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News: FTBs fear rental Groundhog Day

Tue, 30 Oct 07

Britons are more fiercely committed to home ownership than ever, despite the fact rising prices and lack of supply have turned first-time buyers into an 'endangered species'...

As a result, the next generation of first-time buyers could end up never being able to get out of rented accommodation - a prospect that worries well over 80 per cent of the population, according to a YouGov poll conducted for the New Homes Marketing Board (NHMB).

“Our polls already show that most people understand that the difficulties faced by first-time buyers is turning them into an endangered species and actually amounts to a serious social problem. Now we see that the alternative – a lifetime condemned to renting – fills most people with dread” said New Homes Marketing Board Chairman David Pretty CBE.

“Even if renting is seen as a worst-case scenario for many people, there seems to be an assumption that renting will still somehow be affordable in the future. But the supply and variety of homes for rent, like homes for sale, is ultimately controlled by land availability and the planning system, and an ongoing serious shortage of supply will simply drive up rents as it has driven up prices.

“We’re now looking at a situation where perhaps the lost generation of people who can’t afford to buy the home they need today may not be able to afford to rent a decent home in the future either - and that’s a social timebomb, particularly if those renters never have the opportunity to build up equity to supplement their future pensions” said Mr Pretty.

Very unhappy

The latest YouGov poll conducted for the NHMB directly asked respondents how they would feel about living permanently in rented accommodation. Well over 80 per cent of the people sampled said they would be unhappy about it, and for those under 35, the figure rose to 90 per cent. Most respondents – almost two-thirds – declared they would be “very unhappy.”

Just 8 per cent of the population as surveyed said they would be happy renting permanently, while the remaining 9 per cent were non-committal. Other questions posed by YouGov on behalf of the NHMB showed that the difficulties facing first-time homebuyers have grown into a significant social problem which threatens the well-being of local communities nationwide. Almost 90 per cent of respondents thought property prices are a major problem for first-time buyers in their area – and that the problem is worsening everywhere.

With Britain’s innate love of home ownership, said Mr Pretty, it is unlikely that we’ll see the development of a continental-style preference for renting any time soon. “Trends like that take generations to mature” he said. “In any event, because of the severe restriction on housing supply the underlying price trend in future is likely to be upwards for both homes to rent and to buy.

“So the outlook for today’s youngsters, whether they are buying or renting, is much bleaker than for earlier generations.”Mr Pretty added: “Government has woken up to the problem and has ambitious plans to release more land and streamline the planning process. In turn, the housebuilding industry is confident that it can boost production of homes for both sale and rent, and match Government’s increased housing targets given more land and a more efficient planning system.”

Special case

Although the problem is very serious, the tide can be turned says Mr Pretty. “But Government and housebuilders cannot solve the problem alone. We need the active cooperation of local communities to build the homes we need and to make life easier for homebuyers, particularly first-time buyers who are now seriously disadvantaged” he said.

Mr Pretty has long held the view that first-time buyers are so important to local communities, the national economy and the general health of the housing market that they should be made a special case. He has regularly called for a number of special measures to help them, including fast-tracking of planning applications, tax relief on parental contributions and, more recently, scrapping Stamp Duty on first homes or raising the threshold to £250,000 (see link number 3 below).

“I also believe that such an important issue needs all-party consensus particularly as whoever is in power is going to have to tackle the same big problems of housing supply and are likely to find the solutions are going to be similar. This issue is too pressing to ignore, and too important to be a political football.”

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