Low-to-middle income households are likely to be shut out of home ownership for a lifetime, according to analysis published today by the independent think tank the Resolution Foundation.

High average first-time buyer house prices and more restricted loan-to-value mortgage advances mean that the average low-to-middle income household putting aside 5 per cent of their disposable income each year would have taken 31 years to save a deposit in 2010, up from just eight years in 1983. In London in 2010, low-to-middle income households would have needed to save for 54 years compared with 24 years in the North of England.

Alongside cuts to social housing funding, the major new report Making a Rented House a Home argues that the private rented sector must adapt to accommodate the needs of 'generation rent'. This requires large-scale investment and longer term, more secure contracts that allow for home improvements – a model more common in Europe and the US.


In the Netherlands institutions, such as pension and life insurance companies, invest about half their real estate portfolio in residential property. In the UK the figure is just 1 per cent with a lack of returns cited as the major barrier by investors.

Some local authorities, including the London Borough of Barking and Dagenham, are leading the way in this area and demonstrating that by working in partnership this age old problem may be cracked.

Vidhya Alakeson, author of the report said: "Falling between the gaps in home-ownership and social housing, low-to-middle income households are finding themselves increasingly reliant on the private rented sector for housing support. Institutional investment not only brings the potential to deliver private rental homes at scale but also a product more in tune with tenants requirements for a long-term home."

Giles Tucker, Managing Director, RBC Capital Markets said: "RBC has been involved in financing the affordable housing sector for many years and sees the Resolution Foundation's initiative as an important contribution to the sector's evolution. We see housing, particularly for low income families, as a fundamental part of the UK's infrastructure and essential for supporting economic growth."

(CD)