James Moore: 'Generation rent' deserves a helping hand from the greedy baby boomers


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Good news, generation rent! The Council of Mortgage Lenders (CML) has set up a code to make sure its members act responsibly towards the people who are soaking you.

With the Financial Conduct Authority breathing down the industry’s neck, the code demands that CML members pay close attention to buy-to-let loan affordability and generally do things that they really ought to have been doing anyway.

Oh, and they’ll also have to “signpost” information from other organisations about being a cuddly landlord, keeping up with repairs and suchlike.

Doesn’t that make you feel better as you hand over half your salary each month for a studio with a leaky radiator?

The reason this matters is that the number of buy-to-let mortgages has been rising every year for the past 15. That includes during the financial crisis, which served only to slow down the rate of increase. In less than a decade the number of loans, and the amount of money lent, have more than doubled to 1.6 million and £190bn, respectively.

Small wonder. Statistics claiming the sector as a risk-free investment goldmine have persuaded a small army of people to take the plunge.

The trend is all but certain to continue. The members of generation rent are entering the housing market saddled with debt that their parents would have regarded as barely credible when they told Margaret Thatcher they wouldn’t pay back their student loans.

Buying is becoming impossible and renting unaffordable, unless you happen to have landed a well-paid job in the City.

Even if they choose to shun the financial black hole that a university education has become, young Britons face many of years of hard saving to raise the sort of deposit they will need to persuade a lender to look at them, years during which they will be pouring money into the pockets of landlords who see them as a handy means of funding a comfortable retirement.

The situation is coming to a head in places like London, where buying is becoming impossible and renting unaffordable, unless you happen to have landed a well-paid job in the City.

Its character is fundamentally changing – and not in a good way. The wealthy people attracted by its cosmopolitan vibrancy are squeezing out those who create that vibrancy. Not to mention those who keep the place clean, fed, watered, educated and healthy. The capital of the future will be bland, rich and dull if this is allowed to continue. Ditto for other property hotspots.

There are requirements on developers to allocate at least some of their new builds to social tenants and to schemes designed to assist key workers. They are having about as much impact on this as putting a few handfuls of Lego bricks in front of a tsunami.

There is a desperate need for some sanity here. Rent controls, such as those enjoyed by a handful of people in parts of New York, are probably a non starter, not least because they have a habit of producing perverse outcomes by, for example, reducing the motivation of landlords to maintain property or incentivising tenants to game the system by sub-letting.

But some form of rent stabilisation, putting a cap on increases, for example, perhaps combined with a tax break or two to keep landlords from bellyaching, is worthy of investigation.

Having created generation rent, the least its parents, who now have their fingers on the levers of power, could do is take steps to look after it.