[Ben Reeve Lewis has had a bout of man flu …]
My week has been dominated not by housing stories but by a particularly nasty strain of cold (which Frazzy insists on calling ‘Man-flu’).
Not that I’ve been able to snuggle under a duvet and call for cups of tea. We are in Xmas last-lap hell, trying to tie up all loose ends so we can sit for 3 days and do nothing. With a raging temperature I have even had to truck down to Maidstone on Tuesday and train the good people of ex-offenders housing charity ‘Hope’, in between cramming in more illegal evictions than I can shake a stick at and trying to fit in Xmas shopping and various Xmas parties.
If you are in Croydon tonight avoid ‘Cosmo’s’ where 30 of Lewisham council’s finest homelessness posse, people who argue for a living, will be getting drunk and forgetting all notion of political correctness and slagging off all and sundry. Its our annual time off from being sympathetic to people’s troubles and I can assure you we have the blackest of black humour once we are let off the leash.
So what news have I been missing out on in my fevered state?
24 Dash ran an article on the 35% increase in homelessness applications from people whose Assured Shorthold Tenancy has expired. Which is an interesting development.
ASTs expire all the time so why should this cause a dramatic homelessness spike? Could it be a combination of rent levels that continue to rise so that landlords simply look to the next tenant who can afford the hike and the inability of the outgoing tenant to find the money to rent the next property whose landlord has done the same thing?
The article said:-
“Critics have warned the private sector must offer greater security before it can be truly be viewed as a long-term form of tenure”
Landlords want short term tenancies because they offer an element of protection against the possibility of nightmare tenants. Having seen in my day job, thousands of nightmare tenants harassing thousands of decent landlords I can understand that concern, but the knock on effect of that is this limited security which keeps people on the move, destroys communities and pushes up the homelessness bill.
People regularly cite Germany as a renting wonderland, or Wunderland to be more precise, where rents are low and fixed terms are long enough for tenants to feel like they actually have a home (imagine that). Property journalist Madalena Penny replied on a blog post on Property 118 about the ethics of social media mounting a campaign against a letting agent:-
“I once followed a thread in Germany about an article I wrote in the press. Basically, the British were viewed as the laughing stock of Europe. There are many people on the Continent who think we are slaves to the wage, holding property as our God and our little Country is the ideal place to invest in property, because we are stupid enough to pay high rents”
But maybe our attitudes are changing. Property Newshound this week wrote an article about spotting different mindsets in the UK towards owing your own home his argument being that normal surveys aren’t that reliable, the true predictors being changes in the market.
He suggests that attitudes may alter when there are more renters in London than owners, which is an interesting point. It takes more than newspaper articles and Landlords from Hell programmes to actually change things, although he concedes that another possible indicator could be when property pages of newspapers start running articles on renting as opposed to be constantly about home owning.
His most interesting point I think was in identifying the effects of the perceived problems with mortgages being a possibly growing change in the thoughts amongst younger people when he says:-
“Young generations may now be deciding to rent not because it’s cheaper at one point in time but because renting does not saddle them with a mortgage, maintenance and ownership of an asset which no longer looks like it will make money in the long-term future”.
And I would add another angle to that. A book that has been around for ages now is Robert Kiyosaki’s “Rich dad, Poor dad”. It’s been on the best seller list for ages but in the last couple of years has gone stratospheric, becoming an entire financial movement in it’s own right. There was even a series of TV documentaries on it last week.
One of his major tenets is to rubbish the traditionally held belief that buying your own home is the wisest choice you can make. He says a mortgaged property is not an asset but a financial liability and therefore to be avoided in favour of using your money to make you even more money in a better way.
When you look at the growing success and influence of Kiyosaki’s ideas coupled with the bad press around mortgages and the housing crisis in the UK at the moment and the fact that an entire generation of young people know they are never going to own their own home, and as reported in This is Money this week it now takes 30 years for the average person to save a deposit to buy their first home, Property Newshound’s ideas may seem to be very pertinent, as people adjust their thinking to deal with the reality in front of them.
The government’s obsession with home ownership just might be shooting itself in the foot by adding more fuel to the fire being fanned by people like Robert Kiyosaki and the growing band of property journalists starting to write about the same thing.
And in the tradition of the light hearted “And finally” section of News at 10 I give you….the discovery of a witch’s cottage in Yorkshire reported on the BBC. Apparently Pendle Hill was a known haunt of witches several hundred years ago. Builders uncovered a complete cottage previously unknown. It had a mummified cat bricked up in the wall, apparently a sure sign of witch occupation.
In the light of this amazing new discovery I hear that Grant Shapps is about to make a new announcement, following on from the houseboats suggestion and clear the bureaucracy that currently stands in the way of homelessness units being able to use abandoned witch’s cottages to take the pressure off of the housing shortage.
Witching not being what it was, and as many people leave the religion in droves literally thousands of homes could become available. All you need is rent in advance, a decent deposit and a cauldron. What’s not to like?
Ben Reeve Lewis
Ben has started Home Saving Expert, to share his secrets to defending people’s homes from mortgage repossession Visit his blog and get some help and advice on mortgage difficulties and catch up with him on Twitter and check out his free report “An Encouraging note on Dealing with your Mortgage Lender” and have it sent right to your inbox.
Houses on scales picture from Images of Money
Before we lose you to the sins of inebriation, you’ve written a very positive article in the favour of renting. Having just forked out around £5000 this month for various maintenance projects I often think how lovely it would be to just pick up the phone to a landlord and let him/her know there’s water coming through the ceiling! I could then budget my fixed costs accordingly and hit the sales for shoes without having to worry or hold my hard earned cash back to hand over to trades men. As we speak I’ve just had the bill for a broken window where a tenant’s friend forgot the advantages of a front door!
As I understand it, in Germany landlords give longer fixed terms in exchange for repairing obligations that pass to the tenants. That works for me. I would happily pay for my own repairs if I knew I could stay where I was for a guaranteed 3 or 4 years.
Its the complete lack of security that wears me down as a tenant. I have 3 months left and I am going to have to move yet again
“it now takes 30 years for the average person to save a deposit to buy their first home”
I think this is often down to the lack of will, I did not buy a car or go on holidays outside of the UK until I saved a deposit – I also choose to lodge rather then rent a flat so I could save for a deposit.
I keep seeing people that claim they can’t afford to save, but they are just choosing to spend their money one what they WANT, rather than just want they NEED. It’s ok for them to choose to do that, provided they don’t then complain they can’t buy a home!
90% mortgage will be back within a few years, I think we will even see 95% mortgage come back on the market. So anyone that is saving hard now, is lickly to be able to buy at somepoint. (At that point we will think very hard about selling our flat in the midlands).
I decided to buy, as I know I could always find work in Cambridge and rents were high in Cambridge – my sister at the time choose to rent as she wished to be mobile (only one local employer she could work for) and rents were very low in the area relative to the cost of buying.
I have always thought of buying as the best option for most people, provided they are very unlikely to have to move in the next 5 years, otherwise rent and let someone else pay all the legal costs etc.
I have never seen a home I live in as a capital investment, it is an investment in not paying rent – but only to the level of rent I would have had to pay for the most basic place I could have rented. Anything bigger is a drain on cash flow just like going out for a nice meal is.
Ian I think your comments miss a serious point. Although I agree that some people are more disciplined than others when it comes to saving, we live in a vicious recession.
I have been working in housing since I was a teenager, I have seen housing crises come and go but I have never seen anything as bad as we are currently in the middle of.
It is broadly accepted by everyone in the industry, including mortgage companies that people simply cannot get the money together for a deposit, even if 95% mortgages come back in. The average house price in London is £485,000, even a 5% deposit is knocking on for £30k counting moving expenses and with people pay 50% – 60% of their net income on rent each month how can even the most careful person save?
I think you are very wide of the mark in your analysis here, bordering in naive
Ben,
Paying “50% – 60% of their net income on rent each month” is a free choose for anyone without children unless that’s what a shared room in a shared house costs them. Then I would questions way they did not choose to work hard at school and get a reasonable job. Or to spend 30 minutes longer on the bus, so they can live somewhere cheaper.
“Average house price in London is £485,000”, firstly is this the “mean” or the ”median”? There is also no need for someone to aim at the average when they can aim at the lower end of the market. And once again living in London is a CHOOSE people make.
So I think the young professional classes have chosen to put other things before having a home – that a choose people can make, but they should not then complain about the outcome.
If a young professional just saved any money they earned that was more than the student loan they lived on at university and kept living as cheaply as a student does until such time as they had brought a small home and paid off most of the mortgage, then they could have the benefits of home ownership, however these days people are choosing to do other things with their money.
I just look at rightmove and there are flats on the market for under £120,000 in East London, so only needing about £10K saved on a 95% mortgage. (I was expecting the prices to be a lot more! Maybe I should buy one in East London to rent out…But I don’t know how high the service charges are)
(As a landlord I am very glad that lots of people CHOOSE to rent…)
So we are left with the 5% or so, that due to a mental disability or a VERY serve physical disability are unable to improve themselves enough to be able to get a reasonable job.
Having spent some time in the Renting Heaven that is supposed to exist in Germany, allow me to point out the problems. Homes are totally unfurnished – even down to wall tiles. On the plus side, the culture allows tenants to treat the place like an actual home, with pets (usually…with permission) and painted to their taste.
On the downside, yes, tenants must pay for all repairs. There is also a problem with renting for single childless tenants over 35 on low income, since it is assumed they have more income and can pay more rent, and lose out on affordable properties.
At the time of writing, their are demonstrations in Berlin due to rapacious landlords rent-ramping due to incomers. And the landlords, not the incomers are being blamed for this. They also take renting and flatshares very seriously, with full-on interviews and terrifying selection panel of co-tenants, since you might all be in that flat for years. And years…
@Penny. Damn! I knew it was too good to be true. I wonder why the Germans see fit to demonstrate and we dont?
@Ian. Words fail me
While on the subject of Eurohousing, when a student I went to study in Paris for a year and did the whole “appartement” experience – a 6th floor studio in the 14e Arrondissement. At €675.00 per month it wasn’t cheap (although cheaper than London) but it was clean and not too cramped.
No, the worst thing was actually getting it. I had to interview for it and provide heaps of paperwork to show that I could pay rent on time. I found myself heaving all round the city with “le dossier” which consists of years worth of paperwork to prove I was financially stable and responsible and then having to interview for the place. And even then, as I knew nobody else in France I couldn’t provide a “garantie” and a lot of them thought they could stuff me up with “under the table” deals.
Other people I knew of my cohort had a similarly hard time and it wasn’t uncommon for them not to be furnished. Yano the garret where Marlon Brando and Maria Schneider set up in “Last Tango in Paris” where everything’s all o’ert’show? Some of them were like that.