Bob Young, managing director of CHL Mortgages
When the housing market was at its peak before the global financial crisis, certain pundits denigrated property investors for snapping up affordable properties before first-time buyers had a chance to get their hands on them. The ‘big bad wolf’ that was the private rented sector (PRS) was supposedly stockpiling new build flats off-plan and driving up the price of property for the mere mortal. Fast forward five years and it is amusing to see that the rental market has now become something of a knight in shining armour, riding to the rescue of a generation of homeowners unable to amass a big enough deposit to but their own house.
A recent report published by the Joseph Rowntree Foundation entitled ‘Housing options and solutions for young people’ doesn’t seem to know which side of the fence to sit on. While seemingly acknowledging that the PRS saves those unable to buy or live with parents from homelessness, it also jabs an accusing finger regarding the potential creation of a three-tier system that may exclude lower earners, as if a lack of housing supply is somehow the fault of landlords.
It predicts that by 2020, an extra 1.5 million 18 to 30-year olds will be “forced” into private renting and that 500,000 will be forced to stay with their parents until well into their 30s. Among the recommendations made by the report are the provision of more affordable rents and longer tenancies with tax breaks for landlords who offer such options and the importance of addressing the long-term undersupply of housing to improve affordability.
I’m sure the second suggestion may have crossed the government’s mind, but it’s not as simple as flicking a switch and creating a swathe of shiny new properties. What really sticks in the craw about the tone of the report is the suggestion that a generation of twenty-somethings are being coerced into the PRS under duress. I may be out of touch with our latest generation of school leavers and graduates, but I’m pretty sure that none of them expect to leave education and waltz straight into their own house straight away as the report seems to suggest is their entitlement. Saving for a deposit may be harder than ever as loan to value amounts shrink and lenders’ criteria becomes stricter, but potential first-time buyers expect to fly the family nest later than their parents did and are accustomed to the fact they may have to rent for a while first.
Most of us have the ambition to own a house at some stage, but the hysteria about at what age this occurs seems quite unique to these shores. Our continental cousins are far more laissez faire about the whole thing, with France and Germany famed for having a far higher percentage of renters throughout their societies and an average first-time buyer age closer to 40 than 30. To be fair to our twenty and thirty-somethings, they seem far more comfortable with the ‘Generation Rent’ tag bestowed on them than the media and assorted think tanks seem to think.
It is no secret that as a nation we need to address the housing shortage at some stage, but it is wide of the mark to somehow apportion blame for high rental demand at landlords’ doors. There will always be those who will wail and gnash their teeth about their right to own property, but for every one of them, there are a gaggle of renters happy that they have a roof over their head and are not still occupying their parents’ spare room.