Following the publication of a recent blog article about ‘Generation Rent’ a local homeowner of Walsall contacted me. He said that he felt that the plight of our Walsall youngsters (first time buyers), was that like of a novice football player trying to bend it like Beckham! You’re in a minus game playing Beckham at his own game right? Play him a 100 times and you’re bound to lose 100 times!! There is no doubt that buy to let landlords have played a major role in driving up property values in Walsall (and the UK) and from that made housing a lot less affordable for the 20-30 somethings of Walsall.
Let us look at how affordable Walsall is. The best way to measure affordability is to measure Walsall property prices against Walsall average salary (the higher the ratio, the less affordable properties are). Looking at the table below, for example in 2014, the average value of a Walsall property was 5.95 times higher than the average annual wage in Walsall.
3.95 5.81 6.04 6.10 5.55 5.65 5.77 5.59 5.95 5.73
2002 2004 2006 2007 2008 2010 2011 2013 2014 2016
As affordability of property decreases the younger generation find it less appealing to purchase or own their own homes instead…choosing to rent.
But, it’s not the only reason…
The Tories have certainly done much to level the playing field in favour of first time buyers. For nearly a year now, landlords have had to pay an additional 3% in stamp duty on any buy to let purchases and, over the coming four years, tax rules on landlords claiming mortgage interest relief will affect their pocket. It also does not help owner-occupiers that local authorities sold off council houses in the Thatcher years. So, for many on low incomes or with little capital, owning a home has simply never been an option (today or in the past).
It’s easy to look at the headlines and blame landlords. First time buyers have been able to access 95% LTV mortgages since 2010, meaning even today, a first-time buyer could purchase a 1 bed apartment in Walsall for around £70,000 and only need to find £3,500 deposit. Yes, a lot of money, but first time buyers need to decide what is important to them. Either, save up for a couple of years for the deposit or go and have two annual foreign holidays, get the full satellite or cable TV package with sports and movies costing three figures a month, upgrade to the latest mobile phone and go out socialising.
However, as a nation did we always have majority owner-occupier tenure? The graph below shows the history of our tenure in the UK since 1918 to present day 2017.
I think we as a country have changed. Renting seems to be returning to be the norm.
So, my opinion is, landlords have it tough. Let’s not blame them for the perceived woes of the nation. To be frank, we haven’t always been a country of homeowners. Roll the clock back to 1964, and nationally, 30% of people rented their home from a private landlord.
That figure today?
It’s only 15.3% nationally.
Are you a landlord concerned about the future? A first time buyer wondering if now is a good time to buy? Feel free to email me for free and impartial advice. I promise not to charge you for an opinion.
Phone: 01922 311016
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