How good were the good old days of the 1970’s and 1980’s when
young people could afford to buy their own home, and chose to do so? Well…not THAT great - 24% inflation, 17%
interest rates, 3 day working week, 13% unemployment, power cuts. So why
aren’t the 20 and 30 something’s buying in the same numbers 30 or 40 years
on? After all, inflation is below 2%,
interest rates are at an all-time low, unemployment is below 5%, and the lights
stay lit 24/7.
Many people blame the credit crunch and global recession of
2008, which had an enormous impact on the Oxford housing market. Confronting a
problematic mortgage market, the requirement by lenders for bigger deposits, reduced
job security particularly for young adults and declining disposable income, 18
to 24 year-olds found it challenging to assemble the monetary means to get on to
the Oxford property ladder.
However, I would say there has been something else at play
other than the issue of raising a deposit - having sufficient income with rising
property prices in Oxford. Whilst these are important factors and unquestionably
barriers to homeownership, I also believe there has been a generational change
in attitudes towards home ownership in Oxford (and in fact the rest of the
Country).
Back in 2011, the Halifax did a survey of thousands of
tenants and 19% of tenants said they had no plans to buy a home for themselves.
A recent, almost identical survey of tenants, carried out by The Deposit
Protection Service revealed in late 2016, revealed that figure had risen to
38.4%, with many no-longer equating home ownership with success and believing
that renting is better suited to their lifestyle.
You see, I believe renting is a fundamental part of the
housing sector, and a meaningful proportion of the younger adult members of the
Oxford population choose to be tenants as it better suits their plans and
lifestyle. Local Government in Oxford (including the planners – especially the
planners), land owners and landlords need to create an adaptable Oxford residential
property market that allows for the diverse choices of these Oxford 20 and 30
year olds to be met. Whilst Government
help-to-buy schemes have boosted first home ownership for those who choose it, they
have remained peripheral for many affluent young adults, who have chosen to rent
to ensure that they remain geographically flexible to develop and promote their
careers UK-wide and Globally.
This means, if we applied the same percentages to the
current 41,381 Oxford tenants living in 15,980 private rental properties, 15,890
tenants have no plans to ever buy a property – good news for the
landlords of those 6,136 properties. Interestingly, in the same report, just
under two thirds (62%) of tenants said they didn’t expect to buy within the
next year. But does that mean the other
third will be buying in Oxford in the next 12 months?
Some will, but most won’t … in fact, the Royal Institution
of Chartered Surveyors (RICS) predicts that, by 2025, that the number of people
renting will increase, not drop. Yes, many tenants might hope to buy, but the
reality will be different for the reasons set out above. The RICS predicts the number of tenants
looking to rent will increase by 1.8 million households in the UK by 2025, as
rising house prices continue to make home ownership increasingly less affordable
for younger generations or relatively expensive compared to other spending
priorities. So, if we applied this rise
to Oxford, we will in fact need an additional 6,849 private rental properties over the next eight years (or 856 a
year) … meaning the number of private rented properties in Oxford is projected
to rise to an eye watering 22,829 households.
So why is Government policy dissuading new investments by landlords?
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