I was watching Grand Designs last night. Before the start of the project the featured couple owned two properties, and they mortgaged themselves up the ass to build a huge glass-walled mansion. The man suffered a heart attack, the housing market went south, and their dream of living mortgage free crashed on the rocks. The show left them in an unfinished house, sallow complexion, looking like they wanted to kill themselves, or each other. This should have been hilarious, a ‘morality tale’, as Kevin McCloud put it, in which the greedy got their comeuppance, but I just felt sorry for them. They seemed so desperate.

Which brings be to an old hobby horse of mine. Why is everybody so desperate to get on the property ladder? Why is long-term renting not an option in the UK and Ireland? My two cents: It’s not just culture. Of course, if you offered the average Briton if they’d like to outright own a detached house with garden, maybe with a few trees and a stream, well connected but not too close to the road, and within walking distance of shops and a pub, they’d gladly take it. But that’s not the reason so few would ever consider raising a family in a rented apartment.

The reason Brits won’t live in rented apartments and Germans will is simple: Tenancy in Britain (and Ireland) is highly insecure by comparison with our continental friends. Two illustrations. In Britain contracts usually run for 6 or 12 months, and can then roll over indefinitely, with two months notice if the landlord wants you to leave for any reason. If you live somewhere three years, say, always pay rent on time, and are in all respects model tenants, you can still be turfed out on two months notice. After four years (I think) you acquire a right to a more secure tenancy, but that’s not good enough.

The second point is the kicker: Landlords can (beyond the initial contract period) pretty much change the rent to whatever they want. The idea is that they can rightfully raise your rent to reflect the prevailing market value. But strictly speaking there is no market value unless it’s on the market (indeed, until someone’s agreed a price for it). It had a market value when I agreed the price and moved in but now its market value is notional, derived from rental contracts currently being agreed for similar properties.

This is the thing: The market value to which your landlord can lawfully raise your rent is simply the rent he or she believes the property could be rented for if you left and the property was re-rented on the open market. So the rent raise is based on an implicit threat of eviction. The landlord effectively says: this is the price I believe I will get if you leave, so if you want to stay, you need to make it worth my while by making up the difference out of your own pocket. It’s fairly obvious that this is blackmail. It’s illegal in Germany, but it’s not even regarded with a raised eyebrow in the UK.

The upshot is that in Germany you can decide to have children while living in rented property safe in the knowledge that you can’t be removed (more or less) as long as you pay your rent, and your rent can’t rise above a certain (low) amount per square meter of the property per year. In Britain, renters are vulnerable, two months from contract termination, subject to above inflation rent rises, and essentially dependent on the good will of a good landlord.

That, more than ‘culture’, explains why forty percent of Germans rent, from plumbers to professors, and only a fraction of people at the economic margins rent in Britain.

And here’s another two cents. Why  are so many people are so desperate to get on the property ladder? I’ve come up with this simple (amateurish and probably naive) theory:

Most people desire a lovely detached house with a garden, with good transport links but not too close to the road. They may be stupid to desire this, but that’s not the issue.

Most people cannot afford this dream home. Because renting in a decent neighbourhood is affordable but highly insecure, and buying restricts you to properties far away from your ideal, an enormous gap opens up between your actual situation and your ideal.

Most people never will be able to afford their dream home simply by working hard at a good job and saving a little money. Indeed, if they are renting, they will find their rent rising with the rental property market while their pay struggles to keep up with inflation. Unless they win the lottery, land a large inheritance, bag a rich spouse, or work in a big money field (finance, law), they will never be able to afford that dream home. They must somehow turn a small amount of capital into a large amount, and they can’t do it just by working harder.

They try to close the gap by speculating on the property market. Scrape together every penny you can get your hands on. Buy the best you can afford – preferably a poor house in a reasonable neighbourhood – and then add value by renovating. Then sell it and buy a better one. Do this a few times in a dizzily rising market, and you can find yourself in a four bed Victorian townhouse five minutes walk from a decent school. The only downside is that this process needs you to take out a succession of huge mortgages – you’re using your initial capital to leverage funds to speculate on the property market.

So that’s my back of a fag-packet explanation of Britain’s property madness. The property ladder is basically a middle-class lotto scratch card. People cannot conceive of getting what they desire by means of simply earning and saving (and they’re probably right), so they gamble. It’s not just greed – it’s desperation.