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The UK house and home market is different from that in the rest of Europe, and is changing.  Constant increases in house prices and values have encouraged people to ‘get on the ladder’ and constantly buy more expensive properties, secure in the knowledge that even if they struggle to afford payments the value of the property will quickly increase and generate equity value. 

This has also led to people buying properties and renting them out, again secure in the knowledge that increases in capital value and ongoing rental income make this a good investment, leveraged with a mortgage.

This constant increase in prices has meant that many people now can’t afford to buy their first house, and have to rent, or stay living with parents for longer. 

Social housing is low cost rented housing aimed at people who can’t afford the private sector – whether buying or renting.  See our section below on this.

House Facts

£ 10
thousand

is the average house price in the UK in August 2018 (Guardian)

1
is the age

the average Brit will pay off their mortgage (Finder.com)

1
million

mortgages in the UK (Feb 18, Finder.com)

0.1
million

new homes to be built in the UK between 2015-2020 (NAO Report)

Housing Market

In the early 20th century less than 10% of UK homes were owner-occupied – this rose to 62% by the early 21st century, reaching over 27 million households in 2017.

Privately owned property is freehold or leasehold (where the owner buys the right to use the land and property for a time).

Most is bought with a mortgage.  Since the 1980s securitisation of mortgages led to repackaging of mortgage debt to provide an income flow, which was involved in the 2008-9 financial crisis.

Property is also rented, either privately, where landlords typically use short term (often 6 months) tenancy agreements, or local authority rented, where tenants pay a weekly or monthly rent, often subsidised and below market rate. Housing Associations offer affordable properties partly owned partly rented.

The housing market is an indicator of household wealth – when prices rise or fall it creates a positive or negative wealth effect, even as far as moving into negative equity, where the mortgage has a higher value than the house, as in 1990 and 2008.  Rising equity can give rise to increasing housing equity withdrawal.

Other factors affecting home ownership include population, income, interest rates and social trends.

RICS believe that overall sales volumes will decrease by 5% in 2019.  You can download their Housing Forecast under More Info below.

Different housing trends

dwelling types chart

The reason for a slowdown in the market has been driven by supply and political and financial uncertainty rather than mortgage rates, which have kept low and even reduced.

mortgage rates chart

Charts courtesy of Economicsonline

Social Housing

The amount of social housing for rent has been slowly rising for the last ten years – over 4 million homes were rented from councils or housing associations in 2017.  Social rents are about 50% of market rents. 

Housing associations are independent, not-for-profit organisations that provide social housing for people in need..  They are sometimes called ‘registered social landlords’. They sometimes offer shared ownership schemes and have to be registered with Homes England.  They were re-classified as private rather than public in 2016, removing £70 billion form public debt and allowed them to increase borrowing.

This is mainly due to an increase in homes rented from housing associations.  Around 5,000 new homes were built for social rent in 2017, and another 1,00 were bought or converted.

There is also ‘affordable housing’ where the rents can only be around 80% of market rents.

To see an explanation of what these are, click the button below for an explanation from the Designing Buildings wiki.

There were 24,000 homes built for affordable rent in 2017 and 2,000 bought or converted.

‘Intermediate rent’ is defined as ‘above social rent, but below market levels’ (House of Commons library), and these are counted as affordable homes.

Social housing can be sold, with the best known scheme being ‘Right to Buy’ for council housing, with an equivalent scheme for housing associations.  Over 16,00 homes were sold under right to buy in 2017/18, which is less than the year before.  Around 5,00 were sold under different schemes. 

The government committed to replacing all homes sold under right to buy after 2012, but this target isn’t being met.

Rents

The average weekly rent for council houses in 2016/17 was £87 while for housing associations it was £97 in March 2017.  The English Housing Survey calculated average (actually median) social housing rent in 2016/17 as £96 per week as opposed to private rent of £156 per week.

social housing chart
social housing changes chart
council house rent chart

Rent v Buy

This video gives some simple pros and cons of renting and buying – sadly it’s a US video so some points are less relevant, but most of it is common sense.  See the article from the Independent here which gives some comparative costs.

The box below shows some information on how you can look to rent a home.  Hover over it and it will switch to show you information on how you can start to save to buy a home, and what’s involved.  Click the button on the back to see more information and YouDrive’s view!

"Let not him who is houseless pull down the house of another, but let him work diligently and build one for himself, thus by example assuring that his own shall be safe from violence when built."
Abraham Lincoln
US President

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See what other things can help

More information

General advice on buying a home from Money Advice Service

Overall advice on housing issues from Citizens Advice

Information on council housing and housing associations from the government

See how to apply for council housing – from Shelter

If you’re a single parent, the Gingerbread have information on your housing options

Different types of mortgage available from the Money Advice Service

Calculate your monthly mortgage payment using our Money Advice Service calculator

See if you can afford the repayments using our calculator provided by the Money Advice Service

How much is Stamp Duty?  This calculator from MAS lets you work it out

Equity release comparison from Age Partnership – click here to go to their site

Buy to Let guidance from Which

You can download your own Excel calculator which allows you to model whether it’s better to rent or buy there’s one from Excelexperts.  There are two – one with blank values which you should use, and one with example values entered. The third button will open a YouTube video explaining how to use the calculator

Download the Royal Institute of Chartered Surveyors (RICS)  Housing Survey for 2019

If you are getting older and you’re thinking about your options of whether to move or stay where you are, or where to live, AgeUK have a useful guide you can download.

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