Mind the gap: why is there a lack of female homeowners?

Photograph: RichSTOCK/Alamy

This post explains the reason why there is a lack of female homeowners in England and provides some ways to improve this situation. This post will be particularly helpful for those wanting to learn more about ‘Shared Ownership’ and ‘Help-to-Buy mortgages’.

There is a housing affordability gap in England. Put simply, there is a shortage of housing supply and more importantly the housing prices have grown faster than annual wages. This creates an affordability deficit for prospective homeowners. However, like most things, housing affordability does not affect all homeowners equally. Women are disproportionately affected.

Statistics

A report, ‘A Home of Her Own’, written by the Women’s Budget Group and the Women’s Housing Forum in 2019 sets out the shocking statistics on just how difficult it is for women to afford homes as follows:

  • Women need over 12 times their annual salaries to be able to buy a home in England, while men need just over 8 times ;
  • The worst regions in housing buying affordability for women (and men) are London and the South East, where women need nearly 18 times and 16 times their annual earnings to afford a house (respectively).

These figures show (unacceptably, in my opinion) that neither single men, nor single women on median earnings can afford the most common type of mortgage anywhere in England. But the situation is worse for women. This is further highlighted by the regional disparities in house prices, where earnings for women and men hide huge differences:

  • Women’s incomes fall over 50% short of what would be needed for a mortgage in most regions, excluding the North East, North West and Yorkshire and the Humber. Men’s incomes only fall over 50% short in London and the South East.
  • Even though the North East is the cheapest place to buy a home, it is also the region where gender disparities in earnings needed to take out a mortgage are the widest.
  • Women in the 10% highest-paid group in London (average earnings of £60,258) are still unable to afford a mortgage on their own but men in the same earnings group (£99,677) can. (This was seen in ONS (2019) Annual Survey of Hours and Earnings, Table 8).

Why?

Essentially, the issue all comes down to the ability to earn more money. Women on average earn less throughout their lifetime, through various factors – mainly having to take time off or reduce hours for childcare purposes and therefore find more difficulty accessing the housing market. In this way, women find themselves in a situation where they must choose to either jointly purchase a home with a partner/friend or to rent – buying alone is rarely an affordable option.

Even when purchasing with another person, housing affordability can have a significant effect on the power dynamics in a household and the decision making when deciding where and what to buy, as well as division of labour. This disparity in power dynamic can also trap people in unwanted and abusive relationships for fear of homelessness.

Relationship breakdowns are also a huge threat to women’s affordability in the housing market. There are often times, where the lower earning party (again, mainly women) will not have contributed as much to the deposit of a property, or they may pay less of the mortgage in exchange for not having their name on the title. This can cause huge difficulties in the event of a relationship breakdown, as there is no guarantee of receiving 50% of the equity in the property (please see my previous cohabitation post for more details).

So how do we solve this issue?

Essentially, women need to be able to earn more money and the gender pay gap needs to be eradicated. This is an obvious and ongoing issue which is being tackled by companies on a nationwide scale. Higher earnings and also choosing to invest rather than merely save for a deposit, should go some way to improving women’s ability to enter the property market, alone (I plan to post more about investing in property soon).

There are also a few specific housing initiatives which may go some way to help close the affordability gap of women in the housing market

  1. Housing Market Budget

The Chancellor, Rishi Sunak, has recently unveiled a mortgage guarantee scheme to help Britons get on the housing ladder with small deposits of 5%, for any new or existing property up to £600,000. Under the scheme, the Government will guarantee to lenders to pay up to 95% of the property even if the homeowner defaults.

This scheme allows homeowners to put a down-payment of 5% rather than the normal requirement of at least 10%, which should go some way to helping single female homeowners to buy their own property. This scheme is particularly geared to help first time buyers, who were locked out of the market last year when no suitable mortgages were available.

The general rule for affordability and mortgages when purchasing property, however, is that you should only purchase a home which has a maximum value of 4 x your annual salary e.g. if you earn 50k a year, a house worth £200,000 should be your maximum threshold. Thus 95% mortgages will only help aid this issue where local salaries are at least 4 x the amount of average house prices in the are

2. Shared ownership

Shared Ownership offers you the chance to buy a share of your home (between 25% and 75% of the home’s value) from a UK housing association. You then pay the housing association an ‘affordable rent’ on whatever part you don’t own. Later on, you could buy bigger shares when you can afford to – depending on the terms.

The criteria in England is:

  • your household earns £80,000 a year or less outside London, or your household earns £90,000 a year or less in London
  • you are a first-time buyer, you used to own a home but can’t afford to buy one now or are an existing shared owner looking to move.

This scheme offers single women an opportunity to earn equity in a property at a much lower rate. However, it must be understood that they would not be the freeholder (sole owner) of the property as they are paying rent.

Interestingly, one candidate for Mayor of London is proposing 100,000 homes for £100,000, if elected, which would make affording a home a much more realistic prospect for single females

3. Housing initiatives

There are female-only initiatives which exist to ameliorate the housing affordability situation. Women’s Pioneer Housing is London’s specialist housing association for women, with a mission to provide homes and services which offer a springboard to independent women to achieve their potential. They own almost 1000 properties which are rented to women at a low cost and provide first opportunity to buy to all tenants. They also provide sheltered housing for abused or homeless women. This initiative has been running for around 100 years and aims to encourage other groups nationwide to provide similar services.

Conclusion

England is in the midst of a housing deficit with women suffering most in the affordability gap. This presents many with the often unacceptable choice of having to jointly buy a property with someone else or rent and attempt to save for years. State-backed mortgage support and ‘shared housing’ schemes go some way to enable access to purchasing homes as a single female, but essentially a woman’s ability to own property depends on her economic income. Until the gender pay gap is equalised, the housing affordability gap continues to exist.

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