Speaking at the CML annual lunch, McDonald (pictured) said the problem of intergeneration property transfer, or ‘old ladies in big houses’ was getting worse each year.
He said the CML was attempting to lead the way in raising the profile of this problem and that the industry needed to challenge itself, not just point fingers.
In order to unclog the supply of homes, the mortgage market needed to help older homeowners move out of large underused properties, McDonald said. He floated the idea of offering mortgage freedom rules, following in the footsteps of the pensions industry which launched its own reforms on 6 April.
The CML chairman said soon 25% of the UK’s population would be over 65 and the challenge would be to give those people access to mortgage finance because of an ageing population.
“We are a long way off that today and we are going to have to deliver that,” he added.
Dame Kate Barker agreed with McDonald that UK property owners were guilty of overconsuming housing space.
“We talk about a country in which there is an undersupply in housing and yet the 2011 census suggested that of 8.1 million households about one in three have two or more spare bedrooms which kind of doesn’t sound like undersupply it sounds like a difficulty in the way we move stock around.”
Property investors were also named as culprits of overconsuming housing stock.
Barker said the public’s expectations of the value of homes played a big part in problem of supply overconsumption.
She said the persistent undersupply of homes meant the public expected prices to carry on rising which served to drive up investment demand for housing. This caused people to ‘hang on’ to homes rather selling and convert them to buy to let.
“If yields improve in other investments then buy-to-let investors may move their money into different asset classes which would weigh against house price rises allowing them [prices] to have a bigger chance of keeping pace with inflation,” Barker added.
But McDonald said buy to let needed to be celebrated and those who wanted to invest in the market, whether they be private individuals or corporations should be valued.
“Renting is a 20-year-long trend and it isn’t finished yet. Renting is not a problem associated with a recession. Was it exacerbated? Of course it was, but it is not a product of the recession. It is actually something which is valuable.”
