Why bother to buy your own home when you can rent and save?
Of all the sacred cows that inhabit the world of property, few are bigger and more immovable than the emotive issue of home-ownership. Getting more families to own their own home has been a priority of government after government. Should we be alarmed, then, by the fact that the level of owneroccupancy has dropped beneath the 70 per cent mark for the first time in almost a decade?
No. In fact, the number of people who own is likely, if anything, to fall further in the coming months. This may well be a cause for embarrassment in Whitehall, but it should not concern the rest of us. It is actually extremely healthy for our country to have a good chunk of renters as well as owner-occupiers.
While we are on the subject, let’s lay to rest a few myths. The first is that Britain has a high level of home-ownership while the majority of our European neighbours are content to rent. Almost 80 per cent of households in Spain and Italy own their property. The shares in France and Germany are hardly low at about 63 per cent and 43 per cent respectively.
The second is that buying always makes more sense economically than renting. In many parts of the country, it is cheaper to rent than to buy, certainly over a two- to five-year period. Simply put, it is quite easy to find a property where the monthly rent is less than the mortgage interest. Unless you expect a massive increase in house prices over the next two or three years (don’t), or are desperate to buy and will hold the house for longer, it would be better to rent.
Congratulations! You, along with a few million others, are now the proud owner of a bank. Following the first major nationalisation in decades, we are now in control (kind of) of one of the country’s biggest mortgage lenders. Though you may be bored stiff of the story, here, nevertheless, are three important practical tips.
Put some money into a Northern Rock savings account. The company is still offering extremely attractive savings deals — backed by the Government. It is like buying a gilt-edged security but with a far better return. Move fast.
Northern Rock mortgageholders should prepare to move mortgages when their current deal expires. Since its near-collapse, the mortgages offered by the Rock have been dreadful. You can find far better deals elsewhere — and that’s the idea. The company is attempting to drive its customers elsewhere, thus reducing the size of its debts. Now the company is nationalised, the pressure to shrink will increase.
If you are unfortunate enough to have your home repossessed, make some noise. For the first time in living memory, the Government faces having to turf homeowners out of their properties for missing mortgage payments. You probably won’t be able to save your home, but you will certainly raise the pressure on the Government to compensate you.
email@example.com Edmund Conway is Economics Editor of the Daily Telegraph