Britain’s obsession with property ownership is obvious from even a cursory glance through the post-festive season money pages, so I was surprised to see a few of the stories were actually questioning whether we’ve lost our penchant for purchasing.
On New Year’s Eve an article in the Times alerted me to the apparently frightening prospect that a declining rate of owner occupiers in UK housing means we are set to be overtaken by the French in terms of the number of people who own the house they live in.
I’m not one naturally inclined to see this as the sign of economic decay and moral turpitude some among my peers clearly do; after all, despite some recent blips, Germany is widely considered to be financially enviable while its proportion of owner occupiers ‘languishes’ at a little above 50 per cent (it’s 64.6 per cent here, if you care).
It’s also fair to say that this is in some respects a natural correction, the nasty headache that inevitably follows the binging on bank profligacy we saw during the boom years.
What does move me, however, is unfairness in the property market. I mean that both in the general sense, and in the technical sense based on regulatory nomenclature, as in ‘treating customers (un)fairly’.
As I’ve said before, I’m looking to get on the housing ladder and am starting out on my journey now. But it seems to be that as a first-time buyer living in the south-east, I’m at a significant disadvantage to many, especially those buying to add to a property portfolio.
Elsewhere in the paper was another story which revealed in passing that since the turn of the century, of the more than 3m homes Britain has built, 2.4m have been acquired for rental, with a growing share owned by private buy-to-let landlords.
Of the more than 3m homes Britain has built since the turn of the century, 2.4m have been acquired for rentalIt cannot be right that 80 per cent of new property is being bought for commercial purposes and perhaps explains why both house prices and private rents have been spiralling out of control.
While prices have eased a little of late, young buyers remain all but locked out of our nation’s capital. Looking at the mortgage deals being launched in what FT Money termed a “rate war” on Saturday, most of the best deals are only available at the sort of loan-to-value ratios many of us can only dream of, given vertiginous valuations.
Surely it is time buy-to-let borrowing was brought under some form of regulation. Affordability concerns which are hampering residential borrowers, especially those in high-value areas struggling to find a deposit, should apply equally to prospective landlords, in particular those that in my experience have little set aside to actually manage their properties effectively.
And unfairness isn’t just affecting new buyers.
Some existing borrowers who have been prudent and are looking to port are seemingly being placed at a significant disadvantage to new buyers such as myself, simply because they have the temerity to want to use the rules correctly to retain a cheaper deal.
This weekend another story in the Telegraph highlighted the plight of the many existing borrowers who are being rejected on specious affordability grounds, based on new affordability tests they do not have to apply under Mortgage Market Review transitional rules, but have done anyway.
This time a couple wanted to move their £189,000 mortgage in order to move from their £840,000 home to a £900,000 property, funding the difference themselves. Company owners with plenty of collateral and income, they were rejected by their lender, HSBC, twice.
Following the newspaper’s intervention, the bank eventually reversed a decision it branded a “mistake”, but one cannot help thinking the couple’s low mortgage rate which saw them paying just 0.74 per cent interest on £120,000 and 1.49 per cent on the remaining £69,000, played a part. Their total monthly mortgage payment was just £159.
The FCA’s Linda Woodall spoke to the Telegraph, agreeing that this is happening all too often and saying it does not represent “common sense”. Come on Linda, it’s far worse than that and it’s time those TCF principles you’ve raised in relation to this before were applied.
I’m pleased house prices are starting to soften, especially in London, though I’m reliably informed this is common in election years, as foreign owners hang fire to await the change in government and potentially policy.
But we still have a market that is not working for all. While I don’t think we all need to own, we should all have the same chance to do so - and those who have made it and have kept up their end of the bargain should not be at the mercy of lenders’ caprice.
ashley.wassall@ft.com
Click here to find out more about our upcoming live debate on how to get a mortgage.
