Aaron Jacob: We must confront declining rates of home ownership, for across the generations

Aaron Jacob is a solicitor, and former district councillor. He was the Conservative candidate for Sheffield Brightside and Hillsborough in 2024.

Home ownership in the UK is the dream that is slipping through the fingers of millions.

I have previously shared my thoughts on declining home ownership on this site, outlining in detail how there has been such a dramatic shift in the course of one generation. Recent survey data shows that the average age of first-time buyers overall and in the rest of England (excluding London) was 34 in 2024-25, compared to the pre-pandemic years in 2019-20 when it was 32.

Obviously, this is gravely concerning for younger generations. But on present trends, this shift will be equally consequential for older generational cohorts in both the medium and long-term, as well as for the size of the state.

Home ownership is implicit in many retirement saving models. The Pensions and Lifetime Savings Association’s (PLSA) Retirement Living Standards, for example, assume that retirees will be living in their own home and have no mortgage or rent. This assumption is now colliding with reality. The proportion of privately rented homes headed by someone aged 55-64 increased from 6.3 per cent in 2010-11 to 11.3 per cent in 2020-21. The OBR estimates that the likely projected rise in the pensioner renter population will be from around 6 per cent today to 17 per cent by the 2040s. The Office for Budget Responsibility (OBR) estimate that this alone would result in a £2 billion (in today’s terms) increase in housing benefit spending.

Retirement savings models will clearly need to adjust to these facts. Indeed, Standard Life has estimated that pensioners who rent in retirement could need almost £400,000 more in retirement savings than those with no housing costs. The corollary of reduced home ownership is a larger role for the state: as renters age, either government spending on housing support will rise, or pensioners’ living standards will fall. As many as 400,000 more households could become dependent upon income-related pensioner benefits.

A twentieth-century retirement model is rapidly, but quietly, being eroded before our eyes, with this barely registering on the policy Richter scale. Instead of seeking to address either side of the home ownership-retirement savings equation, Rachel Reeves has opted for the short-term expedient of capping at £2,000 per year the amount that can be shielded from employer and employee NI contributions by using salary sacrifice from 2029.

Reduced rates of home ownership in later life have wider and often underappreciated consequences beyond the public finances. Housing security is itself a determinant of wellbeing in old age. Older renters are more exposed to rent inflation, possible eviction, and forced moves at a time when they cannot adjust their income. All of these factors can lead to poorer physical and mental health outcomes.

Home ownership, by contrast, is correlated with residential stability and the ability to adapt housing to changing mobility or care needs. A growing cohort of older renters therefore implies not just higher fiscal pressure, but a population ageing with less security and less autonomy. These costs ultimately reappear in the taxpayer-funded NHS and welfare system.

The Labour government’s decision to establish an independent commission on adult social care reform, chaired by Baroness Casey, signals that ministers are at least alert to the scale of the challenge. The NHS website currently states: “You will not be entitled to help with the cost of care from your local council if you have savings worth more than £23,250 and you own your own property (this only applies if you’re moving into a care home).”

Whilst I am no expert in adult social care, this framework is clearly relevant to any serious discussion of housing policy and home ownership. Put simply, however the system is designed, the funding model must fall into one of three broad categories, or a combination thereof: greater state provision, greater individual or family responsibility, or some form of insurance-based solution.

If the funding model for adult social care is fully socialised, as with the NHS, this implies a much-expanded role for the state and, given demographic pressures, higher general taxation. Alternatively, there could be an insurance solution, whether universal or targeted at those not eligible for state support. There could also be a largely privatised model.

What matters here is not an argument for the use of housing wealth to fund care, but the recognition of a constraint: lower rates of home ownership narrow the range of feasible policy options. As the literature notes, “providing household support for old-age costs was a core goal in early policies for housing wealth in most countries”.

This is not an endorsement of using housing equity as the preferred means of paying for care. Rather, it states the obvious: when fewer people own homes, policymakers have fewer levers at their disposal and face a starker choice between higher taxation and lower provision. Whatever the eventual settlement for adult social care, declining home ownership increases fiscal rigidity and pushes more responsibility onto the state.

For too long, the housing debate in the UK has had a narrow and crude focus on the inter-generational inequality in housing wealth. The decline in home ownership is having, and will have, consequences across the generations. The growth of pensioner renters is a slow-burning political and social issue whose scale is inversely related to the government attention it receives. Assumptions that underpinned twentieth-century housing, welfare, and retirement policy no longer hold. There is an urgent need to confront what can be done to reverse declining rates of home ownership; not only for the young, but for the security and dignity of pensioners. Let this article sound the alarm bells.