Be aware of the holes in TV documentaries about the private rented sector says David Lawrenson of LettingFocus
There was an interesting programme on ITV last week from the “Tonight” team.
Called “Generation Rent” the programme set out to look at a number of aspects of the growing private rented sector and the problems people face trying to scrape together money for a deposit to buy a home of their own.
There was a strong axe to grind and the programme makers certainly tried to grind their particular axe as hard as they could.
Early on in the programme, some research was quoted that tenants in the private rented sector were less happy than homeowners – a piece of research that has certainly passed me by and which was not name-checked.
I have since tried to find the research on line but have not yet succeeded.
Lending No Longer Constrained
Another statement said that lenders demand much higher deposits now than they did pre-crunch. Again, this seemed an odd claim. 90% loan-to-value mortgages are widely available today and at interest rates which are much lower than in 2007. (I agree the lenders are harder on any blots in one’s credit record but the fact is that high LTV are available now).
Another curiosity was the case study the programme makers had selected (or been dumped with) for the would-be “first time home buyer trapped in rented accommodation”.
Much was made of the fact that they had a total household income of £80K but still could not afford to save for a deposit.
The couple, who had two children, had chosen to live in a part of London where rents are quite high (so no economising there!). They paid rent of £1,500 a month, (which I thought fairly low for the leafy area they had chosen to live in).
But even so, if we assume an unequal income where one partner earned say £55K and paid higher rate tax whilst the other made £25K a year, then even on this conservative assumption of who earned what, the gross income of £80K would still equate to a net (after deductions) income of £55K. So, take off the rent of £18K per annum and that still leaves £37K a year for everything else.
It seems a pretty decent amount of spare cash to me which ought to allow them to save quite a bit towards a deposit.
Perhaps the programme makers could have called in Alvin Hall to give advice on budgeting?
The Landlord Case Study
Later on in the programme another case study was bought in of a couple of new novice landlords who were looking to buy to let for the first time. They had “read up on buy to let a bit” and wanted to take the plunge. “Hope they have read my book”, I thought.
“How did you get the money for this venture?” the interviewer asked. I cannot recall the answer, but what they did not say but perhaps should have done was, “Well, we budgeted and saved.”
Perhaps they could have advised the other couple?
The programme followed the novice landlords as they looked at an older terrace property that needed a little bit of redecoration accompanied by the National Landlord Association’s, Richard Blanco (who spoke at my London seminar in March 2012).
Then they looked at a new build property.
Amazingly (or not), they decided to buy the new build – which was almost certainly the worse of the two properties investment-wise.
Richard Blanco must have been scratching his head at this. This was also the moment when I realised that they almost certainly had not read my book. (Anyone who has read it would have opted for the older property in this case).
Indeed, I predicted that this would have been the outcome because there would have been no way a major house builder / property developer would allow a film crew on site for the film to be screened if the would-be landlords had not plumped for the new build in the end.
As they say, “That’s Entertainment” (and that is how the “biz” of TV really works).
What you see on TV is sometimes misleading, but if you stop and think of the messages you are being sent you can often see the flaws in the argument. You did not have to think too hard to see the flaws here.
There are things that need fixing in the private rented sector – many of which we cover assiduously at our blog.
What a shame the programme makers missed an opportunity to look at the real issues.
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