To wonder how people are going to actually buy houses?

(391 Posts)
slatternlymother Tue 29-Jan-13 09:08:56

There's going to be a whole generation that can't, isn't there?

What about those people who rented due to circumstances/not knowing if they wanted to live there long term/work commitments etc, and then hit the wrong end of the financial crisis?

We rent, and have (luckily) really well paid jobs for our age. We are 25, and between running a car, putting DS through nursery, and just living, I doubt we'll have enough of a deposit to buy anything reasonable before we're 30. 28/29 at an absolute push. And that will be pressuring us to make a choice on where we're going to be living, but we won't be able to leave it much later because otherwise we'll be tied up in a mortgage forever.

But we are so, so lucky. Actually, it was blind luck that got us here.

And if we're struggling, how the hell is everyone else coping? Tbh, I'd happily rent all my life, but I worry about retirement age and no longer being able to pull in a decent wage.

AIBU to think that long term, more and more elderly people will have been in rented accommodation their whole lives, so when they do retire; they're going to have to fall back on the state, aren't they? To put them up in council accommodation?

Isn't this just a massive time bomb for the future?

Sorry for rambling thoughts, I just have been thinking about this quite a lot recently blush

It is going to be a mess. We are trying to buy a house, we have a 20% deposit, we are both employed but we run the business we are employed in. The lenders we have approached have all seen our company accounts which show a few years of increasing profits. We both have very good credit. We are having terrible trouble finding someone who will give us a mortgage, the choices are basically to either give up our company and work for someone else (they hate that we run it ourselves!) or give up on owning a home.

As for retirement I have a feeling that in a few decades there will be a lot of people working until they drop just to pay rent - back to the good old days eh?!

CailinDana Tue 29-Jan-13 09:21:41

The desire to own property tends to be a cultural thing - in other European countries it's perfectly normal to rent for your whole life, and rental regulations are excellent so it doesn't really make sense to take on the burden of actually owning a place and having to maintain it. Not owning property isn't the end of the world. Planning for retirement is important though, regardless of whether you own property or not.

What puts people off renting in the UK and Ireland is the fact that you can legitimately be treated like shit and it makes your situation very insecure. The government definitely needs to introduce tighter legislation to give tenants far more rights and to stop landlords screwing them over.

We bought our first house two years ago (when I was 28). We managed it by saving, getting money from DH's parents (which is very lucky for us, and not something everyone has to fall back on I realise) and being fortunate to live in a relatively cheap city, property-wise. We also chose a cheap area on top of that so our mortgage is small. Had we stayed in the south east it would have been a different story.

slatternlymother Tue 29-Jan-13 09:22:21

5dcs I agree with you.

Surely the banks will have to relax sooner or later, or prices will have to drop again or something. Because it can't go on like this.

You can't have an entire generation of people who will have to be housed by the council; it's a time bomb, surely?

slatternlymother Tue 29-Jan-13 09:23:37

cailin do people just put away more for retirement to pay their rent, or do they work for longer? That's what I don't really understand about the European situation.

CailinDana Tue 29-Jan-13 09:23:55

Slatternly - it's not possible to have an entire generation housed by the council, that's not how markets work. If there is no one buying then prices will naturally drop to a level where people can start buying again.

CailinDana Tue 29-Jan-13 09:24:33

I'm not sure slatternly. I would imagine they pay rent from pensions?

survivingwinter Tue 29-Jan-13 09:28:44

We could only buy our house because my dad gave us a huge deposit to add to our savings so we could get a mortgage. He was worried because we were about to be kicked out of our rental so the landlord could sell up. We had 2 kids at the local school so it was awful.

Renting in this country sucks - longer term tenancies for families should be available as its just not fair that a landlord can play God with your lives when you have paid your rent on time and been good tenants.

I just don't think about the longer term.. no pension and no hope of one either...

Crawling Tue 29-Jan-13 09:29:13

We bought a 3 bedroom house 5 years ago when I was 20 and dp was 24. Dp doesnt earn ridiculous amounts of money he has a good wage but its less than 30 and I dont work so it can be done.

We lived in a dive with cheap rent though so we could save up.

slatternlymother Tue 29-Jan-13 09:30:37

cailin I see what you mean, but surely by the time house prices have fallen low enough to be within reach, or deposits aren't so sky high; it's going to be too late for a lot of people. Lending gets harder as you get older.

Like I say, I would happily rent all my life because I honestly don't know where we'll settle. But I'm constantly checked on that idea, because people say it's throwing money away, and how will you pay when you get older?

RedToothBrush Tue 29-Jan-13 09:33:20

Most people now don't buy until they are over thirty, nor do they have children. Which is perhaps why you are finding it more difficult. It has been the case for a number of years. I honestly don't think its anymore of an issue than it was 10 years ago though.

Yes, its not as easy to get a mortgage especially as there aren't 100% mortgages out there anymore. But there are deals for first time buyers that are 5-10% deposit out there and more are creeping back into the market. The gap between wages and house prices has eased a bit in many places too, which will help some people (though admittedly this isn't the case everywhere). The number of first time buyers has dropped in the last 5 years but so has the number of people moving full stop as they've changed the way mortgages are sold. It should start to change in the next 18months or so, with a bit of luck (and as people have had time to save to reflect this).

TBH I think changes to the mortgage market will focus people more on saving a deposit at an earlier age and making sure they have a better credit rating as they didn't tend to before. Which is a good thing.

When I bought a number of years ago, I remember having the same debate about it being more difficult now but I think I've come to the conclusion that its always been difficult and if you want a house of your own you have to be patient and sacrifice/compromise on something. There were different problems in every decade of the last 30 or 40 years that we don't really consider (scary interest rates in the early 90s for example). I don't think we are used to doing that in our lives as we tend to get everything instantly and on demand. Hence why its even more frustrating and we get all despairing over it.

thekidsrule Tue 29-Jan-13 09:49:23

agree op

it will be the ones were the parents/relatives stump up (lucky them)

probably the baby boomers or BTL lanlords/ladys that inflated prices in the first place (well they contributed imho) will be the ones handing there kids a foot up so to speak

for the working poor they dont stand a chance

the gap will get bigger and bigger between have and have nots

nothing fair or equal about this,depressing times ahead for the normal person as always

cantspel Tue 29-Jan-13 09:58:44

Maybe people will just have to reassess what they can have.

As it stands we have been sold the lie that we can have it all. Children when we want to have them and a 3 bed house in a good area with nice new furniture in every room along with a hoilday every year, all the latest gadgets, phone contracts of £35pm sky tv at £80pm, a couple of bottles of wine a week and a meal out at least once a month.

It will be a matter of choosing what is most important to you. If you want a child in your early 20,s then maybe you cant have the house. If you want "stuff" then maybe you cant have the house.
If you dont have a child, save instead of spend then maybe you can.

wannabedreams Tue 29-Jan-13 10:01:26

OP I have said this a lot lately, round here it's 80% rented with most families struggling on a day to day basis, let alone saving for retirement people can't afford to save for next Christmas.
Scary times.....

FayeKorgasm Tue 29-Jan-13 10:07:52

It don't know how FTB's will manage.

I live in one of the most expensive areas and buying a small one bedroom flat can cost £200k. My son graduated in the summer with an economics degree and has just started his first job (phew!), however, it is going to be years before he can earn enough to get a deposit saved - he lives with us so he doesn't have rent to worry about. DH and I are going to help him with a deposit, but he has to be earning enough to run a home, not just service a mortgage. That could be a long long time!

If I had more than one DC it would be very hard to help them all.

It really is a horrific situation for a generation.

survivingwinter Tue 29-Jan-13 12:59:11

It is more difficult for this generation than it was for the boomers to buy houses - a radio 4 prog recently looked at the multiples required and the lack of disposable income to save for a deposit due to spiralling living costs now.

I often think people in their 50s and 60s blame the young for not being able to save but that's just not the case - it is simply impossible in some areas to afford a family sized property.

I think this issue will be huge in a few decades time but there is real lack of political will to deal with it (they all have their rental portfolios to think about after all hmm)

letsgomaths Tue 29-Jan-13 13:04:20

^ Exactly. Many politicians are so wealthy they don't live on the same planet as the rest of us, with DC one of the worst offenders.

Hammy02 Tue 29-Jan-13 13:10:31

YANBU. House prices where I live are around £300,000 for an average 3 bedroom house. You'd need to earn around £90k to afford to buy one and have a decent deposit. So average earners are priced out of the market.

amillionyears Tue 29-Jan-13 13:12:00

But votes will come into play at some point.
The problem is going to get worse and worse, so at some point, with thousands if not millions of votes at stake, the political parties of the day will really start to see what they can offer potential voters.

ethelb Tue 29-Jan-13 13:18:02

I wonder how I am going to continue to pay my rent tbh.

Estate agents round here recommend landlords put up prices by RPI every year (I have heard) and most people I know in London are at breaking point with their rent, including middle class professionals.

SomeBear Tue 29-Jan-13 13:24:00

I'm in my mid-thirties and I still rent. I hate it - the lack of permanence, the 3 monthly tenant inspections (which remind me of my mum checking my bedroom was tidy enough to be allowed out to play), the relentless grind of just earning enough to cover the rent, bills and essentials without any fripperies - we don't smoke, a bottle of beer is a treat at the weekend, shop at Aldi, car is 12 years old - yet we both work full-time. There just isn't the space in our budget for any sort of savings sufficient to cover a deposit on a house big enough for the 5 of us. With hindsight, I would have waited to have children.

It definitely feels like there is a widening gap between those who own and those who rent. My parents own their house outright and cannot understand why we "throw money away" on rent yet have never offered any sort of loan towards a deposit. I can't think of any of my friends who haven't had some help with getting a foot on the housing ladder.

It would be nice to see some more government help along the line of shared ownership and more social housing (and therefore more secure tenancies, which would might residents being more willing to invest in their local areas) but I doubt this will happen. Any changes had better happen soon or I will be too old to appreciate them!

SomeBear Tue 29-Jan-13 13:33:30

Meant to answer the OP's question about older people still in rented housing. My inlaws have rented all their lives as farmers. Now they are retired and rely on housing benefit to cover most of the rent as the state pension doesn't come close to covering the cost. Luckily they were working when they took the tenancy on, but we are worried that if (when) their tenancy ends they will struggle to find anywhere else to live - FiL has major mobility problems and HA bungalows / ground floor flats are rarer than hen's teeth. Not many landlords will take HB tenants.

I don't think they are unique in this situation, and with the new bedroom tax and shorter term tenancies that LAs are offering (most new tenants in our area are given 7 years) I think is potential for a big housing crisis in the over 60s.

myrubberduck Tue 29-Jan-13 13:35:32

I do wish those ( I am guessing older) posters who think that the reason that people under 30 cannot afford to buy is becasue they are spending all their money on smartphones and meals out would cop themselves on. Its utter horseshit frankly. not buying smartphones and shopping in Aldi would not in any way address the way in which rocketing property prices is seeing a huge transfer of wealth between genererations. You might as well tell a streetsweeper that if he saves up hard enough and cuts back on non essentials he will be able to afford that yacht

Take a good look at your house. Can you appreciate that you children will never ever be able to afford a house like it unless there is a sharp correction in the housing market.

Easiest way to do it
1. Reverse stamp duty so seller pays
2. CGT to be paid on all house sales and
3. End tax breaks for buy to let and increase CGT on all sales of BTL properties

But of course no govt would ever to this as it would be electoral suicide.

DialsMavis Tue 29-Jan-13 13:46:16

We can't afford to buy sad. We pay £1500 PCM in rent and earn 40k. There is just nothing left to save. Today I found out about a part ownership scheme near me, you need to be earning £52k to qualify for a 40% share in a small new build 3 bed terrace. We can't get a 2 bed as the DC are 10 and 2 (boy and girl) so its not really feasible for them to share or us to share with one of them. We can't really move out of area as its the only place DP can work & he works extremely long hours at anti social times.

forevergreek Tue 29-Jan-13 13:47:09

We rent in central London . ( need to for work as long hours), our one bed flat last sold 5 years ago for £385000. There's no way we can afford that. Especially as only one bed.

We will be looking to move and commute in a few years but it will take us that long to a) save deposit, b) adapt work so we don't need to commute 5 days as a 90/120min commute will be gruelling. Currently out jobs are only availiable in major cities.

We are hoping to find a place to renovate. The key factor for us is that we spen thousands and thousands a year on rent for a tiny place, we could easily have a 50% mortgage in a few years if we didn't pay rent

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