Monday, 21 August 2017 14:54

Big rise in second home ownership

Written by  Ruralcity Media
Big rise in second home ownership

More people now own a second home, including in rural and coastal areas, says a report.

Some 5.2 million people now have second homes, reveals a new analysis published by the Resolution Foundation think tank.

This represents a 30% increase between 2000-02 and 2012-14 in the proportion of adults who own multiple properties.

The rise of second home-owning in 21st Century Britain has underpinned the increasing concentration of property wealth within a declining proportion of families, says the report.

In contrast to the one in ten adults with multiple sources of property wealth, four in ten (40 per cent) adults have no property wealth at all, up from 35 per cent in 2000-02 and the same level as in 1993-95.

Multiple home ownership has been blamed for contributing to high house prices in sought after areas of the countryside.

Resolution Foundation senior policy analyst Laura Gardiner said: “Multiple property ownership is still a minority sport, but a growing one that represents a significant boost to the wealth pots of those lucky enough to own second homes.

"People with second homes not only have an investment that they can turn to in times of need, for instance in later life when care is required, but if the property is rented out they also see a boost to their incomes here and now."

The analysis finds that alongside an increase in the number of people with additional property, the average value of assets held in these properties has increased by 20 per cent in real terms between 2000-02 and 2012-14 – from £125,000 to £150,000.

The wealth held in additional properties had a gross value of £760 billion in 2012-14 – 15 per cent of the £5.2 trillion held in gross property wealth overall.

The foundation says that there is a clear generational split in terms of who owns second homes, with those in prime age and the early stages of retirement having accumulated the most.

Adults born since 1981 own just 3 per cent of the additional property assets.

These are the first group since records began to have less of it than predecessors at the same age had.

While owning an additional property is sometimes depicted as a common way for typical workers to shore up savings or for ordinary pensioners to boost retirement income by letting properties out, the analysis finds that those with a second home are overwhelmingly rich and wealthy.

Some 88 per cent of additional property owners are in the top half of the wealth distribution, and 79 per cent of adults who earn income from additional properties as landlords are in the top half of the income distribution.

Second home owners continue to stand out even when compared just to their peers, for example over four-fifths (82 per cent) of baby boomer second home owners are in the wealthiest half of their generation.

There are also stark regional differences in those who earn income from a second home as a landlord.

Nearly six-in-ten (59 per cent) landlords are found in the South West, South East, East of England and London, which are also the areas where incomes and average wealth are highest.

Ms Gardiner said: “With young people much less likely to own a home at all than their predecessors at the same age, the growing concentration of property wealth among fewer families raises concerns not just for their living standards but for wealth inequality of our country as a whole.

"Recent steps to increase stamp duty on second homes and reduce tax relief on buy-to-let mortgage are attempts to address this challenge, but policy makers should consider what more can be done to ensure that home ownership doesn’t become the preserve of the wealthy for generations to come.”

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