i rent therefore i am
Apparently, two-thirds of 20 to 45 year olds who don’t yet own a home now believe they never will. Not withstanding my knee-jerk reaction to question why those in the latter half of this age spectrum haven’t done so already and to point a disapproving finger at them for obviously enjoying themselves far too much by not burdening themselves with the crippling mortgage payments the rest of us have, it certainly highlights a proportion of individuals quickly becoming known as ‘generation renters’.
If this really is the case the explosion of home ownership and owner occupiers, propagated by Thatcher some 30 years ago through the ‘right to buy’ at massively discounted prices, could be on the wane. Whilst it still remains the goal of most, a combination of high and surprisingly, still rising, house prices, stagnant (declining in reality) wages, the threat of unemployment and unavailable/unaffordable mortgage finance is stopping them from climbing on the property ladder. The prospect of imminent interest rate rises only exasperates the situation. Could we really have seen the last of the ones who created, supported and made money out of the artificial market of the last generation – the buy-to-let investor, the speculator and the ubiquitous ‘property developer’?
The only good news on the horizon for this generation of renters is that the UK housing market is still unquestionably way overpriced, perhaps to the tune of as much as 25% and it has to start to fall and correct itself sooner rather than later. It simply has to start to obey the rules of the market – demand (at current prices) is not present and what little supply there is (at these currently inflated prices) is not being snapped up. Whether or not prices will ever reach a level that is truly affordable is the question. The irony in the short term and the vicious circle that is created, is that rents are on the increase as no one can afford to get out of this sector, and demand is also on the up due to the shortage of good rented accommodation. All this goes to make it even more difficult to save the necessary, required mortgage deposit.
It is often argued that Britain is a unique case because there is such little supply and because we’re a small island (buy land young man, they ain’t making it anymore!). Planning restrictions and the current poor state of the building industry mean the former ain’t going to change anytime soon and with coastal and tidal erosion the latter certainly isn’t. Hey, house prices in below-sea-level Norfolk may fall though! We are certainly different than all our counterparts in mainland Europe and until the mid 70s most people rented. Truth be told, we’ve only recently lost the renting habit. If we were to perhaps follow their example where legislation supports the tenant and the long-term renting approach, as opposed to the owner-occupier or buy-to-let investor (for example, the removal of CGT from profits made on primary residences) we may in time begin to question the dubious assumption that owning a house is what all decent upstanding British people do.
