I WAS astounded this morning when I read that there are 1.5million people in the UK on Council House waiting lists. That sounds like great news for landlords and those of us who sell Landlord Insurance, but trust me it, this is terrible news.
Consider that 2.5% of the population is on a housing waiting list. Now consider that 300,000 migrants are coming to our country per year and adding pressure to that list. In five years if all else remains the same that will be 3million or 5% of the population on a house waiting list.
All against he backdrop of the Government reducing Council spending on housing, allowing and instructing them to sell high value properties when they become untenanted. So we have a massive list already and supply is going down. Just as well the private rented sector can step in and take up the slack then.
Oh, but wait a minute, this is the same private rented sector that has been hit by a tax grab on revenue and not profits and is seeing landlords selling up or going off the books (so the Revenue won’t find them) and rogue. This sector is shrinking faster than you can follow.
So the builders with all these new incentives will start building enormously and all will be ok? No it won’t, that is naive. For a start, the new build still need permission and that’s not easy to get. Then they need financing and who is going to buy them when the people in need cannot afford to get mortgages? Not landlords anymore as they have no incentive to purchase. Affordability is key and anything in London is not affordable with the average price being over £500k. Not unless we start building box rooms and selling as houses like they do in Japan – you read it here first.
So what is the combined changes going to do to us in the UK. My prediction is this:
1: Less social housing, forcing people to private rented as they cannot afford to buy.
2: More homeless on the street and an increase in crime. It’s a natural follow through.
3: Less private rented sector and more company rentals. More rogue landlords as they dodge the new taxes.
4: More demand for property than ever as population increases and builders cannot keep up.
5: Stagnating prices that will edge up until 2020, then plateau for a year before climbing again after landlords distress sell properties in much smaller numbers than expected.
The real losers are the first time buyers that still will not afford property, tenants who will be paying a lot more in rent and those on the housing waiting lists who will now wait a lot longer.
The only good news is if you need property insurance, then The Property Insurer can help you save money.