The UK government is considering a new program that will allow renters to buy home they have been living in for more than 3 years with the landlords of such property not having to pay property tax. Could this be the solution to the housing crisis in the UK, that has seen a whole generation not been able to own their home also known as generation renter. This could mean a win win for all parties including landlords, tenants and the government as a whole, we look at the benefits and challenges with such a program.
Owning a property has several benefits including having a mortgage free home in the future and total control on what you can do in the property. However, the challenges include higher down payments deposit required by banks. Also there is the challenge that you might be affected by interest rates and perhaps even lose your property if you are unable to maintain payments. On the other hand, renting provides benefits such a lower initial payment, you don’t lose money when property prices go down and landlords are required to do any repairs. The main disadvantage include the fact that all payments go to the landlord and not to your mortgage or saving, landlord could increase rent and deposit paid could be kept by landlord i.e. some or all.
With the number of rough sleeper in the UK steadyly increasing, this new prospective program is seen as a step in the right direction, as it provides the opportunity of allowing the generation renter to get on the property ladder. Usually renters tend to stay 1 to 3 years in a property without any of their rent payments going towards to a mortgage or owning their own home, this in turn leads to the renter finding it harder to saving enough to get on the property ladder. Whether this is enough to solve the housing crisis or just a part of the solution remains to the be proven. The opposition party has said that the program is just a start and does do enough, especially to protect renters from increase rent prices.