First, we had the ‘credit crunch’, a drama played out in governments, stock exchanges and banks throughout the global economy.
The how and the why it happened is probably only fully understood by financial experts; i.e. the people that caused it. The aftermath of this has resulted in cuts to jobs and services and most recently the increase in VAT to 20%.
Lettingaproperty.com urges you to tread with caution. Just when you thought it might be safe to return to you bank account, next we have its terrifying sequel the ‘housing crunch’. Landlords and tenants beware, this time you have a staring role.
This ‘housing crunch’ is one we can all understand and will over the coming months and years feel the full effects of. Without serious initiatives and investment in housing by ‘the powers that be’, first time buyers, affordable lending and adequate rental stock could become a thing of the past.
The Private Rental sector is growing in Britain not out of design, but out of necessity. As fewer first time buyers are able to enter the housing market, with deposits of over 25% the choices are stark, rent or remain with family. Tenant demand is now outstripping home ownership in Britain and recent figures suggest close to 6 tenants to each available property. The previous administration announced that 240,000 new builds would be needed each year running up to 2020 just to cope with demand. In 2009, 118,000 were completed and even less in 2010. Not since the post-war ‘baby boom’ generation has the demand for housing been so great. That housing shortage resulted in a social policy which saw the dawn of high rise flats, built quickly and in some cases run down just as quick!
The new administration’s Housing and Communities department announced last May that they are looking for major investors in a new initiative in a ‘build to let’ venture. One proposed scheme in London would see money raised through floatation on the stock exchange fund purpose built sites for long-term rental. The flats would be privately rented in perpetuity to sharers, families and students with no option to buy.
With the government tightening its purse strings over the lifetime of the current Parliament and most probably beyond, the country as a whole will become more reliant on the private rental sector to meet its housing needs. The initiative in London will be one of many partnerships between private investors, local authorities and the government. The ‘initiative’ it appears has to come from landlords and property developers taking the plunge and entering the letting market. The current flat-line in interest rates makes this an ideal time to invest, but as we have mentioned before lending products from the banks, (yes, they are out there) can be difficult to find.
The ‘housing crunch’ will be appearing in a street near you, in fact every street in the country, but if you can come up with a way to solve it, maybe you could send your answers to the government, but they may not give you ‘credit’ for it.
