I had the most interesting chat with a mature couple (in
their early/mid 50’s) from Fixby the other day, whilst viewing one of our
rental properties. The property wasn’t for them, but their son, who wanted a
second viewing with his parents to get the parental blessing. Now I know that
isn’t the norm, but in this case the parents were going to act as guarantor. We
got chatting about the Huddersfield 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 highlights
of that conversation with you today.
Their son, like many 20 to 30 year olds in Huddersfield,
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 Huddersfield is huge. There are in fact 12,973 private rental
properties in Huddersfield at the last count, impressive when you consider
there are 8,322 council houses in the town. However, let us not forget 22,796
properties are owner occupied (43,744 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, I have proved time and
time again, 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 early £40,000’s in the Milnsbridge area of Huddersfield
(meaning a modest deposit of £2,000 would be required).
When it came to affordability, I was able to tell them that
when they bought their first house in Huddersfield in 1988, the ratio of house
prices to salary was 3.56 to 1 in Huddersfield ... and here was the surprise
for both of us, today’s ratio is still only 4.44 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. Youngsters today have far much
more disposal income today than people had in the Callaghan and Thatcher years,
but choose to spend it upgrading their mobile phones every 12 months, the
newest tablet or PC, a newest 50” plasma LCD TV and two sun drenched holidays a
year, than go without and save for a deposit.
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 couldn’t 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’s the norm.
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.£2,000 in Huddersfield 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.
Hence, I cannot see the demand for decent, high quality
rental properties ever dropping in the next 10 to 20 years, but only ever
increasing as the population continues to soar. Just make sure you by the right property, at the price,
in the right location. One source of information on such matters would be the Huddersfield
Property Blog ... INSERT URL
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