A philanthropist claims the difficulty some younger people have in getting on the property ownership ladder is caused by Baby Boomers who have bought buy to lets.
James Drake, who has contributed to and founded sports science and music organisations in the UK, has written on his website that many wealthier buyers from the Baby Boomer generation - in their 50s and older - have substantial wealth including, often, more than one property.
“Property is one of the few ways investors can access cheap leverage on their investments via buy to let mortgages. While you couldn’t secure a £300,000 loan from a bank to invest in stocks and shares, securing a loan for 75 per cent of an investment property’s value is comparably achievable” he writes.
And he adds: “Buying property with borrowed money and reinvesting the profits is a well-established fast-track to building wealth, but this can have a devastating impact on younger generations looking to close deals on affordable properties.”
Drake’s article also includes a claim that private renters’ rights are less powerful in this country than in many others.
“European countries with a larger proportion of renters than the UK have more rights and security in place for tenants, making rented accommodation more appealing. Not only do these rights attract tenants and therefore reduce demand for affordable homes on the property market, but the wider acceptance for renting also dissolves the social stigma associated with life-long renting that is all too prevalent in the UK” he claims.
And he suggests that UK tenants pay almost double the European average in rent, even compared to countries that share similar wage levels.
“Instead of questioning why tenants aren’t making their way onto the property ladder, we should be questioning the validity of the negative associations with renting” he concludes.
You can see Drake's lengthy complete article here.
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I have to say I agree!
Well Mark I clicked on the last one above, they should stand on their own two feet just as us baby boomers did when we were young, if the young of today want to get on the property ladder they need to adjust their excessive life styles, work harder and save.
Any "help" just distorts the market and is unfair to those not qualifying for it.
Wages and property values are out of alignment, partly due to ultra low interest rates and too may speculators driving up prices chasing yield. The removal of mortgage tax relief is the start of rebalancing the market.
That's real talk Andrew/Robert.
20/30 year olds do not save money anymore. They expect Mum & Dad to cough up the full deposit. The GR lot carry on because they haven't got discipline & they are used to having someone else to blame for their woes in life.
Plenty of starter homes available with prices suitable for millennials just not good enough for their expectation level as it involves ability to do some DIY
Jahan, agreed, I've lived in 3 houses since I moved out of mum and dads house, the first 2 were total renovations (no bathrooms or kitchens) and lived in caravans on site, the last one was a near total rebuild and lived 2 yrs onsite in 2 very old mobile homes linked together with a 4 yr old and a new born, I not a builder by trade, but I not afraid to roll up my sleeves and do what I can, not complaining, I loved it all, the whining ''entitled'' generation really P me off big time
As a 23-year-old, it's nice to hear some balance here. Everyone is so quick to say that all young people are bad with their money, and can't save for the life of them. Sure, some of them, like any demographic, will be financially irresponsible. A lot of people not saving large amounts have no aspiration of buying a house in the near future. It's a lot easier to travel now and move around, and that lifestyle has become more popular. But many young people are regularly saving, using spreadsheets to track their money and so on.
Not everything is a matter of entitlement and bad money management. I know many young people who certainly would not be upset about buying a property that needed a lot of work done to it. The whole "stop spending so much money on avocados and coffee" thing is getting a bit old now. If we saved all of the money from a few coffees here and there, it's not going to pay for a deposit. The key issue is, as Mark says, wages and property values being vastly out of alignment. When my Mum and Dad purchased their first property in the South-East decades ago, the property would have been about 3 times their annual salary. Now, it's about 10 times. If we are entirely self-sufficient in this day, and not living with Mum and Dad, we then enter a new territory of being basically unable to save - especially if you have a job in the City and need to pay rents that would have been nowhere near this amount years ago.
Thanks Mark.
The reason first time buyers have difficulty in getting on the property ladder is that lenders want 15% deposit for new builds and 10% for other houses. If the lenders did what they were supposed to do which is to lend money there wouldn't be a problem.
Of course this philanthropist is right, it gives everyone another chance to deride landlords. I mean we go to a lender and all but trip over £300,000 as soon as we walk through the door. That said, this is some merit in what has been stated but like all points of view it must be taken in context. Yes it will be easier for someone to borrow money if they are solvent with a good history. However, as that person gets older the attractiveness will lessen as the risk grows. The Section 24 negates a lot of this argument as the loan is now not a taxable allowance. This will have a considerable effect on landlords whom have several buy-to-let mortgages, myself included. With regret this will mean that I will have to review my rents, most of which I have either not increased or have done so marginally since 2008. Property has always had the possibility of a good return, however it is a double edged sword and many a person has been burned and this will continue.
I completely agree about the stigma of renting, when I was younger I paid rent. You were certainly treated as a second class citizen. It was a case of how things were said to you rather than being repelled by society. I also had to put up with a couple of awful landlords, but i also had some decent ones as well, overall I am certain that there are more responsible landlords now than back in the 80's.
Europe is different to UK over renting and have many different rules so impossible to compare. What I do know is that in Germany they have an ongoing property revolution and property prices are soaring where a lot of Germans are putting savings into property as they deem it a safe place, much like the UK. This ,however, is making rents competitive. Maybe the UK Government should look in that direction and instead of taxing the landlord into putting up rents and excessive legislation they should promote fair competition. Just a thought. IMHO the private landlord offers better competition in a market place that will keep rents at a fair rate. Nobody wants an empty property.
Anyway to give context I am just behind the baby boomer generation and have made sacrifices to build my portfolio, as I am sure many of them would have done so also.
James what a twisted article, it no use telling me rubbish about how it was in the 1970's I lived it, so many things left out or untrue. We had no help to buy, Free Stamp Duty, half the money interest free loan for 5 years, no Mom & Dad piggy Bank, no sky high wages, no Benefit System that required a woman to be a single Parent to have a big advantage over working Parents, of course we didn't have internet costing £25 pm, sky tv £60 pm, iPhones god knows how much a month lots more.. We didn't have coffee Shops £3 a cup but at least we had Public Toilets that are now virtually closed its disgraceful, people back then knew what sex they were, but we did save in very difficult times £60.00 pw wages (3k pa) top whack, not £60k pa like many are getting now for not working only playing with Computers they think it work, did you mention inflation No, did you mention Interest rates back then 4 to 5 times higher NO, did you mention there were no licensing Schemes back then now driving rents through the Roof No... what a load of crap.
In the 70s, 80s and even 90s, people could buy a home - even in London! - without the help of the Bank of Mum and Dad, and without high, long-term mortgages.
House prices weren't many times higher than salaries back then. The reason there is Help to Buy, and free stamp duty, is because it's much, much harder for a young person to get on the ladder now than it was 30 or 40 years ago. I don't think there is any argument over that.
I know young people who have been saving for years, and still can't cobble together the £30k or £40k needed for a deposit. Nearly every young buyer will require the help of Mum and Dad, even if their parents are not super well-off, no matter how long they save.
Of course, the promised new 95% mortgage scheme and New Homes scheme announced by Boris have all gone very quiet and remain very thin on detail.
£60 per wk, my word Michael you were earning well, I was a HGV fitter in those days, the most I was earning then was £40 per wk, £32 take home, yes and I still managed to save.
Once again we are all getting drawn in to an argument with someone who doesn’t understand the whole picture and who is missing the point by piling in with the mob to once again blame us! The reason BTL is attractive as an investment is because there is a market opportunity to be filled as a consequence of simple supply and demand dynamics. And that market only exists because of failing housing policy that goes back decades and continues today. I have long said the government is welcome to effectively make me redundant by getting the National housing stock back up. His comments are accurate to an extent but should be treated simply as passing observations and tackled as such So thank you Landlord today for sharing this article but has their been an official response to this guy? I still still see a woeful lack of defence of our industry.
I know Andrew it was more like £40 pw but I gave the high figure to stop people coming at me saying we were better off when we were't thank you for that. The argument is far from over homes are still affordable if they keep away from Developers with their stupid high rise over priced Flats. I say in most cases one bed Flats are £50k over priced & 2 Bed are £100k over priced and they rope in young people with schemes initially that they will struggle with for ever in unsuitable accommodation, keep away from the Sharks they'll will be ok. I had some good Tenants that always paid & I didn't rob them either now they have bought their own 3 bed house Semi' Freehold no Service Charge a couple of miles from where they were, front & back Garden + side passage for £445k in Greenford so it is possible to rent / save and buy your own Home unless you want everything handed to you. With-in the Area there is plenty New Development Leasehold 2 bed Flats costing substantially more than they paid for the House, its madness and with the House they have the option of taking in a lodger if they need some extra funds.
The problem is not LLs buying properties - they are investors who are responding to a supply and demand chain - it is the lack of building houese for decades by successive Govts.
The lack of housing pushes prices up - for buying & for renting - then LHA paid to allow renters to afford to rent pushes rents up even further!
Builders restrict the number of units coming onto the market so the price doesn't drop - why risk profits by building more?
Build more houses and house prices stop rising; build more houses to rent and rents stop going up.
This is Govt policy at fault, not landlords who are providing a much needed service.
Agreed as per my points above. Arguing with people who write articles missing the point is in itself pointless! It all just distracts from the real housing policy issues.
build more houses--more immigration
Terry NO!
Build fewer houses and prices for rent will increase. Good.
Build fewer houses and less places for immigrants. Also good.
I get more rent. VERY VERY GOOD!
UK gets less immigrants. VERY VERY VERY GOOD.
Mark, dearest obviously you are referring to Section 24 the removal of Mortgage tax relief for private LL's only who hold the Property in their own name, so how could this possibly be the start of re-balancing the market when its plain for anyone to see it the un-balancing the market given that it don't apply to LL's who hold the Property in a Ltd Company, many switched to take advantage of this unbalancing system who can still claim all the interest Tax Relief on the Mortgage. I like your idea if re-balancing of the Market its a total distortion, unjust & Discrimination.
New Property is more expensive because of help to buy / help to get into trouble Schemes, as Government attempts to help the young own a property with financial support the Developer ups the Price to take the extra they can now afford off them, just like it used to be with the Enterprise Zones, pull the other one its got bells on.
I bought a lovely two bed terraced the week before last, £15,000 deposit on a £60,000 buy to let mortgage, even less deposit if I was buying for myself. All I can say is that if the younger generation can't save up enough for a deposit on that then they don't want it enough. They need to give up their Costa Coffee, newest iphone, nights out getting boozed up and spreading Covid and start saving and oh yes accept that they don't get it fully furnished with all the best gear when they move in. When I moved into my first home I had a gas cooker from the second hand shop, an old sofa that the neighbour was throwing out my bed from my parents house and an tv I picked up for £10 from a friend which I stood on an old tea chest in the corner. No central heating and a two bar electric fires in the bedroom and living room. That would probably be reportable to the EU court of human rights these days - and before someone asks, no I didn't have to walk to work in bare feet!
They want to run before they can walk and expect expect expect, if they won't help themselves then why should anyone else help them ?
welfarism is destroying the west
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