Home ownership for those aged 20-30 in Rotherham has seemed a vague dream. Talk to many of this generation and they have been vexatious towards the Baby Boomer generation and their pushover ‘easy go lucky’ walk through life. They’re 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 Rotherham for say £15,000 in first quarter of 1977, today it would be worth £177,447, a windfall increase of 1082.9%.
But to blame the 60 and 70 year olds of Rotherham 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 Rotherham area who have two or more spare bedrooms (meaning they are under-occupying the house). I see many mature members in our area 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 1970s and 1980s 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.
So… who is to blame?
Hyperinflation in the 1970s meant the real value of people’s mortgages was whipped out (as mentioned above).
In the 1980s Margaret Thatcher sold off millions of council houses and Nigel Lawson delayed ending the MIRAS tax relief in 1987. During the New Labour years, the Blair/Brown combination doubled stamp duty in 1997 and again in 2000. As a tax off property transactions, this precludes a more efficient distributions of the current housing stock – the government has had plenty of opportunity to change the draconian stamp duty rules to incentivise those mature Rotherham house movers to downsize.
However, I have started to see over the last few years a change in Government policy towards housing.
Are landlords to blame?
I don’t directly blame the multitude of Rotherham 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.
The new breed of Rotherham 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 Rotherham property trends to hand).
It’s easy to think the only reason that hundreds of first time buyers have been priced out of the Rotherham housing market is because of these landlords. Yet I believe landlords have been undervalued with the Rotherham homes they provide for Rotherham 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 Rotherham by these buy-to-let landlords.
Providing 5,000 new homes for local people
In the Rotherham area there are 714 homes being bought up by buy-to-let landlords each year. One side of the argument is that these houses might otherwise have become available to other buyers. However, the other side of the argument is that the current national average rage deposit in £51,800 – 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 – they equate to 4,997 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 60s/70s/80s, people thought that you were a failure unless you owned your own home. This traditional perspective has now all but disappeared. If you ask many young people they would probably say renting was the perfect option for them at certain times of their life.