Many local 20-somethings see home ownership as a distant dream aggravated by ‘Baby Boomers’ - with their free university education with grants, property windfalls, golden final salary pensions and free bus passes. Indeed, a Stamford property purchased in 1977 for £20,000 is worth £337,108 today!
But to blame the 60/70 year olds for that sort of rise seems a little unfair, with the value of the homes rising like rocket it’s hard to make them liable for that. In fact, they simply reacted to the inducements of our property and tax system; in the 1970’s and 1980’s, they were able to take out huge mortgages protected in the knowledge that inflation would corrode the real value of the mortgage, while wage gains boosted their ability to repay. Buy-to-let landlords are also humbly reacting to the peculiar historic inducements of the UK property market.
So, who is to blame?
Hyperinflation in the 1970’s meant the real value of people’s mortgages was wiped out, Margaret Thatcher sold off millions of council houses and then there was Nigel Lawson’s delayed ending of the MIRAS Tax Relief in 1987. The Blair/Brown combo doubled stamp duty in 1997 and again in 2000, which, as a tax on property transactions prohibits a more efficient distribution of the current housing stock.
Under-occupancy is another current concern, i.e. couples living in large 4/5 bed houses despite their children having left home years ago. Governments have had plenty of opportunity to change the draconian stamp duty rules to incentivise mature house owners to downsize.
However, over the last few years there is a change in government policy towards housing and the new breed of buy-to-let landlords that have come about since the Millennium have had their wings clipped recently with the introduction of new tax rules, making it harder to make money out of property unless they are well informed with national data and facts on local property trends.
It’s easy to think the only reason that first time buyers have been priced out of the housing market is because of these landlords. Landlords have been undervalued with the local homes they provide for local people. With first time buyers struggling to save for a deposit, if it weren’t for those landlords providing homes over the last 10/15 years, we would have a bigger housing crisis than we have today.
Since the global financial crisis of 2008/9, local councils have had to cut services, so they certainly don’t have enough money to build new homes ... homes that were instead available on the private rental market.
Each year, 448 homes are being bought up by buy-to-let landlords in the South Kesteven District Council area when otherwise they might have become available to other buyers.
However, the current national average deposit is £51,800, which is by far the greatest barrier to those wanting to buy their first home.
For advice on the buy-to-let market, please contact David Crooke, UPP Property on 01780 484 554 or via email on: david@upp-property.co.uk
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