“Home Sweet Home” – But Not If It’s Rented Or Leased:

The property market is enjoying a summer boom. The worry is a winter bust”. This was the sombre assessment by the Guardian, in an editorial on 3rd September, of the “frenzy” in house buying which has taken place in Britain during the summer. This has been due, it noted, to a combination of a rebound in transactions after the months of lock-down, the suspension on 8th July by Chancellor of the Exchequer, Rishi Sunak, of stamp duty on properties worth less than £500,000 and the Bank of England’s decision to release a “flood of ultra-cheap money” in response to the pandemic.

The Guardian also shared the view expressed by the Economist in its July 25th/31st edition, that this “fragile revival” is likely to be undermined by the forecast steep rise in unemployment (“3.5 million by Christmas”) following the phasing out of the furlough scheme in October, along with a possible “no-deal Brexit” and the rescinding of the “stamp duty holiday” on 31st March 2021.

One significant outcome of “the worst job crisis in decades”, warned the Guardian, will be that some households will struggle to keep up their mortgage instalments, hence the Chancellor should “negotiate with mortgage lenders to forestall mass repossessions” and also extend beyond September the ban on landlords evicting the many tenants around the country who are currently facing difficulties in paying their rent.

Everybody deserves to have a home that is supportive to their happiness, health and wealth”, the Irish Feng Shui expert and author of “The Happy Home”, Patricia Lohan, has declared.. Similarly, the American writer, Catherine Pulsifer, considers “Home is where we should feel safe and comfortable”. Although renters and leaseholders no doubt would agree wholeheartedly with such sentiments, that’s not at the moment the reality for a large proportion of them.

The Economist article, citing housing charity estimates, observed that around 200,000 private tenants in Britain have slipped into rent arrears over the past six months and a “host of issues”, such as repairs badly or tardily done and the frequent prohibition on keeping pets, has made it hard for them to treat their accommodation as a home. Furthermore, although the cost of buying with a mortgage is now less than renting, the rising deposit requirements mean that they are unable to get onto even the first rung of the “property ladder”.

According to the Sunday Times journalists, James Coney and Kate Palmer, on 13th September, the UK’s biggest building society, Nationwide, has placed a restriction on the use of money from parents or grandparents. Instead, an aspiring purchaser now needs to prove that 75% of the deposit has come from their own savings.

This could well exacerbate a situation whereby, as the Guardian’s economics correspondent, Richard Partington observed on 10th February, “one in three of the millennial generation, born between the mid-1980’s and the mid-1990’s, are expected to never own their own home”.

Data issued by the Office for National Statistics (ONS) indicates that in effect “home ownership has collapsed for adults in their prime working age”. In a press bulletin on 8th September, the “Generation Rent” (GR) organisation called for the Government to pass emergency legislation which will ensure renters who have been hit by the pandemic do not lose their homes this autumn.

The results of a survey GR conducted show that 68% of those questioned are having to reduce their spending, are getting into debt or using up their savings in order to meet their rent. Finding an alternative, affordable place to live is not always an option if their income has been cut and “letting agents automatically reject anyone on state benefits”

The circumstances appear to be no better for those who live in a leasehold property. The Ministry of Housing, Communities and Local Government calculates that there are 4.5 million of these in England – 69% of them flats and just 31% houses. Unlike a freeholder, a leaseholder only has the right to stay there for a specified period of time. As Ross Clark, a contributor to Spears Magazine, has scathingly pointed out, “this is an arrangement which is almost universal in apartment buildings in England yet hardly exists elsewhere on Earth”. It’s all too easy, he asserts, for freeholders to impose excessive, even ridiculous, service and repair charges.

The Spectator magazine’s assistant editor, Emma Byrne, in its 29th August edition, highlighted the huge financial burden which will fall on herself and the other 600,00 residents in 11,300 tower blocks around the UK where the inflammable cladding needs to be replaced following the Grenfell fire in 2017. Because she hasn’t yet received an External Wall Fire Review (EWSI) form, she can’t sell or remortgage her flat, which consequently renders it“technically worthless”.

The Competition and Markets Authority (CMA) acknowledged in a statement published on 28th February that it had found “troubling evidence of potential mis-selling and unfair contract terms” and hence that it would be launching a probe into abuses within the industry. The National Leasehold Campaign (NLC) is advocating that the system, which “provides neither true home ownership nor real control”, should be completely abolished.

Filed under: Politics, Society | Posted on September 16th, 2020 by Colin D Gordon

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