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Let’s create more first-time buyers by making private tenants homeless!
Make Text Bigger The recent policy announced by Boris Johnson that he will turn ‘generation rent’ into ‘generation buy’ by under-writing mortgage deposits for first-time buyers (FTBs) is outrageous and a non-starter for reasons I have outlined today on conservativehome. Click here
Due to word limits, I couldn’t expand on all the reasons this will get nowhere, so would like to add here a huge flaw in the idea – supported by the ‘right-wing’ think tank, the Centre for Policy Studies. They published a report not long ago about ‘resentful renters’, declaring that 3.6 million people fall into this category. Click here
In fact, however, in the small print one might say, they mention that they are including young people who live with their parents in this category. As someone who has two young adults still sharing the family home I always find the negative aspersions cast offensive. Why is it such a terrible thing to live with your parents while in your 20s, with the comfort, home-cooking and often very cheap if not free accommodation thrown in?
I returned to live with my Dad in his Cardiff council house when I was in my 20s, enjoying the vegetarian pasta dishes and ‘two desserts’ he would have ready for me after work, at the same time effortlessly and not even deliberately saving enough for a deposit on a house.
I was not a ‘resentful renter’ and neither are my children now. And when I finally bought a house I didn’t want to live in it for some time as it was too lonely on my own (in addition to it needing thousands spent on it as it needed everything doing to it). So it is not necessarily a good idea to buy too young – unless you are willing to rent the property out and become a landlord, with the huge regulatory burden and risks this entails, not least facing the appalling Section 24. Click here
So, in addition to my disagreement with conflating adults living at home with private renters in the CPS’ ‘resentful renters’ category I would like to know the separate figures for each. This is important because we are often told that if a landlord sells their property and leaves the market – and many are doing this now Click here – this just means that either another private tenant moves in or a first-time buyer buys it, meaning no change to the overall housing provision.
This is not true, as if 1 million people currently living with parents manage to somehow get hold of a property in the private rented sector (PRS) – not coming from ‘generation rent’ but nevertheless becoming ‘generation buy’ – this will create a demand for 1 million more homes. The tenants who need to be evicted to make way for the FTBs will presumably not be offered a home in the new tenants’ parents’ house in a kind of exchange, so where will they go?
What’s more, even more than a million households could be involved – I can’t give an accurate figure as I don’t have the CPS dataset or know if they separated out those living in the family home from those living in the PRS in their raw data.
In a nutshell though I see this latest policy by Boris Johnson going absolutely nowhere.
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13:37 PM, 18th January 2021About 20 hours ago 7
Gromit
9:56 AM, 3rd November 2020
About 3 months ago
Usual muddled thinking Government that'll stimulate demand, drive up house prices and disadvantage even more the poorest (non Tory voting) people in our society, cleverly spun to make a good sound bite and win a few middle class votes.
Deborah Clare
10:14 AM, 3rd November 2020
About 3 months ago
I agree with the point you made about not all young people wanting to leave the family home and live alone. I have two children in their 20s. One left and came back because she realises the benefits of living in a house where she has little responsibility for cleaning, cooking, etc. and enjoys having other people around. The other moved out reluctantly when he became a father and he and his partner would quite happily move back here if I had room to accommodate their family. Also, many of their friends still live with their parents through choice not necessity and others rent because they don't want to buy. Until covid 19 hit, they were enjoying spending their money on travel and didn't want to commit to living in one place too long due to moving around the country for different jobs. Home ownership isn't for everyone, especially when they are young.
Chris @ Possession Friend
11:03 AM, 3rd November 2020
About 3 months ago
Can see it now, Govt claiming a roaring success ( having ' spun ' the statistics to suit their story )
Monty Bodkin
12:03 PM, 3rd November 2020
About 3 months ago
The private rented sector makes far more efficient use of the housing stock than owner occupied. You need a lot more owner occupier homes to house the same number of private renters.
When a private rented home is sold, it doesn't disappear, it just houses less people.
English housing survey;
Under-occupation was much more prevalent among owner occupiers than in the rented sectors. Over half (52%) of owner occupied households (7.8 million households) were under-occupied in 2018-19 compared with 14% of private rented (623,000)
David Price
13:43 PM, 3rd November 2020
About 3 months ago
Dr Beck has a good appreciation of the problem and the government does not, in fact everything the government does makes it worse for tenants AND worse for owners.
Dr Rosalind Beck
17:10 PM, 3rd November 2020
About 3 months ago
Reply to the comment left by Monty Bodkin at 03/11/2020 - 12:03Yes, Monty. We make far more efficient use of housing and huge amounts of income tax are paid by us because of how rental housing is taxed. Homes occupied by owner occupiers in contrast are, as you say, far less efficiently used and also provide no income tax - or CGT - for HMRC's coffers. And yet the latter arrangement is always lauded over the former.
TrevL
22:17 PM, 3rd November 2020
About 3 months ago
I think you miss the point that allowing the younger generation to borrow double the amount they currently can i.e. 10% to 5% mortgage it's a way to keep property prices as high as possible.....this is beneficial to landlords as it keeps their asset prices high.......the morality and basic economic value of helping young people into huge amounts of dept is questionable.....but as landlord we should be thanking them.
Although it's the extra competition for potential rentals that probably irks you I'm guessing.
Dr Rosalind Beck
1:33 AM, 4th November 2020
About 3 months ago
Reply to the comment left by TrevL at 03/11/2020 - 22:17
Sorry, I don't understand the comment.
Hedley
10:20 AM, 4th November 2020
About 3 months ago
Reply to the comment left by Dr Rosalind Beck at 04/11/2020 - 01:33
Neither do I. As long as the house prices don't depreciate, there are benefits to all if prices don't spiral. The returns will be better with a stable market (unless you are in it purely for capital gain).
Gwen Davies
12:11 PM, 4th November 2020
About 3 months ago
I wonder if the government have thought through the enormous expense of rehousing evicted tenants? The costs economically are horrendous and emotionally even worse. Creating mental health breakdowns that all have to be dealt with by the taxpayers.