PricedOut > Blog - A discrepancy at the heart of government home owner statistics?

Location: Blogs The Simple Sums Blog
Posted by: SimpleSums	7/19/2006 2:48 AM
Homeownership is at 71% proclaims the government. Owner occupation continues to rise steadily according to DCLG statistics. Sounds good doesn't it... but is it too good to be true? The Council of Mortgage lenders announced that in 2005 there were over 700,000 outstanding loans to Buy To Let landlords up from 73,000 in 1999. Simply staggering. Now consider this the DCLG report that 1,115,000 new homes were completed in the same 6 year period. Using the power of simple arithmetic it is hard to reconcile the government's claim. If all the newly built homes during that period were bought by Buy To Let investors that's still 56% of the new additions going to the rental sector so how can the rate of owner occupation have increased? Yet this is working from CML mortgage data alone, this does not cover the number of properties transferred into the rental sector that were cash purchases or former owner occupied properties now being rented without informing the mortgage company. The scale of this is hard to measure but must be significant. Let's not forget also the rise in second homes and foreign ownership either. So where does this discrepancy stem from. The answer is that the owner occupier figures the government use are based on Census data, so the intervening periods are estimates. Given that the last Census was conducted in 2001, back before Buy To Let started sucking in almost 250,000 properties every year, this leaves one uncomfortable lingering question. Is the owner occupier rate falling significantly and under the radar screens of the government, the media and the British public? Our simple sums would indicate so.

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Re: A discrepancy at the heart of government home owner statistics?	By bobo on 7/19/2006 4:58 AM
i've sold my property to a landlord 2 years ago hopping of a house price crash which hasen't happend. The land lord has rented to students.

Re: A discrepancy at the heart of government home owner statistics?	By David Barker on 7/19/2006 10:17 AM
These numbers are not suprising when it is cheaper to rent than buy. Why not take advantage of the mug BTL landlord who invested thinking houese prices would rise forever and interest rates would never rise. Anyway as returns on BTL's are now minimal or non-existent an interest rate rise will flood houses back on the market.

Re: A discrepancy at the heart of government home owner statistics?

By frugalista on 7/21/2006 4:16 PM

I think the quoted statistic is incorrect: the statistic is that 71% of properties are owner occupied, not that 71% of people are owner occupiers.

These two things are not equivalent. Suppose there are 100 houses. 71 of them have a single occupant who is the owner. The other 29 are landlord-owned and have 10 occupants each.

So, in this extreme case 71 percent of properties are owner-occupied, but over 80% of people rent.

Re: A discrepancy at the heart of government home owner statistics?

By frugalista on 7/21/2006 4:21 PM

The 700k BTL loans which the CML announced is a *lower bound* on the number of BTLs which have come into existence. Many BTLers will have used owner occupier mortgages for their BTLs as these have lower interest rates and allow a higher loan-to-value. It may also help them evade rental income tax and capital gains tax. Lenders turn a blind eye to this even though it is against their own terms and conditions.

Re: A discrepancy at the heart of government home owner statistics?	By SimpleSums on 7/25/2006 5:15 AM
Frugalista, you are quite right I have updated the text. The government's claims are subtly worded as "homeownership is 71%" with no details leaving the reader prone to misinterpret that. Regarding the lower bounds, quite agree, the scale of this problem could be very easily hidden.

Re: A discrepancy at the heart of government home owner statistics?

By brainclamp on 10/11/2006 5:24 AM

OO is certainly falling.
A look around your neighbourhood would show you that fact.
Because of a decade of landlord tax breaks and legal changes favouring landlords in tenacy law, an immense amount of equity(net worth) built during the past decade, Landlords now get far better credit terms (lower interest rates) than ordinary families, and can write off more against profits.
A polarisation of credit as a market response by lenders to such treatment means Landlords can always profitably outbid ordinary buyers over a property.

Add in the millions upon millions from unrestricted mass immigration, resulting in rising rents in a fairly limited housing stock, and of course owner occupation is declining as the government know full well! The maths just do not stack up for ordinary homebuyers due to thier own policies!

Thats why you have subsidies to 'key' workers to buy a home etc..! Your right to challenge this nonsense about rising OO.

Of course, in 17 months time or so ordinary people will be Iris scanned, fingerprinted, and under the thumb for taxation and rents, and forced to report ourselves everytime we move landlord or face a huge fine in what effectively will be a return to surfdom based on positional status - land ownership and membership of the state. This is clear fact.

Its time people started to grow some balls.

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