‘A major cultural shift in home ownership is on the horizon, with more private renters than mortgaged home owners within just a few years.
By 2025, the number of mortgaged households will be just under 6m, while the number of households in private rental accommodation will be a whisker more, at 6m.
The forecast comes from NatWest senior economist Sebastian Burnside, who says the cross-over will happen in late 2024.
He said: “We think it’s a fairly comfortable bet that by 2025 we will have more households renting privately than owning their homes with a mortgage, which is a big cultural shift for a country like the UK and something that’s being driven by those underlying demographics.”
There are already more people owning a home outright than people buying with a mortgage, and the number of outright home owners will continue to climb.
Since 2013, outright home ownership has been the biggest form of housing tenure in the UK. By 2024, about 9m households will own their homes outright.
The number of households in social rental accommodation will edge downwards, from 4m today to just under that figure.
Burnside said that fewer people are taking out mortgages because of the differences between their incomes and house prices.
However, baby boomers are increasingly able to pay off their mortgages.
Burnside said that as the private rented sector grows, lenders need to rethink their repossession strategies.
At the moment, lenders treat home owners who fall into mortgage arrears with more leniency than buy-to-let landlords unable to keep up payments. Defaulting landlords usually have their properties possessed within months.
However, Burnside said that possessing landlords’ properties swiftly was problematic for tenants with ties in the area, or children at school.