Interesting times since Plymouth dad, Jamie Pogson started an online petition to Parliament demanding that rent should be used as proof that someone can afford mortgage repayments.
Interesting because that is exactly the point I have been making for years and interesting because it has been picked up by the media and the injustice of the situation highlighted by people from within the financial industry.
The number of signatures quickly racked up and the 100,000 point was soon passed meaning his petition stands a chance of being discussed. Sadly there are no guarantees and if I’m honest, I’ll be surprised if it happens given the state of national and international affairs, but what this petition has shown is that there are thousands of people who agree and it’s not just the people who are suffering from this unfair system.
Media and Social Media latch on
Amongst the many press reports there is also a LinkedIn post from Ryan Crighton, director of Marketing at Aberdein Considine, a Scottish law firm, and he states renting a property is now more expensive than paying a mortgage; the last time renting was the cheaper option was back in 2008. Whilst he is applying this to Scotland, I am confident it also applies south of the border.
The London Metro picked it up and published a comment from Mark Homer of Progressive Property in Peterborough who said ‘lenders should be more intelligent about it…they are simplistic in their approach’.
Prudential Regulation Authority
A friend of mine who signed the petition told me I was on a hiding to nothing because it was not within the government’s remit to change things; it has to be the lending houses who make the decision. But it seems this may not be the case; it is the Prudential Regulation Authority (PRA) created under the Financial Services Act 2012 as part of the Bank of England, who are responsible for and regulate the financial institutions. The Bank of England is owned by the government.
The PRA was set up in the wake of the 2008 financial crash that happened due to the greed of those same institutions. But now, some 8 years on, the archaic rules are too prohibitive and have gone too far the other way preventing 100s if not 1,000s of people from getting a mortgage.
A nation of shopkeepers? No, a nation of no-hopers
It seems obvious to me that given the massive increase in the number of people renting, this level of financial commitment is absolute proof you can pay a mortgage.
I keep being told the UK is moving away from a nation of home-owners to a nation of renters and the government is encouraging local authorities to increase building of homes to rent.
But that is not the answer.
We are not turning into a nation of renters, we are becoming a nation of those who have and those who have not and it is being made worse by government short term goals and human greed.
As fewer people are able to get a mortgage, those people who can are snapping up properties the moment they come on the market, giving them a quick coat of paint then renting them out at extortionate prices to finance their pension pot.
The net result is property prices keep rising, supply dwindles, property owners increase their property portfolio, the average person can’t get a mortgage so have to rent, often a sub-standard house and their rent is funding the landlord’s next property purchase.
A never ending circle.
There is only one solution; the PRA has to adjust the lending rules allowing rental payments to be used as proof of ability to pay a mortgage, this will open up a large bank of people who will become house buyers. The rental market will become less popular therefore rent will go down and/or the landlord will sell the property. Those people who want to move onto or up the property ladder or downsize will be able to because there will be more available properties to buy.
Property investors are capitalising on the misfortune of others, the trend needs to be reversed.
The Saffron Building Society were offering ‘Rent-to-Buy’ mortgages back in 2011. They were unable to tell me anything about this product or why they stopped selling it, perhaps it’s time to take another look at it.
With so many people agreeing the lending rules need to change, to me it’s a no-brainer and the thought that there could ever be a possibility I will never own my home fills me with despair.
The rules need changing. End of.