Britain will become a nation of renters within the next generation | Discuss

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Britain will become a nation of renters within the next generation
18/04/2014
4:29 pm
Mary Latham
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In  2014 report produced for Halifax by the National Centre for Social Research some interesting facts have been highlighted and, in much of the media, have been reported in a negative light. headlines like

“Half of Britain will become a nation of renters within the next generation” and “Britain to become a nation of renters within the next generation  

Are missing a point in my opinion

What the survey results actually tell us is that there is a change of attitude towards home ownership

 

One in five of 23-27 year olds have no desire to own a home”

 

Since the last survey

 

The proportion of people who don’t want to raise children in a rented property has reduced by 10%

 “The proportion of people worried about renting having a negative impact on their retirement also decreasing by 10%

 

There is nothing new about the younger generation aspiring to a different lifestyle to their parents.  My generation became the generation of homeowners for this very reason. We aspired to homeownership because it was an improvement on the lifestyle of our parents and, as property price rose, we saw it as a vehicle to wealth creation which later lead to an increase in the number of my generation who invested in property to let and the term “property ladder” was born.  Property was not always a ladder and there is now a divide between those of us who see property as an asset and those who see it as a burden. 

In his book Rich Dad, Poor Dad, Robert Kiyosaki tells us

 

an individual's house is not an asset, although banks permit people to list it as such”.

He says

 “a house is a liability”: "During hard times assets feed you, and liabilities eat you". “Therefore a house that costs you money is a liability, and a rental property that produces positive cash flow income is considered to be an asset”

 

The reason that so many of my generation now live full or part time in Spain is because we fell in love with Spain during our two week annual holidays in the sun, which we saw as a huge improvement on our parents annual holidays in Cornwall and our grandparents trips to Margate.

I could not have imagined that “Home and Away” and “Neighbours” would inspire my children’s’ generation to up sticks and live in Australia but this is what has happened in my own family and that of many of my friends.

Surveys are only useful if we take the facts as we find them and the facts that have come out of this survey are telling us that this generation do not aspire to homeownership

 

“86% of potential homeowners refuse to sacrifice the quality of accommodation they currently live in to reduce the amount of rent they pay in order to save for a deposit

46% agree Britain is becoming more like Europe, where renting is ‘the norm’

 

Whether my generation agree with this or not will have little or no impact on what your children decide to do.  I remember my own father worrying that my taking on a mortgage was a “burden” which he referred to as a “rope around your neck”. You don’t want to know what he thought of investing in property to rent.  This did not stop me nor most of my generation, who thought that we had arrived when we owned our own homes and gave little or no thought to it being a burden.

Times are charging, as they always will, and this generation aspire to a different lifestyle which does not include spending most of their income on buying and maintaining the roof over their heads. This generation want to live in areas where they could not afford to buy, to have the freedom to move to chase job opportunities and spend time overseas, to go from loft apartments to 3 bed houses with gardens as their circumstances change and, no doubt, to bungalows or flats at home or abroad when their families have flown the nest.

 

“54% of homeowners think people aren't willing to make the necessary sacrifices to get on the property ladder

 

My question is “Why should they if that is not what they want?” Are we all so confident that we are right to be going into our later years carrying the cost of maintaining our homes?  And at the end of the day, when all our sacrifices have been made, Generation Rent will no doubt inherit the fruits of our labour and sacrifice

 – not so daft are they?

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19/04/2014
4:05 am
PaulBarrett
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The reason GR vis not interested in buying is because it is now unaffordable for them!

Without the BOMAD resi property buying is almost impossible.

If it was made affordable  nearly every person would buy a property.

Very few single people can ever afford to purchase a property.

They need a partner on a decent wage and we are talking about £50000 each.

Even on these wages they would struggle to buy a £250000 property without about £40000 deposit.

Property prices in the South -East are so unaffordable that these aspiring resi owners don't stand a chance of buying

They are forced to rent if they want to be where the 'action' is!!

GR refuses to save and cut back on lifestyle and so they will always be renters.

They are not prepared to make any sacrifices to purchase a property; which is fine, their choice, but GR should NOT moan that  they cannot buy.

It is their choice NOT to put themselves in a position where they could possibly afford to buy.

Which is great news for PRS LL who can rely on feckless high earners to rent their properties.

Let us hope that these feckless high earners do not wish to save and we LL can make hay at their expense.

We will increase rents which will occur regularly.

These feckless high earners will have to pay the price of not having a mortgage; but being at the mercy of a LL decision on what rent to to charge.

Property will remain unaffordable for most people unless the BOMAD or the BOGAG step in with pension pots to give their offspring large deposits.

The feckless who wish to live a grand lifestyle will have to accept that they will be renters for life unless they wish to save and live at home whilst doing so

That is what I did!!

After such saving of a few years I could afford a mortgage for the property I wanted.

But ONLY because I lived a subsidised lifestyle at home and NO spending money on social activities.

After about 6 years I had saved enough for the deposit and my wages had just increased to where I

could obtain the mortgage I needed.

I chose to make sacrifices of lifestyle to buy my first property.

For GR life is all about choices!

Up to them what ones they make; but they cannot have it all; it is one or the other!!

Something that GR refuses to accept and stores up resentment from them as to why they can't have it all!!

I have NO sympathy for GR cos they make the wrong choices if they want a property and refuse to cut down their lifestyle.

I was never GR cos I aspired to owning a property and my mother accepted subsidising my rent at home cos she knew and could see what I was trying to do.

I'm afraid that GR to a large extent is feckless; which is why they will never own a home; which is great news for me as a non-feckless PRS LL!

 

 

 

 

 

 

19/04/2014
12:20 pm
Mary Latham
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Paul, As the survey showed

“One in five of 23-27 year olds have no desire to own a home” 

As a mother of two young people in their early 30's I can also tell you that many of that age group also have no desire to own their own homes and are CHOOSING TO RENT.

You said

"These feckless high earners will have to pay the price of not having a mortgage; but being at the mercy of a LL decision on what rent to to charge."

Why are they "feckless"? They will never have to face the situation that my generation had to deal with when interest rates rose to 14% and many people I know, who had taken out large mortgages and were rearing children, could not afford their repayment - many people lost their homes at that time.

Many of my tenants are choosing to rent, they are choosing a lifestyle which enables them to live in an area where they could not afford to buy.  When the boiler breaks down I have it repaired, when the fence is blown down I replace it, when the property needs to be redecorated I have it redecorated....... The expenditure on their home is capped with no sudden costs for repairs and replacement and they are NOT at my mercy because there is a glass ceiling on rents in every area apart from London and surrounding areas and rents are also capped for those on benefits to the LHA rates.  

My rents have risen on average by 8% in the last 15 years and this is common among landlords in the Midlands, unless they are letting to students where increases have been higher but so has investment in students properties. In some parts of the north rents have fallen or remained static. The 2014 LHA rate in Birmingham for a single room is £8.23 a day!  Many young professionals are choosing to house share for both social and economic reasons, this is both affordable and flexible which suites their lifestyle, they are not "feckless", they are simply making choices just and you and I did at their age - are you saying that you are right and they are wrong?

According to an analysis carried out by LSE in 2006 the national minimum wage rose by 14.1% between 1999 (when the national minimum wage was introduced) and 2006 - a period of 7 years.

 

There is a nice calculator to work out your personal inflation since 1999 here http://www.thisismoney.co.uk/m.....-1900.html

 

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19/04/2014
10:17 pm
PaulBarrett
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Feckless in respect of wishing to have a lifestyle aswell as be a homeowner immediately.

That is  usually impossible in today's economy.

It is either one or the other; they can't have it all immediately.

I even read somewhere that most new homeowners want to move to a place already done up!!

Whatever happened to the idea of buying a cheaper rundown place and then doing it up to get on the housing ladder!??

There does appear to be less propensity amongst the young to get their hands dirty and add value to cheap property.

Too much property porn on TV has given them delusions of what they should expect when trying to get on the housing ladder!!

Fecklessness can be in attitude and not just in actions.

The I want it all NOW attitude of some some people is exactly the feckless attitude which does society no good!!

Saving and working hard to avoid debt seems to be an attitude buried in the past; which is why this country is in such a mess.

Personal debt is now over a trillion pounds excluding mortgages I think.

This is just plain unsustainable.

Most people are just an IR rise away from disaster.

A recovery so espoused by Gideon ( Osborne), is founded on sand; it can be blown away very easily!!

Zero hours contracts; part-time and under employment, QE, low IR, HTB, massive working tax credits to price people into jobs rather then remaining on full welfare benefits, massive welfare payments to supposed job seekers and allegedly not fit for work people, a massive deficit and  massive national debt, mean this country is technically bankrupt.

And yet people are still expecting everything they want NOW!!!

It is just unsustainable to consider fecklessness of all types is manageable; it isn't and it can't be really afforded either!!

 

 

 

 

20/04/2014
6:35 pm
Mary Latham
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Paul again

"“One in five of 23-27 year olds have no desire to own a home”

The point is they DO NOT WANT IT ALL they want different things, just as we wanted different things to our parents - this is the way of the world and, to be honest, I think "kids these days" type of comments are outdated and irrelevant to this discussion.

These young people will not be "just an IR rise away from disaster" because they do not intend to saddle themselves with huge mortgages - which account for much of the national debt.

Young people are the future and it is important for society to evolve to meet their wants and needs.  The PRS is very good and recognising changes in society and changing our business models to fit in with them - the growth in HMOs over the last few years is a direct result of changing needs and increase in the demand for one person affordable homes.

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21/04/2014
7:58 am
PaulBarrett
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Indeed I think perhaps as you suggest that we are seeing a major sea change in attitudes of GR towards accommodation.

Now as a point of conjecture I suggest that it may be because property prices are just unaffordable in areas where the work is; essentially the South-East and are likely to remain so for the foreseeable future!

This potentially forces a realisation on GR that is is pointless chasing an unrealisable dream and so they resign themselves to making the best of a bad job and ensure they have the best letting situation they can achieve.

I do wonder how GR will accept that they will have to commence stable family situations in rented accommodation.

This has never been any problem for tenants on HB; but other tenants I'm sure would prefer their own property once they are no longer footloose and family free.

For those tenants I can understand that a longer security of tenure would be appropriate.

The problem is that with existing eviction laws that is a risk that few PRS LL are willing to take.

I believe most LL would prefer to have longer tenancy tenures if that is what a tenant requires.

But our hands are tied by the stupid eviction laws and lenders who won't generally allow anything longer than a year's AST.

GR has every right to expect extra rights if it is willing to commit; but that will only happen if the present possession laws are changed.

Which I can't see happening anytime soon!

So I do believe that GR does want it all; but now realises they can't.

Perhaps this new paradigm will change the British obsession with property and divert monies into more productive parts of the economy.

Germany is a classic example of an extremely successful economy where there is no overwhelming desire to own property and where most are content to rent for decades.

This provides tenure security for a family situation.

This prevents money being wasted on ever increasing house prices which don't really add anything to the economy; effectively it is dead money.

So perhaps we will become more like Germany; which can be no bad thing, where property obsession is considered slightly strange.

It is just an asset class; it could be said that investing in other asset classes is far more productive for the economy as a whole.

I think the Brits are conservative with a small c and wealth is very much judged on how much your property is worth.

In a fragile world where low wage jobs abound and unemployment continues to grow despite what the govt thinks property is seen as a bulwark against the vagaries of the cruel world and can provide stability from increasing rent costs.

But there may well be a major change in GR attitudes of living for the day and not busting a gut for an unaffordable property purchase.

That is not an incorrect way of living and aspiration; but it is certainly different from my generation's attitudes.

That is not a criticism; just an observation.

We are destined to all become dinosaurs at some stage; so we will become dinosaur PRS LL whilst GR gets on with living life to the full without the worries of managing a property.

That being the case I believe Housing laws will need to be changed.

A radical change is needed to take into account the new situation for property in the UK.

I don't think anyone has grasped the full enormity of what effectively is occurring.

GR therefore needs encouragement and assistance to ensure they feel as secure as a person who rents their property from a bank via mortgage.

I just don't believe the political will exists; property is seen by successive governments as a way to mug the population that they are doing well.

I would far rather have an economy like Germany than what we have in the UK; shame we won the war!!!

 

 

 

22/04/2014
6:25 pm
Mary Latham
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Result!

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23/04/2014
2:05 pm
lauragva
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That's such a high population... It's scary to think that so many people will rent rather than buying!  I signed for my first house and mortgage at 22!

23/04/2014
2:25 pm
Mary Latham
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lauragva said
That's such a high population... It's scary to think that so many people will rent rather than buying!  I signed for my first house and mortgage at 22!

Why do your find that scary lauragva? Many people of 22 would find taking on a mortgage very scary - good for you

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