Just as you thought it couldn’t get any worse, it does. For young people already struggling to reach the bottom rung of the housing ladder, it looks to be pulled up even further.
From 6 April, over-55s will be free to cash in their pension funds, with many expected to invest in buy-to-let properties, unleashing a new wave of wealthy older people into the housing market.
Low interest rates have meant that people are making little money from their savings while those with money in property have seen far larger returns. There is even the option for “crowdfunded” buy-to-let, with a host of micro-investment companies offering the chance to invest in property for as little as £500.
More investors will surely increase demand, which will inflate prices and spell disaster for Generation Rent. Many young people are already marooned in unaffordable rented accommodation with few tenancy rights, or living with family. Increasingly, home ownership appears a mirage.
In much of England, affordable homes are in short supply. Demand outstrips availability and this is heightened in London where prices rose 13.3% last year. And even though prices in the capital have started to stall, current predictions suggest that property prices in London may increase 30% in the next five years.
But viewing housing simply as an investment is placing yet another hurdle in the way of the next generation of potential homeowners. The changes will make younger homeowners an increasingly endangered species. All this does not bode well for a country where home ownership has now reached its lowest level for 29 years.
Last year saw the largest number of first-time buyers since 2007, as the combination of the government’s help-to-buy scheme and low interest rates enabled more young people to get their foot on the ladder. However, if house prices continue to rise, this increase will quickly reverse. .
For years, buy-to-let has made it harder for first-time buyers to get on the ladder. A roof over your head is a necessity. Not everyone can be a homeowner, and private landlords fulfil a definite need. But housing should not be seen as a commodity while people are being driven out of expensive cities, or forced to put plans to have children on hold.
Competition for suitable homes will inevitably become fiercer for those at the bottom of the ladder. But first-time buyers are up against buy-to-let investors who have average deposits of £100,000. It’s little wonder that Scottish Friendly recently suggested first-timers have just months left to purchase a house or “risk missing out on the chance of getting on the property ladder for years to come”.
With elections only weeks away, the question is whether any of the parties will put housing higher up their agenda. Buy-to-let pensions are not in the national interest and younger voters must be more vocal on housing. Thatcher’s dream of a nation of homeowners seems like a fairytale to those trapped in generation rent.
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