‘Rent controls not best way forward for young people to access housing’
The International Union of Property Owners (UIPI), which represents more than five million property owners around Europe, says that there enormous challenges for young people accessing housing and rent controls are not necessarily the best way forward.
At its Annual Congress, UIPI committed to continuing to discuss solutions on how to improve young generations’ participation in the housing market, by fostering home ownership and promoting access to affordable housing.
“Young generations’ access to the housing market is a major issue of the running decade and it needs to be tackled. UIPI has a clear role to play in this debate and we have to promote solutions that stimulate the inclusion of young Europeans in the European housing market,” said UIPI president Stratos Paradias.
He pointed out in Property Wire that the new generation faces higher unemployment ,which is reaching some worrying rates in a number of European Union countries, and many have low and unstable incomes. ‘This is the harsh reality owed to the financial crisis making difficult for them to access home ownership market through mortgage loans despite current low interest rates,’ he explained.
“Even our own children, who should inherit our own home and properties, are reluctant to do so, because they might be unable to cope with the payment of the transfer and inheritance taxes, not to mention the annual property taxation imposed in more and more countries, at ever increasing and alarming levels,” he pointed out.
“This situation forces an increased number of young Europeans to live with their parents, or to be financially dependent on them, postponing their family plans. It also puts additional pressures on the residential rental market,” he added.
He also explained that the burden on both the private and social housing sectors is amplified by population migration, notably of young EU citizens leaving their country of origin in search of suitable jobs, in already densified areas of the European centres of economic activities.
“Low incomes, tightened lending and demand pressure on rental housing is a combination that generates political demands for stricter rent regulation, rent control or further investment in public housing and/or housing allowances. Rather than imposing rent control and high taxation, we believe that we have to correct the damages of the crisis in a way that does not endanger financial as well as macroeconomic stability,”Paradias concluded.
Director of operations at the UK’s National Landlords Association (NLA) and executive director at the Association of Letting Agents (ALA), Richard Price explained that younger generations are finding it much harder to enter the housing market across Europe.
“Increasing the supply of affordable housing is the most likely factor to improve the situation in the UK, but this needs to go hand in hand with a stable economy and confidence in employment prospects,”he said.
The meeting also heard that low interest rates and solid banks is obviously not enough to help the young. Additional property taxes, reduction of tax advantages for home owners and reduced access to mortgage financing is regarded by many as a way to meet these challenges.
However, young people with low and unstable incomes have a limited ability to get a mortgage. They have to find a rented home until they can get a permanent job with a good fixed income. This increases demand for rented housing with price pressure on rented housing as a result.
Reduced tax revenues will force many states to consider more property tax. At the same time landlords face a steadily increasing number of regulatory requirement for energy efficiency, smart meters, accessibility and so on that weaken the profitability in the rental sector. This distorts the whole market.
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