Technorama

The age old debate in the mainstream press, the "Housing crisis" or "Generation rent!" is continuing. But why is there a shortage of housing? Or is there indeed a shortage in the first place?

In 1997 Tony Blair at the Labour Party continued the Conservative trend, of getting both parents to work in a household. This meant that a household which earned 30k, now earned 60k, in turn they probably paid out 15k in child care (leaving the young children feeling abandoned, that is another debate). So they were left with 45k income.

The banks in-turn said, well if you now have 45k, that means we can lend you 50% more than when you earned 30k in your household. So mortgage loan limits went up from 135k -> 202k for those income levels. Which in-turn meant those families could offer more. So offers were higher, sale prices were higher, and house price boom, indeed happened! It was the same old houses, nothing had really changed.
-- Who made money out of this? The people who bought properties 5 years before the boom. So don't blame those buying. The banks made money out of interest payments. But it was the baby boomers who were lucky enough to just own at the right time who could really cash in, by releasing equity, or selling to those first time buyers.

Now we have young people stuck renting, or renting from parents. But is that really an issue? Most of Germany is happy to be tenants, they don't want the trouble of being a property owner. It's only UK press that have whipped up this idea that every man and woman need to own!

Foolish people will try mislead, pretending that it was the Right To Buy policy that created this problem, it hasn't, all that did was remove the state from responsibility of the same housing stock. Some of which are now managed by B2L Landlords. The percentage of families renting from local authority or B2L landlords, is actually consistently the same over the Office For National Statistics reports published over the last 40 years

The real problem is that people wish to live alone, and in houses and flats, not just studios. So a 2 bed flat will now be occupied by one person. Where as 20 years ago, a couple would have shared.

So this leaves some young people renting, or living with parents, because they can't afford, as the lower density occupation rates have also impacted prices.

Council planning departments are terribly slow, we need to increase permitted development, to allow also extra floors. We need to have a max 30 day timescale for planning permission. Councils need to allow internal relocation of kitchens to create open plan living and extra bedrooms in ex council flats.

Permission for new build on land and brown field needs to be stream lined. Cut out all the newt studies, and consultations which often cost up to £20M for a block of flats.