experience those that promote this as a solution don’t rent themselves and wouldn’t want their children to either. Someone who rents for life is over half a million pounds worse off and regarding the taxpayer; my projections indicate that this will cause housing benefits to rise by tens of billions of pounds per annum. These findings have been validated by the Public Accounts Committee, which has linked a chronic undersupply of properties with resulting affordability issues and increasing renting trends. We need to understand the individual perspectives. For example, a young person may have £50,000 in student loans and have to pay ever-rising rents while saving a deposit. While they do so they might not be able to contribute to a pension. To achieve a retirement income of £30,000 a year, a 25 year-old must save £4,950 a year, but if they wait until they are 35 this amount rises to £9,000. The average first-time buyer is now 35 compared with 28 just 10 years ago and 24 in the 1960s.
I incorporated these figures, originating
from The Telegraph, into my existing models and found that the losses
experienced by disadvantaged pension savers could easily total a seven-figure amount depending on the lifetime assumptions used. So an ineffective housing strategy impacts on a wide range of issues, including the nation’s pension contributions and the nation’s demand for housing benefits. And let’s not be suckered by an
affordable rental utopia. Social sector rents are now 50% of private sector rents but ‘affordable’ rents can be pushed up to 80% of market value - or put another way, the same as the mortgage repayments.
PROPER PLANNING The Prime Minister, in his foreword to the housing strategy, stated that the government wants to take long-term decisions that create a stronger and fairer society for our children but what does this actually mean and how can it be achieved? At the same time Eric Pickles, secretary of state for the Department of Communities and Local Government, says that Whitehall will not attempt to control the market. Well I don’t care about Hayek versus Keynes. I want clearly stated objectives
and well-defined roles and responsibilities with formalised communications and prioritised actions. And I want a plan and schedule with targets, success criteria and paybacks.
PROBLEM SOLVING The government keeps coming up with schemes but then fails to follow through with an effective implementation plan of action to ensure a successful outcome. The DCLG need to get the Department
of Work and Pensions involved, as they (and not the DCLG) will see the paybacks in terms of increased pension contributions and reduced housing benefits. I would like to see the strategy properly coordinated and corrective action taken when things go wrong, with incentives and sanctions - big sanctions - for builders and lenders.
Rather than scoping the strategy
around the DGLC’s purview and writing chapters around the HBF, Council of Mortgage Lenders and British Property Federation, lets turn the microscope around 180 degrees and scope the strategy around the needs of the real people that are affected and set out to resolve their property-related problems systematically and collaboratively.
MORTGAGE INTRODUCER JANUARY 2013 MORTGAGE INTRODUCER MARCH 2012 35
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