By Steve Roulstone
We have seen several items in the press yesterday about the 95% mortgage starting to appear again and of course it has received mixed reviews. However the BBC report on Radio 2 during the lunchtime Jeremy Vine show hosted by Vanessa Feltz was nothing more than an attempt to get as many negative comments about the Banking world from the general public and lacked any real depth, however they did attract several sensible comments about how if housing sales are to start to improve again, a move to ease the deposit burden was bound to be the sensible solution.
Renting options.
The show focused on the options available to those who could not afford to purchase and it was nice to hear one commentator point out that renting is a perfectly viable and acceptable option now and certainly offers a plentiful and varied option of places to set up home (I say this as a Tenant myself) and indeed this same topic was discussed during the finance slot on BBC Breakfast show yesterday. It is a fact that the rental market has shown consistent growth in demand over the last two years and I have commented many times through these pages that our market is very healthy at present.
Mortgage options.
Now to me these two facts point clearly to the need for better mortgages for Landlords as a way of easing the market and supplying rental property for current demand at the same time. This is another subject that I have mentioned before and I do not apologise for doing so again! It was clear however from the comments made during the show that Mortgages are an emotive issue with one (poorly advised) person thinking any easing of Mortgage availability was just a way for banks to ‘line their pockets again’. Of course the facts are that Mortgages need to be made easier to obtain before the market starts to move again, no matter what sector of the market is considered.
Differant options.
One area that I do not agree with however is the split option of shared ownership, which has been trialled before (as the problem for first time buyers is not a new one) The problem for me is that no matter how long you own the property, when you come to leave you are still only left with half of the collateral built up in the property during your time under shared ownership. Now most people who use this scheme as a starter home, need to move on having got married, started a family and as is normal need more space. This means that moving to a bigger house can present just as many problems as finding a house in the first place, because shared ownership is only encouraged for started homes. Therefore, assumptions are being made that everybody will be able to improve their circumstances (income) during the period the initial property is shared. Experience tells me this is not the case and guess what? Most co-owners will not allow renting as a method of financing the next move!
One option stands out.
It is a little ironic that the same scheme is being championed again when in the past the rental market was seen as the solution to the eventual problem most shared owners find themselves in! With the current trends which are not only financial but also lifestyle choices for the majority of Tenants the rental market yet again shows itself as the market that can trigger an increase in house sales, if the proper Landlord tool was made available. Surely this is where the Mortgage Companies should be looking alongside any easing of deposits required; after all, buy to let properties have the additional support of that income behind them!
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