Let’s create more first-time buyers by making private tenants homeless!

Let’s create more first-time buyers by making private tenants homeless!

9:26 AM, 3rd November 2020, About 4 years ago 22

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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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Comments

Smartermind

12:57 PM, 4th November 2020, About 4 years ago

Boris's plans are always flawed, but that is the nature of the Tory party -

Reading Rosalind's comments you would think that the only houses that come onto the market are those off-loaded by [reluctant] landlords by evicting tenants. But a quick cursory browse on Rightmove shows 45 pages worth of up to 2 bed apartments/houses for sale within 5 miles of Manchester priced under £200k. I didn't study who was selling what, but they can't all be non-starters for FTB's. Of course it won't meet all the potential demand, but some supply is already there.

Roaslind states she doesn't understand Trevl's point, but it is clear that he is stating that if renters become buyers then the demand for rented property will fall and landlords will have to work harder to get tenants.

I have two adult children (23ish and 33) still at home and would help them become FTB's even if they did end up staying at home and rented out their own property. My eldest lived with us for two years even after he bought a property and let it out and then bought another to live in. He only moved out after he got married.

Chris Novice Shark Bait

14:37 PM, 4th November 2020, About 4 years ago

We are all different, families are very different from one to another. What works best for one may not for another. What matters is their is individual choice, and preferably the more the better. There are no rights or wrongs. Meddlesome government interference to harness popular votes are manipulative and short sighted. The political agenda trumps joined up thinking and helps nobody in the long run.
I have just signed up for the York report number 2 since report number one may have been swept under the Rug. I would urge all to do the same. It is a shame that Dr Beck is not allowed to contribute because she lives in Wales. I guess it is another short-sighted funding issue.

Big Blue

16:47 PM, 4th November 2020, About 4 years ago

Reply to the comment left by Smartermind at 04/11/2020 - 12:57
There is a fundamental flaw in your comment that the anti-landlords also seem oblivious to.

The rental market is not a zero-sum game. If a tenant buys, it paradoxically does not necessarily (nor at all in reality) reduce the rental demand. It reduces it by that single family of course, and thus is a -1 in the moment of that transaction, but over the whole market does not change demand. Multiple other factors do that. For example, if the family in question does indeed buy such that rental demand is -1, how are you so confident that two divorcing couples aren’t coming along at that moment to add between +2 and +4 into the equation? They are! Similarly, someone gets hacked off at work and decides to go to uni. That’s +1. A struggling council suddenly finds 25 new immigrant families to house, so that’s another +25 in the demand column. The idea that the -1 buying their own home creates 1 less demand is only true in isolation with those individuals, but why anybody thinks that demand is not replaced, often many times over, is baffling, and deeply flawed. The figures become even more skewed for renters if they happen to buy the rental they’re living in, which reduces the demand by 1 but also the supply for future renters. Landlords selling also usually means evicted tenants, all of whom are then chasing fewer properties, while all the cases I mentioned above joining the rental market for the first time face even stiffer competition for rentals. In one case last week, I had a house come empty after 10 years and had 22 viewings and 3 offers in the first 48 hours alone. Some of these were renters being evicted by a local RAF base, thus increasing demand dramatically even though the departing tenant was a buyer of their own property. The ‘1 in, 1 out’ argument is factually flawed.

Ed Regent

17:19 PM, 4th November 2020, About 4 years ago

It's shameful that the Government can't even fix the serious problems that already exist in the housing market. The cladding scandal is affecting 10,000s of young people already and yet this is being largely swept under the carpet! This interview with Robert Jenrick sums the whole issue up and shows where priorities lie. https://www.lbc.co.uk/radio/presenters/nick-ferrari/cladding-crisis-jenrick-admits-hes-still-not-met-people-trapped-in-dangerous-hom/

Paul Chetwyn

18:05 PM, 4th November 2020, About 4 years ago

Reply to the comment left by Gwen Davies at 04/11/2020 - 12:11
No the government haven’t thought it through ! As usual !
It would be great if all the private landlords in the uk could get together and put all their properties on the market giving the tenants notice all at the same time, sending the tenants off to the local councils to house them, as we would only be selling to first time buyers !!!!
I wonder what would happen?

Gwen Davies

7:48 AM, 5th November 2020, About 4 years ago

Reply to the comment left by Paul Chetwyn at 04/11/2020 - 18:05
Indeed!

dismayed landlord

10:30 AM, 5th November 2020, About 4 years ago

Yes Paul - it would be a wonderful idea. Though as a group we are also competitors supplying to the same market. Hence we will never be able to pull that off. Boris would bring in some legislation to probably take away our properties and give to existing tenants?

Whiteskifreak Surrey

10:39 AM, 5th November 2020, About 4 years ago

Reply to the comment left by dismayed landlord at 05/11/2020 - 10:30Give the properties to existing tenants? That sounds more like Commie Corbynov's idea...
Don't you remember a discussion here about Boris The Landlords Friend? So many people here were sadly deluded (excuse a strong word), but the alternative seemed to be much, much worse.. I am not so sure anymore...

dismayed landlord

10:56 AM, 5th November 2020, About 4 years ago

Oh I certainly do. There are more tenants than landlords so its an automatic vote catcher and Boris will need some votes when all this C-19 dies down.

Dylan Morris

11:57 AM, 5th November 2020, About 4 years ago

So the Government are going to lend FTB’s the 5% deposit and force lenders to hand out 95% mortgages. Not too sure lenders are going to be happy about this. Nationwide has recently announced they will not accept the deposit being provided by Mom and Dad presumably because they want to see the applicant has managed to obtain the deposit from their own resources, ideally savings.
I really don’t think the Government should be getting involved in dictating banks/building societies’ lending policy. They’re not in the risk assessment business. Not going to end well ....... Credit Crunch 2.0 designed by Boris.

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