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Renting to be 'the only game in town', says housing expert

Thursday 14th June 2012

Renting is set to be ‘the only game in town’, with an extra 1.5 million 18 to 30-year-olds going into private rented accommodation over the next eight years.

An additional half a million young people will be forced to stay with their parents into their thirties, taking the total number of young people still at home to 3.7 million by 2020.

The influential Joseph Rowntree Foundation says that one risk is that pressures on private rental accommodation could force young families out of the sector and into homelessness. The foundation forecasts that around 310,000 more young families will be looking for private rented housing in 2020 compared with today.

In a new report, ‘Housing options and solutions for young people in 2020’, it warns that the influx of youngsters chasing a private rental home will see young families, poorer and vulnerable people finding it hardest to compete for tenancies.

The report is just the latest in a welter of similar documents warning of the growing pressures on the private rented sector as increasing numbers of people are locked out of home ownership.

It warns of a three-tier race to find rented accommodation, with those at the top who can afford to pay rents, a ‘squeezed middle’ group who struggle to pay, and a bottom rung of 400,000 who risk being excluded completely.

Kathleen Kelly, programme manager at the Foundation, said: “Our badly functioning housing system will see those on the lowest incomes really struggling to compete in the competitive rental market of 2020.

“Renting is likely to be the only game in town and young people are facing fierce competition to secure a home in what is an already diminished supply of housing.

“With 400,000 vulnerable young people, including families, on the bottom rung of a three-tier private renting system, we need to avoid turning a housing crisis into a homelessness disaster.”

The Foundation wants to see more homes built, longer tenancies at affordable rents – with the incentive of tax breaks for landlords – and the expansion of local letting agencies to find suitable homes for vulnerable young people.

David Clapham, lead author of the report, added: “With 1.5 million more young people no longer able to become home owners by 2020, it’s vital we take the opportunity to make renting work better.”

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Added by Oi Dave on 2012-06-19 17:16:37

What can you tell us about Japan's level of public debt in comparison to the excessive borrowing of let's say Gordon Brown?

A very interest Radio 4 this morning confirmed how the younger generation always blames the one before and how their economic thinking changes with age and maturity

http://www.bbc.co.uk/radio/player/b01jmx0p

Added by dave on 2012-06-17 12:13:03

fred goodwin worked for rbs for most of his working life....he struggled to see the wood from the trees

I can't be making it up because countries have actually GONE bust and our entire banking system has had to be bailed out.

interest rates are 0.5% for a reason and QE has fed the economy a lifeline

these circumstances have never happened before and the consequences are unknown

Added by Industry Observer on 2012-06-17 11:14:26

@dave

Final words

1. Is it a funny farm you own?

2. It's because I worked for NBS for 23 years that I have
a better understanding as a practitioner than you do
as a theorist.

Stick to milking the cows dave - ohg by the way I assume you refuse all the illegal farm subsidies from the EEC too?

Added by Swansea EA on 2012-06-15 11:39:08

I'm originally from Burnley and visit on a regular basis.

Property in and around Burnley has always been low in price compared to most of the UK and that is simply down to a serious lack of employment.

The race riots several years ago did not help either.

Most people are unemployed or commute to Manchester, Leeds etc.

It is a town full of empty footwear factories and cotton mills. The local council tried to auction off lots of properties a few years ago starting at £1. Many London investors bought a street at a time, spent money renovating and could not find tenants due to the above. It's a ghost town. The only thing keeping the town going is the football club.

Those properties have now been vandalised and left to rot again.

You can search youtube with terms like 'Burnley war torn town' or 'Burnley riots' to see what condition it is in now.

Added by former banker on 2012-06-15 10:04:10

@dave

whilst boe keep printing cash,the housepricecrash is delayed.

they may even manage to put it off completely and keep the average around 150-160k

unfortunately that would also be the cost of the weekly shop ;-)

Added by dave on 2012-06-15 09:44:35

wow....I think I may be too optimistic

worried looking mervyn king just found another 140 BILLION to prop up the banks

I'm sorry,but history will show these people have lost the plot

Added by dave on 2012-06-14 15:34:09

I've worked as an estateagent then hedge fund researcher and did a thesis on japan while living there about their credit bubble bursting and the aftermath

I currently run a farm which I own cash

I believe the UK is on the verge of a horrific crash,in particular central london where some properties I believe will fall 90% like tokyo

btl market will lead the spiral down as portfolios are liquidated

Added by He is Hendry on 2012-06-14 15:33:10

He will not answer a question!

Added by dave on 2012-06-14 15:29:22

funny that most of our banks have either been nationalised or are being propped up by taxpayers

they can hardly be called prudent when 50% of lending between 2005-2007 were liar loans

japan was not thrifty during their credit boom,they are now though

If you worked for nationwide for 23 years then you should know that we are in unprecendented times where out entire banking system almost collapsed

this is how bad things really are

Added by Industry Observer on 2012-06-14 15:20:54

@dave

Sorry 15:17:52 was me untitled. Senior moment (again)

Two other things. Japan has always been a thrifty society and many of those being excluded here from credit and borrowing should be.

Home ownership is not for all - neither is credit.

Added by on 2012-06-14 15:17:52

@dave 9:38:33

Please dave tell me you are joking and don't really believe your tripe about banks future knowledge on house prices?

You don't really, do you?

Banks are lending to lower multiples for several reasons, but the three most obvious are that they want to rebuild their asset bases, they know borrowers are a bigger risk because of job insecurity, and above all becuse they have finally realised that you cannot lend at x5 salary and not be lending too much.

This has nothing to do with house prices and whether they fall or rise. Lenders hedge against price falls by having lower LTV levels. Just as they do on commercial and other lending because the risk is different.

I worked for Nationwide for 23 years so know a little of what is behind these motivations and multiples. Where does your knowledge come from dave?

Added by Ray Comer on 2012-06-14 15:08:51

@ Dave
"http://www.rightmove.co.uk/property-for-sale/Burnley.html?sortByPriceDescending=false "

Are you kidding? A derelict house for £14k in Burnley isn't a sign of a burst property bubble; if it was the house opposite that sold for £62k in 2007 wouldn't be worth £48k now would it? it would be worth 14K too

2/10 Nice try but no coconut

And why have none of the first time buyers not snapped it up at £14k? Because its a depressed area through lack of employment, not because they have no money from paying too much rent.

1/10 Must try harder.

Oh, and I searched for BTL property portfolios to buy in Burnley - if you're correct I might as well try to make some money out of it right? - and guess what? there weren't any that I could see - why is that? Because an average £350pcm on a 2 bed in Burnley produces a 30% ROI on a £14 k house, thats why. If I owned a portfolio up there, with a lot of DSS tenants paying me £350pcm i wouldn't want to sell up; in fact I'd be adding properties as qucik as I could.

0/10 Completely missed the target

Added by rantnrave on 2012-06-14 13:22:38

Norn Iron - Prices down 50% from peak.

Over in England, prices in Hartlepool hit -20% YoY according to a recent Land Registry Release.

I'm in the Midlands and even Zoopla's ridculously optimistic valuation tool says prices in my postcode are cheaper now than at any point during the past five years. Given that was the peak of the market, selling prices are back to 2003 levels I would say (so 2002 salary multiples?). And they are still falling. Sure, it's not a blistering pace, but there is zero upwards pressure on prices.

Added by dave on 2012-06-14 13:18:45

http://www.rightmove.co.uk/property-for-sale/Burnley.html?sortByPriceDescending=false

anyone care to comment on houses for sale between 10-20k in th UK

one of many northern areas

Added by Is Dave Peter Hendry? on 2012-06-14 13:17:03

If Realising Reality posts on here, everyone knows to ignore the post, my theory is that Dave is either Peter Hendry AKA Realising Reality or that two of them have now escaped from a laboratory.

RUN FOR YOUR LIVES!

Added by dave on 2012-06-14 13:15:37

also as is here today the amount of people excluded from credit is growing rapidly...as in japan... people will have to save to buy stuff they don't need...unfortunately as was the japan case,when they saved up enough they found they had lived without the said item they didn't need

they also found that it was cheaper than when they started saving..they also felt good having cash they had saved

now thrift is engrained in society and they suffered deflation,falling prices and stockmarket for 20 years which still has not recovered

with deflation debt increases

Added by Ray Comer on 2012-06-14 13:12:01

Dave posted: "its happening now in parts of the country,the figures are distorted by london and south east "

OK, time to put your money where your mouth is Dave.

Provide us with the evidence that your 'prediction' is actually already happening. Show us conclusive evidence of:

Where the property bubble has burst - by this one would assume property prices have fallen through the floor

Where, in those areas, BTL portfolios are being put up for sale or given away.

And that previous renters are now snapping up those, or other properties, at affordable prices. It would follow, surely, that your evidence would also show that the rental market has completely collapsed in those areas.

In this world of information sharing, it shouldn't be a herculean task to show us quite quickly the data that you base your assumptions on.

Added by rantnrave on 2012-06-14 13:09:49

"Are they those who go out most nights drinking lager at £3+ a pint, go on £1000+ holidays, drive around in HP cars, pay £35+ a month on smart 'phones, buy designer clothes etc. etc..."

Here we go again with the Daily Mail type comments.

There are financially irresponsible people in every generation. The free equity that the over 55s have been given has masked that to some extent though. Even then, the over 55s are one of the most-indebted age groups in this country. It wasn't young people who MEW'd up to the hilt and went on world cruises, bought sports cars etc.

Those over 55s who think the young 'uns are especially financially incontinent may well be looking at the tip of the iceberg of what's to come. In a tip of the hat to Dave, once property prices in Japan went sky high, the younger generation found they had little incentive to work hard or save. Family houses were so unaffordable, they gave up the idea of having kids, getting married or even moving out (Japan's population is consequently declining rapidly). In essence, the carrot was dangled too far out of reach. Many of them stayed in the family home (and still do), living off their parents' generosity, bouncing from one part-time job to another. All the income of these 'parasite singles' is blown on trips abroad, designer clothes etc. If prices in the UK remain out of reach, how long until this arrives at our shores? It's already starting to happen in my opinion.

Added by dave on 2012-06-14 12:22:04

==========================================
Hey dave, you sound like a loser with a chip on his shoulder.
==========================================

try to argue the point not the person

just because someone has an opinion different to yours doesn't mean you have to be rude on this free discussion board

I think as a country,the people should be very concerned about how we treat the next generation which after all is the future...propping up a housing bubble is the economics of madness

Added by Millionaire Landlord on 2012-06-14 12:18:30

Hey dave, you sound like a loser with a chip on his shoulder.

Added by dave on 2012-06-14 09:57:03

its happening now in parts of the country,the figures are distorted by london and south east

vested interest means people ignore warning signs

unfortunately at their peril

12% mortgages in some sort of forebearance 1 million people indebt management schemes,rising unemployment..the list is endless

Added by Ray Comer on 2012-06-14 09:47:41

Still not happened though has it, Dave? How long have you been sounding the death knell now? 12+ months?

Wishing for it to happen won't make it happen; if that was the case I'd be living in luxury with a fleet of Bentleys.

Added by David Coleman on 2012-06-14 09:39:11

Errrrrrrr....quite extraordinary!

Added by dave on 2012-06-14 09:28:33

thats simply not the case....banks require big deposits now because they know prices will fall

in the 90s crash nadir,you could get 95 or 100% mortgage on 2-3 x salary

we are in the midst of a financial meltdown if you hadn't noticed,we've had to print 325 BILLION to avoid the pain and reduce interest rates to 0.5%

there is nothing we can do now to avoid a serious depression,however,our marginalised kids will pick things up,buy a property and grow the economy

Added by Industry Observer on 2012-06-14 09:22:56

dave

If there is you won't profit from it and neither will anyone else who isn't either a pure cash buyer or otherwise hardly needs finance.

If there is a crash it will be part of a much wider financial melt down including the stock market and above all employment. How do you pay a mortgage on this reduced price property with no job?

Added by dave on 2012-06-14 09:09:09

prices in US are not recovering even though a ftb can get a mortgage based on salary...some areas of detroit you can buy for a few thousand a detached property

there are crashes in US,spain,greece,ireland and china to name but a few

and there will be one here too

Added by Industry Observer on 2012-06-14 09:06:16

@dave

You are only seeing what you want to

Where are these "property crashes all over the world" then?

After a severe correction in America prices are recovering. The current financial crisis was caused by three things:-

1. Banks creating potty schemes even they themselves didn't understand - in effect multiple lending on the same security

2. Over borrowing on sovereign debt - borrow now credit crunch down the road (hence UK problems courtesy of the worst Chancellor in history, Brown)

3. Too much personal borrowing

Property crash hasn't even happened yet here so how can it be contributing to the financial crisis except in an indirect way under (3) below?

Added by on 2012-06-14 09:01:38

"..........find suitable homes for vulnerable young people........"
Who are these people? Obviously there are some really vulnerable but others?

Are they those who go out most nights drinking lager at £3+ a pint, go on £1000+ holidays, drive around in HP cars, pay £35+ a month on smart 'phones, buy designer clothes etc. etc. and expect the rest of us to support them!
Most of their parents went without and saved for a year or two so that they could provide a roof over their heads. Difficult, of course, but they did it if they really wanted to..

Added by dave on 2012-06-14 08:59:08

so we have property markets crashing all over the world which has in turn caused the current financial crisis

But if anyone thinks the same will happen here must be barmy

I think you are not seeing the wood from the trees

Added by Industry Observer on 2012-06-14 08:38:47

@ dave

Nice to see you as daft and wide of the mark as usual.

As I have been saying to all HPCers and anyone else who thinks like you for whatever reason property will never come within reach of the tented tribes of St Pauls steps even if 6 bed luxury mansions are available for £50,000

Why?

Because if the scenario you envisage comes to pass lending weill also seize up.

Why?

Because either the banks will have so much bad debt they won't be able to cope with it.

And property will not offer the security it once did and probably will for ever.

The only people who will benefit will be cash buyers or those with massive deposits - assuming the banks lend at all.

You see their lending terms at the moment and how the market is seized up? You seriously think that will improve if there is massed forced selling of property?

If you do then you truly are barmy

Added by dave on 2012-06-14 06:53:50

boy...is this country in for the shock of a lifetime

hmg fault for propping up the biggest property bubble in history

this situation will be sorted as the bubble burst and liquidated btl portfolios are put up for sale

then the 'renters' will buy rather than rent at affordable prices

anyone who thinks the above article spells out the future is crazy

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