Youngsters unable to buy their first home in Loughborough – Are the Baby Boomers and Landlords to Blame?
Talk to many Loughborough 20 something’s, where home
ownership has looked but a vague dream, many of them have been vexatious towards
the Baby Boomer generation and their pushover ‘easy go lucky’ walk through
life; jealous of their free university education with grants, their eye
watering property windfalls, their golden final salary pensions and their free
bus passes.
If you had bought a property in Loughborough for say £15,000
in first quarter of 1977, today it would be worth £252,831, a windfall increase
of 1585.5%.
But to blame the 60 and 70 year olds of Loughborough for
that sort of rise seems a little unfair. With the value of the homes rising
like rockets, I don't believe they can be censured or made liable for that. A
few weeks ago, I discussed in my blog the number of people in the Loughborough
area who have two or more spare bedrooms (meaning they are under-occupying the
house). I see many mature members of Loughborough society, rattling around in large
4/5 bed houses where the kids have flown the nest years ago ... but should they
be blamed?
We are all just human, and the mature members of UK society have
just reacted to the inducements of our property and tax system. The mature
generations who joined the property market party in the 1970’s and 1980’s were
able to take out huge mortgages, protected in the knowledge that inflation
would corrode the real value of the mortgage, while wage gains would boost
their ability to repay.
Neither do I directly blame the multitude of Loughborough buy
to let landlords, buying up their 10th or 11th property to add to their buy to
let empire. They too, are humbly reacting to the peculiar historic inducements of
the UK property market.
So, who is to blame?
Well, hyperinflation in the 1970’s meant the real value
of people’s mortgages was wiped out (as mentioned above). Margaret Thatcher
and Nigel Lawson are also good people to blame with Maggie selling off millions
of council houses and Nigel Lawson’s delayed ending of the MIRAS tax relief in
1987; meaning he too can get his share of indignation. The Blair/Brown combo
doubled stamp duty in 1997 and again in 2000, which, as a tax on property
transactions, precludes a more efficient distribution of the current
housing stock. The Government has had plenty of opportunity to change the draconian
stamp duty rules to incentivise those mature Loughborough house movers to downsize.
However, I have started to see over the last few years a
change in Government policy towards housing. The new breed of Loughborough buy
to let landlords that have come about since the Millennium, have had their
wings clipped over the last couple of years, with the introduction of new tax
rules (meaning it is slightly more difficult to make money out of property
unless you have all the national information and Loughborough property trends to
hand).
It’s easy to think the only reason that hundreds of first
time buyers have been priced out of the Loughborough housing market is because
of these landlords. Yet, I believe landlords have been undervalued with the Loughborough
homes they provide for Loughborough people. With first time buyers
struggling to save for a deposit, if it weren’t for those landlords buying up
those 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 certainly didn’t have enough money to build new
homes ... homes that were provided to Loughborough by these buy to let
landlords.
One side of the argument is that 485 homes are being bought
up by buy to let landlords each year in the Charnwood Borough Council area when
otherwise they might have become available to other buyers, the other side of
the argument is the current national average deposit is £51,800, which is, by
far, the greatest barrier to those wanting to buy their first home. Those homes
bought by local buy to let landlords are not left idle, as they equate to 3,394
of new homes for local people, most of whom who see renting as a better option
because of the choice, the simplicity and the flexibility which renting brings.
In the 60’s/70’/80’s, the traditional thoughts that you were
a failure unless you owned your own home have now all but disappeared, because
if you ask many young people, they would probably say renting was the perfect
option for them at certain times of their life.
If you would like to discuss the Loughborough property market or chat about any potential investment please feel free to call us on 01509 260777 or email me j.lee@belvoir.co.uk
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