The English Attitude To Investing All Of Our Capital In The Family Home Must Be Due For A Change.

Ask anyone where most of their capital is invested and you will most likely get the reply “Oh, it’s all in the house ”. And that will probably be the case for a large part of the populace as it’s a Modern British Tradition that all your eggs must be in the same basket, i.e. tied up in the house. We Buy Houses in the UK whereas on the continent or in the USA renting is a much more common option. The idea is that in Britain today your money is completely wasted on rental payments and that, even though your mortgage payments may be a lot more that you would pay in rent, or indeed can afford, it’s all going to be worth it in the medium term . When We Buy Homes here the investment value of the property is always going to be an issue and it brings a sort of dual purpose mentality to the purchase of a property. This means that if I want to make an investment in the property market I would have to keep half an eye on the future time when I want to Sell My House as when We Buy Homes in todays world it’s not just a place to live.

Can this continue ? Can we in point of fact have the situation where a massive chunk of the population has most if not all of their savings in one place? Any financial analyst would advise you to diversify when investing in the stock market and not to put all our eggs in the one basket and yet this is just what we do when We Buy Houses. I do this myself, struggling to overpay the mortgage, cutting down on luxury purchases to improve my property all so that when I come to Sell My House I will get a maximised profit on my initial investment which I will undoubtedly re-invest in another home and do exactly the same thing again!

I can foresee the time when we move over to a more continental or US style of paying for our accommodation and we start to consider renting as more of an economically viable option than owning property. The reasons for this are as follows:

1. The property market cannot continue to rise for ever as it has in the last few years . This is pretty obvious as we surely cannot reach the situation whereby nobody can afford anything . Therefore property won’t be seen as the super inflationary investment that it has been in the past few decades and people will go back to considering property just for living in.
2. A new financial era wherein cheap loans, incentives to buy property and 100% plus mortgages will not be easily available any longer. Gone are the days of self-certified incomes, no long term employment history etc.
3. Student loans. The previous Labour party instigated a policy of ever increasing numbers of students going into university and higher education. But there was no provision to pay for these students either in terms of the course fees or in terms of their living allowances. Previous students back in the sixties and seventies would not only have had their course fees paid by the state, but would have had a fairly large grant available to tide them over through the length of the course. But then only a small percentage went to university and the state could afford this as the money would be reclaimed in increased tax revenues as the graduates would earn more after graduation. It’s plain to see that modern students, graduating with debts of around twenty thousand pounds, are not going to be in a position to save up a twenty to twenty five percent deposit to satisfy the mortgage companies stipulations in order to buy a home. So a new generation of renters is going to be arriving with each graduation ceremony. It’s obvious.

I think I’ve made the case to explain why the UK’s love affair with the property market may be heading for at least a temporary break up, if not an actual divorce! The question is what are we going to do with our money now, and where all these new rental properties coming from!