The Government’s Annual Housing Survey is 50 years old this year. It has taken a snap shot of the UK’s property market every year since 1969 and in the recently published report for 2018, it wasn’t a surprise that owner occupation is still the most predominant tenure, yet now more people own their home without a mortgage rather than having a mortgage as the number people buying their first home (obviously with a mortgage) has declined since the Millennium. The report also shows homeowners (mortgaged and owned outright) are, on average, older than renters and between the homeowners themselves, those who are mortgage free are older than those with a mortgage.
Looking at the most recent of data for North Hertfordshire, I wanted to see how we compared to the national picture. Therefore, focusing on the main 4 tenures of owned outright, owned with a mortgage, social housing (i.e. Council Housing and Housing Association) and private rented, this is what I found out…
Looking at the stats, you can see that homeownership in Letchworth and council area as a whole (both owned and owned with a mortgage combined) is lower in the 25 year old to 34 year old age range compared to 35 year olds to 49 year olds, yet roll the clock back to the 1980’s and opposite was the case.
So how many local homeowners have paid off their mortgage?
45.6% of Letchworth and North Hertfordshire homeowners are mortgage free, yet of the 10,787 households that are owned by 50 year olds to 64 year olds in Letchworth and the North Hertfordshire area, 51.7% of those people still have a mortgage.
As most people bought their first house in their early to mid 20’s back in the 1980’s, this shows that a lot of Letchworth and North Hertfordshire people must have re-mortgaged in the past and extended their borrowings (otherwise they should have paid their mortgage off now).
The other thing that concerns me is the 14% of the Letchworth and North Hertfordshire over 65 year old homeowners that have a mortgage.
If you amalgamate the national historic ranges going back to 1977 (see the graph below “UK Households with a Mortgage by Age – 1977 to 2018” and note the age bands are slightly different to the recent local stats because they were carried out under different government departments), you will see the number of people who own a property with a mortgage has been dropping since the Millennium, yet nationally the number of people who own a property has remained roughly the same, even with the growth of the private rented sector.
Reports in the industry suggest that in the next ten years that will increase, as nearly 1 in 5 homeowners will be still paying off their mortgage after retirement. One of the reasons behind that will be the legacy of interest-only loans and delayed first-time buying as we become more and more like Germany in our house ownership models, where people naturally rent their homes until their 50’s and then buy when they inherit money from their parents.
In the meantime, demand for Letchworth rental properties will only increase … so good news for Letchworth Buy to Let landlords and indirectly Letchworth homeowners as well.
If you are an existing landlord with us (or even another agent in Letchworth) or someone thinking of becoming a first time Letchworth landlord looking for advice and opinion and what (or not to buy in Letchworth), one source of information is the Letchworth Property Blog or drop me an email or phone call and let’s start a conversation – I do not bite and I do not do hard sell … and maybe, just maybe, I could help you get better returns from your property portfolio.
If you are not ready to talk to us yet…….
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