Falmouth’s private renting set to hit 2,896 households by 2021 - Is Buy to Let immoral? (Part 1)

 

Can we blame the 55 to 70-year-old Falmouth citizens for the current housing crisis in the town?

 

Also known as the ‘Baby Boomer Generation’, these Falmouth people were born after the end of the Second World War as the country saw a massive rise in births as they slowly recovered from the economic hardships experienced during wartime.

Throughout the 1970’s and 1980’s, they experienced (whilst in their 20’s, 30’s and 40’s) an unparalleled level of economic growth and prosperity throughout their working lifetime. This was on the on the back of improved education, government subsidies, escalating property prices and technological developments. You could say they have emerged as a successful and prosperous generation.

Some have suggested these Falmouth baby boomers have (and are) making too much money to the detriment of their children, creating a ‘generational economic imbalance’, where mature people benefit from house-price growth while their children are forced either to pay massive rents or pay large mortgages.

 

Between 2001 and today, average earnings rose by 65%,

but average Falmouth house prices rose by 125.8%!!

 

The issue of housing is particularly acute with the generation called the 'Millennials'.  These are young people born between the mid 1980’s and the late 1990’s. Moulded by the computer and internet revolution, these 18-30 year olds are finding it very hard to buy a property. The  ‘greedy’ landlords of their parents generation are buying up all the property to rent out back to them at exorbitant rents. It is no wonder these Millennials are 'lashing out' at buy to let landlords, as they are seen as the immoral, wicked people who are cashing in on a social despair.

Like all things in life, we must look to the past, to appreciate where we are now.

The three biggest influencing factors on the Falmouth (and UK) property market in the later half of the 20^th Century were - the mass building of Council Housing in the 1950’s and 60, the subsequent Tory sale of the same Council House stock in the 1980’s and thirdly 15% interest rates in the early 1990’s; the latter resulting  in unprecedented levels of house repossessions. It was these major influences that underpin the housing crisis we have today in Falmouth.

In 1995 the USA relaxed its lending rules by rewriting the Community Reinvestment Act. This Act saw a relaxation on US Bank’s lending criteria’s. The political impetus for this was that the working class person (even someone on the minimum wage) should be able to live the American dream and buy their own home.  Unsurprisingly, the UK followed suit in the early 2000’s. Banks and Building Society’s relaxed their brought to the market 100% mortgages. One Bank Northern Rock even started lending every man and his dog 125% mortgages - and we know where that ended up.

So when we roll the clock forward to today, and we can observe those very same footloose banks from the early/mid 2000’s (that lent 125% with a just note from your Mum and a couple of breakfast cereal tokens), ironically reciting the Bank of England backed hymn-sheet of responsible-lending. On every first time buyer mortgage application, they are now looking at every line on the 20-something’s banks statements, asking if they are spending too much on socialising and holidays ... no wonder these Millennials are afraid to ask for a mortgage (as more often than not after all that – the answer is negative).

 

Conversely, you have a relatively unregulated Buy To Let mortgage lending. As long as you have a 20% deposit, have a pulse, pass a few very basic yardsticks and have a reasonable job, the banks will literally throw money at you ... I mean Virgin Money are offering 2.99% fixed for 3 years – so cheap!

 

So, in Part Two next week, I will continue this emotive article and show you some very interesting findings on why young people aren’t buying property anymore (and it’s not what you think!).

 

END

 

Notes

 

This is Part 1 of a two-part article.

 

Numbers for Households from Census.

 

Numbers for House Price Growth from Land Registry.

 

Numbers for Earnings from Office of National Stats.

 

Its 670 words long, which for those of you that need to chop it slightly, you will need to trim it slightly. Can I suggest you remove the some/all of the following to reduce word count if required?

 

·        Second to last paragraph – the one starting   “Conversely, you have” (c. 50 words)

·        Third to last paragraph – the one starting “So when we roll” could be trimmed (not removed)

 

Graph

 

We are still doing graphs – it’s just we don’t put an example on the article

 

The link to every graph (so might be good idea to book mark this link) is here

 

https://drive.google.com/open?id=0B0d59TaH3c33RzdYSlVTdkZKTUU

 

Again, any issues on changing the numbers, export the graph out an=s an image – please pick up the phone to me   (Christopher 07950147572)