Setting up the generations against each other

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The new report by Legal and General and CEBR (Click Here to view) has been presented as yet another example of ‘intergenerational inequality,’ with particular focus on the fact that the Bank of Mum and Dad is not only used to assist offspring with property purchases, but now also with accessing rented accommodation.

The L & G report highlights the financial assistance given to access rented housing; however, its findings are that in the case of the security deposit this is given in only 10% of cases. This is excellent news; 90% of renters are able to fund their own security deposits.

What’s more, with regard to home purchase, only a tiny percentage of parents (3%) use equity release from their homes to fund assistance and once the deposit has been funded the vast majority of new home-owners have no problem funding the repayments. Indeed the report states with regard to first time buyers:

‘Once they’ve raised the initial sum, affordability, it seems, is no longer a problem.’

Although this seems like good news to me, media coverage of it would suggest otherwise, and is typical of the current tendency to use housing research as a way of setting one generation against another. As Thomas Sowell said:

“Back in my old neighborhood, there was a special contempt for the kind of guy who was always trying to get two other guys to fight each other. Today it is considered a great contribution to society to incite consumers against producers, tenants against landlords, women against men, and the races against each other.”

It is simply not the case that older generations en masse had it ‘easier’ than younger generations, especially where their housing conditions are concerned. I just broached this subject with my 82-year old mother (who divorced and left the family home, penniless, when she was 40). She had the following to say:

“When I moved into an attic flat when I was 42, I could set a jelly in the bedroom in 20 minutes. I never used to take my coat off – which was good, because if you had a visitor and wanted to get rid of them you could say ‘I’m just on my way out.”

She often tells me of the day she walked into the loo, shut the door and was faced with a rat staring at her.

My father was a German who had to go to war aged 15 and before that often slept in a barn so that his washer-woman mother could put up paying guests in her house. His parents were then kicked out of their Sudeten homeland at the end of the war, had their house expropriated and had to live in East Germany for the remainder of their days, initially surviving on nettle soup.

On what planet were these lives and lifestyles ‘having it easy?’ (I am sure many of us have stories of our cold houses, no central heating and even outside loos)

So in the specific context of housing it is incontrovertible fact that conditions have vastly improved in the Western world in recent decades, and yet Shelter in particular continues to misrepresent private housing in the UK as though it is still Dickensian (as a private landlord, constantly being libeled in this way, I am sick and tired of it).

This talking-down of the quality of lives and the concomitant setting of people against each other is so damaging as it leads youngsters to believe that life is stacked against them and they will never be able to buy a home or even rent one if they don’t have wealthy and/or generous parents. As property expert Kate Faulkner, founder of Property Checklists has been saying for some time, the message that it is impossible to get on the property ladder is false and counter-productive. It misleads young people into thinking they will never manage it. In fact it is suggested in The Telegraph article ‘Investment plan: how to get your child on the housing ladder for £230 a month’ that people can get a foot on the property ladder for just £230 a month.

It is in fact far easier now than at points in recent decades when interest rates were astronomically high and home owners had to struggle and go without to cling to the ownership of their properties; indeed many had their homes repossessed because of this.

In addition to home ownership being so much more affordable now, it has even been reported in the Times today, that first time buyers who purchased 5 years ago have made around £55,000 already in increased equity. More good news for the younger generation!

We need to get away from constantly moaning that things aren’t fair.

As the child of an unemployed father living on benefits (he left his job as a bus conductor to look after the children when my mother left), I was never given a penny by my parents and I gained a lot more self-respect from creating my own financial success in life than I would have had I been given a leg up.  Indeed, I used to help my parents out and felt pleased to do so (even when I wasn’t earning much). Many people must do this when they have poorer parents, but this flow of money in the opposite direction receives scant attention.

Young people need to realise that the more they rely on parents, the less self-respect and self-esteem they will have. They need to learn that the way forward is through hard work and saving, through practising abstinence and through patience.

Young people whom I know often want to have it all now, however – in terms of nights out, expensive clothes, beauty treatments, cigarettes and alcohol. They often live at home in their late teens and early 20s (not everyone goes to University), and use all their wages on the above mentioned pastimes and treats, don’t pay anything towards their board and lodge and don’t save at all. I know one 18-year old who lives at home, has a take-home pay of £200 a week and has spent it all within 24 hours each week on simple hedonism (including paying his debts from the week before because he couldn’t wait until he had earned the money before spending it).

Many younger people want it all now and do not have the willingness, desire or patience to save.

In a nutshell, working hard, saving and being self-sufficient should be promoted to the younger generation. The satisfaction of achieving your own success is priceless.

The ‘Bank of Mum and Dad’ needs to lay off  and allow their children to stand on their own two feet.

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