Stephen Gilbert, Lib Dem MP for Newquay and St Austell, has spoken about his difficulties in getting a foot on the housing ladder in his own constituency. Despite earning over £65k, Stephen is renting a flat until he can build up the higher deposit now needed — usually £25k or more — to secure a first home.
The Cornish Guardian reports:
“This is the double whammy first-time buyers have been affected by,” said the 35-year-old Liberal Democrat. “If I can’t afford a deposit on £65,738, what about the thousands on lower incomes?”
Mr Gilbert said: “I think the Government needs to look at using the houses we already have. There are about 750,000 empty houses across the country and 7,000 in Cornwall. The coalition Government said it will tackle this problem to allow owners of these homes to bring them back into use. There should also be a limit to the number of second homes, as in some areas these make up 40-50 per cent of houses. We need to be making sure there are enough homes to meet needs and make houses become affordable because this issue has not been taken seriously before.”
Mr Gilbert chairs the all-party parliamentary group on housing. He is also part of the scrutiny committee for the Localism Bill before it becomes law at the end of this year. This would devolve greater powers to councils and neighbourhoods, giving local communities control over housing and planning.
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31 Comments
Could the LibDems PLEASE be the one party that doesn’t obsess about property ownership?
We should have a more balanced set of policies which attempts to make it easier, more comfortable and more secure to rent long time in the private market to give tenants a stake in their rented home, and we should try to do our best to work against the false premise that only an owned property can be a home.
As long as society in Britain has such irrational prejudices (fuelled, presumably, by old class stereotypes and Thatcher’s policies) against rented accommodation we’ll be in danger of another bubble. I would have hoped that the LibDems at least could be sensible about this issue.
I agree with the first comment, although we are now in an era in which the ownership of assets is seen as of central importance and, in Britain, household asset ownership is synonymous with house purchase (for all but the very rich). We really need an viable alternative investment vehicle in order to break the link between home and wealth accumulation. Only then would it become possible to challenge the idea that to be a tenant is not to be financially disadvantaged. It would also reduce house price volatility.
Quite, Maria.
Unfortunately, one of the first decisions made by this government was to prevent better regulation of the private rented sector. It’s clear to see where this government’s priorities are regarding housing, especially wiith Shapp’s attempts to prop prices up with ‘help’ for first-time buyers (of course in reality help for property speculators) and his desire to decrease stamp duty for multiple buy-to-let owners.
It’s interesting how our society applies different moral standards, depending on whether one rents or owns: tenants that default on their rents are described as problem tenants, whereas mortgage-holders that default on their mortgage are invariable described as hard-working families being forced out of their(sic) homes. I get the impression that the vilification of tenants and the appalling lack of regulation of the rented sector are designed to make people buy a house at any price just to escape. It helps keep land-owners land valuable. Same old tories.
“Mr Gilbert chairs the all-party parliamentary group on housing. He is also part of the scrutiny committee for the Localism Bill before it becomes law at the end of this year. This would devolve greater powers to councils and neighbourhoods, giving local communities control over housing and planning.”
Yeah, cos the localism bill’s really going to help get new houses built.
Besides, tenants aren’t being disadvantaged financially at the moment, as house pricesare falling. All it takes is a small percentage fall in house prices over the course of a year to make renting cheaper than buying. However, the great British public always believe that buying is better than renting. Years of brainwashing has told them so.
I completely disagree with the first couple of posts. Anyone who is currently in rented accommodation such as myself whilst saving up for a deposit knows that renting is vastly inferior to owning your own property.
Having spent Christmas and January without hot water, whilst waiting for my inept letting agency to get through to my inept landlord to get in touch with the inept outsourced maintenance company who in turn had to get through to an inept plumber who has to be harassed through these layers of bureaucracy to come and look at my boiler on subsequent occasions, I can safely say that renting isn’t the pleasant experience people make out. I would have quite happily ripped the thing out and replaced it with a decent boiler after the first couple of weeks.
The issue with renting (especially in a flat like mine that is only 6 years old) is that the landlord still has a mortgage. Therefore, I am paying the mortgage of the landlord, the fee of the agency, the retainer of the maintenance people, etc. Renting is always more expensive than buying… for the amount I’m paying in rent down the drain I could be paying the mortgage of a place much bigger. The only prohibitive issue is the deposit.
The real issue with deposits is that we’re using an old mortgage system that has got rapidly out of date. Wanting 10/20% of the amount when a house was £40k in 1986 wasn’t so bad (still hardly pain free). Wanting 20% of 200k these days simply prices normal young people out of the market.
What is the Lib Dems bizarre obsession with renting? Some say it seems to be part of a “class system” but actually renting imposes a class system. It creates a separation between the tenants who will be perpetually poor due to paying for a house multiple times over their lifetime and not gaining anything for it, and the landlords who will become fatter and fatter as they take their profits and buy more and more property with it, which in turn perpetuates the initial issue.
And what is wrong with people wanting to own property? We’re not going to start spouting the old “property is theft”, are we? Wanting to save up your money, have a nest egg for your old age, an inheritance for your offspring, the ability to customise and control your environment and habitat is only natural. Saying people should not want that is simply perverse.
Well said Tommy. Almost everyone who can buy, buys, in every country in the world. It is a sensible thing to do if you can afford it, for all sorts of reasons. That doesn’t mean it should be the only tenure available, but it does mean that we should ask why, as Britain has got richer over the past 10-20 years, the number of owner occupiers has been falling.
Agree with Tommy. & Stephen Gilbert MP, to an extent. Fed up with renting, myself, would love ot buy, but can’t afford to, despite a fairly healthy double income.
Action and detail is what’s needed, not “a vague bill to devolve responsibility for this to local councils so they can do nothing about it either”.
Maria –
‘Could the LibDems PLEASE be the one party that doesn’t obsess about property ownership?
We should have a more balanced set of policies which attempts to make it easier, more comfortable and more secure to rent long time in the private market to give tenants a stake in their rented home, and we should try to do our best to work against the false premise that only an owned property can be a home.’
Be honest – how many buy to lets do you own?
I’m not even sure where to begin on this. Suffice it to say that your argument seems to be that secure ownership and inflation is for the boomer generation, renting to prop up the boomers is for the generation after?
I will be charitable and take it that you have never actually lived in a buy to let? This line about, ‘rents – not that bad,’ is pernicious nonsense that must be denounced in the strongest of terms at every opportunity. Firstly, it causes a pretty big problem post-retirement, take a look at Germany. Second, why on earth should it be that people should not aspire to own their own property and be satisfied with the poor man’s dependence that Tommy describes? Third, who are you to decide what people’s motives for buying are, still less judge?
What I will say is this, it was the 1989 Rent Act that started all of the trouble with the current housing market and until someone takes on the vested interests of the boomer generation we wil continute to have these problems. Whilst the likes of Maria and Steve see no problem with three generations being priced out of shelter these debates will simply go round in circles.
Further, what is additionally galling is the breathtaking ‘we know better’ attitude that those who champion rents flaunt. Look at Steve’s comment (by the way, do you rent Steve?)
‘All it takes is a small percentage fall in house prices over the course of a year to make renting cheaper than buying.’
So in other words, don’t attach any value to control or ownership, You say that price risk must be considered above the non-cash benefit of ownership and so everyone must think that too. Staggering.
We must smash buy-to-let and make the boomers squeal. If that means building on green-belt or loading the planning system against BANANAS, so be it.
Stephen Gilbert should be feted and raised high on an elephant and given a parade through the streets of St Austell – let us pray that this is the beginning of the end for BTL.
@Tommy
I don’t know where to start, but I’ll give it a go.
Your only experience is renting? At various times, I’ve rented, owned and let houses, so I’ll give you my thoughts.
Renting:
Advantages:
You’re not paying dead money on interest payments to the bank. Buying a house with a large LTV mortgage will mean paying for a multiple of the loan principle over your lifetime.
You’re not paying for the maintenance of the house.
You’re not paying for the labour involved in dealing with tenants in addition to the maintenance.
You’re not paying for the insurance.
Much easier to move to another house at short notice if you change jobs, don’t like the house you’re in, etc.
Disadvantages:
You can’t do it up the way you’d like (although there isn’t much you can do with many houses in terms of building extensions).
Insecurity of tenure. Two months notice from the landlord isn’t great if you’re wife’s pregnant. That’s why I, and others, argue for improving the rights of tenants.
Rude and unhelpful letting agents.
Rude and unhelpful landlords
Letting:
Disadvantages:
Buying a house to rent in today’s market makes no economic sense. Landlords certainly aren’t fat, as yields are close to a record low and capital gains a fantasy. If you buy a house with cash then you will make a very small return, but at enormous risk, given prices are still in a bubble in many areas of the Country (London and SE in particular) and have only partially deflated.
Poor legislation to protect the landlord if the tenant absconds owing rent.
Tenants can leave at short notice, leaving the possibility of voids.
Rude and unhelpful tenants.
Rude and unhelpful letting agents.
Solution to some of the above problems for landlords and tenants – better regulation. However, over the last decade as prices have bubbled, landlords found it easy to ‘make’ money without paying regards to keeping good tenants. As a result, standards of service from landlords have suffered. But now we’re in a long-term bear market in house prices, it is essential that landlords treat their tenants better if they are to survive. Hopefully the market will now play some role in righting the abuses of the last 10 years, now that landlords are struggling. The boot is on the foot of the renters – if only they realized, instead of being brainwashed into thinking they’re inferior.
Buying to live in:
Disadvantages:
Paying multiples of the price of the house in dead money: interest payments.
Paying an uneconomic price in a long-term bear market, that will potentially lead to negative equity, or low equity making it difficult to re-mortgage.
Paying for maintenance.
Paying the insurance.
The risk of a change in (a) the house price (b) mortgage terms – potential rise in interest rates (c) personal circumstances – redundancy, decreased income (d) the risk of inflation being greater than wage inflation (as at present), whereby everything else goes up fast than your wages, resulting in a decreased ability to service the mortgage (e) Buying in a low interest/low wage inflation environment costs more of your wages over the term of the mortgage than buying in a high interest/wage inflation environment.
Advantages:
You can brag about how much your house has lost value and how much it costs to service at dinner parties (unless, bizarrely, you and think your house is making money and want to brag about it).
You can paint the walls a different colour and possibly build a lean-to if you’re allowed.
OK, sarcasm aside, you have the benefits of not facing eviction at two months notice and the ability to clear the mortgage so you’re not paying rent in retirement and have something to to sell to pay for a care home. I’m not a fan of inheritance, as it’s the opposite of meritocracy. In my world, everyone pays for their house and uses any wealth they’ve earned during their lifetime to enjoy their retirement; everyone works for what they get back.
Anyway, the reason banks are asking for large deposits at the moment is to protect themselves if prices fall a further 20%-30%. That’s obvious, and should be a warning to anyone thinking about buying a house. In reality, many potential first-time buyers are being protected from themselves at the moment by the banks.
Renting has certainly been cheaper than buying over the last four years. The amount of money lost in interest payments and an over-prices purchase easily outweighs any rent paid as an alternative. House prices are in a bubble; yields are lower than average because house prices rose astronomically on the back of easy credit whilst rents remained the same. In an ideal world where houses are priced according to their economic worth (rather than overpriced as they are today due to speculation) then there would be a fair choice for people between renting and buying; each would be priced sensibly. A good way to ensure that prices remain sensible is the introduction of a land value tax in place of other forms of taxation. However, current governments suffer from ‘helping’ current homeowners at the expense of potential homeowners – that is why prices are taking so long to fall and why first-time buyers are struggling to buy – it’s because houses are overpriced. Simples.
Nobody is arguing against home-ownership. I am arguing that there is fundamental problem with the way the rental sector is treated, that leads to a poor quality of service for tenants and leads to overpriced housing. It’s partially because of this attitude that potential first-time buyers have to pay over the odds to buy a house and in addition receive poor service for their rent.
Oh, and the price of a house is ultimately determined by the rent (ignoring unsustainable speculation that leads to temporary distortions, such as at the present), not the other way round.
Sorry if I went on a bit there.
There is a problem with the supply of property to first time buyers.
This is caused in part by the demographic changes in our society where more single people are seeking their own independent housing.
Where do we build all these extra houses?, are the people able to find work nearby? are prices so high because of the shortage of houses or because of property speculation?
there are so many different variables when it comes to housing that to look at one aspect in isolation risks creating further distortions.
Why do people think buy-to-let makes money for people????????
If you bought (the average house to let) in 2004, your house is worth the same as when you bought it in nominal terms. In real terms it is worth less, so the capital value has depreciated since buying. Factor in the costs of interest payments, transaction costs, maintenance, labour, etc and there’s no way you’ve made money for all that effort and risk.
Why do people have the absurd notion that paying rent is paying someone elses mortgage? It doesn’t make sense. You pay rent at a market rate for a particular product. If you buy a house you are also paying a market rate for a particular product. However, at the moment the home-buying market is hugely distorted with overpriced houses. WHy would anyone want to buy at the moment.
To all those grass-is-greener-onn-the-other-side renters moaning on here. Can I ask you this – if you are able to buy the house you want at 20% less in 2 years time as a result of the market price falling, are you going to feel sympathy for those current buy-to-letters who will being losing even more money??
Living in the UK is like living in a brainwashed cult when it comes to homeownership.
Steve –
‘Why do people think buy-to-let makes money for people????????’
The Mail once claimed that prices rose at £100 a day. I think that people can crunch the numbers regardless of your contortions and apologism.
‘Why do people have the absurd notion that paying rent is paying someone elses mortgage?’
Is this a joke?
‘It’s partially because of this attitude that potential first-time buyers have to pay over the odds to buy a house and in addition receive poor service for their rent.’
No – it is because we have had a feckless boomer generation who grew fat not on labour or saving but on rent-seeking and selling houses to each other in place of the country having an economy. I for one am delighted that landlords are having it hard – long may it continue.
Land Value Tax people. It’s not complicated. Houses in UK are over-valued by about 300%, creating a landowner cartel that periodically brings the rest of the economy crashing down. Land ownership is, in the nicest possible way, parasitic, and land speculation is a monster that eats everything in its path. Make these people pay their way, and give some relief to earners and investors, who at the moment are bankrolling EVERYTHING (that the Labour government hasn’t borrowed).
Steve – one other thing
‘Poor legislation to protect the landlord if the tenant absconds owing rent.’
I take it you have never had to hunt down a landlord who decided to up and go. I had to trace the bloke’s mother to a hospital bed to get him to pay attention. Legislation that punitively sanctions landlords should be borught into force. The Late Payment of Commercial Debts Act allows for charges of interest at 3% above base rate – that should be extended to rent agreements and any attempts to evade payment should result in the additon of punitive charges and perhaps even a criminal conviction.
The idea that landlords are hard done by is an affront.
@Duncan
“The Mail once claimed that prices rose at £100 a day. I think that people can crunch the numbers regardless of your contortions and apologism.”
The Mail?? Are you being serious? Yes, there were many sections of the media involved in ramping house prices – without irrationality and the behaviour of crowds there would have been no bubble, but most buy-to-letters bought in late (after seeing other people’s houses rise in value) and they’re not going to make a profit. That’s what happens in bubbles. I have no sympathy for people that think they can make money for doing nothing, although letting a house does actually involve doing things – it’s just that what you get back in rent as a landlord is uneconomic for current house prices, hence prices must fall.
‘Why do people have the absurd notion that paying rent is paying someone elses mortgage?’
Is this a joke?”
Nope. It’s a pefectly rational analysis based on the economics of buying vs renting in a stable market. Why do people assume that buying a house is some kind of path to riches- it’s only easy money if you speculate well by buying at the bottom and selling near the top. Most people don’t sell at the top though – they cling on in the hope things will get better, which is what we’re seeing at the moment in the housing market with such low transaction volumes.
“No – it is because we have had a feckless boomer generation who grew fat not on labour or saving but on rent-seeking and selling houses to each other in place of the country having an economy. I for one am delighted that landlords are having it hard – long may it continue.”
I have no sympathy for people that bought houses in the expectation of prices rising – they were greedy, dumb and socially parasitic. I have respect for landlords that buy a house and provide a good service to their tenants in return for the rent, the same way I respect anyone that runs a good business – most buy-to-letters, though, had no intention of running a business – they were just speculators, speculating very badly. Blaming it on the boomers is slightly silly IMO – it wasn’t the boomers that forced up prices by borrowing more and more money. All they did was buy a house when prices were sensible – it’s the people that bought houses at prices that weren’t sensible (and the people that lent them the insensible amount of credit) that are to blame and the government and bank of england who keep bailing them out in various ways, using other people’s money.
I have full sympathy for anyone wanting to buy a house at the moment, but are unable to do so – they have been priced out by the mentality that house prices are a good investment and alway go up and a government willing to make the dumb believe they are not.
Land value tax would help – best to introduce it when prices reach the bottom though. If it were introduced now then homeowners would blame the government for the crash. Best to sit back and watch.
@Duncan
“The idea that landlords are hard done by is an affront.”
Where did I say landlords are hard done by? Some are, some aren’t. Some tenants are hard done by, some aren’t. Why are you getting so easily outraged? I’m suggesting better legislation to protect both good tenants and good landlords and punish bad tenants and bad landlords – or do you not think that there are any bad tenants out there? In my opinion, security of tenure rights need to be improved for tenants. Economically, many buy-to-letters are struggling at the moment and so they should – it was their chioce to buy an overpriced house with borrowed money. Because I perceive them to be struggling economically, based on my understanding of the curren situation, doesn’t mean I have sympathy for them.
Steve –
‘Yes, there were many sections of the media involved in ramping house prices’
It may well have been ramped. But that is of no consolation to those priced out of home ownership. I am at a loss as to how you can appear to deny that this is a generational issue.
It’s a pefectly rational analysis based on the economics of buying vs renting in a stable market. Why do people assume that buying a house is some kind of path to riches’
That’s a nice swerve into a criticism of the house prices will always rise mentality rather than addressing the actual point at hand about rents = paying someone else’s mortgage. That you can deny that very plain fact suggests to me that you are treating both those who pay rents and stark reality with utter contempt.
‘I have respect for landlords that buy a house and provide a good service to their tenants in return for the rent.’
This is all very nice, but it is missing the point. What we need is house-building. The chronic undersupply of houses (note that, houses, not flats, units, residences, dwellings etc) is the problem. Part of this is due to feckless land-banking, part of this to Councils being in the pockets of the BANANAS and part due to BTL. Smash all of these say I.
@Duncan
“Whilst the likes of Maria and Steve see no problem with three generations being priced out of shelter these debates will simply go round in circles.”
Where did I say that exactly?? I think current house prices are obscene (from my moral viewpoint) and uneconomic (from my rational viewpoint). I think they will fall (from their current level in the national indexes)- and that it will be a good thing. If it cheers you up – my wife owns a second house (that we previously lived in) – prices there have fallen 40%, which I think is good as it means owner-occupiers stand a better chance of being able to buy a house.
That’s a nice swerve into a criticism of the house prices will always rise mentality rather than addressing the actual point at hand about rents = paying someone else’s mortgage. That you can deny that very plain fact suggests to me that you are treating both those who pay rents and stark reality with utter contempt.
I’m sorry but that’s just bizarre. If you care to read anything I’ve written above, you will realise that I think current house prices are uneconomic and that it is a bad thing. I certainly don’t think that house prices only go up – I’m very bearish in that regard. The irony is that it is actually you that seems to think prices only go up and that buying a house is a path to riches and that renting is dead money. It is you that is bleieving all the myths propagated by those with a vested interest in keeping house prices high.
‘I have respect for landlords that buy a house and provide a good service to their tenants in return for the rent.’
This is all very nice, but it is missing the point. What we need is house-building. The chronic undersupply of houses (note that, houses, not flats, units, residences, dwellings etc) is the problem. Part of this is due to feckless land-banking, part of this to Councils being in the pockets of the BANANAS and part due to BTL. Smash all of these say I.
Land-banking creates a temporary distortion to the market, wherevy speculators artificially limit the supply of houses. Land value tax is the answer. However, the huge rises in house prices over the last decade had almost nothing to do with a lack of supply. Prices increased in areas of the Country where the population was stagnant by ~200% in the space of a few years. It was correlated with the lending practices of the banks – i.e. it was an artificial and unsustainable increase in economic demand (the ability to pay for something, not the desire) created by ever bigger mortgages being loaned (on the back of house price increase, created by previous bigger loans, etc).
Steve –
‘my wife owns a second house’
Do you mean, ‘owns,’ or do you mean, ‘is paying a mortgage on?’ In either case, when did she buy it and the 40% fall you mention, is that on the price you purchased it for or is it from the notional peak? How much inflation have you benefited from on your entire portfolio of property?
To be clear, I’m not getting at you. I’d just hope you can understand that it is easy to be moral and rational about this whilst sitting on £x00,000 of houseprice inflation.
“Do you mean, ‘owns,’ or do you mean, ‘is paying a mortgage on?’ In either case, when did she buy it and the 40% fall you mention, is that on the price you purchased it for or is it from the notional peak? How much inflation have you benefited from on your entire portfolio of property?”
The 40% is based on the peak selling prices and the current sselling prices. It’s worth less now than when she bought it. I’d prefer it if she didn’t own it and had sold it a couple of years ago, like I tried to persuade her to, but the mortgage is more than half paid off – the vast majority of the payments coming from our wages.
In the house we live in, we are not currently benefitting from the increase in original purchase price to the current notional price, as we’d like to move to a bigger house. As a result of the bubble inflation, it now costs more to pay for the larger house, so in reality we are worse off because of the inflation. If we were close to retirement and wanted to downsize then we would be better off because of it. The bubble in property prices has certainly resulted in an inter-generational wealth transfer – but how many of the boomers have cashed in? They weren’t the ones responsible for the price increases and if my bearishness is well-founded then they won’t be able to sell at current prices if they leave it any longer.
IMO, one of our houses was bought at a sensible price and the other was overpriced – hence we are net losers if the market returns to sanity. Does that answer your question?
To be honest putting people through the discipline of having to save before acquire a property is no bad thing, as it gets people used to the higher outflows they will experience when they they acquire a home and have to start paying off the mortgage. It was also the basis on which building societies were founded. What is wrong is the level of deposits that people are having to save before they can get a mortgage and the higher interest rates that they have to bear if they cannot provide an even higher level of equity. If someone has genuinely saved up 5-10% of the cost of a house – it is difficlt to see why they shouldn’t be entitled to a mortgage at a decent rate. Although of course this isn’t necessarily in the interest of the banks and hence wasn’t addressed in the ineffectual Vickers report.
Another example of how young adults are being penalised in a manner which there parent’s weren’t? Looks like we are storing up a big problem for the future here I’m afraid .
‘Why do people have the absurd notion that paying rent is paying someone elses mortgage?’
Perhaps because the yields most people involved in buy to let look for are greater than the mortgage rates they pay for their finance. Of course buy to letters are also looking for capital appreciation as well.
I’ve had to move my family three times in two years because consecutive landlords have either decided to sell up, or been forced to by the bank. Thanks to the dearth of suitable rental properties the most recent meant moving far enough that my lad had to change school. I don’t want to buy a house because I think it will make me money, or because it’s a status symbol, or because I think it will contribute to my retirement, I want to buy a house so that my family can have a stable home, where we can decorate or put up shelves or change the garden without having to get prior written permission, and where we can plan further ahead than the end of our 6 month rental agreement.
In my view, buy-to-let landlords are the very worst kind of parasite, in that they feed entirely on the slightly-less-fortunate, and until this social disease is eradicated any attempts to help first time buyers simply prop up the existing system. Let the market crash and take these blood suckers with it, then we can get back to treating homes as places to live instead of tools of extortion.
Thought you may all be interested in seeing this broader article on housing which Stephen wrote: http://www.stephengilbert.org.uk/en/page/housing-essay
@toryboysnevergrowup
Perhaps because the yields most people involved in buy to let look for are greater than the mortgage rates they pay for their finance. Of course buy to letters are also looking for capital appreciation as well.”
But current net yields are are lower than current mortgage rates for buy-to-lets. It makes no sense without the prospect of modest capital gains to top things up, yet house prices are falling, so buy-to-letters are currently losing big time. Even a cash buyer wouldn’t be able to make a profit with house prices falling at a modest rate of ~3% per annum. Leveraged speculators are doomed.
My point about the notion of paying rent=paying someone elses mortgage is that I regard it nothing more than spin used by vested interests to persuade people to throw money at purchasing a house. In reality, rent pays for labour and costs. If the landlord choses to spend the money received for his labour on paying down the mortgage then that’s no different to anyone else going out and getting a job to pay for a mortgage.
OMG, please tell me Stephen Gilbert has nothing to do with shaping Lib Dem policy on housing:
“First-time-buyers are now effectively priced out of the market, despite a decade of easy credit and 125% mortgages.”
Oh deary me. I’ll correct that statement: First-time-buyers are now effectively priced out of the market, BECAUSE OF a decade of easy credit and 125% mortgages.
“Demand is up, but supply is down and falling further.”
Er, demand is well down since 2007, owing to sensible lending being resumed. Demand is the willingness and ABILITY to pay; not just desire. Availability of credit has a huge influence on economic demand for housing.
“Solving the problem will need intervention in the market. First, the publically owned banks need to be asked to revisit the criteria on which they are lending and the level of despots they are asking for. ”
Great – and keep prices propped up – that’s really going to help first-time-buyers.
“Local Councils should be encouraged to offer mortgage schemes themselves.”
Great – and keep prices propped up – that’s really going to help first-time-buyers.
“And, if we are not just going to sit back and wait for market conditions to pick up, then we need to find innovative ways of encouraging underwriting of the costs that developers face on consented but stalled schemes to get the private sector moving.”
We just need to wait for prices to fall, that’s all. Failing that – perhaps additional taxes on BTL, remove tax exemptions for empty houses and when we reach the bottom of the cycle, introduce LVT.
“First-time-buyers are now effectively priced out of the market, BECAUSE OF a decade of easy credit and 125% mortgages”.
Steve is right – it’s yet another problem caused by the failure to regulate the Banks. Too much was lent – and some of it to people who were never likely to pay it back, having lied through their teeth about their income.
Property prices moved increasingly out of line with incomes. We’re now seeing a gradual adjustment, but sellers will have to reduce their asking prices further if the market is to get moving again. This will be hard on those in negative equity, but it’s necessary.
Will we actually learn this time? Or will the sorry cycle repeat itself a few years from now?
Steve
You know very well that you are looking at only current situation – perhaps you might wish to provide us with some longer term information. Any longer term investment involves good and bad years – I’m not sure about buy to let but he typical business model for property companies used to be a return of 50% yield ad 50% capital appreciation over the long term.
I rent out of choice.
I know that many people in the UK don’t understand, but it’s quite normal on the continent. As it happens, in my area monthly mortgage rates would be higher than my monthly rent (not to talk about the deposit), and what I’d get would be substandard compared to my lovely, good-value-for-money flat. I don’t want to be condemned to living in a substandard house for the next 25 years, just so I own a piece of bricks and mortar in the end – not to mention the constant worry of having to keep it up, something my letting agency is taking care of very well, and with minimum hassle for me.
Even IF this isn’t the wisest choice economically (but in my case, I think, a FAR better choice in terms of quality of life, so much so that I am happy to take potential losses), I think I ought to have the choice. At the same time, I ought to be able to fix up my bathroom without having to fear that the landlord will put my rent up because the value of the property has been increased (by me). I ought to have the right to stay in there for the long time without right to buy giving my landlord an incentive to throw me out before the right takes effect. I ought to have a chance to have some security so that I don’t have to be nervous each time a letter arrives from the letting agency, wondering whether I’ll get two months’ notice. It’s that kind of thing, which is completely avoidable if the laws only were right, which make renting unnecessarily uncomfortable in the UK.
Continental countries have long-term contracts, for example. Why can’t we have those? Why can’t private tenants acquire something that council house tenants take for granted?
What’s wrong with having better laws for private letting which protect tenants?
I am not saying that people should all make the same choice that I have made. But I’d like a little less obsession with buying houses. I think it would be healthier for our society and for our economy, too.
Moreover, I think that the time of house price booms is over. I am simply not convinced that buying now will ever bring the same returns as it did for the baby boomers. All in all, my conclusion is that the collective obsession with this probably makes far too many people unhappy – and I really don’t see the point.
Give people more choices by making private renting viable for long-term homes. What’s so wrong with that demand? What’s wrong with challenging the orthodoxy?
Maria – you may be fortunate to have a very cheap rental property, but this is rare. My rent is now slightly below market price, but if I had a mortgage my housing would be about 30% cheaper, and eventually would be free when paid off.
Just as important – “I don’t want to buy a house because I think it will make me money, or because it’s a status symbol, or because I think it will contribute to my retirement, I want to buy a house so that my family can have a stable home, where we can decorate or put up shelves or change the garden without having to get prior written permission, and where we can plan further ahead than the end of our 6 month rental agreement.”
I agree, IMc.