Brian Berry, FMB Director of External Affairs reports:
A whole generation of young renters is giving up on the traditional dream of buying a home according to recent report from the Halifax bank which reveals that 66 percent of 20-45 year olds believe that they will never own a home due largely to the size of deposit required. The finding is a cause of alarm for everyone in the housing and construction sectors because a dearth of first time buyers might bring the housing market to a standstill.
Key obstacles to buying a property included the size of mortgage deposit required and fear of the toughness of the mortgage application process. To make matters worse, the so called ‘Generation Rent’ is either unable or unwilling to make a start on saving for a deposit on a property. Only five percent are currently saving, while 95 percent said that they had no cash, no interest in saving for a deposit, or were trying to save but failing. The survey which was carried out by the National Centre for Social Research for the Halifax bank revealed deep pessimism about the possibility of obtaining a mortgage. More than 90 percent of those questioned said it was hard for first time buyers to get a mortgage, while 67 percent thought that there was a general perception that everyone is rejected by lenders so there is little point in applying. The implications are serious because the housing market could suffer a slowdown, with those already on the housing ladder not being able to make the next step up. It would also encourage a widening of the wealth gap that already exists between homeowners and non-homeowners.
The Generation Rent study is one of a series of reports highlighting the plight of young people in today’s housing market. Research carried out by price comparison website, Moneysupermarket.com, revealed that house hunters estimate that they will be 38 years old before they succeed in buying their first home. 31 percent of non-homeowners – equivalent to six million people – said that they never intended to buy a property. A study by Shelter, the housing charity, found that 25 percent of 18 to 34 year olds found it difficult to move for work because of high housing costs, while 22 percent have been forced to move back in or continue living with their parents because they can’t afford to rent or buy their own home.
232,000 NEW HOMES NEED TO BE BUILT EVERY YEAR UNTIL 2030
The FMB has been highlighting the growing housing crisis and the urgent need to increase the supply of more homes during the passage of the Localism Bill in Westminster. The FMB has flagged up to MPs that last year only 102,570 homes were built which represented a 13 percent reduction compared with 2009. To meet demand 232,000 new homes need to be built every year until 2030. The FMB is calling for the creation of single tariff to replace both Section 106 agreements and the Community Infrastructure Levy (CIL) as well as simplification of the planning system. In addition, the FMB has been talking to its housebuilders about an initiative being developed by Britain’s largest house builders and the Council of Mortgage Lenders (CML) to provide 95 percent mortgages to help thousands of first-time buyers. Although the details have yet to be confirmed one idea being considered is the creation of a fund into which housebuilders would inject money. This would be then ring fenced for each housebuilder and the fund would have a finite lifetime. This fund could be used by banks to underwrite mortgages for up to 95 percent of a property’s value.
