Generation Rent to Generation Buy: an obsession?
Another Budget and another focus on property buying. ‘An Englishman’s home is his castle’ but does it really matter if they, or a landlord, owns the property?
When Boris announced in October 2020 that he was determined to turn Generation Rent into Generation Buy, he wasn’t the first Prime Minister to do so. Travel back to 1980 and it was Margaret Thatcher who instigated the biggest property purchasing spree in living memory.
The then Prime Minister’s ‘Right to Buy’ scheme saw a reported 90,000 council-built houses bought buy their tenants in the first year and as of March 2020, 1.98 million Right to Buy purchases had been made.
The UK’s fascination with homeownership is unique and often at odds with attitudes in mainland Europe, where there is no stigma attached to renting. In fact, people in Holland, Germany and France, for instance, quite happily join waiting lists for state-subsidised rental properties.
There is, however, no change to the narrative back here in the UK. March 2021’s Budget only underlined the desire to get more people out of private rented accommodation and onto the property ladder, with three schemes now running concurrently to incentivise homeownership.
These are:
1.The Government’s Help to Buy scheme
This initiative is open exclusively to first-timer buyers of brand-new homes. It allows those who qualify to purchase using a low 5% deposit, with an additional deposit of 20% coming from a Government equity loan and 75% provided by a mortgage.
2. Stamp duty-free purchases
The stamp duty holiday is now running until the end of September 2021. The first £500,000 of a property purchase will be stamp-duty free until 30th June 2021. After then and until 30th September 2021, the first £250,000 of a property purchase will be stamp-duty free.
3. 5% deposit mortgages
A new range of ‘Government guaranteed’ mortgages launch in April 2021, with High Street lenders offering home loans to all property purchasers – not just first-time buyers – who have saved a 5% deposit and where the property’s purchase price is £600,000 or less.
The above benefits are currently working in tandem with historically low interest rates. The net result? It has never been cheaper to borrow money to buy a property, with only a small deposit needed and a stamp duty saving of up to £15,000.
What’s wrong with renting?
Many feel that tenant status is somehow inferior – a wasteful option that only serves to line the pockets of landlords. This couldn’t be further from the truth. Access to rental accommodation is an essential part of the UK’s property market; utilised by those new to an area, temporarily relocating for work, studying at university, experiencing changing circumstances and those who simply love the freedom renting affords.
Set-up costs have reduced
So what help is available for tenants who want to stay as tenants? While one of the negatives is paying rent that’s on a par with mortgage repayments (and not rental cap at the moment), the Tenant Fee Ban removed virtually all tenancy set-up costs that were previously passed on to the renter.
There’s also a growing number of landlords and letting agents who offer deposit-free renting, where the cash deposit is replaced by an insurance product that’s a fraction of the cost. It’s also worth noting that the incoming Renters’ Reform Bill includes the introduction of ‘lifetime deposits’ – where a cash deposit is paid just once, before moving with the tenant from property-to-property.
The unique lettings lifestyle
The rental market’s image – of money-grabbing landlords and poor-quality properties – may have hampered its status but a new breed of Build to Rent developments are addressing this head on. Brands including Grainger, Legal & General and Quintain Living are creating new communities where every property is offered exclusively to tenants, and where the rented homes are complemented by a host of glamorous shared facilities – think co-working spaces, rooftop bars, swimming pools and private dining areas.
Whether you’re Generation Rent or Generation Buy – or see yourself switching between the two as you move through life’s milestones – let us help you find your next home. We can view a property on your behalf, take photos and host a live video call when we’re there, for the times when you can’t visit in person but really need to see inside. Book a Viewber today – we offer nationwide coverage with 7-day-a-week availability.
