I had the most interesting chat with a mature couple (in their early/mid 50’s) from The Banks the other day, whilst viewing one of our rental properties. The property wasn’t for them, but their son. We got chatting about the Bingham property market and how they had bought their first property in the town just after they got married in the late 1980’s when they were in their early/mid 20’s.
Their son, like many 20 to 30 year olds in Bingham, desperately wants to own his own property. His parents said he had read in the Telegraph recently - when you compare house prices to earnings, the current 20 to 30 something’s generation have to spend more of their salary in mortgage payments than any previous generation. The demand for private rental sector accommodation in Bingham is huge. There are in fact 414 private rental properties in Bingham at the last count, impressive when you consider there are 119 council houses in the town. However, let us not forget 2,969 properties are owner occupied (1,612 with a mortgage).
Private renting doesn’t have the stigma it had a few decades ago and it might surprise people that even though us Brit’s class ourselves as a nation of homeowners, roll the clock back 100 years and over 75% of people rented their home. It might also surprise you to learn that at the time of the 1971 census, still more people rented than owned their own home.
Looking at the affordability issue, I have proved time and time again, it is in fact cheaper to buy a property than rent, when one looks at starter homes for first time buyers. 95% mortgages have been available to first time buyers for over four years and whilst you could certainly find better properties in better condition in better areas, terraced houses can be bought for as little as early £140,000’s off Kirkhill near the rail line in Bingham (meaning a modest deposit of £7,000 would be required).
When it came to affordability, I was able to tell them that when they bought their first house in Bingham in 1988, the ratio of house prices to salary was 5.08 to 1 in Bingham ... and here was the surprise for both of us, today’s ratio is only 4.96 to 1!
I said I believed there had been a cultural attitude change towards renting property in Britain and that this quiet revolution was likely to be permanent. During the 60’s, 70’s and 80’s, buying a house was everything. Young people today have far much more disposal income than people had in the Callaghan and Thatcher years, but choose to spend it on the newest tablet or PC, newest 50” plasma LCD TV and two holidays a year, than go without and save for a deposit.
So with mortgage affordability being well within the bounds of most first time buyers, the level of deposit required for a 95% being surprisingly modest (starting off at c.£7,000 in Bingham as mentioned above) until we change our attitudes, the UK housing market is slowly but surely turning into a more European model, where people rent for long periods of their life, then eventually inherit their parents properties and subsequently become homeowners themselves, albeit later in life.
I cannot see the demand for decent, high quality rental properties ever dropping in the next 10 to 20 years, but only ever increasing as the population continues to soar. Just make sure you buy the right property, at the right price, in the right location. One source of information on such matters would be the Bingham Property Blog or please pop into see me in out office on the Market Place.