Bouyant Renting Market

There are some curious things happening in the property market. Many youngsters until a few months ago would have secured a foothold by utilising such mechanisms as Northern Rock’s 125 per cent mortgage. That has now been stopped – as are 100 per cent mortgages. They have come to be seen as a symbol of everything which was wrong and cavalier and which have contributed to today’s financial melt down.

Though property prices have fallen they are still beyond the reach of many first-timers. Northern Rock’s recent announcement that it was re-entering the lending market was welcomed, albeit it that it was a move financed by the taxpayer to the tune of another £14bn. Its announcement that it is going to start offering 90 per cent mortgages – lately even 75 per cent mortgages have become thin on the ground – was also well received.

But even a ten per cent deposit is beyond many people. The result is a rise in the number of people choosing to rent instead of trying to buy. It could be that the UK is inching closer towards the continental model where renting rather than buying is the norm. Or it could be simply another side-effect of the volatile market. Only time will tell whether it’s a temporary blip or the start of a change in attitude in Britain towards buying.

It’s impossible to quantify how many people are holding off from buying or selling because they are nervous about prospects for property. There is increased demand – but changing that interest and demand into definite deals is still a hard slog. Auctioneers and some estate agents say they’re doing reasonably brisk business. It’s mainly from cash-rich buyers, some investors, and those who think the market is at the bottom or close to it.

Again, it’s difficult to estimate how many people who sold well in the boom are now living in rented property biding their time while looking for bargains and who out of that number will, eventually, re-enter the market and make their purchase.

More and more Mums and Dads are trying to stump up deposits to help their children. They are able to do so by utilising equity in their existing homes, although much of that has been imperilled by the drop in house values.

But 45 per cent of owner-occupiers in the UK have paid off their mortgages. That’s a sizeable figure. This group has real spending power. In the good times a proportion took out loans on their family home and bought a flat or three as buy-to-let properties.

Latest surveys suggest that a sizeable number of such investment properties are now being lived in by off-springs who are unable to find deposits to buy a property. If the off spring can be coerced into paying proper rent it’s a good wheeze. The tenant has a direct line to the landlord – it’s Mum or Dad. And Mum and Dad as the landlords are happy that their child will make a good and appreciative tenant ( they hope).