Private Renting In Oakham Set To Hit 929 Households By 2021 (Part 1)

Private Renting In Oakham Set To Hit 929 Households By 2021 –

Is Buy-To-Let Immoral? (Part 1)

 

Can we blame the 55 to 70-year-olds for the current housing crisis in our towns? Also known as the ‘Baby Boomer Generation’, they were born after the end of WWII as the country saw a massive population explosion and recovered from the economic hardships experienced during wartime.

Throughout the 1970’s and 1980’s, they experienced (whilst in their 20’s, 30’s and 40’s) an unparalleled level of economic growth and prosperity throughout their working lifetime on the back of improved education, government subsidies, escalating property prices and technological developments... they have emerged as a successful and prosperous generation.

Yet some have suggested these baby boomers have (and are) making too much money to the detriment of their children, creating a ‘generational economic imbalance’, where mature people benefit from house-price growth whilst their children are forced either to pay massive rents or pay large mortgages.

 

Between 2001 - today average earnings rose by 65%, but average Oakham house prices rose by 144.9%

The issue of housing is particularly acute with the generation called the ‘Millennials’, who are young people born between the mid 1980’s and the late 1990’s. These 18 to 30 years, moulded by the computer and internet revolution are finding it very hard to buy a property, as these ‘greedy’ landlords are buying up all the property to rent out back to them at exorbitant rents ... it’s no wonder these Millennials are lashing out at buy-to-let landlords, as they are seen as the greedy, immoral, wicked people who are cashing in on a social despair.

Like all things in life, we must look to the past, to appreciate where we are now.

The 3 biggest influencing factors on the property market in the later half of the 20^th Century were, firstly, the mass building of council housing in the 1950’s and 60’s, secondly for the Tory’s to sell most of those council houses off in the 1980’s and, finally, 15% interest rates in the early 1990’s which resulted in many houses being repossessed.  It was these major factors that underpinned the housing crisis we have today.

To start with, in 1995 the USA relaxed its lending rules by rewriting the ‘Community Reinvestment Act’.  This Act saw a relaxation on the banks’ lending criteria as there was pressure on these banks to lend on mortgages in low wage neighbourhoods, the American viewpoint was that anyone, (even someone on the minimum wage / any working class person) should be able to buy a home.  Unsurprisingly, the UK followed suit in the early 2000’s, as banks and building societies relaxed their lending criteria and marketed 100% mortgages, even Northern Rock offered 125% mortgages.

Today we can observe those very same footloose banks from the early/mid 2000’s (lending 125% with a just note from your Mum and a couple of breakfast cereal tokens), ironically reciting the Bank of England backed hymn-sheet of responsible-lending.  On every first time buyer mortgage application, they are now looking at every line on the 20-something’s banks statements, asking if they are spending too much on socialising and holidays ... no wonder these Millennials are afraid to ask for a mortgage (as more often than not after all that – the answer is negative).

Conversely, you have unregulated Buy-To-Let mortgages.  As long as you have a 25% deposit, have a pulse, pass a few very basic yardsticks and have a reasonable job, the banks will literally throw money at you ... E.g., Virgin Money are offering 2.99% fixed for 3 years – so cheap!

So, in Part 2 next week, I will continue this emotive article and show you some very interesting findings on why young people aren’t buying property anymore - and it’s not what you think!

 

Understanding People & Property

We are here to help you buy, sell, rent and manage your homes & property investments

 

Oakham 01572 725 825  &    Stamford 01780 484 554