FIRST-TIME buyers are taking longer to save for large deposits, and so the number of owner-occupiers is set to fall, David Miles from the Bank of England’s monetary policy committee said in a speech yesterday.
The transition to a society with fewer homeowners will be painful, he warned, but could have long-term benefits to the wider economy.
After the financial crisis, banks have demanded larger deposits from buyers. Although “most people put great value on having a home that they can reliably call home for many years,” there will be positive effects in terms of offsetting tax distortions, Miles said.
He argued that because capital gains tax is levied on rental properties but not owner-occupied houses, the market is skewed against renting and the trend against ownership will offset this distortion.