Young Britons Feel the Strain of Rising House Prices
04-07-2016
Young people are losing out in what's become an increasingly polarized U.K. housing market.
The proportion of people aged 26 to 30 in privately rented accommodation rose to 39 percent in 2014 from 9 percent in 1987, according to the Office for National Statistics. For all renters, the proportion of disposable income they spend keeping a roof over their heads has increased to almost 20 percent from 12 percent.
The situation is even more extreme in London, where more than one-third of income was absorbed by rent in 2014.
Stretched affordability for first-time buyers has been a constant refrain in housing reports recently. Rightmove Plc said last month that asking prices are more than 50 percent higher than a decade ago, leading to an affordability gap that's affecting more and more aspiring homeowners.
Some are benefiting from the skew toward renting. The proportion of households receiving rental income has jumped as existing homeowners leverage their primary residence to become landlords. That's caught the eye of Bank of England stability officials, who endorsed tighter lending criteria for buy-to-let mortgages last week.
New rules from Chancellor of the Exchequer George Osborne could also help cool buy-to-let: those properties and second homes are now subject to a higher purchase levy, while the wealthiest landlords face the loss of tax relief on interest costs from 2017.
But more is needed to bring some balance to the housing market. BOE Chief Economist Andy Haldane said Monday that ``ultimately the solution to the problem lies in the supply side'' and that there is only so much the central bank and the Treasury can do to damp down demand.
