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Young people need radical housing policies or things won’t get better – Bamford

by: Patrick Bamford, head of international business development at Qualis Credit Risk, part of AmTrust International
  • 14/06/2024
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Young people need radical housing policies or things won’t get better – Bamford
We are now in the throes of in the general election campaign, but I don't feel there has been a massive number – from either of the two main parties – of policies that are going to make the lives of young people significantly better.

Indeed, when you have someone from that generation confronting Rishi Sunak with the question, “Why do you hate young people?”, you might guess that the policies we have heard, particularly from the Conservatives, have tended to focus on the older generation, not those born this century. Triple lock plus, for example.

 

Barriers against young people 

I don’t want to get overtly political, but I think it’s fair to look at the life options younger individuals tend to have at the moment. Lower wages and incomes than their parents, much higher levels of student debt, soaring rental costs, a higher cost of living, a pandemic that effectively put a stop to their education/social lives for 2-3 years, and a housing market that will seem out of reach as a result of all that, and then some.

At least for those in their 20s, they are also not having to consider a year spent doing National Service as well. Small mercies and all that.

To give the Conservatives their dues, this is a party during the coalition years that has focused a lot of money and resources on first-time buyers. It is the party of Help to Buy – which it wants to bring back – and introduced the mortgage guarantee, which undoubtedly boosted the availability of high-loan-to-value (LTV) mortgages. The latter idea has since been poached by the Labour Party’s pledge to make it permanent. 

Perhaps, recently, the Conservative Party has felt the focus, housing-wise, doesn’t need to be on 18-30-year-olds. After all, the average age of a first-time buyer is now in the mid-30s, and all the opinion polls show this younger demographic is far less inclined to vote for them anyway.

However, this is a generation that does feel neglected, and from a housing sense you can understand why. The opportunities afforded their parents and, perhaps even more so, their grandparents, no longer appear to be available to them.

Even if they can save up the deposit for a home, they have to find an affordable one to buy, and when they do, many are going to need to take out 30-, 35- or 40-year mortgages that will take them well into retirement, plus interest rates are now clearly much higher than they were over the last 10-12 years, and therefore the cost has increased significantly.

As have all the associated utility and transport costs. 

 

An all-embracing approach to housing 

Even with all that to ‘look forward’ to, surveys consistently show that the aspiration to own their own home is a major one for many young people. But what price is that aspiration? 

We should all remember that, just because the average age of the first-timer has moved up, it doesn’t mean those in their 20s, for example, don’t want to buy a property. They just come up against these series of obstacles that make it incredibly difficult for them to make this a reality.

Without the Bank of Mum and Dad, it is very hard to buy a home. We therefore need the next government to look at how the housing market works in the round; how impacting the private rental sector’s (PRS’) supply of homes impacts rent levels, which impacts the ability to save for a deposit, which clearly impacts on the ability to purchase.

My view is we’ve treated renting and buying as separated entities, when the reality is there is a cause and effect between the two.

Helping more first-time buyers to buy homes earlier in their lives should be a priority, but so should encouraging greater supply of homes within the PRS, especially given the large population increases we’ve seen over the last 20-30 years.

This general election feels like a pivotal moment for so many reasons, but certainly when you consider how important housing is, and how it requires long-term decisions to shift the dial, then the sooner we start approaching this in the right way, and moving that first-time buyer age down rather than simply watching it continue to escalate, the quicker we’ll see positive outcomes.

The longer we leave it, the worse it will become.

The good news is we have solutions, but they need more traction, action and more government and regulatory support to really give them the boost they need, which will help more younger people into their first homes and beyond. Let’s hope our politicians take this as seriously as those who want to own their first home do.

In short, we need a vision for future generations, not simply pandering to those in or nearing retirement.

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