How renters will pay to keep mortgages low

Posted: January 24, 2013 | Author: | Filed under: Buy to let, Housing benefit, Private renting, Welfare reform | 2 Comments

One of the first things that any child learns is that 1+1 = 2. Not any more it seems. In the world of austerity 1+1 = 0.5.

That was the thought that struck me after reading work and pensions minister Steve Webb sum up for the government in the committee stage of the Welfare Benefits Uprating Bill this week. Thanks to his widely applauded work on pensions reform, Webb would come close to the top of many people’s lists of effective coalition ministers and he also knows his brief better than most people in Westminster. Yet for me he has always tried too hard to defend the latest piece of indefensible welfare ‘reform’.

And that’s exactly what happened on Monday as the Uprating Bill was rushed through its committee and third reading stages with debate severely limited and time to consider just one amendment.

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A housing timebomb

Posted: December 17, 2012 | Author: | Filed under: Buy to let, Housing benefit, Housing market, Private renting, Social housing, Welfare reform | Leave a comment

The big shift from owning to renting revealed in the Census has potentially massive implications for government spending on housing costs.

The headline results revealed by the Office for National Statistics last week were that home ownership fell from 68.3 per cent of households if England and Wales in 2001 to 63.5 per cent in 2011. Private renting increased from 9 per cent to 15 per cent and social renting fell from 19.3 per cent to 17.6 per cent.

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A nation divided by housing tenure

Posted: December 14, 2012 | Author: | Filed under: Buy to let, Housing market, Mortgages, Private renting, Social housing | Tags: | Leave a comment

This week’s Census reveals a historic shift from owning to renting as the nation adjusts to new housing realities. That much is obvious but there are some significant trends behind that headline number too.

The results for England and Wales show private renting has risen from 9 per cent of households in 2001 to 15 per cent in 2011 and that home ownership has fallen from 68 per cent to 64 per cent over the same period.

However, that simple two-way split misses what has happened beneath the surface. Tenure is now split roughly three ways between outright ownership, owning with a mortgage and renting (itself split evenly between social and private renting). Many people were watching to see whether private renting would overtake social renting (for the first time since 1961) but this did not happen unless you include all forms of private renting, including those who rent from an employer or live rent-free.

So the more significant change for me is the fact that there are now more renters (private and social) than people buying with a mortgage. Between 2001 and 2011, mortgaged home ownership fell from 39 per cent of all tenure to 33 per cent. The total number of households buying with a mortgage has fallen by 749,000 over the last ten years from 8.4 million to 7.6 million. However, if mortgaged ownership had maintained its 2001 share of a rising number of households, there would now be 1.4 million more home owners on the housing ladder.

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Buy, buy…rent

Posted: August 10, 2012 | Author: | Filed under: Buy to let, Housing market, Mortgages | 2 Comments

Four years after it was supposedly killed off by the credit crunch, buy to let continues to go from strength to strength as first-time buyers are squeezed out of the mortgage market.

Figures published by the Council of Mortgage Lenders (CML) yesterday confirm that the total number of buy-to-let mortgages has increased by 45 per cent since the third quarter of 2007 from 978,900 in the third quarter of 2007 to 1,415,000 now. According to CML director general Paul Smee it is ‘growing broadly in line with expectations’. He goes on: ‘The rental sector has grown strongly over the last decade or so, and buy-to-let continues to help deliver a wider choice for tenants.’

Wider choice? I doubt very much that would-be first-time buyers will see it that way when tighter lending criteria mean their only choice is to be a tenant. After all, the same banks who are unwilling to give them a loan against their future income unless they have a sizeable deposit seem quite willing to give an amateur landlord a buy-to-let loan to be repaid from the rents (and therefore the future incomes) of their tenants.

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Why every little will not help much

Posted: August 4, 2012 | Author: | Filed under: Buy to let, Housing market, Mortgages | Leave a comment

The launches of Tesco mortgages and the Funding for Lending scheme have led to some hope at last for the dysfunctional housing market. Here’s why I don’t think they will make much difference.

In the short term at least, most of the benefits look like going (yet again) to existing owners rather than frustrated first-time buyers.

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Return of the undead

Posted: May 11, 2012 | Author: | Filed under: Buy to let, Mortgages, Private renting | 7 Comments

Another quarter, another big milestone for buy to let. The latest figures from the Council of Mortgage Lenders (CML) reveal some startling facts about the growth of loans to landlords.

The boom in buy to let is usually associated with the mid-2000s: the number of BTL mortgages rose from 120,000 in 2000 to more than a million in 2007. Then lending slumped after the credit crunch and the collapse of Lehman Brothers. By 2010 Fergus and Judith Wilson, the ex-teachers who went on to buy 700 homes, were pronouncing that the sector was ‘absolutely dead and will never return’.

Two years on and the corpse is back to life with a vengeance. BTL lending for house purchase is running 30 per cent ahead of levels seen a year ago (although down 9 per cent on the fourth quarter). As the CML points out, new lending to landlords is still around a third of 2007 levels, but that disguises the underlying trend.

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See you later, regulator

Posted: April 3, 2012 | Author: | Filed under: Buy to let, Mortgages, Private renting | 2 Comments

Another day, another consultation and still no prospect of regulating buy to let.

The Financial Services Authority (FSA) closed the consultation on its Mortgage Market Review (MMR) on Friday to a chorus of calls from lenders for more flexibility and pleas from organisations like Shelter for no more concessions to the banks. The charity also produced an animation to press its case against reckless mortgage lending.
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