Another Angle on our Estate Agent London's previous opinion


Previously the Estate Agent had the following to say

Flying in the face of this eminent good sense is the Government’s Help-to-Buy scheme, which “experts” are relying on to restore the insanity that has until recently constituted the British
housing market, this mortgage lending on a Mickey Mouse scale which will prop
up grossly inflated property prices, thus drawing millions of ordinary
working people into unsustainable debt.


We owe a lot to Janet Dayley for her research and opinion which forms the basis of this article. “Let’s chant the following sentences all together, shall we? Property prices in this country are too high: they are completely out of sync with ordinary earnings and many, many people – especially the young, and possibly the old – should not be pressured into owning their own homes, for them renting would be a far better option. And furthermore, just to compound the heresy, a reduction in home ownership might be better for the economy.”
What the Government needs to do if it really wants to help is not subsidise high property prices by underwriting ever more mortgage debt. Instead, it should do everything in its power to facilitate the private rental market. The decision this week to scale back the proposed regulations that would have required all landlords, in every sector of the market, to act as border police checking the immigration status of their tenants, is seriously good news. This the estate agents in Shoreditch, Islington and Bethnal Green will all gladly underwrite and support
The post-war slum landlord scandals gave rise to an understandable political drive toward over-regulating privately rented accommodation, and so the commonplace 19th century practice of “taking a house” or a set of rooms on a rental arrangement had virtually disappeared by the 1960s. It was private ownership or the council estate. (And council tenancies, modelled on the ideal condition of home ownership, became permanent and immovable, too.)


The simple matrix for a safe mortgage calculation remains that your mortgage should not exceed two and a half (or, at most, three) times your annual income. House prices used to reflect this assumption because sellers had no option but to comply with it, you could not sell a house for a price that exceeded any possible mortgage offer. Then came easy credit – and we all know the rest.
There is a widespread belief that it is the shortage of available housing that makes British property so expensive. This may be partly true but the sudden ridiculous increase in house values that occurred over the past couple of decades did not coincide with a drastic fall in the number of houses, or even a dramatic increase in population: it came as a direct consequence of easy mortgage credit. People were throwing Monopoly money at a single commodity and the prices went through the roof.
It is just not acceptable that the health of the British economy is so dependent on property prices – meaning they must always go up, up, up, never down.


It has become a virus to encourage everybody on to the property ladder virtually right after leaving puberty. Owning a home at the child-rearing stage of life, can be beneficial, provide stability and security but, provided you are not trapped in an insane mortgage.
Being locked into (mortgaged) property-ownership before you have undertaken the responsibilities of adult life, or even decided what you want your life to be like, is absurd. It is a trap which makes people less adaptable, less able to grasp unexpected opportunities, and less free to make the sort of adventurous decisions which ought to characterise the early years of development existence. It is such a prolonged issue to sell a home and extricate yourself from a mortgage compared to the withdrawal from a rental agreement.


Always discuss any intention with an expert before the decision is made, have a consultation with your London estate agent before you choose between rent or ownership.
Having so much private household wealth tied up in property means that the population tends to not invest in anything else. Instead of buying shares as Americans do, or investing in entrepreneurial ventures as many Europeans do, the British sink their capital into their houses.
A great many of them trust the value of their property to rise with such unquestioning faith that they rely on it to provide a pension, either by outright sale or increasingly now through equity release.
The chronic “under-investment” which has been the curse of British economic life for as long as anyone can recall, is at least partly a result of this reliance on property as the provider of financial security. If fewer people had a home which they saw as the only asset they needed, there might be far more private cash flowing into the British economy, either directly or through pension funds and investment accounts of all kinds. Again, money that is not tied up in a static property is more mobile, more flexible and more versatile.


To ensure a dynamic economy which can adapt robustly to changing circumstances, we need mobility in people and money, while locking them both into property does not facilitate this.
During bad economic times, the problem is exacerbated, in Britain a recession is always marked by the property market turning sluggish, to the point of being moribund resulting in greater difficulty for people and their money to be liberated.
Of course, politicians = governments = temporary glory, face an intractable political dilemma.
How do they explain to a nation of property-owners that it would really be better for everybody if the price of their precious assets has to be allowed to “crash” to a natural level, bankrupting half of them and leaving them homeless. Unfortunately and practically not possible, therefore we will have to wait for natural economic laws to enforce that unavoidable adjustment. Soon, it seems.
Go now and deliberate with your rental estate agents at Nelsons.