30% increase in second home owners since 2002
New data indicates that the UK has become a nation of second home owners since the turn of the century, with over five million Britons owning a second home, either to live in themselves or as buy-to-let landlords.
Figures from the Resolution Foundation indicate that buy-to-let retains its appeal for many in the UK, as the perception of strong potential in bricks and mortar prevails.
The data compared the number of people owning second homes between the years 2000 and 2002, with the period between 2012 and 2014 and the figures increased 30%, from 1.6 million to 5.2 million.
The report indicates that those most likely to invest further in property are the baby boomer generation, aged between 52 and 71 years old, who are responsible for 52% of the wealth held in extra property.
At the same time, the foundation discovered a disparity in ownership, with 40% not owning a home at all, an increase of 5% on the 2000 to 2002 period and the same percentage as the period from 1993 to 1995.
The so-called ‘Generation X’, currently aged 37 to 51, accounts for 25% of wealth from multiple properties, while millennials, born after 1981, own just 3% of multiple properties.
Commenting on the findings, Laura Gardiner, the foundation’s senior policy analyst, said:
Contrary to the popular narrative, these second homeowners are rarely your typical middle-income worker shoring up savings or ordinary retiree boosting pension income. They tend to be baby boomers who are very wealthy indeed relative to their peers, living in the South and East of England.
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.
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.
Policy makers should consider what more can be done to ensure that homeownership doesn’t become the preserve of the wealthy for generations to come, she added.
Andrew Turner, chief executive at Commercial Trust, commented:
The age and geographical demographics of this report make for interesting reading and suggest that it takes time for people to build up sufficient reserves to purchase a second home.
Over the past 20 years many people have seen property investment as a credible means to creating an extra source of income to live their dreams and sustain a higher quality of life.
The figures also underline the challenges facing younger people, who typically have lower earning power initially and may take longer to take the first step on the property ladder; let alone to think of second homes.
However, with more disposable income available, there is a clear intention for many people in their older lifetime to invest in property, with rental income still retaining plenty of allure.
This information should not be interpreted as financial advice. Mortgage and loan rates are subject to change.