Using figures drawn from sources that include the Office of National Statistics, the Resolution Foundation has published a report which reveals a growing gap between those who have property wealth and those who don’t.
As many as 5.2 million (or one in ten) UK adults has either bought or inherited a second home, and the number of multiple home owners rose by 30% between 2002-2014. The figure includes buy-to-let landlords, which are counted as one owner when they have multiple properties, as well as homeowners who own a property they don’t live in.
Over half of second home owners are of prime or early retirement age (aged 52-71) and living in the south and south east of England. The figure is far higher now than those currently in their seventies and eighties had at the same age. A quarter of second homes are owned by those aged 26-51 while just 3% are owned by those aged under 25.
The asset value of these properties has grown by 20% over the same period. The Resolution Foundation said that, not only did second home ownership provide an asset that could boost wealth, but if the property provided rental income it had the potential to significantly boost income.
Shelter’s Anne Baxendale said: “At a time when buying a first home is a pipe dream for many, councils should not be incentivising owners of second homes by offering a reduced rate on council tax. By doing so, they encourage second-home owners to hoard the homes which are so desperately needed by aspiring first-time buyers, stuck in expensive and insecure private renting.”
The sentiment was echoed by Alistair Smyth of the National Housing Federation, who said that the findings exposed the inequalities of the housing crisis. He said: “Building homes is the only fix for our failing housing market.”
Higher rates of Stamp Duty on second homes were introduced in April 2016, and tax relief changes due to be phased in between April 2017 and 2020 mean that landlords will no longer be able to claim tax relief on all their mortgage payments once changes have been implemented. The additional revenue collected from stamp duty in the first quarter of 2017 was nearly £2bn, 16% higher than the same quarter of 2016.
It is not yet known what effect these changes will have on second home ownership, but the Resolution Foundation is appealing to the government for more action to close the property wealth gap.
While second home ownership has grown, figures show that 40% of adults do not own a property, and this figure has risen by 5% over the same period.
Critics have said this is a ‘wake up call’ for those wanting to preserve the current economic system.
The Resolution Foundation was founded in 2005 as an independent social and economic research organisation which produces research and analysis aimed at improving the standard of living of low to middle incomes living in Britain. It calculates there are six million households on low to middle income in the UK, and ten million low to middle income adults. The Foundation says these households are squeezed in the mixed economy: they are too poor to thrive in private markets while too rich to receive substantial state assistance.