For many years in Britain the story was a young
person left their parents home married by 25, bought a house and started a family. But the
story today is very different . The number of young people living with their parents has
been on the rise since the turn of the century. In fact the number of 20 to 34 year olds living
at home has grown by nearly 50 percent since 2002. The housing system in London really is a pretty
disastrous system for most people and certainly at least half the population, they are
paying through the nose. I don't think it's like realistic to think about how I could save to buy a home unless I change jobs and like you know climb that ladder. So why is it so hard to get
on the London property ladder? Home ownership hasn't always
been a national obsession. A century ago three quarters of the UK rented the place they lived.
Now only about a third of the country's households are renting. But those that are have a serious
disadvantage if they ever hope to own. To understand how we got here, let's rewind
back to a pivotal part of the country's history: the second world war. The country which was heavily bombed during the conflict began a period of rebuilding and repairing between 1945 and 1951. The government launched an ambitious building
program of homes to rent at controlled prices. Prime Minister Clement Attlee's government built
more than one million houses during this period By the 1970s, one out of every four
London households was living in an affordable social rented
accommodation, also known as a council house. But 1979 changed everything. To all the British people, how so ever they voted,
may i say this now that the election is over may we get together and strive to serve and
strengthen the country of which we are so proud. Margaret Thatcher was elected prime minister less
than a year later she introduced an act allowing tenants in social housing to buy their homes from the government, moving these houses from the public to the private sector. She also eliminated the rental cap,
which meant prices were vulnerable to the whims of the market. Her policies initially increased
home ownership among the working class in London. But eventually lower and middle
income workers began to see the drawbacks of being thrust
into the competitive private housing market. It became much worse for tenants
but much more attractive for landlords and that sector began to grow
and it grew from the mid-1980s right through till now. Rents which take up 30 or 40 or 50%
of their salary so they're not in a position to save the money you need to
break into the ownership system. So we have if you like disgruntled people, but particularly young adults who are really not being served by this system at all. This graph shows the relationship between private
rentals and home ownership in London. When Thatcher took office private rentals were declining
steadily while home ownership with a mortgage was on the rise. By the end of her time in 1990,
this changed dramatically. Private rentals rose while those
owning homes with a mortgage dwindled. More than 30 years later for the first time in decades,
there were more London households privately renting than owning
a home with a mortgage. Thatcher also weakened trade unions a platform
workers used to demand better work conditions and pay. All she's on she is on about are these high tech...
you know going to college and all this I'm thick, I'm not a college man. I'm a labourer and
all I want is a labourer's job. She took them all away! She felt these unions were too powerful and made
British companies less competitive on the global stage. Her plan worked. Well, somewhat. British firms did become more competitive but salary growth across the country declined from about 17% in 1979 to just over 10 in 1990 and it has continued to decline today. In London, the average house price in the 1980s was
something like three or four times the average salary, but now in London, it's something like
13 times the average salary. Jonathan Oomen is a 30-year-old Londoner
who has felt the sting of high rents and low salaries Buying a home seems
very far out of his reach. If I'm attempting to save it's like straight away as soon as the paycheck comes in it's going into savings by the end of the month You're thinking right okay, I've gotta need to like take another 50 quid back out or another 100 quid out just to get through, so it's kind of demoralizing I suppose, but
if I wasn't to leave London I don't imagine that I would even consider the idea of at this stage
of my life of like thinking to like save for that The financial crisis in 2007 and the bursting of the US bubble
marked another turning point in London's property market. The housing borrowing and
lending system collapsed because low quality debts had been bundled and sold as securities on the global markets by banks as though it was reliable but it wasn't. The crisis triggered in North
America was so bad in the UK, that the country's finance minister at the time
said there was a danger of a breakdown in law and order, hours after the government bailed
out one of its troubled banks. The British government devised a rescue plan that involved buying some of this bad debt in exchange for stakes in these banks. By 2011, London had bounced back faster than many
other cities in the country and around the world. Many of us in London had expected at the time of
the financial crisis that the economy of London would really suffer because it was so dependent on
this financial sector and the financial sector had really behaved so badly we thought a lot of it
will shrink here but because of the generosity and scale of this government rescue of the
banking system actually London did very well. The rebound cemented the capital as a stable
market for investments and attracted several real estate buyers. These investors bought up several homes in the city either for rental income or for its resale value as house prices appreciated. Another thing attracting investors?
Paying less on property taxes. In New York for example, if you own a luxurious
apartment in an expensive district in Manhattan, you could be paying thousands and
thousands of dollars a year in property tax, quite a significant percentage
of its value - which is not the case here. The most you can have to pay in London in annual property tax
is in the range of two or three thousand pounds a year. Some of the most attractive areas to these
investors are the boroughs of Westminster, and Kensington and Chelsea in West London, where
rows of investment houses lie vacant. It's not very transparent but it's pretty clear that investing
in London housing has been very attractive to investors. The government has tried to make housing
more accessible to lower and middle-income earners. In 2016 for example, the government rolled out an additional three percent tax for homeowners with more than one property. This was on top of the
existing stamp duty land tax. The idea here was to make the property market
more accessible for individuals and families rather than investors. Perhaps the government's most
successful policy has been the help to buy scheme set up in 2013. This scheme allows first-time
buyers of newly built homes in London to borrow up to 40 percent of the purchase price in the form
of an equity loan, if they can pay a 5% deposit. Traditional mortgages usually require at least 10%. So for example, if a buyer
wanted a flat in London that cost £500 000, she would have to pay
a £25,000 deposit. Under the scheme, the government could loan
this buyer up to£200, 000, interest free for five years. The rest £275,000 would have to be
borrowed from elsewhere like a bank. The scheme has been popular. About 330, 000 households have bought
homes through the scheme since 2013. But some experts including Professor Edwards
have observed drawbacks to the scheme as well. There were some pluses for the
people it was aimed at but because it was operating across the country and across
the markets it also seems to have pushed prices up For young people like Jonathan, the hardest part
of buying a home is saving the initial deposit, a problem the Help to Buy
scheme doesn't completely solve. His solution to becoming financially secure? Leave London. I'd consider leaving London and moving to
another city, where I could earn a bit more money where things are still
cheaper so rent could be cheaper or I have friends there that I can stay with perhaps
for a short amount of time just to get me back on my feet.
