Will the plan work to turn generation rent into buy?

[bigpriest]

BoRED S2upid said:

Why is renting seen as such a bad thing for a generation? They rent cars, phones, houses even clothes can be rented. It’s just a different way of living.

No assets for nursing care in later life.

[BabySharkDooDooDooDooDooDoo]

BoRED S2upid said:

Why is renting seen as such a bad thing for a generation? They rent cars, phones, houses even clothes can be rented. It’s just a different way of living.

Buying you’ll eventually own a nice home and be able to retire there.

Renting you’re just paying for someone else’s mortgage so they can enjoy retirement. As a renter you’ll still be struggling with money as a pensioner.

I see buying as securing a cheaper retirement.

[A500leroy]

ARHarh said:

A500leroy said:

If we REALLY want it levelling out, we need to introduce a national wage no matter what job your doing, ie doctor £16p/h,Nurse £16p/h, shelf stacker £16 p/h, That way everyone has the same income, everyone has roughly the same outgoings for necessities and we become this great level nation the g/ment want us to be.

Then there would be no incentive to do anything more with your life than stack shelfs. We would have some well stacked shelfs though. Or if it really was a national wage would I get that on benefits? If so sign me up?

I would hope doctors are doing that job because they want to, but i get your point!
Not on benefits no, i think there should be a scheme where you only get out what you pay in by working first, and also getting rid of council tax and have a 'local' version of income tax on every person so its based on that persons wages instead of house values.

[austinsmirk]

I’m not sure the younger generation drive around in sheds, have cheap holidays, save up for stuff as perhaps we once did.

Society is a bit more instant now perhaps ?

But I can’t see the tipping point changing now, prices are way beyond a lot of people’s means. I certainly know for me buying a house in the90’s was just simple sense: why rent when a mortgage is cheaper ?

That isn’t happening now.

[MitchT]

BoRED S2upid said:

Why is renting seen as such a bad thing for a generation? They rent cars, phones, houses even clothes can be rented. It’s just a different way of living.

Because the cost of living in this country is so high that you'll never be able to retire unless you get to a point where you no longer have to pay to keep a roof over your head. You'll be stuck working till the day you die and if your health starts to fail, such that you can no longer work, you won't have a means of keeping a roof over your head. Also, if you need to go into care there'll be no asset to sell to pay for it after you die. In fact, I think that when this priced-out generation have all died leaving local authorities with a colossal care bill to recoup and no way to do so, there's going to be a bloodbath. Plus, why the hell should you pay for an asset for someone else when you could pay for one for yourself?

[ClaphamGT3]

Whilst the Govt’s current measures are better than nothing in terms of encouraging people into home ownership, Government controlled, supply-side measures will always be a blunt instrument to achieve any outcome. What we have seen in the housing market is that measures such as HTB provide some advantage to first time buyers but at the cost of skewing new housing output towards the FTB market and reducing the option for FTBs to purchase and rehabilitate older stock.

We often hear pistonheaders bemoaning that the youth of today are unwilling to buy older, cheaper properties and do them up as a means to get on the housing ladder but the reality is that the necessary assistance isn’t there to make that a realistic option for many.

If the Govt really wants to move generation rent into generation buy, one of the most impactful things that they could do would be to work with the banks to significantly relax lending criteria.

[Northernboy]

rover 623gsi said:

same sort of house - 3 bed semi but i'm in the suburbs whereas he's nearer the city centre. Probably about the same sort of value approx £250,000

A 20 year mortgage on 90% LTV is going to be about £1,100 per month on that I think, so a fair bit more than the £600 for renting a share.

Rental yields are pretty low at the moment, especially on nicer properties, so it’s not an awful time to rent.

[Northernboy]

austinsmirk said:

I’m not sure the younger generation drive around in sheds, have cheap holidays, save up for stuff as perhaps we once did.

Society is a bit more instant now perhaps ?

But I can’t see the tipping point changing now, prices are way beyond a lot of people’s means. I certainly know for me buying a house in the90’s was just simple sense: why rent when a mortgage is cheaper ?

That isn’t happening now.

There’s always a push-back when this point is made, but I do think it has some validity.
I used to take sandwiches to work, a “night out” would actually be going to the supermarket and bringing a few cans home, and a holiday would mean just staying at home and not going in to work.

It does seem more common now to get takeaway food, drink in pubs, buy brand-name clothes etc.

When added up, it does put quite a dent in the rate of savings.

[TomTheTyke]

austinsmirk said:

I’m not sure the younger generation drive around in sheds, have cheap holidays, save up for stuff as perhaps we once did.

Society is a bit more instant now perhaps ?

But I can’t see the tipping point changing now, prices are way beyond a lot of people’s means. I certainly know for me buying a house in the90’s was just simple sense: why rent when a mortgage is cheaper ?

That isn’t happening now.

Not saying it's right or wrong but you'll find quite a lot of backlash against that kind of view (first part anyway) on social media. Older people tend to assume it's just that the young won't save, when actually it's not their regular Costa coffee making much difference, but rather the second part of what you said fits. It doesn't matter what they do, it's out of their reach.

Of course, as we all know there's tons of regional disparity, only now closing slightly with people realising they don't need to be in a city to work from home. Myself and fiancee both work in professional jobs and could save as we lived at home after uni. Obviously that helps but the thing was we knew it would only be temporary as housing was not 'out of our reach.' Bought our house (3 bed, garage, small garden) five years ago, 2 years or so after finishing uni, for 132k, very affordable.

[Northernboy]

TomTheTyke said:

Not saying it's right or wrong but you'll find quite a lot of backlash against that kind of view (first part anyway) on social media. Older people tend to assume it's just that the young won't save, when actually it's not their regular Costa coffee making much difference, but rather the second part of what you said fits. It doesn't matter what they do, it's out of their reach.

Two coffees per day through the work week is £1,500 per year, and it’s not only the coffee.

You’re possibly right that even foregoing their little luxuries that they’d still not be able to afford a house, but I don’t think so; you can get a pretty nice starter home in Northumberland for under £100k, for example.

[Oakey]

bigpriest said:

No assets for nursing care in later life.

Also, who is paying the rent when they retire?

[TomTheTyke]

Northernboy said:

TomTheTyke said:

Not saying it's right or wrong but you'll find quite a lot of backlash against that kind of view (first part anyway) on social media. Older people tend to assume it's just that the young won't save, when actually it's not their regular Costa coffee making much difference, but rather the second part of what you said fits. It doesn't matter what they do, it's out of their reach.

Two coffees per day through the work week is £1,500 per year, and it’s not only the coffee.

You’re possibly right that even foregoing their little luxuries that they’d still not be able to afford a house, but I don’t think so; you can get a pretty nice starter home in Northumberland for under £100k, for example.

I suppose the argument is whether someone who has been brought up in London should be expected to move to Northumberland in order to have a reasonable chance of owning a home? As I say, luckily being a resident of God's Own Country I've never been far from affordable housing, but it really is just luck.

[ARHarh]

Northernboy said:

Two coffees per day through the work week is £1,500 per year, and it’s not only the coffee.

You’re possibly right that even foregoing their little luxuries that they’d still not be able to afford a house, but I don’t think so; you can get a pretty nice starter home in Northumberland for under £100k, for example.

2 coffees and a meal deal every lunchtime, could easily be over £2k a year which in its self wont go far towards a deposit, but add to that not paying £300 a month for that Merc you don't really need, that I phone you could replace with something 10 x cheaper and all the other stuff you "need".

Round my way you could buy a 2 bed terraced house for £110.

So my advice drive a shed for a few years, buy a second hand sim only phone, and take a flask and a packed lunch to work, and i reckon you could buy that house after 3 years with a combined income of £30k a year. Doesn't sound to tricky to me, but you may need to sacrifice some things in t your life for a while

[Northernboy]

TomTheTyke said:

I suppose the argument is whether someone who has been brought up in London should be expected to move to Northumberland in order to have a reasonable chance of owning a home? As I say, luckily being a resident of God's Own Country I've never been far from affordable housing, but it really is just luck.

If you’re not able to afford the life you want where you are brought up it’s pretty normal to move.

Millions of people move from the regions down to London for a career, why would we not expect others to need to go the other way?

Despite being Northern I’ve been away from home for decades now, working in Farnborough, London, New York, Frankfurt, Amsterdam, and am now looking at a job in Milan.

I don’t really get the idea that someone can wander into whatever job is available locally, spend their spare cash on nice things, and still expect to be able to buy a three bedroom semi with a garage and a nice garden in London.

[Gooose]

Loads of people are moaning about how hard it is to buy but around me you can buy a two bed terrace for 80k, I mean come on, why can’t someone save up for that?

Rent a room rather than a house, move back in with parents, work more, don’t have car finance, don’t have a phone loan for a god dam iPhone 20 or whatever, don’t have pets, don’t buy stupid amounts of clothes, upskill yourself for better job prospects, don’t live in big city’s, the list goes on.

The sacrifices the older generation made for their life is incomparible to younger people these days.

I’m selling my house I rented out due to the housing market but the younger tenants I had just couldn’t make sound financial judgements.

[skinnyman]

Loading people up with 95% mortgages is fine whilst the interest rate is so low, but what happens if/when it climbs back up to 5-6%? So many households are walking a fine line between survival and bankruptcy with historical low rates, I'd imagine a sudden jump up to 5% would cripple a hell of alot of people.

[Gooose]

skinnyman said:

Loading people up with 95% mortgages is fine whilst the interest rate is so low, but what happens if/when it climbs back up to 5-6%? So many households are walking a fine line between survival and bankruptcy with historical low rates, I'd imagine a sudden jump up to 5% would cripple a hell of alot of people.

Will they ever get back to that? I can’t see it happening in the next 10/15 years

[Tango13]

I've posted this before in the 'how far will house prices fall' thread but what we need is a clear, long term strategy to take the heat out of the housing market over the next 20~25 years

To do that we need to 'boil the frog' on interest rates, ie slowly raise them to somewhere around 5~7% whilst also returning to the days of proper affordability checks and not lending more than 3x salary for singles/2x combined salary for couples.

I would also tighten up on 'Bank of Mum and Dad' equity release with some stiff taxation to reduce money flowing into the housing market from that direction.

Implemented carefully this could cause price stagnation in the housing market but create inflation in the wider economy to reduce the cost of property in real terms. The government also needs to accept that inflation is not the devil incarnate but a useful tool to reduce the cost of long term debt.

I would also have Gordon Brown publicly hanged, drawn and quartered for what he did to the pension industry which is partly what caused this current situation.

[ClaphamGT3]

Gooose said:

skinnyman said:

Loading people up with 95% mortgages is fine whilst the interest rate is so low, but what happens if/when it climbs back up to 5-6%? So many households are walking a fine line between survival and bankruptcy with historical low rates, I'd imagine a sudden jump up to 5% would cripple a hell of alot of people.

Will they ever get back to that? I can’t see it happening in the next 10/15 years

That’s a risk that people would have to take. It’s worth noting though that rising rates of interest are normally balanced with rising inflation. Within reason this can actually be beneficial to the home owner as wage inflation partially offsets increased mortgage costs in the short term and devalues the principal debt in the medium to long term.

Notwithstanding interest rates at about the 10% mark, inflation in the 1970s has made millionaires of many a boomer

[Gtom]

austinsmirk said:

I’m not sure the younger generation drive around in sheds, have cheap holidays, save up for stuff as perhaps we once did.

Society is a bit more instant now perhaps ?

But I can’t see the tipping point changing now, prices are way beyond a lot of people’s means. I certainly know for me buying a house in the90’s was just simple sense: why rent when a mortgage is cheaper ?

That isn’t happening now.

What defines the younger generation? I’m 37 and doing exactly what you have mentioned, cheap car, cheaper holidays, save up and put some overtime in to buy stuff I want.