Talk to many
Stoke-on-Trent 20 something’s, where home ownership has looked but a vague
dream, many of them have been vexatious towards the Baby Boomer generation and
their pushover ‘easy go lucky’ walk through life; jealous of their free university
education with grants, their eye watering property windfalls, their golden
final salary pensions and their free bus passes.
If you had
bought a property in Stoke-on-Trent for say £22,000 in first quarter of 1977,
today it would be worth £342,519, a windfall increase of 1456.9%.
But to blame
the 60 and 70 year olds of Stoke-on-Trent for that sort of rise seems a little
unfair, with the value of the homes rising like rocket, I don't believe they
can be censured or made liable for that. A few weeks ago, I discussed in my
blog the number of people in the Stoke-on-Trent area who have two or more spare
bedrooms (meaning they are under-occupying the house). I see many mature
members of Stoke-on-Trent society, rattling around in large 4/5 bed houses
where the kids have flown the nest years ago ... but should they be blamed?
We are all
just human, and the mature members of UK society have just reacted to the inducements
of our property and tax system. The mature generations who joined the property
market party in the 1970’s and 1980’s were able to take out huge
mortgages, protected in the knowledge that inflation would corrode the real
value of the mortgage, while wage gains would boost their ability to repay.
Neither do I
directly blame the multitude of Stoke-on-Trent buy to let landlords, buying up
their 10th or 11th property to add to their buy to let empire. They too, are humbly
reacting to the peculiar historic inducements of the UK property market.
So, who is
to blame?
Well, hyperinflation
in the 1970’s meant the real value of people’s mortgages was whipped out (as
mentioned above). Margaret Thatcher and Nigel Lawson are also good people to blame
with Maggie selling off millions of council houses and Nigel Lawson’s delayed
ending of the MIRAS tax relief in 1987; meaning he too can get his share of indignation.
The Blair/Brown combo doubled stamp duty in 1997 and again in 2000, which, as a
tax on property transactions, precludes a more
efficient distribution of the current housing stock. The Government has
had plenty of opportunity to change the draconian stamp duty rules to
incentivise those mature Stoke-on-Trent house movers to downsize.
However, I
have started to see over the last few years a change in Government policy
towards housing. The new breed of Stoke-on-Trent buy to let landlords that have
come about since the Millennium, have had their wings clipped over the last
couple of years, with the introduction of new tax rules (meaning it is slightly
more difficult to make money out of property unless you have all the national
information and Stoke-on-Trent property trends to hand).
It’s easy to think the only reason that hundreds
of first time buyers have been priced out of the Stoke-on-Trent housing market
is because of these landlords. Yet, I believe landlords have been undervalued
with the Stoke-on-Trent homes they provide for Stoke-on-Trent people. With
first time buyers struggling to
save for a deposit, if it weren’t for those landlords buying up those homes
over the last 10/15 years, we would have a bigger housing crisis than we have
today. Since the global financial crisis of 2008/9, local councils have had to
cut services, so certainly didn’t have enough money to build new homes ...
homes that were provided to Stoke-on-Trent by these buy to let landlords.
One side of the argument is that 857 homes are being bought up
by buy to let landlords each year in the Stoke-on-Trent City Council area when
otherwise they might have become available to other buyers, the other side of
the argument is the current national average deposit is £51,800, which is, by
far, the greatest barrier to those wanting to buy their first home. Those homes
bought by local buy to let landlords are not left idle, as they equate to 5,997
of new homes for local people, most of whom who see renting as a better option
because of the choice, the simplicity and the flexibility which renting brings.
In the 60’s/70’/80’s, the traditional thoughts that you were a failure
unless you owned your own home have now all but disappeared, because if you ask
many young people, they would probably say renting was the perfect option for
them at certain times of their life. 