More than 2 million households have been left behind by the credit crunch – many will continue to be excluded from the improving housing market

Over 500,000 UK households a year have failed to move onto or up the housing ladder since 2009, according to new analysis from real estate adviser, Savills comparing transaction levels before and after the credit crunch. 

Of those excluded from market activity through lack of credit, some 200,000 households a year would have been first-time buyers.  

Many of these 'excluded households'  are unlikely to benefit from the strengthening property market or Help to Buy, according to a new research paper published today, Bridging the Gap in Housing. Savills expects that the private rented sector will continue to grow by 200,000 households a year over the next five years. 

"Although the property market is strengthening and mortgage availability is improving, many households are being left behind,"  says Susan Emmett, Savills residential research director.  "The new excluded  are unlikely to qualify for social housing yet their incomes are not high enough to take advantage of the market recovery.  The average income of most of these households is below ?45,000 which is the average income of those currently accessing Help to Buy."

This is a countrywide phenomenon although the biggest concentrations of excluded households are found in lower value markets.  The north and south of England have suffered similar numbers of excluded households, with transaction shortfalls of 165,290 and 179,116 respectively.  Even in London, where the market has been buoyant relative to the rest of the country, transactions are down by almost 60,000 a year compared to the pre peak norm, though this represents a smaller percentage of the total market.

Savills expects Help to Buy to support 400,000 transactions over its three year lifespan, but for the bulk of excluded households, whose median incomes fall below the ?45,000 average incomes of those currently accessing the scheme, Help to Buy will not make a material difference.

According to Savills the median income of an 'excluded household' is ?36,710 in the South of England, ?25,410 in the Midlands and Wales, ?22,662 in the North of England.  In London the figure rises to ?54,756.

Younger households are most affected, which is reflected in private rental trends.  The biggest group of private tenants is aged 25 to 34, but the fastest growing group are in the 35 to 44 age cohort, a quarter of which are young families.  More people are renting for longer and many 'Generation Rent' households will never become home owners.  

Housing associations could provide the bridge
Providing good housing options for these excluded households has become a major political issue.  The social sector is unlikely to become the main provider of housing for these households left behind by the recovering market, and other solutions are urgently needed, Savills says.

"We need to end our fixation with home ownership", says Emmett.  "With homeownership now in decline, bolstering the private rented sector with high quality housing at market rents is vital.

"Housing associations are well placed to take on this challenge and tackle a different kind of housing need.  By broadening their tenant base to provide a proportion of their housing at market rather than social rent, they could extend their revenue and cross-subsidise other tenures." 

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