Select – Lead Gen – 06-19 – LB
Coyne – Lead Gen – 06-19 – LB
Fielding Financial – Seminar 06-19 – LB

Brexit, Europe, and Home Ownership

I am totally sick of the Brexit saga for the UK to leave Europe, and suspect many of the population feel the same, irrespective of their private feelings about being in or being out. 

Freight companies are being warned that the paperwork for exporting goods to Europe may change from 1st November. As it all seems rather muddled still, it seems premature to be saying that there will be major changes and what applies on 31st October will be out of the window on 1st November.

What brought this to mind was an article I was reading which stated that since 2017, Stamp Duty in the UK is higher on a property bought to be rented, most purchasers having to pay an additional 3 per cent in tax. The reasons for this seem a little tenuous. It appears that previously, buy to let purchasers were in a more favourable tax position than those seeking to buy their own home. This policy sought to rectify this, to some degree. Would anyone like to argue whether it did so?

Why did I start this talking, or mentioning, the Brexit saga and Europe? 

The UK has long perceived homeownership as the ideal to be aspired to. At one time, it approached 70 per cent, though this has decreased with the economic difficulties in the country, zero hour’s contracts and less full-time working.

More and more see a sojourn in the private rented sector as the way to start independent life away from the parental home. With young professionals leaving university with substantial debts, raising a deposit for a mortgage is often out of their reach for several years, unless they have a good account with the ‘Bank of Mum and Dad’.  

This has not been the case in Europe. Home ownership has not been aspired to in the same way. Their houses are often built with a much better space standard, which means families remain together in extended family groups, offering support to each other. A house is a home, and not seen as the cash-cow to fund moves up the social ladder to the same extent as we do in the UK.

The Mortgage Market Review (MMR) has tried to address issues of affordability, recognising that a young couple may over-extend themselves and whilst the interest rates have remained low and not caused strain by large, unexpected increases, ordinary life might add unexpected pressures. A reduction in working hours; suddenly no over-time; an unexpected illness or even the joy of a baby, can all put stress on what once had been a comfortable situation. 

It is now suggested that a loan should not be more than 4.5 times the working income. This may help some not to over-stretch, but there will always be those who will live on a knife-edge, balancing mortgage, council tax, water bills and the myriad others demands on their income, which will lead properties to deteriorate. Does that benefit anyone?

Whether we stay in Europe or not, whatever criticisms can be made of either position, it seems in the matter of private renting, they have it right. If we could foster the same attitude as Europe in the UK, landlords would feel respected and expand their portfolios; tenants would happily live in the private sector for as long as they wished, with a greater choice and without feeling forced to buy at extortionate prices.

Are we too late to get a situation like this back, as in Europe, which benefits both landlords and tenants?

Select – Lead Gen – 06-19 – LB
Coyne – Lead Gen – 06-19 – LB
Fielding Financial – Seminar 06-19 – LB

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