The report released today by the National Federation of Housing (NHF) could well be translated as an open invitation to property investors to go out and buy landlord insurance on more homes. The report predicts a steady fall in home ownership over the next 10 years and with it a rise in rents.
Report blames a number of factors
According to the report, the decline in the building of new homes, the tight-fisted approach by mortgage lenders to first time buyers, and a dysfunctional housing market which is seeing prices for houses going up at the same time as prospective buyers constantly bid considerably less, is taking the UK into “Generation Rent.”
Is the argument flawed?
The NHF also use an Oxford Economics report suggesting that house prices will go up by over 20% in the next decade which will make it even harder for first time buyers to get on the property ladder. Using this particular statistic does in fact seem to take away the credibility of the report. It is difficult to see how house prices can go up so dramatically in a period when the NHF are predicting a drop in home ownership of 12%. One thing is for sure and that is the sector is becoming more complicated to predict.
Bank lending the major factor
The report is correct in saying that owning a home in London is already the preserve of the rich, but is it correct to say that this will become the state of affairs all over the country. Residential landlords are getting landlord insurance quotes on houses every day to extend their portfolios simply because the demand for their business is there. They are seeing higher rental achievements than ever before, which in turn means that it is now more expensive to rent than it is to buy. A mortgage in most cases would now appear cheaper than rent. It is the big deposits demanded by lenders that is causing the problem and for it to be resolved may need intervention by the Government.
Government wave goodbye to common sense
Housing Minister Grant Shapps has unveiled several Government policies to ease the housing crisis including giving over Government land for the purpose of building social housing, his latest novel idea actually suggests that more people could live on boats, leading one to ponder whether this will be seen as a sink or swim policy!