I had the most interesting chat with a couple from Bedgrove the other day, whilst viewing one of our rental properties. The property was not for them, but their son, who wanted a second viewing with his parents to get the parental blessing. Now I know that is not the norm, but in this case the parents were going to act as guarantor. We got to discussing the Aylesbury property market and how they had bought their first property in the town just after they got married in the late 1980’s when they were in their early/mid 20’s. Anyway, we got chatting about how the youngsters of the UK seem to rent more than buy nowadays and from that the conversation covered a number of similar topics. I want to share the main thread of that conversation with you today.
Their son, like many 20 to 30 year olds in Aylesbury, desperately wants to own his own property and the parents said he had read in the Telegraph recently, when you compare house prices to earnings, the current 20 to 30 something’s generation have to spend more of their salary in mortgage payments than any previous generation. The demand for private rental sector accommodation in Aylesbury is huge. There are in fact 4701 private rental properties in Aylesbury at the last count, impressive when you consider there are 1,254 council houses in the town. However, let us not forget 19,022 properties are owner occupied (11,918 with a mortgage).
Let us all be honest, private renting doesn’t have the stigma it had a few decades ago and it might surprise people that even though us Brit’s class ourselves as a nation of homeowners, roll the clock back 100 years and over 75% of people rented their own home (and it was all from private landlords as council housing only started to come in with the ‘homes for hero’s’ after the first World War). It might also surprise you to learn that at the time of the 1971 census, still more people rented than owned their own home.
Looking at the affordability issue, it is in fact cheaper to buy a property than rent, when one looks at starter homes for first time buyers. 95% mortgages have been available to first time buyers for over four years and whilst you could certainly find better properties in better condition in better areas, terraced houses can be bought for as little as the mid £130,000’s (meaning a modest deposit of £6,500 would be required).
When it came to affordability, I was able to tell them that when they bought their first house in Aylesbury in 1988, the ratio of house prices to salary was 7.54 to 1 in Aylesbury ... and here was the surprise for both of us, today’s ratio is only 6.53 to 1!
I said I believed there had been a cultural attitude change towards renting property in Britain and that this quiet revolution was likely to be permanent. In the 60’s, 70’s and 80’s, saving for the deposit was everything and buying a house was everything. I am sure many of you like me can remember the sacrifices made to ensure I saved a deposit as quickly as possible. Youngsters today have far much more disposable income than people had in the Callaghan and Thatcher years. But choose to spend it upgrading their mobile phones every 12 months, treating themselves to the newest tablet or PC, a new 50” plasma LCD TV and two sun drenched holidays a year, rather than go without and save for a deposit. It is just not as important now as it was then, attitudes to renting have changed.
Yes, there are horror stories of tenants living in rat infested properties with landlords who charge massive rents and don’t repair their properties. But that is very much the exception as most tenants rent homes of a quality they could not ever to afford to buy. Twenty years ago, if you said you rented a property, you were considered the lowest of the low ... but now it is the new normal.
So with mortgage affordability being well within the bounds of most first time buyers, the level of deposit required for a 95% being surprisingly modest (starting off at c.£6,500 in Aylesbury as mentioned above) until we change our attitudes, the UK housing market is slowly but surely turning into a more European model, where people rent for long periods of their life, then eventually inherit their parents properties and subsequently become homeowners themselves, albeit later in life.
I cannot see the demand for good, high quality rental properties dropping in the next 10 to 20 years, but only ever increasing as the population continues to soar. Just make sure if you are becoming a landlord for the first time that you buy the right property, at the right price, in the right location. One source of information on such matters would be the Aylesbury Property Blog http://theaylesburypropertyblog.blogspot.co.uk/ or pop in and have a chat with me when you are passing my office in Temple Street. email@example.com
|Nala and the Mortimers team wish you a Happy and Prosperous 2016|