalise the accommodation by decorating and a dissatisfaction with the speed at which landlords deal with repairs.
Concerns were also evident among the older cohort about the security of renting if a landlord changes their mind.
In general, renting was seen as a temporary situation, with owning a home viewed as the ultimate goal.
The renters reform bill, announced earlier this summer plans to tackle some of these issues by offering greater protection to renters but it has been met with scepticism by some in the industry over concerns that it will ‘shrink’ the buy-to-let market and drive landlords out.
Different pathways to ownership
Meanwhile, affordability was seen as the biggest barrier to homeownership and was cited by 61 per cent of 18-24-year-olds and 53 per cent of 25-30-year-olds as the main reason for not buying.
Those surveyed were asked about their attitudes towards shared ownership, a tenure seen as more affordable because it allows the purchase of a leasehold property for a lower deposit with a rent paid on the remainder.
But SO Resi said there was a “worrying lack of awareness of the product”.
Only 18 per cent of 18-24s and 32 per cent of 25-30s were aware of shared ownership as an option and just 19 per cent said they would consider it.
However, once the tenure was explained, SO Resi said interest jumped to 47 per cent for the younger cohort and 42 per cent for the older.
The report from SO Resi, followed a paper from the Centre for Social Justice, ‘On the Money – A Roadmap for Lifelong Financial Learning’ which highlighted that 14mn adults experiencing financial problems say it is downto low money management skills, with only one in three children currently receiving any form of financial education in primary school.
The Centre for Social Justice’s head of housing and communities, Dr Samuel Bruce said he welcomed the report from SO Resi as it addressed both the issue of low homeownership rates for young adults and the need for more financial education across the board.
Bruce said: “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 research 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."
SO Resi’s Rawal added: “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.”
jane.matthews@ft.com
