11:16 AM, 31st August 2017, About 7 years ago 8
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The new report by Legal and General and CEBR (Click Here to view) has been presented as yet another example of ‘intergenerational inequality,’ with particular focus on the fact that the Bank of Mum and Dad is not only used to assist offspring with property purchases, but now also with accessing rented accommodation.
The L & G report highlights the financial assistance given to access rented housing; however, its findings are that in the case of the security deposit this is given in only 10% of cases. This is excellent news; 90% of renters are able to fund their own security deposits.
What’s more, with regard to home purchase, only a tiny percentage of parents (3%) use equity release from their homes to fund assistance and once the deposit has been funded the vast majority of new home-owners have no problem funding the repayments. Indeed the report states with regard to first time buyers:
‘Once they’ve raised the initial sum, affordability, it seems, is no longer a problem.’
Although this seems like good news to me, media coverage of it would suggest otherwise, and is typical of the current tendency to use housing research as a way of setting one generation against another. As Thomas Sowell said:
“Back in my old neighborhood, there was a special contempt for the kind of guy who was always trying to get two other guys to fight each other. Today it is considered a great contribution to society to incite consumers against producers, tenants against landlords, women against men, and the races against each other.”
It is simply not the case that older generations en masse had it ‘easier’ than younger generations, especially where their housing conditions are concerned. I just broached this subject with my 82-year old mother (who divorced and left the family home, penniless, when she was 40). She had the following to say:
“When I moved into an attic flat when I was 42, I could set a jelly in the bedroom in 20 minutes. I never used to take my coat off – which was good, because if you had a visitor and wanted to get rid of them you could say ‘I’m just on my way out.”
She often tells me of the day she walked into the loo, shut the door and was faced with a rat staring at her.
My father was a German who had to go to war aged 15 and before that often slept in a barn so that his washer-woman mother could put up paying guests in her house. His parents were then kicked out of their Sudeten homeland at the end of the war, had their house expropriated and had to live in East Germany for the remainder of their days, initially surviving on nettle soup.
On what planet were these lives and lifestyles ‘having it easy?’ (I am sure many of us have stories of our cold houses, no central heating and even outside loos)
So in the specific context of housing it is incontrovertible fact that conditions have vastly improved in the Western world in recent decades, and yet Shelter in particular continues to misrepresent private housing in the UK as though it is still Dickensian (as a private landlord, constantly being libeled in this way, I am sick and tired of it).
This talking-down of the quality of lives and the concomitant setting of people against each other is so damaging as it leads youngsters to believe that life is stacked against them and they will never be able to buy a home or even rent one if they don’t have wealthy and/or generous parents. As property expert Kate Faulkner, founder of Property Checklists has been saying for some time, the message that it is impossible to get on the property ladder is false and counter-productive. It misleads young people into thinking they will never manage it. In fact it is suggested in The Telegraph article ‘Investment plan: how to get your child on the housing ladder for £230 a month’ that people can get a foot on the property ladder for just £230 a month.
It is in fact far easier now than at points in recent decades when interest rates were astronomically high and home owners had to struggle and go without to cling to the ownership of their properties; indeed many had their homes repossessed because of this.
In addition to home ownership being so much more affordable now, it has even been reported in the Times today, that first time buyers who purchased 5 years ago have made around £55,000 already in increased equity. More good news for the younger generation!
We need to get away from constantly moaning that things aren’t fair.
As the child of an unemployed father living on benefits (he left his job as a bus conductor to look after the children when my mother left), I was never given a penny by my parents and I gained a lot more self-respect from creating my own financial success in life than I would have had I been given a leg up. Indeed, I used to help my parents out and felt pleased to do so (even when I wasn’t earning much). Many people must do this when they have poorer parents, but this flow of money in the opposite direction receives scant attention.
Young people need to realise that the more they rely on parents, the less self-respect and self-esteem they will have. They need to learn that the way forward is through hard work and saving, through practising abstinence and through patience.
Young people whom I know often want to have it all now, however – in terms of nights out, expensive clothes, beauty treatments, cigarettes and alcohol. They often live at home in their late teens and early 20s (not everyone goes to University), and use all their wages on the above mentioned pastimes and treats, don’t pay anything towards their board and lodge and don’t save at all. I know one 18-year old who lives at home, has a take-home pay of £200 a week and has spent it all within 24 hours each week on simple hedonism (including paying his debts from the week before because he couldn’t wait until he had earned the money before spending it).
Many younger people want it all now and do not have the willingness, desire or patience to save.
In a nutshell, working hard, saving and being self-sufficient should be promoted to the younger generation. The satisfaction of achieving your own success is priceless.
The ‘Bank of Mum and Dad’ needs to lay off and allow their children to stand on their own two feet.
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Dennis Leverett
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Sign Up11:23 AM, 1st September 2017, About 7 years ago
Once again Ros so perfectly put. Most of my friends of my age, 67, similar stories. My mum had serious health problems when I was a child and Dad had to work round caring for her and earning a living, no benefits help. My two sisters and me pulled our weight, I earned my own pocket money buying bicycles at local auction doing them up and selling to friends. My first job at 16 earned £4.00 a week and gave my parents £3.00 to help towards bills. That was normal life to me and an excellent upbringing because I had loving parents despite hardships. Would not want to change it and have huge respect for my parents for how they got through it without any handouts. That has rubbed off onto my own children who are doing alright for themselves. They will do alright though when on pass on!!!! but deserve it.
Dr Rosalind Beck
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Sign Up14:40 PM, 1st September 2017, About 7 years ago
Reply to the comment left by Dennis Leverett at 01/09/2017 - 11:23
Yes, Dennis. Of course the younger generation do face different challenges. I think the effect of social media addiction is very bad for their mental health for example. As children they also don't have as much of the outdoor life as previous generations. When my daughter goes clubbing in the city centre she also gets harassed by (foreign) men in the street, which was something I didn't face in the '80s. I am sure there is a long list of these things which cause difficulties for youngsters, but it is not a one-way street as most of the media seems to imply.
Susan Robinson
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Sign Up15:39 PM, 1st September 2017, About 7 years ago
Spot on Ros. We keep hearing about how tough it is now vs how "easy" it has been for our generation and previous generations; but that's not so, as you've eloquently pointed out. I struggled to get my first home (and mortgages were rationed much more strictly), and couldn't afford anything in my family location in the Thames Valley. No point in whingeing, so I did something about it and got a job in London which meant expensive rail fares (which knocked out any financial benefit, but the banks ignored that ironically!) but meant I could look for a home in a cheaper area so I moved 100 miles to the other side of London, to Canvey Island Essex to get on the ladder and waited until I could move back again. That first starter home was eight times my salary, at an interest rate of around 9%, and we all know that it's been even higher in the 80's. I went without a car, no holidays for seven years, a frugal existence. My dad was well into his 40's before he bought his first home, so it wasn't a doddle for him either.
Let's explode the current myth that property has increased disproportionately to be beyond the reach of the young (there will always be regional differences). Even in today's Property 118 article "49% of Home Purchasers....read " Connells Survey and Valuation report that 'Economic conditions are still tough........house price inflation........ House prices are around eight times higher than earnings' ". Well, that multiplier is as it was in my day; so no difference there then! It's always been tough to get started and hard going to manage finances. Those who really want to "have it all now" will have to forego the I-pads, I-phones, cars, holidays, take-aways, eating out, pizza delivery etc. They'd be surprised how much they could save - even if it's not trendy. It may sound harsh, but its the reality of deciding on priorities.
Dennis Leverett
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Sign Up16:29 PM, 1st September 2017, About 7 years ago
Reply to the comment left by Sue Twyford at 01/09/2017 - 15:39
Sue
That is exactly it, it's all about priorities, you make your own choices. Most people can't have it all and can't have it all now. I agree with Ros about Social Media it's basically brainwashing and misleading all the younger generations. Credit being so easily available is also another major problem.
Dr Rosalind Beck
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Sign Up19:59 PM, 1st September 2017, About 7 years ago
More evidence of affordability:
http://www.ladbible.com/news/uk-news-awesome-welcome-to-ferndale-the-town-where-you-can-buy-a-house-on-4ph-20170901
Kathy Evans
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Sign Up23:38 PM, 1st September 2017, About 7 years ago
Reply to the comment left by Sue Twyford at 01/09/2017 - 15:39
It's been that way since the great council house sell-off in the 80s. My first house in the 70s cost only twice my wages (it was 12,000) and there were two of us working. My parents lived in a rented flat until I was on the way, though, and they both had good jobs (that was the 50s).
Annie Landlord
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Sign Up11:03 AM, 3rd September 2017, About 7 years ago
I think much of the reporting and the figures used are London centric. There is undoubtedly a significant affordability problem in London. I bought my first home there in the early 80s for £21,000. Its now probably worth around £300,000. But also, interest rates were 15% then. In my area of the North West a nice terraced house, great for a first time buyer, can be bought for as little as £75,000. On a 5% or even 10% deposit that should be affordable. Everything young people read will suggest that they are never likely to get on the property ladder, which is simply untrue. There are cheaper houses needing a bit of work, shared ownership schemes, the option to share costs with a partner or a friend, help to buy schemes and ISAs and so much more. It saddens me that so many young people express a lack of optimism, or confidence in their own ability to make their way in the world. With a plan, and a goal and a good work ethic the future can be bright (maybe not in London!)
Mandy Thomson
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Sign Up13:53 PM, 3rd September 2017, About 7 years ago
Easy credit which took off in the mid 1990s has made mortgages, at least until the credit crunch and the stricter lending criteria following the mortgage market review, much easier to obtain than previously. Before this, housing (both to own and rent) was much cheaper but hard to access because it was harder to get credit and wages were lower.
My parents started their married life living in a really grotty room in which they slept, ate, cooked and washed their clothes, while they shared a bathroom and toilet with several strangers. This was around the 1970s.
Certainly since the 1990s, material expectations have increased because of easy credit, typified by popular shows such as Sex in the City in which the main character wears expensive designer clothes and shoes, mingles with celebrities in top restaurants and clubs, paid for by running up massive credit card debts on a relatively modest salary and living in a modest apartment (which she rents).
This is the kind of aspirational message I was receiving when I was in my 30s, but friends of mine who entered the property ladder before me in the 1980s made many sacrifices to get on it.
One friend held down 3 jobs to get his mortgage, while another moved out of London. My partner was a first time buyer in 1982, and it was several months before he could buy furniture, even a bed, as he'd exhausted all his savings to get on the property ladder, even though he had a reasonable salary from his management grade in the civil service.
In short, I agree that part of the problem is the compulsive consumption that we as a society have learned to feel entitled to since the 90s, from childhood onwards.