British 'demonized' landlords face a triple whammy of huge taxes, rising mortgage costs and increased red tape that has led The housing crisis is getting worse, according to Skipton Building Society CEO.
Stuart Hare, in a stark warning, blamed unaffordable property prices and rising rents on the disappearance of the middle class as more people are forced to move into social housing or forced to live longer at home with their parents.
The toxic mix of rising costs means it no longer makes financial sense for some landlords to keep their property, he says, adding to the pressure on the flow of properties available for rent.
Khaire said: “Demand has increased. gone. We have a slightly demonized private rental sector, and landlords are forced to pay taxes and higher mortgage rates that they have to pay if they have debt related to this property.”
0308 But lending < p>Hare, who manages the UK's fourth-largest mutual investment firm, said new standards that are forcing landlords to make their properties more energy efficient are also driving up costs.
The Bank of England warned earlier this month that tenants are facing rising costs. financial pressure that others have warned could spark an NPL crisis «as landlords endure higher mortgage and regulatory costs.»
Haire said: “It will be less affordable for renters to rent because the supply of rental housing will decrease, leading to higher prices. This means that more and more people will depend on social housing. We don't have enough social housing. We have a lot of people on the lists. And so you will have a lot of people who, perhaps, will again live with their families in difficult circumstances, there will be much more social pressure on you.”
He said there was «a real risk of social cohesion». collapse» caused by lack of affordability of housing and the growing division of wealth between «haves and have-nots» in society, which can lead to «desperate actions».
«The middle class is getting smaller, it is either becoming a stronger plutocracy or become out of control. I'm talking about extremes. But this is what I think. If we are not a caring society and more people move into vulnerable groups, more desperate actions happen.”
1503 Net change in rental
The former HSBC chief added: «The more people who leave the middle class and start to struggle to afford something, the more unstable your policies become.»
Hare urged the government to think about the impact of higher taxes and other costs imposed on landlords and ultimately tenants, warning that many landlords are now unable to sell properties due to lack of demand and rising mortgage values.
«[Fewer landlords] are coming,» he said. “It just gets a little complicated. They are not sold yet, because there is no consumer demand on the market yet, because the cost of mortgages is growing.
“Of course, if you look at it from an economic and not a political point of view, you have an asset class that used to earn 'x' percent, and that was reduced by additional borrowing costs, additional taxes, and you might you will also have to invest in your property to make it more energy efficient. These are just the basics of the economy, so I think the government should take this into account.”
According to the Office for National Statistics (ONS), rents have risen at the fastest rate on record: prices paid by tenants have risen up 5.3% in the 12 months to July, according to the Office for National Statistics (ONS), putting pressure on a group that tends to be more financially precarious than homeowners.
Bank of England data shows the median household income for renters is £24,000, compared to £52,500 for those with a mortgage. Renters are also saving less, with an average cash savings of £750 compared to £5,500 for mortgage holders.
“Higher debt and lower savings will make renters more likely to face tough financial choices down the road — like default or spending cuts — that could trigger or exacerbate a broader economic downturn,” Threadneedle Street analysts warned this month.< /p>
Khaire says Britons spend more time in their homes than other nations and take pride in leaving their mark on them.
A recent study by Bupa found that two-fifths of British adults spend less than an hour a day outdoors. , which Hare says adds another dynamic to homeownership in the UK.
He added: “I have lived in England for most of my adult life and for me, when you rent a property that is not yours, it's probably not your furniture, it's not your walls, you can't hang a picture. You will never have the opportunity to fully personalize it. So I think that in Britain, unlike some other places (to some extent due to bad weather), we spend more time in our homes than in some other places.
“I spent a lot time in Hong Kong. And some of the houses there are really complex in size, which is why many people spend most of their lives in them. The British, however, tend to spend most of their lives at home, watching TV or whatever. Therefore, the need for you to be able to personalize it and make it your own is high. In fact, this is impossible to do if you rent an apartment.
Hare said these brewing social issues were one of the key reasons Skipton issued the UK's first 100 percent mortgage since 2008. available to first-time buyers who have paid at least a year's rent in full.
Mortgages for onward travel
While rising interest rates have led some to warn of the dangers of so-called negative equity in the event of a housing price crash, when people end up living in properties worth less than their mortgage, Hare said mortgages are popular among members. «More than 30,000 people» have asked about it, he said.
«We've already received applications for around £40m and they're only two months old,» he said. “This is still small compared to our £30bn mortgage portfolio. But it shows that the demand there is quite large. And it is these offers that led to the fact that we increased the percentage of our new customers.
Hare added that Skipton mortgage holders remain resilient — at least for now. Back in June, when mortgage prices skyrocketed due to rising inflation, Jeremy Hunt pressured lenders to offer borrowers more breathing room.
Many can now opt for temporary mortgage adjustments that are on short-term reduction in payments. without hurting their credit score.
When asked how many Skipton customers have asked for help, Hare replied, «Very, very few.» Hare said in July that the building society had received about 250 inquiries, and in August about 50.
“So it's not much. It's good for people who have it, but most of the reasons don't necessarily have to do with the fact that their interest rate went up from 2% to 6%,” Hare said. “It has more to do with lifestyle: people just want to have a little extra money in their pocket. It is not difficult for them to feed their children.”
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