We are currently witnessing a housing market crash that seems to be similar to the 1992 crash, in which people got into negative equity and the value of houses fell dramatically. The signs are all there that this is currently happening again in 2008, and first time buyers all over the country are waiting for prices to fall to a level they can afford to pay.
The prices have started to come down, but sales of property have all but ground to a halt as both purchasers and sellers alike seem to be sitting back and waiting to see what happens.
The 2008 housing market differs significantly to the 1992 one in one crucial element that is a big problem for first time buyers: there are now far more potential property investors than there were in 1992.
In 1996, laws were introduced making it easier for people to hold onto or purchase property to let. The laws gave the landlords the ability to get the property back by reducing the tenant’s security of occupation. The government introduced a key law which changed the dynamic in the housing market completely: The two months notice to quit. It is now legal for any landlord to serve two months notice to quit on a tenant once the original six months of the tenancy has expired, meaning that the investment buyer knows they can get the tenant out quickly if they need to. Following this legislation, the UK now has the worst security of tenure laws for private tenants in Europe, as well as being worse than most US states.
No market analyst seems to be able to predict who is going to be in a better position to buy in the coming years - will it be owner occupiers or will it be property investors? But one thing is sure: with the current tenancy legislation, and potential for foreign investment in the UK housing market due to our draconian treatment of tenants, first time buyers could find themselves permanently excluded from the housing market, and lumbered with a six month tenancy, regardless of whether the market is in boom or bust.
The answer to this problem? Lobby the government to amend the current security of tenure laws so that private tenants have more security in their properties. This will have the effect of dissuading a lot of potential investors looking to enter the market, and crucially, keep those entry level properties available for owner- occupation.
This will not be achieved unless we take action and make the government aware of the problem, and that we are out there in out thousands prepared to do something about it of they don’t listen. Our campaign can only do so much at the moment so do the right thing:
- Join our campaign
- Write to your MP
- Write to your local councillor