The over-inflated property prices we have suffered in the last couple of decades can be traced right back to the original right-to-buy schemes championed by Margaret Thatcher in the early ‘80s. Local authority housing stock was sold off at huge discounts to tenants on the basis that we’d all be ‘better-off’ if we owned our own homes rather than continuing to rent. It turned us into a nation obsessed by the concept of home ownership at any cost, and of making money from owning these homes.
But as we’ve seen in recent years, it’s not real money and it’s led to the current situation when millions can’t afford to move and millions more can’t access the finance they need to purchase somewhere to live. And at the same time there is not an adequate supply of good quality publicly owned housing available at affordable prices for those who can’t, or don’t want to, get on the housing roundabout.
A house is a place to live; it’s not a place to make money from. What we need is pressure on lenders to do their jobs and lend money. And money made available for new, affordable, housing for those who can’t buy to rent.
And for those of us who see property as something to profit from, remember this. Whether house prices rise or fall, and whether you make money or lose money from your house, you need a roof over your head. Your house can either be somewhere to live, in which case it’s your home, or it can be for investment, in which case it can provide an income or some cash when you sell it.
It can’t be both.
If you continue to live in it it’s your home not an investment and if you don’t live in it because it’s rented, then it might be ‘your house’ but it certainly won’t be your home!
Huge rises in property prices over the last couple of decades have meant that more and more of us are taking this ‘property can’t fail’ line to justifying not having a good mix of investments, or more importantly as an excuse for not making proper arrangements for retirement as in “I don’t need a pension, I’ll just sell my house when I retire.”
Now I happen to think that property can be effectively used as part of a well-structured plan for retirement. But it generally only works if it’s a second or third property purchased specifically for rental with no requirement for you to have to live in it yourself. The ease with which mortgage money could be obtained up until a couple of years ago flooded the market with amateur landlords who thought there were quick bucks to be made from buying and selling flats up and down the country.
There is still money to be made from the property market if you’re looking to buy to rent, but generally only if it’s part of a longer term strategy, and generally only if you are borrowing to help fund a purchase, and effectively using someone else’s rental to repay your loan and where your only outlay is the deposit. As well as any time taken to manage the property.
For those of us with one property that we live in we should start to enjoy it as such, rather than worrying about how we can ‘maximise our profit’ when we sell!