Where have all the 20 something’s gone?

Malthusian

LydiaJ wrote: »

This position would make more sense if working-age families in rented houses could reliably expect to keep pets, put up pictures and not worry about being turfed out with two months' notice.

If that's what they want they can have it. If they prefer to have two holidays abroad a year, it's a free country.

This is a joke, right? Everybody over 25 is an owner occupier, but there are enough tenants wanting houses to live in for everyone over 40 to have a BTL????

Yes, it was a joke, and well done on spotting the obvious problem with re-engineering the economy so that every single person is entitled to buy a house in their mid-20s.

The standard mortgage term is somewhere around 20 years. When you get a mortgage the mortgage company allows you to borrow money from your future self and enjoy the benefit of the next 20 years' income right now, instead of saving up and enjoying it in 20 years' time, in exchange for interest.

So if it was a reasonable expectation that everyone should be able to get a mortgage and buy a house at the age of 25, most people or couples would be able to buy two houses using one career's worth of earnings - the first using earnings from 25-45 and the second from 45-65. Then on top of this they would get any houses their parents leave them.

But of course this is a nonsense scenario because if everyone owns three houses, the rental market would collapse. In turn houses would collapse in value and the banks would refuse to lend. Which shows that the idea that anyone in their mid-20s should be able to afford to buy a house is nonsense and always has been. Buying a house at that age is for a minority of people who are some combination of a) well-off b) savings motivated c) in stable and settled jobs and relationships.

buglawton

AdrianC wrote: »

For some people, yes, those buyers who are heavily reliant on as high an LtV as they can get. A £237,500 95%@£250k mortgage turns into a 119%@£200k mortgage. Impossible.

For others, those who have lower LtV finance or are cash buyers, there is no such issue. A down-valued lender's valuation simply means a higher LtV than nominally apparent, but the property can still be easily acquired. A £100,000 40%@£250k mortgage turns into a 50%@£200k mortgage. The rate may well remain the same.

Then there are those properties which are unmortgageable, because lenders do not view them as suitable security. The lenders say value of £0, but they are clearly not of £0 value.

Cash buyers will be in the same marketplace as buyers willing to go high LTV. So the market price will be the highest bidders, that's determined by lending policy. If there were 3 times as many houses for sale at any time, maybe things would be a bit more flexible.

GreatApe

Malthusian wrote: »

Not at all. There are plenty of houses available for working-age families to rent. The point they "need" a mortgage free house is after they have retired, and on average they will get their free house 10 or 20 years before that point.

Of course what we really want is for people to buy a house at 25 with subsidy from the taxpayer. Then in their late 30s or 40s when they have increased their earnings and paid their mortgage off, they can get another mortgage and buy a buy-to-let property, using more subsidy from the taxpayer. Then in their 50s they get their free house from their parents. Hey presto, thanks to the magic of Government subsidy, everyone will have a nice little property portfolio of three houses each and we'll all be rich.



Childhood and by extension education lasts longer because life lasts longer. 50 years ago average life expectancy was 70. A person leaving school at 15 had 55 years of working life + retirement to look forward to on average. Today someone leaving university at 22 has spent 7 extra years dossing around and partying, and still has 3 more years of working life + retirement to look forward to than the person born in the 1960s.

When a healthy human has potentially 80-100 years of life to look forward to, why on earth should there be any rush to leave school at 15 and go sweep floors in an abattoir or do data entry?

The people who left school at 15 would have been viewed as stunted by Victorian children who went up chimneys from the age of 8. But when life expectancy was only 60 you couldn't afford for someone to spend a quarter of their life being economically unproductive. When life expectancy rose to 70 we could afford for children to take a bit longer developing. And now that life expectancy is north of 80 we can afford for them to take longer still.

Now ideally 22 years of development should not come with a £60,000 debt and a worthless degree at the end of it, but that's a separate issue. Even if we razed all the useless universities to the ground, you would not see UK children going back to work at 15 en masse.

In your view what is the purpose of marginal university education for the public and for the individual?

Is it a financial investment?
Is it a consumption good (for the enjoyment)?
Is it just expensive day care?

For me personally and for most people I know and their parents they view it as a financial investment. An institutions they believe if they invest in will give them a more comfortable middle class life. If that is what the universities are advertising and the parents and kids believe they are buying then they are being missold a very expensive dream. The marginal university education now adds negative value.

As for kids not willing or able to start work at 15 or 16 I think that is wrong. Currently there are little or no opportunities for them because the system is set up that way. We could however change the systems. There is no reason why 16 year olds couldn't enter the workforce and contribute and learn as they go.

GreatApe

House prices are NOT expensive
This is just a human failure thinking something that costs more than yesterday is now overvalued.

I go back to the example of a three bedroom terrace house in Birmingham built 120 years ago. When it was built it was worth 1 house. Fast forward 120 years and its worth less than 1 new build. So over a period of 120 years the real price of the house has fallen. This is despite even having had electricity and plumbing and double glazing added.

The problem is people most people only know nominal prices and not real prices and of course those in London and the SE are more vocal than those in Scotland wales north and mid England who can buy starter homes for around build cost or even less.

westernpromise

LydiaJ wrote: »

This position would make more sense if working-age families in rented houses could reliably expect to keep pets, put up pictures and not worry about being turfed out with two months' notice.

The lease on my flat doesn't allow the owner to keep pets, and thus the AST has to pass that stricture on to tenants.

Where there isn't a prohibition in the lease, the likelihood is that landlords refuse to allow pets because they cause damage or costs that in their experience the owners will refuse to cover. 20-odd years ago I had that problem; I let a property to a woman with a cat which scratched all the furniture to shreds. When I proposed to make deductions from the deposit she argued that I'd agreed to her cat and as everyone knows all cats are destructive I had thereby agreed to allow the cat to damage the furniture. Why would anyone tolerate that?

As for pictures, of course you can put those up - any marks in walls would certainly be considered FW&T by the TDS.

If you don't want to be on 2 months' notice, you could always buy.

GreatApe

The idea that without mortgages homes would be much cheaper is in my view false. I think at most there would be a short term correction of 20% and this would work itself out in the long term as fewer homes are built at a lower price point.

Now 20% is a big difference in price but often the crash cheerleaders are not crying about a 20% overvaluation they feel prices are ridiculous and need to crash to 1/5th of what they are and would do if only there were no banks or mortgages.

The reason homes wouldn't crash is simple. At a lower price point yields go up which means existing owners are much less likely to sell. As I keep saying to the other side, if house prices doubled tomorrow I would sell all if house prices crashed in half tomorrow I would liquidate my stocks and shares and even sell my business and buy more homes at the lower 10%+ yields point. And while I am small fry there exists huge walls of capital in the form of pension funds, hedge funds, SWF, etc who aren't going to stand on the sidelines for house prices to crash 80% and yield 25%-50% so some crash cheerleaders can win a silly bet.

ginger_chocolate

At 37, I'm just a touch too old to be a 'millenial' but it does still make me bristle a bit when I hear people (of any age) suggest that if young people would just stop buying smartphones and avocados they'd all be able to get on the housing ladder. I spent the majority of my twenties sharing a rented flat. I had a secondhand mobile phone, no computer, no car (not even a bike), only basic tv channels, rarely went out, wore secondhand clothes, didn't have a holiday in seven years - I was as frugal as frugal can be. Sure, I occasionally managed to chuck the odd tenner into a savings account but nothing approaching even a deposit for a house. When people suggested I should 'cut back on luxuries' it took me a lot of effort not to slap them! If your wage is low and your rent is high you don't have space in your budget for luxuries anyway.
The reason I eventually was able to get on the ladder was a mixture of finally finding a decentish job at 31 (still only earn around 25k though) and getting together with a man ten years older than me who already owned a place.

LydiaJ

westernpromise wrote: »

The lease on my flat doesn't allow the owner to keep pets, and thus the AST has to pass that stricture on to tenants.

Where there isn't a prohibition in the lease, the likelihood is that landlords refuse to allow pets because they cause damage or costs that in their experience the owners will refuse to cover. 20-odd years ago I had that problem; I let a property to a woman with a cat which scratched all the furniture to shreds. When I proposed to make deductions from the deposit she argued that I'd agreed to her cat and as everyone knows all cats are destructive I had thereby agreed to allow the cat to damage the furniture. Why would anyone tolerate that?

As for pictures, of course you can put those up - any marks in walls would certainly be considered FW&T by the TDS.

If you don't want to be on 2 months' notice, you could always buy.

I don't need to buy, thanks. If you look at the "mortgage free glee " badge by my avatar (or even what I wrote in the paragraph after the one you just quoted) you will see that I not only own a house but own it outright. I'm not complaining about my current circumstances. I'm not unsympathetic to the concerns of landlords who don't want their properties damaged, either. I merely assert that the restrictive clauses on many, or even most, ASTs, and their uncertainty of tenure, pose a problem to the suggestion that nobody needs to own a house until they retire, so they can all just rent until their parents die and they inherit.

GreatApe

ginger_chocolate wrote: »

At 37, I'm just a touch too old to be a 'millenial' but it does still make me bristle a bit when I hear people (of any age) suggest that if young people would just stop buying smartphones and avocados they'd all be able to get on the housing ladder. I spent the majority of my twenties sharing a rented flat. I had a secondhand mobile phone, no computer, no car (not even a bike), only basic tv channels, rarely went out, wore secondhand clothes, didn't have a holiday in seven years - I was as frugal as frugal can be. Sure, I occasionally managed to chuck the odd tenner into a savings account but nothing approaching even a deposit for a house. When people suggested I should 'cut back on luxuries' it took me a lot of effort not to slap them! If your wage is low and your rent is high you don't have space in your budget for luxuries anyway.
The reason I eventually was able to get on the ladder was a mixture of finally finding a decentish job at 31 (still only earn around 25k though) and getting together with a man ten years older than me who already owned a place.

That sounds reasonable and normal

Most people rent in their 20s and more accurately they rent part of a property and then they manage to buy when the couple up or inherit

Also nearly 1/5th of the housing stock is council owned which means 1/5th can never own they will always rent (privately or council). So the poorest 1/5th of adults won't be able to buy. As a lower paid 20 something you were likely in the bottom 1/5th in income and savings so again very normal

wjr4

I'm aware the conversation has moved on a lot from the original post but I thought I'd just say that it is possible to buy in the south east still if you are willing to sacrifice having a life for a while!

I bought a 3-bedroom house in Essex (£260k), age 24 in 2016 with my boyfriend (could not have bought on my own though!). It is possible but you do have to sacrifice a lot (e.g. never going on nights out, no holidays, no new phones, no new cars, whatever else you tend to spend money on without thinking!).

The only difference is we were able to live with our parents for 6 months (separately!) to try to save as much as possible. I see a lot of people buying at my age now in Essex so it is possible here - you just need to know what your goals are and work towards them!