Rent time, no mortgage or ownership for you lot, ever

I read today that paying rent is about to overtake home ownership as a percentage share.

Bit worrying really.

Property has generally been relied upon as. a decent sort of income with the equity you bag from the capital you borrowed from a benevolent bank.

But it seems now that the age of buying your first property in your 20s, 30s or whenever are over.

The great British home ownership dream is about to become just that – a dream, it would seem,

So who or what’s to blame?

Many factors actually.

As a homeowner, and occasional relocation payer of rent of 30 years, property price increases have given me lump sum income every time I’ve moved.

We’ve always made a handsome sum on property which, after a weekend in Centre Parcs or a trip to the Canaries in winter, is quickly absorbed into the next bigger mortgage.

Salaries too have hardly increased.

In education, my salary remained static for the past 6 years – hence why few teachers put crosses in Tory boxes at election time.

Academisation is making schools businesses with CEOs or Executive Principals of MATs earning more than the Maybot, whilst teachers’ salaries are frozen, because those who don’t ever teach, are clearly worth more than those who do.

Nurses too with food banks. I can see that happening in London and the south east where rent and other costs are quickly depleted by a poxy salary.

I talk politics a lot, even on LinkedIn.

But I don’t think it’s salaries that have driven people out of ownership.

It’s largely down to two factors:

  1. Property price growth of around 5% year on year
  2. Mortgage lending criteria.

Let me expand:

 

Property Price Growth

Those properties that cost £20k to £50k thirty years ago are now worth anything from £300k to £1 million, dependent on area.

I had a friend who bought a two bed flat off Old Street, Shoreditch, as the area was being gentrified and sold it making £175,000 profit after just four years.

The property price growth of the six properties I’ve owned in: Oldham, Cheddleton, Waterhouses, Scunthorpe, Gorleston-on-Sea and now Bradwell has totalled similar to that Shoreditch gaff – but over 30 years.

Read more about my property purchases here.

 

Mortgage Lending Criteria

In 1988, I could get a 100% mortgage on a property costing £18,500.

In 2016, the best deal we could get on a 19 year mortgage was with a 40% deposit on a new-build detached home.

Even with help to buy, with one of the affordable homes of £180,000, who could muster even a 10% deposit when rent and commuting absorb those incomes already?

As 2018 approaches and the balance of ownership v lettings, tips to tenants not buyers, I can only envisage renting continuing to overtake mortgages.

Great news for landlords with property portfolios, but I think, a chastening experience for those in their 20s and 30s who will never experience home ownership and that equity pot of gold when they sell up.

 

Either mortgage lending relaxes or property crashes to the ground – or many of us will be rent asunder. 

 

 

 

 

 

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