The Times - UK (2020-10-17)

58 1GM Saturday October 17 2020 | the times

Money

5

All first-time

buyers really

want is a big

housing crash

I

once saw a young woman in the

park with a flash of green just

above her ankle — it was a

tattoo of an avocado.

The image has become

embedded in my brain: it shows real

commitment to your favourite food.

Was it a drunken joke at the end of a

night out, or perhaps she’d just had a

really amazing portion of guacamole

with her brunch?

Of course, an avocado is much

more than just an exotic fruit these

days; it has also become a symbol of

a generation, specifically millennials.

Now I know millennials hate the

word millennial — I do too — but it

is a useful shorthand (much as baby

boomer is) for the clichés attached

to a generation. In particular the

stereotype is that millennials waste

their money on life experiences such

as foreign travel, going out and

brunching on avocados — and indeed

getting tattoos of their brunch — and

this is the reason they can’t afford to

buy a home.

What the avocado-haters

ignore is the fact that

millennials are only eating

out and having nice

holidays, coronavirus

allowing, because

they have all but

given up on the

hope of ever

owning a home.

One is the

symptom of the

other, not the cause.

They save, but without any

certainty that they will achieve their

goal. Or perhaps the goal seems so far

in the future that it doesn’t feel real.

Life was far kinder when I bought

my first home in 2008: a two-

bedroom, second-floor flat at the

wrong end of Finsbury Park in

north London.

My then boyfriend, now husband,

and I pooled our savings towards a

ten per cent mortgage with the help

of my mum, had an offer accepted

and got an interest-only mortgage

(as many people still did then) paying

5.3 per cent.

Spending the first night lying on

the floor in sleeping bags among our

boxes and bags, I remember thinking:

I own every brick, or at least we will

do one day.

Never mind that I didn’t fully grasp

the feudal property laws which meant

that the freeholder owned all the

bricks, I felt a warm glow of knowing

we were finally on the property

ladder; that we were financially

secure and in control of

where we lived.

Take this warm glow

away from large

numbers of young

people and

there will be

consequences.

I was lucky in

many ways, but

one of them was

that I never

doubted I would own

a home. I was one of Thatcher’s

children. She came to power in 1979,

29 years before I would buy my first

home, and when only 55 per cent of

Britons owned theirs. In 1990, when

she tearfully left office, the figure had

climbed to 67 per cent.

Now that has dropped to

63 per cent and looks likely

to dip further as a perfect storm

descends on those hoping to buy

for the first time.

There are many solutions touted

for reversing this trend, but really

first-time buyers don’t want any of

them. They don’t want to have to rely

on being born into a rich family who

can help with a deposit, or having to

buy 100 miles from their job just to

get a property in their price range.

They are sick of being offered

fudges to their problem, of which

there have been many, including

long-term fixed-rate mortgages, as

proposed last week by Boris Johnson,

or the suggestion this week that they

take money from their pension, as put

forward by, of all people, the pensions

minister, Guy Opperman.

Neither do they want shared

ownership or Help to Buy loans,

which require a 5 per cent deposit to

buy a poorly constructed and overly

expensive new-build shoebox. These

are all schemes that essentially just

encourage them to borrow ever

greater amounts and for longer.

They also don’t want stamp duty

holidays, which most will never

actually benefit from anyway.

So what do they really want? A fall

in house prices.

It may be that Covid-19 delivers this

for first-timers. Off the back of the

significant recession caused by the

pandemic, Lloyds is forecasting a

worst case scenario in which house

prices could fall as much

as 30 per cent by 2022.

You can only hope that

those denied fair access to the

housing market will eventually

vent their anger via the

polls — if not now, then in

the future when they

realise that failed

housing policies have

left them with lifelong

financial insecurity.

They should not be fobbed off

much longer by fudges devised by

their elders, people who already own

a home; sometimes more than one;

perhaps even a holiday home in the

Dordogne.

The government ignores first-time

buyers at its peril. As Generation

Rent gets older and takes over

from Generation Brexit as the

demographic to please, the previously

unthinkable — capital gains tax being

levied on principal homes as well as

investment properties, for example

— may become reality.

Maggie’s vision of home ownership

for everyone must be reclaimed and

reframed for a different set of voters,

ones with tattoos of avocados on

their ankles.

Home

Economics

Jessie

Hewitson

Deputy Money Editor

63

Happy holidays

Half of homeowners who took a

mortgage payment holiday during the

pandemic did not suffer a drop in

disposable income, according to the

credit agency Experian. It found that a

quarter of householders who stopped

paying off their mortgage found that

they had more cash, suggesting that

they had taken the holiday to build a

pot in case their earnings went down.

There are nearly 2 million mortgage

accounts on a payment holiday. So

many people applied in a short space

of time that lenders were unable to

check if they were needed or not.

Insurance write-off

Anyone who has had to start working

from home or using their car for

company business will not have to

update their insurance policy until

December 31. Insurers have agreed to

give extra support to customers who

have been affected by the coronavirus,

so you won’t have to extend your

cover to take your home office or

extra work miles into account. The

reprieve also applies to drivers who

have been using their cars to

volunteer by transporting medicines

or groceries to help others suffering

during the pandemic.

Branching out

The lockdown has changed our

banking habits for good, with an

estimated 1.4 million people having no

intention of ever returning to a bank

branch. An estimated 1.6 million people

don’t have an account with a high

street bank, according to the personal

finance comparison site Finder, which

calculates that about 3 million people

in the UK will have no need for a bank

branch. A quarter of branches have

closed since 2012 according to the

Office for National Statistics. In the

East Midlands a quarter of people say

they no longer use branches.

Save your energy

A quarter of us are not looking at our

energy bills, with one in ten saying it is

because they are too complicated to

understand. Research by the price

comparison site Energyhelpline

suggests that 138,000 energy bills go

unopened every day. Some 16 per cent

of customers said they didn’t check

because they thought their direct debit

would always be the same, so they

may not notice when a supplier

increases their payments. The same

percentage said they do not log into

online accounts, so billing errors and

cheaper tariffs may go unnoticed.

did you know?

The word quid to describe

a coin was first used in

the 17th century and is

believed to come from

the Latin phrase

quid pro quo —

something for something

IN THE

SUNDAY TIMES

TOMORROW

plus

Is it time to buy

British shares?

special report

The £61m hole

in the earl’s

savings firm

HMRC fishes for fraud

The taxman has begun writing to

24,000 recipients of self-employed

Covid-19 support payments who may

not have been entitled to the

government’s handouts. A total of

2.7 million self-employed people

claimed £7.8 billion for businesses

affected by coronavirus, but HM

Revenue & Customs understands that

24,000 workers made claims but then

never resumed trading once the

national lockdown ended. The letters

give recipients until November 20 to

show that they are still in business or

they could face penalties.

Expats account warning

Banks planning to close the accounts

of expats in the EU after Brexit must

ensure that they are not left in “undue

financial hardship”. Thousands of

expats were told that their bank

accounts will be closed, but the

Financial Conduct Authority, the City

regulator, said banks have to give at

least two months’ notice of plans to

close accounts that are in credit. After

the UK’s full departure from the EU at

the end of the year, British banks will

no longer be allowed to provide

services to customers in the EU

without special banking licences.