Are Wigston Builders Constructing the Wrong Type of Property?

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The British housing market has never been so newsworthy. Every other day, there is an article in the newspaper or online about impending house price drops, house price rises, building on the Green Belt, mortgage rates going up/down, first-time buyer affordability and the woes of being a buy-to-let landlord, to mention but a few. As a nation, we have a strong national desire to be homeowners.

The English Housing Survey stated the proportion of owner-occupied households increased steadily from 52% in the early 1980s to 2003 when it reached its peak of 71%. Since then, owner-occupation gradually declined to 63% in 2014, then increased to 64% in 2017 and has stayed there since.

One of the main motives for homeownership is the prospective tax-free capital appreciation that can be obtained. It’s no wonder the phrase ‘as safe as houses’ is popular in the English language – many homeowners use homeownership as a nest egg or even a pension pot, as savings rates are at extraordinarily low levels.

Yet even with the news that homeownership is on the rise, the biggest seismic shifting the Wigston property market has been in the growth of the rental market, which has more than doubled in the last 15-20 years. So how can the social housing sector (Council Housing) remain roughly at the same level since the millennium, homeownership slightly grow, yet the private rental sector be so huge? Well it comes down to the fact that many more homes have been built in Wigston in the last 15-20 years, and a lot of them have been bought for to let, and Wigston homeowners with secondhand starter homes have sold them to buy-to-let landlords to buy larger, brand-new homes.

Yet the question we wanted to ask is, are we building the right sort of homes, especially when it comes to the number of bedrooms? Whilst the data doesn’t exist for Wigston, the country’s stats are available and it makes for fascinating reading…

Looking at the graph, in 2008, 59% of new homes built were one and two beds, yet last year that had dropped to 35%.

The Housing Minister said recently he was concerned that new homebuilders were building the wrong types of homes, in the wrong places, at the wrong prices. Many (not all) tenants are tenants because they can’t afford the deposit needed to buy a house, and as there is a direct correlation between the rents landlords charge and tenants’ earnings (i.e. as earnings go up, rents go up and vice versa), and earnings for the last seven years have been subdued, the type of property tenants have been able to afford in Wigston are the smaller one and two-bed properties. Yet a lot of these tenants are now having families (with the need for a larger property with three, even four bedrooms).

Looking at the stats for Oadby and Wigston, it can be seen that the vast majority of homeowners live in the larger properties with more bedrooms, whilst private rental tenants are in the smaller properties (with fewer bedrooms).

Our concern is, will young families and professionals be able to afford to live and work in Wigston, especially as the local authorities are unable to build council housing (aka social housing)?

One symptom of all the issues mentioned above is the massive growth in multi-family households (i.e. households containing two or more families), which have increased by 42% in under a decade. Now, of course, many of these will occur because of older couples moving in with their adult children, yet many are unrelated families sharing a house, something that simply shouldn’t be happening in 2019.

If we don’t increase the supply of the ‘right’ sort of homes, what will their living conditions be like?

Whilst we are still a country of homeowners, even though there has been a slight growth in numbers, the long-term trend is going downwards if we don’t build enough of the ‘right’ new homes, in the ‘right’ location and the ‘right’ price, Wigston people will continue to increasingly rent… which is only good news for Wigston buy-to-let landlords.