Over 5 million people now have second homes
There has been a 30 per cent increase between 2000-02 and 2012-14 in the proportion of adults who own multiple properties, rising 1.6 million to 5.2 million people (one in ten adults) in that period, new analysis published today (Saturday) by the Resolution Foundation has found.
Combined with falling home ownership since the early 2000s, the rise of second home-owning in 21st Century Britain has underpinned the increasing concentration of property wealth within a declining proportion of families. 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.
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.
Multiple homeowners are most likely to be baby boomers, the group born between 1946 and 1965 and currently aged 52-71. Boomers account for half (52 per cent) of all the wealth held in additional properties, with far higher additional property asset levels than those now in their seventies and eighties had at the same age. Generation X – born 1966 to 1980 and currently aged 37-51 – accounts for a further quarter (25 per cent) of additional property wealth.
By contrast the millennials – born since 1981 – own just 3 per cent of the additional property assets and are the first group since records began to have less of it than predecessors at the same age had. For example, those born in the 1980s have less than half the additional property assets at age 26 than those born in the 1970s did at that age (an average of £2,600 across all adults born in the 1980s, compared to £5,500 for those born in the 1970s).
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. 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.
Laura Gardiner, Senior Policy Analyst at the Resolution Foundation, 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.
“Contrary to the popular narrative, these second home owners 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.
“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.”