Is there a housing crisis?Make Text Bigger
I am a new member to Property 118.
I am an Investor building high yield property portfolios in the North of England primarily the North West.
Like most Landlords I have been concerned at the trend of Government policy. I am not an economist or an expert but as an informed observer my perception has been that the Government is using the wrong remedies to fix the wrong problem.
They are doing so because of lobbying from well funded pressure groups and because the proposed solutions seem reasonable, but counter intuitively I think they are not.
Below are two posts I did on Facebook groups where I am a member and a number of commentators on those posts, which aroused a lot of interest, suggested I should put my points on Property118. They thought Property118 was one of the better campaigning groups for Landlord (as opposed to say RLA and NLA), so here I am.
You can read what I say on these posts but the summarised version of my points is this …
I am questioning if outside London (and a few selected areas where prices are being driven by the London effect) there is actually a housing crisis in terms of lack of supply of affordable homes.
The Government is clearly persuaded there is., so they have two remedies. The first is to encourage much more housebuilding across the country. The second is to force buy to let Landlords out of the market to ensure more properties are available for first time buyers.
When I look around where I operate from Carlisle to Liverpool and across to Sunderland I see almost no evidence of lack of affordable housing. There are tens if not hundreds of thousands of houses that I would consider affordable at all levels from lowish paid workers to executives. Houses and flats aplenty are available from £40,000 to £250,000 which are levels I would say are affordable.
So why is there a perceived housing crisis?
My view is that the real problem is not lack of property but lack of finance. No matter what mortgage brokers may say many people really struggle to get finance and to find the deposits required in the modern market. At the lower level many people are shut out because lenders do not lend below £75,000. At the higher level, to find a £50,000 deposit for a £200,000 home is a struggle.
There are good reasons why finance is restricted in light of the madness before 2008. In the North many people got their fingers badly burnt when prices collapsed and they have yet to go back to 2008 levels. There is little growth so why make the sacrifice?
I believe this situation prevails in 80% of the Country, but that the London bubble which most MPs are experiencing means they are taking remedies that may well be needed for London and applying them to the whole country where they will actually make things worse not better.
Just think about it this way.
If 1,000s of houses are built in areas with current low demand prices will fall. But what evidence is there that if say a £100,000 house falls to £90,000 they will be snapped up? If people are not buying them today at £100,000 why would they buy them at £90,000? If they cannot get finance for £100,000 I do not think they will get it for £90,000, especially if they perceive the market is in decline so prices might fall further. People are not going to be encouraged to buy in a falling market. People buy in a rising market.
But make controlled finance available in a sensible way then at a stroke the housing problem will be solved as people make the effort to buy, prices will rise and more people will be encouraged to buy and build. That does not mean go back to 2007. It means craft sensible finance incentives. Carry on as we are and we are going to slide into a European model of low prices , low demand, low home ownership and much more renting. If that is the goal fine but please do not let MPs get away with saying they want to increase home ownership and believe in a property owning democracy, because their current policies will not have that effect in my view.
The question that then arises is who is there to put the case to MPs in a way that will make them listen? That is why some of the many who agreed with me suggested I join your group and do this post. They thought this might be a forum where there are people who can put these points forward to the Government.
I welcome your thoughts
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