Homeownership at lowest level in thirty years

Homeownership is on the decline in many UK cities. Why is this a problem, and how can we fix it?

Recent research published by the Resolution Foundation shows that homeownership is at its lowest level in thirty years. It also shows that declining homeownership is not a uniquely London problem – in most major cities, owning a home is moving further and further out of reach for ordinary people.

Homeownership is unaffordable because house price growth has outpaced wage growth for decades. The root cause is that not enough homes have been built to accommodate our growing population.


Many would argue that falling homeownership rates are not a problem. After all, many of our European cousins are happy to rent all their lives. In Germany, for example, renting is seen as the norm.

But the UK is not Germany. Our private rented sector is insecure and expensive, and not a long term option for families who want to put down roots. Social housing and homeownership are the tenures of security, and with social housing stock diminishing, households are eager to own their own homes as a means to escape private renting.

Furthermore, retired renters can be especially vulnerable to unpredictable price increases in the private rented sector. This makes the aspiration to buy a home earlier in life that much more rational and necessary.


We need government to commit to a target of 0% house price inflation.

There are 3.5m renters who are unable to afford the average house price. Research by PricedOut shows that if house prices stopped rising, within ten years an additional 1.2m people would be priced in to homeownership. This figure dwarfs those lucky few additional renters who can afford homeownership thanks to government’s demand side policies like Help to Buy.

We need to build more homes.

The need for more homes in high demand areas is clear. We need to build around 300,000 homes a year in order to tackle the housing crisis effectively, but we build only half that.

As well as ending public sector land banking and releasing brownfield sites, we need to build on greenfield sites too, including the Green Belt. To take London as an example – there are 110,000 hectares of Green Belt land inside the M25. Building on just 5% could supply enough land for 200,000 homes.

We need to reform property taxes.

Council tax is based on outdated values from 1991. The highest value properties are taxed at 0.1% a year, whilst lower value homes are taxed at 1.5% a year. We need property taxes to be intelligent and targeted, ensuring our housing stock is used efficiently.

We should also look at more radical property tax reforms, like land value taxes. These could have great potential to ensure land is used to its potential. We should pilot land value tax in some areas to gauge its effect on land use and the wider economy.

We need to reform the private rented sector.

We need to recognise that a lot of people will be renting for a long time. Families need security so they can plan for their future and put down roots. Currently after just four months a landlord can evict a tenant household with just two months’ notice, for any reason (or no reason at all). We need to abolish these without-cause (section 21) evictions, and we also need to look at longer minimum tenancy lengths in some circumstances.

By making the private rented sector a better place to live, this will ease demand for homeownership, which will bring down prices, as well as ensuring those who can’t own their own home are not left in fear of eviction.


Everyone who works hard should be able to afford their own home if they want to. The way to achieve this is not fuelling demand for a lucky few, but making housing affordable for everyone. If government committed to trying to end house price inflation, using the tools listed above as a start, this could become a reality.

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