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| They're property millionaires. Why can't their child get on the housing ladder? | They're property millionaires. Why can't their child get on the housing ladder? |
| (1 day later) | |
| In 1985 Melanie Glanville and Adrian Harrison bought a flat. It was their first home together: a spacious one-bed, ground-floor Victorian conversion in spottily gentrifying – and, as yet, some way off desirable – Clapham South. | In 1985 Melanie Glanville and Adrian Harrison bought a flat. It was their first home together: a spacious one-bed, ground-floor Victorian conversion in spottily gentrifying – and, as yet, some way off desirable – Clapham South. |
| Related: Unaffordable country: where can you afford to buy a house? | Related: Unaffordable country: where can you afford to buy a house? |
| Harrison was 24, a junior in the production department of an ad agency. Glanville, one year older, worked in what was then known as personnel. Each was earning in the mid to upper teens, and their flat cost them £87,000. | Harrison was 24, a junior in the production department of an ad agency. Glanville, one year older, worked in what was then known as personnel. Each was earning in the mid to upper teens, and their flat cost them £87,000. |
| So they put 10 grand down – Harrison using money from his parents; Glanville from her share of an all-but-uninhabitable five-bed wreck in Clapton, east London, that she had moved into and done up with friends – and took on a mortgage amounting, Harrison said, to a grand total of “about twice our joint annual income”. | So they put 10 grand down – Harrison using money from his parents; Glanville from her share of an all-but-uninhabitable five-bed wreck in Clapton, east London, that she had moved into and done up with friends – and took on a mortgage amounting, Harrison said, to a grand total of “about twice our joint annual income”. |
| Thirty years later, we are sitting in the kitchen of the couple’s current home, a comfortable Victorian semi for which they exchanged that first flat in 1987 (thus benefiting from the last few years of multiple mortgage interest tax relief, a mechanism introduced in the 1960s when – imagine! – it was felt the British still needed encouragement to buy houses). | Thirty years later, we are sitting in the kitchen of the couple’s current home, a comfortable Victorian semi for which they exchanged that first flat in 1987 (thus benefiting from the last few years of multiple mortgage interest tax relief, a mechanism introduced in the 1960s when – imagine! – it was felt the British still needed encouragement to buy houses). |
| A few streets away from their first home, it cost them £165,000. It is now worth between £1.1 and £1.3m. | A few streets away from their first home, it cost them £165,000. It is now worth between £1.1 and £1.3m. |
| So far, of course, so banal. This is, after all, the story – not to mention the favoured topic of conversation – of an entire generation of 50-somethings who were fortunate enough, in the 1970s or 1980s, to be able to buy a small flat in London and who are now, as a direct result, property millionaires. | So far, of course, so banal. This is, after all, the story – not to mention the favoured topic of conversation – of an entire generation of 50-somethings who were fortunate enough, in the 1970s or 1980s, to be able to buy a small flat in London and who are now, as a direct result, property millionaires. |
| But the conversation this evening has an added piquancy, because also at the couple’s kitchen table is their daughter, Georgia. Just like her parents in 1985, she is smart, has a sought-after job (with a tech start-up) that pays good money (nearly £30,000), and recently turned 24. | But the conversation this evening has an added piquancy, because also at the couple’s kitchen table is their daughter, Georgia. Just like her parents in 1985, she is smart, has a sought-after job (with a tech start-up) that pays good money (nearly £30,000), and recently turned 24. |
| She is not, however, about to buy her first flat. “I can barely afford my rent,” she says, flatly. “Owning a home of any kind in London, let alone something like this, in the area I grew up, is … well, beyond aspirational. Actually I’m resigned to it never happening. I don’t really see how it can, anyway.” | She is not, however, about to buy her first flat. “I can barely afford my rent,” she says, flatly. “Owning a home of any kind in London, let alone something like this, in the area I grew up, is … well, beyond aspirational. Actually I’m resigned to it never happening. I don’t really see how it can, anyway.” |
| Related: Home shortage and lending rules: why Generation Rent is out of luck | |
| Many families – especially in south-east England – will be all too familiar with the family’s situation. Britain’s house price crisis is generational: according to the Council of Mortgage Lenders, in the 1970s the typical first-time buyer was 25; now, just 8% of 25-year-olds own their own homes. Meanwhile, a tenth of all 55- to 64-year-olds live in households with net property wealth of £500,000 plus. | Many families – especially in south-east England – will be all too familiar with the family’s situation. Britain’s house price crisis is generational: according to the Council of Mortgage Lenders, in the 1970s the typical first-time buyer was 25; now, just 8% of 25-year-olds own their own homes. Meanwhile, a tenth of all 55- to 64-year-olds live in households with net property wealth of £500,000 plus. |
| Here, in essence, is why: the flat that Harrison and Glanville bought in 1985 would now fetch something in the order of £525-£550,000 – an increase of more than 500%. But at exactly the age her parents were then, Georgia Glanville Harrison now earns just 70% more than they did. So to buy a similar flat flat with a friend or partner on a similar salary, she and her co-purchaser would need, somehow, to raise around eight times their joint income – four times the multiple her parents needed. | Here, in essence, is why: the flat that Harrison and Glanville bought in 1985 would now fetch something in the order of £525-£550,000 – an increase of more than 500%. But at exactly the age her parents were then, Georgia Glanville Harrison now earns just 70% more than they did. So to buy a similar flat flat with a friend or partner on a similar salary, she and her co-purchaser would need, somehow, to raise around eight times their joint income – four times the multiple her parents needed. |
| That’s not going to happen. So she is paying £620 a month to share a three-bedroom, ex-local authority – and recently burgled – flat in Stockwell, south London, with two friends. “And that’s really, really cheap,” she says. “In the Oval I paid £645. Round here you’d be talking more like £850.” | That’s not going to happen. So she is paying £620 a month to share a three-bedroom, ex-local authority – and recently burgled – flat in Stockwell, south London, with two friends. “And that’s really, really cheap,” she says. “In the Oval I paid £645. Round here you’d be talking more like £850.” |
| As a proportion of Glanville Harrison’s net income, her monthly housing cost is less than the 50-60% that her parents were having to stump up when they first moved into their present home. “We had to do quite a bit of work here,” says Harrison. “There was no kitchen, no bathroom, no garden. The place had been condemned 15 years earlier, and not a lot had been done since then. Things were very tight for a while. Black Wednesday, interest rates up at 15% … It was spreadsheet stuff.” | As a proportion of Glanville Harrison’s net income, her monthly housing cost is less than the 50-60% that her parents were having to stump up when they first moved into their present home. “We had to do quite a bit of work here,” says Harrison. “There was no kitchen, no bathroom, no garden. The place had been condemned 15 years earlier, and not a lot had been done since then. Things were very tight for a while. Black Wednesday, interest rates up at 15% … It was spreadsheet stuff.” |
| But the difference for them, Glanville notes, was that their monthly payments were “paying off a mortgage, on an asset whose value was constantly, and rapidly, appreciating. Georgia’s paying a landlord. And of course, we didn’t start our careers with a £30,000 student loan on our backs.” | But the difference for them, Glanville notes, was that their monthly payments were “paying off a mortgage, on an asset whose value was constantly, and rapidly, appreciating. Georgia’s paying a landlord. And of course, we didn’t start our careers with a £30,000 student loan on our backs.” |
| Plus, says Harrison, you could add value then: “Our generation, there were still plenty of places – Clapham, Balham, Battersea – where if the survey let you buy with a damp problem or a dodgy roof or dry rot or whatever, you could really improve it. Camden was falling apart; Islington too … There was huge scope for appreciation. And no one was so much as looking at the East End. Not now.” | Plus, says Harrison, you could add value then: “Our generation, there were still plenty of places – Clapham, Balham, Battersea – where if the survey let you buy with a damp problem or a dodgy roof or dry rot or whatever, you could really improve it. Camden was falling apart; Islington too … There was huge scope for appreciation. And no one was so much as looking at the East End. Not now.” |
| And unlike many of their contemporaries, the couple did not even, they are at pains to stress, game the market for deliberate gain. “So many people bought bigger and better, every three years – we never did,” Harrison says. “For me, really, this house has always been a home, not an investment. We did convert the loft, so we now have four bedrooms. But that was it.” | And unlike many of their contemporaries, the couple did not even, they are at pains to stress, game the market for deliberate gain. “So many people bought bigger and better, every three years – we never did,” Harrison says. “For me, really, this house has always been a home, not an investment. We did convert the loft, so we now have four bedrooms. But that was it.” |
| Which, for Glanville Harrison, makes the contrast in their situations all the more galling. “It’s not as if anything has gone wrong for me, either,” she points out. “I got a good job too, straight out of university. Promotion, regular pay rises … Yet I can’t even begin to think about buying. Can’t even begin.” | Which, for Glanville Harrison, makes the contrast in their situations all the more galling. “It’s not as if anything has gone wrong for me, either,” she points out. “I got a good job too, straight out of university. Promotion, regular pay rises … Yet I can’t even begin to think about buying. Can’t even begin.” |
| She reckons that as things stand, with what she has to spend – rent, bills, travelcard, food, clothes – she could probably save “a bit. But if it’s a choice between squirrelling away a hundred or so a month and having a drink with a mate, when the money involved is so far removed from what I’d actually need to get on the property ladder ... There doesn’t seem a lot of point. And anyway, whatever you have managed to save disappears in agency fees every time you have to move.” | She reckons that as things stand, with what she has to spend – rent, bills, travelcard, food, clothes – she could probably save “a bit. But if it’s a choice between squirrelling away a hundred or so a month and having a drink with a mate, when the money involved is so far removed from what I’d actually need to get on the property ladder ... There doesn’t seem a lot of point. And anyway, whatever you have managed to save disappears in agency fees every time you have to move.” |
| Like many people her age, she is caught in a 21st-century rent trap: she cannot save enough for a deposit, so has to rent – and is paying so much rent she cannot save for a deposit. | Like many people her age, she is caught in a 21st-century rent trap: she cannot save enough for a deposit, so has to rent – and is paying so much rent she cannot save for a deposit. |
| “But actually, I reckon could stay at home till I’m past 30 and still not save enough,” she says. “What’s the average deposit a first-time buyer in Greater London needs now – £30,000, £50,000? I’ll never be able to get that. Never. Where on earth am I supposed to get that from?” | “But actually, I reckon could stay at home till I’m past 30 and still not save enough,” she says. “What’s the average deposit a first-time buyer in Greater London needs now – £30,000, £50,000? I’ll never be able to get that. Never. Where on earth am I supposed to get that from?” |
| Related: Revealed: the widening gulf between salaries and house prices | |
| An unspoken further question hangs, of course, behind that innocent little query – one that no one round the table seems particularly willing to answer. Because both Glanville and Harrison are self-employed, and have been for most of their working lives, neither has much of a pension. And the big – the really big – unknown that haunts them now is what they might need in their old age. | An unspoken further question hangs, of course, behind that innocent little query – one that no one round the table seems particularly willing to answer. Because both Glanville and Harrison are self-employed, and have been for most of their working lives, neither has much of a pension. And the big – the really big – unknown that haunts them now is what they might need in their old age. |
| Silence. “This house,” says Glanville, carefully, “is the only security we really have. And I look at my father, he’s 93 now. He was a surgeon – he has a good pension, a very good pension. But he’s spending twice that every week now on his care. And of course I want him to. He has assets – that’s what they should be used for.” | |
| Her daughter instantly agrees: “He’s my grandad, of course I’d never question that it should go to anyone but him. But I don’t know … I suppose I’m just beginning to understand that the money you guys have in this house, the money I’d seen as a glimmer of hope – you’re probably going to need every penny of that, too.” | Her daughter instantly agrees: “He’s my grandad, of course I’d never question that it should go to anyone but him. But I don’t know … I suppose I’m just beginning to understand that the money you guys have in this house, the money I’d seen as a glimmer of hope – you’re probably going to need every penny of that, too.” |
| There is another pause. She smiles. “We’re resourceful, though, my generation,” she says. “We’ll buy together, lots of my friends are thinking about that. We’re counting on Crossrail. We’ll live two families to a house, miles outside London, because that’s what we’ll be able to afford. But I don’t think I’ll be exercising an option to buy if it means paying £350,000 for a pokey one-bed flat.” | There is another pause. She smiles. “We’re resourceful, though, my generation,” she says. “We’ll buy together, lots of my friends are thinking about that. We’re counting on Crossrail. We’ll live two families to a house, miles outside London, because that’s what we’ll be able to afford. But I don’t think I’ll be exercising an option to buy if it means paying £350,000 for a pokey one-bed flat.” |
| Is anyone to blame, then, for the situation so many of her generation find themselves in? Harrison points the finger at right to buy, and at buy to let, “both clearly, with hindsight, mistakes”, and warns that equity release will probably be the next big scandal. Some kind of private-sector rent controls, and greater protection for tenants, are long overdue, he thinks. | Is anyone to blame, then, for the situation so many of her generation find themselves in? Harrison points the finger at right to buy, and at buy to let, “both clearly, with hindsight, mistakes”, and warns that equity release will probably be the next big scandal. Some kind of private-sector rent controls, and greater protection for tenants, are long overdue, he thinks. |
| I get that you can't afford the kind of money that would make a difference to me | I get that you can't afford the kind of money that would make a difference to me |
| Glanville Harrison, for her part, tries to put a brave face on it. “Property investors haven’t helped, obviously,” she says. “But they are in it for their pensions, I can see that. Foreign buyers, I suppose – but they’re arguably good for the economy overall. Someone should plainly have stepped in earlier, so I guess the government … But it’s very complicated. There’s a myriad of factors.” | Glanville Harrison, for her part, tries to put a brave face on it. “Property investors haven’t helped, obviously,” she says. “But they are in it for their pensions, I can see that. Foreign buyers, I suppose – but they’re arguably good for the economy overall. Someone should plainly have stepped in earlier, so I guess the government … But it’s very complicated. There’s a myriad of factors.” |
| She turns to her parents. “I get that you can’t afford the kind of money that would make a difference to me, in the way your parents could give you something that would make a difference to you,” she says. “Things ... aren’t the same now. Everything’s changed. I can see that. I’m not bitter.” | She turns to her parents. “I get that you can’t afford the kind of money that would make a difference to me, in the way your parents could give you something that would make a difference to you,” she says. “Things ... aren’t the same now. Everything’s changed. I can see that. I’m not bitter.” |
| What does get her down, though, is that she, and many more of Generation Rent, may reach “30 or 35, and want to settle down, start families, and perhaps just not feel secure enough to be able to do that … Or that we’ll all end up moving out of London, finding nice commuter towns – and that the whole cycle will simply start all over again. Prices rising, those who didn’t get in early enough being pushed out. The idea that history will repeat itself.” | What does get her down, though, is that she, and many more of Generation Rent, may reach “30 or 35, and want to settle down, start families, and perhaps just not feel secure enough to be able to do that … Or that we’ll all end up moving out of London, finding nice commuter towns – and that the whole cycle will simply start all over again. Prices rising, those who didn’t get in early enough being pushed out. The idea that history will repeat itself.” |
| And when it comes, yet further down the line, to her children? “God knows. I dread to think what will be left for them. That’s really depressing.” | And when it comes, yet further down the line, to her children? “God knows. I dread to think what will be left for them. That’s really depressing.” |