The chief executive of Generation Rent has slammed the chair of the NatWest Bank for comments over first time buyers.
At the start of the weekend Sir Howard Davies told the BBC that people have always had to save for a deposit but admitted they had to save more today.
He warned of the dangers of "very easy access to mortgage credit" and suggested that one lesson of the banking crisis over a decade ago was that people should not over-borrow and find themselves in negative equity should house prices fall.
Asked when he thought it would be easier for people to get on to the property ladder in the UK, Sir Howard said: "Well, I don't think it's that difficult at the moment. You have to save, and that's the way it always used to be. What we saw in the financial crisis was the risk of having people being able to borrow 100 per cent and then suffering severe falls in the equity value of their houses and having to leave and having a bad credit record so there were dangers in very, very easy access to mortgage credit.”
Generation Rent’s Ben Twomey blasted the comments in a sharply-worded statement.
“What planet does he live on? This is astounding to hear from a senior banker” says Twomey.
“We are in a cost of renting crisis, that is making it incredibly hard for people to buy a home as we hand a third of our wages every month over to our landlord. Interest rates have increased but house prices have yet to correct, meaning we still need to save for a huge deposit but also would need a high income to afford monthly mortgage repayments.
“Sir Howard recognises the need to save, and blames the response to the 2008 financial crisis for this. But the situation has got far worse since the credit crunch. In 2012, it took 6.8 years for the average earner to save a deposit in England, but in 2023 this had increased to 9.6 years. In that time, the average price of the first home had gone up by 72 per cent and average rents are up by 29 per cent.
“Banks can’t keep blaming mortgage regulations for the plight of first time buyers. It is the result of the government’s failure to keep rents and house prices under control. We need to be building more homes in the places where people want to live, especially social housing, to ease the pressure on rents and keep more cash in renters’ pockets. The first step to solving the housing crisis is recognising that we have a problem, and a very serious one too.”
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We all know how out of touch the gilded elite are, this is simply a good example 🤔😲
Simon
I think he's just telling it like it is.
In the early 70's, we lived frugally on 75% of my after tax salary and saved 100% of my wife's salary. It was a struggle but after about 2 years we had saved enough for the deposit, carpets, lounge and bedroom furniture etc - all brand new G plan ( would now be worth a fortune to mid century modern fans).
It wasn't easy but it wasn't impossible and we didn't have easy targets for savings, Iike avoiding costalot coffees, expensive pcp car scheme,designer clothes, fancy mobile phones etc.
We had no holidays, home or abroad, took any overtime on offer, drove a 1956 Morris Minor and rarely ate out in the local Schooner Inn steakhouse.
Our biggest expense was £65 per month for a very modest rented flat and our first mortgage was actually about the same after tax relief.
Not much has changed other than the unwillingness of the younger generation to make realistic sacrifices for the end goal of home ownership and the move to provide all the advantages of home ownership in rented properties but without the accompanying responsibilities.
It was not easy in the 60's/70's either. You could only get a mortgage through a building society, usually after saving with them for some time and they did not lend on properties over 50 years old, banks did not do domestic mortgages. If you wanted to buy an older property in those days, most councils provided mortgages for older property in their area., and of course interest rates were far higher. Remember those days?
Yes, I do and it was a struggle, but we stopped going out and having holidays. Of course it helped that we had no Netflix, Amazon Prime, I-phones and holidays abroad to support.😀
Trust Generation Rant to shoehorn in rents as part of the problem.😡
Hi William.
my wife and I had businesses then and we were paying 17% interest on the loan and living above in a maisonette that I had to convert to accommodation.
It is ok for Gen Rant to kick off about cost of mortgages and rent but they really should look at themselves. The majority of landlords on here have said they never raised the rents for years for existing tenants yet Genration Rant have said they have gone up 29%.
Maybe Ben, Polly and the rest started a campaign against landlords which has forced the issue. They have increased rents 29% not landlords, Social Housing is the worst and that needs addressing.
A few rogue landlords out there but they are in the minority and I mean minority.
I have 3 daughters. They have all worked hard and saved hard and have bought nice houses. It is not that difficult. The key word there is worked.
Almost anyone can buy a property if they're prepared to get off their lazy a*ses, work hard and give up a few luxuries. The problem is, some people want everything handed to them these days, want good things but expect everyone else to supply them. I have no trade, received no inheritance but built up a portfolio through hard graft. It IS possible!
The guy was right work and save do that and home purchase is easy
I remember the interest rate being 15%.
We never went out for months and months. No holidays, worked elsewhere during annual leave.
At one point I had 4 different jobs over the week just trying to get on. It’s paid off during my life and now resent the able bodied scroungers taking money for nothing! Push back on Gen Rent and the likes, life’s hard!
I think one problem is young people now have so many expenses that are accepted as basic living expenses that we didn't have 30 plus years ago. But the extra luxuries like overseas holidays. Constantly buying new clothes, shoes. Home wares and streaming accounts must be sacrificed. I lived off Beans on toast for a whole year when I was saving.
Generation Rent have been bought up as the entiltled generation. They want everything new, and don't want to work for it, if at all. Too busy on Instagram, Spotify and Tiktok these days. Jodie Forster was in the news at the weekend saying how hard it was to work with younger actors. Saying they will get in at 10:30. Probably after their advocado on toast, with their daily latte after their private gym work out. Saying how they are "just not feeling it" right now etc.
Like Martin, I remember having baked beans on toast and also having 2 to 3 jobs as was saving for a home. These days young generation wish the money to be handed to them. It does not matter how much they have already received but will order others in the family.
We’ve lost the work ethic and replaced it with the ‘entitlement culture’. Self reliance’ are two dirty words and blaming others rather than ‘taking responsibility’ is the new norm .
Doesn’t bode well for future generations.
Another reason I want to sell up and not be involved with unnecessarily burdened procedures and legislation with increasingly irresponsible and entitled woke generations.
So all this Computerisation hasn’t helped at all just added endless costs as said don’t forget the play station. Businesses going to the wall their Offices and staff not required. Banks closing by the thousands Government throwing them a life line to take over Private landlords Business with incentives and tax brakes.
No one ever gave me anything for nothing. I never smoked didn’t take a drink until I was 22 always saved half my wages I made a point of that. I was always on good money as working foreman usually doubled as site Engineer, Theodolite’s angles or degrees no barrier neither was dumpy levels, imperial or metric measurements.
Couldn’t get a Mortgage they expected you to be married.
So I bought the site in Ealing for my first house from savings then I able to approach to Bank to borrow the money to Build, they gave me the money but the interest rate was 13%.
I still have the house after over 50 years on. I was there today actually replacing the main bathroom basin that Tenants broke accidentally with one of those stupid candies in a heavy glass jar. What a job to get one to match which involved me driving 94 miles to Newhaven & 94 back yesterday evening and installed this morning how is that for Service.
But did they appreciate you changing the basin? My tenants dropped a cup and broke my basin. I replaced it for free. Not a word of thanks - just a no win no fee scam letter claiming asthma!
No charge when you know it’s an accident. They are ok generally and I couldn’t have water peeing out on the bathroom floor and dropping down into the kitchen below, just one of those things.
Correct just one of those things, I have a leaking roof at present, it's in a lean to porch outside the back door of the property, the roof has been completely recovered in torch tight roofing felt, and still there is a leak the guy there is being good about it and sees the problem, his gobby wife is making a right fuss about it, we are doing our best under difficult circumstances, these things happen
Have you tried expanding foam if there is a visible gap, Andrew. Have to wear a mask and eye protection to use it.
expanding foam is great however the problem we have there is no visible gap next is a coat of waterprof roof paint over the whole roof
That sounds like a good solution but try not to breathe in any of the chemicals yourself; not long since you came out of hospital.
For a minute there I though Ellie was suggesting expanding foam as a solution for this," his gobby wife is making a right fuss about it"
Ha ha ha!
Won't be me doing it Ellie, my wife won't allow me onto any roof at present, it'll be my daughters partner Tom a good chap right now
Roof seal on sale in Toolstation for about £30.
Incidentally, Lidl is selling white bathroom paint which is described as mould resistant for £6.99 for 2.5 litres. I've bought quite a lot. I hope it is effective.
I am so pleased you have help Andrew
Annoyed, don't tempt me I would love to as would her husband I expect
How times have changed one time the steam of hot tar was the cure for whooping cough get behind the bitumen boiler and the cough disappeared.
That is really interesting Michael.
I remember when I was in Sochi (when it was part of the Soviet Union) that they used sulphurous spas. I had learned in Chemistry at school that sulphur dioxide was poisonous. It may come down to the concentration of the substance. The body can detoxify small concentrations of these potentially toxic substances and they may have beneficial properties in small amounts.
Surely its always been the norm to expect buyers to have some element of deposit (other than a mad period before the 2008 crash when there were 100% mortgages being offered). Even if property prices are generally rising it's quite possible for an individual property to fall in value for various reasons. So its not totally unreasonable to ask buyers to put some cash into the purchase.
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