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

DialsMavis Tue 29-Jan-13 13:47:34

Our £1500 rent us for a small, cold house with ancient windows, boiler, kitchen and bathroom, we have already down sized as much as we can to try and save.

Onlyaphase Tue 29-Jan-13 13:48:53

There are some really thought-provoking posts on this thread and it has made me think.

I wonder how DD is ever going to buy somewhere to live without help, especially if she goes to university.

The burden of paying for higher education will only increase, tuition fees and living costs won't get smaller in 15 years time. So her 20's will be spent repaying student loans and renting somewhere. Unless she has a fantastic job, I can't see her repaying loans and saving for a deposit before she is 30, but then my advice (based on bitter experience) is to have children sooner rather than later...so then childcare costs kick in as well as everything else.

I hope we will be in a position to pay for at least some of these costs for her, and maybe help with a deposit as well, but what if we had 3 or 4 children? What are we supposed to do then, pick our favourite?

Bramshott Tue 29-Jan-13 13:51:35

Wow - I like your reversing stamp duty idea rubberduck - that would help first time buyers, but most other people would notice no difference (as they'd be paying it anyway).

StanleyLambchop Tue 29-Jan-13 14:06:59

What I can't understand is why they are building so many new houses, when mortgages are so difficult to get who is buying them? Apparently we have a shortage of supply which pushes the prices up, but then the developers build more houses and price them at such high levels that the people who need housing cannot afford them. So they are snapped up by the landlords who then charge massive amounts in rent to cover the massive price they had to pay. Its just a vicious circle!!!

These new homes need to be sold at affordable prices, but then I suppose the developers would not build them in the first place if there was not massive profit involved. I agree, its a total mess. I worry that my dc's will never be able to afford a house will never move out

BornInACrossFireHurricane Tue 29-Jan-13 14:14:27

I hate renting. Yes, I enjoy not having to pay out for a new boiler or to fix the electrics but I loathe the insecurity, especially with children.

We won't be able to buy for a very long time unfortunately.

hanahsaunt Tue 29-Jan-13 14:17:34

We've just bought having had to relocate for work and renting for just over a year. Renting was fine up to a point but I did really resent the three monthly inspections - felt a bit like being a student than a sensible family with 4 dc. We are stretched with what we have bought and despite dh being in what should be a fairly secure professional area and a 25% deposit, we struggled to get a mortgage and thought that if we were struggling what chance would our dc have and so did buy a house that has the capacity to have them stay with us in the long medium term i.e. beyond university years.

hazleweatherfieldgirldetective Tue 29-Jan-13 14:19:51

DH and I are lucky. We live in the north east where housing costs aren't ridiculous, and were able to buy ex-council in an area that might as well be private as everyone has bought their homes.

No way could we have afforded the same size house with the ridiculously large garden that we have now if we'd had to buy in a more affluent area of the country, or if we'd bought on a private housing estate.

The government is creating a time bomb for about 50 years time, but they won't see it. Those of us in our 20s are going to be receiving housing benefit/state pensions/unable to fund our own care without a shadow of a doubt.

I'm 23 and dp is 24. We are renting a room in somebody elses home, I have no clout how we are going to afford to rent or own place even when dp finishes uni in a few years, let alone save the deposit to get our own home. I'm dreading it tbh. We live in the south east which makes things a bit more expensive :/

I'm hoping beyond everything that my parents will be able to loan us some money towards a deposit as we're looking at twenty k minimum for that, which just isn't going to happen as I can't work full time and dp is trying to get a future by studying so has barely any income.

noddyholder Tue 29-Jan-13 14:34:51

I have just been 'studying' this as am hoping to volunteer for a homeless charity and it does require some 'knowledge' of the ins and outs of the financials of renting esp relating to 16-29 year olds. I have also been looking at minimum wage jobs locally/p time or full time and also tax credits and utilities etc. I haven't even scratched the surface of some of the info and I really don't see how young people are ever going to have a decent home unless things really change radically. I calculated a basic room and added council tax utilities at the lowest possible rate,mobile but no landline,travel,food etc and the minimum was £800 a month.

ethelb Tue 29-Jan-13 14:43:21

@noddy another big problem for people on low incomes is that the deposits needed to rent are high, often 1.5 months rent upfront, and fees that run to a couple of hundred on top of that. If you need to move frequently those costs add up fast (or any savings, even if people have them, get depleted fast, making you more vulnerable).

noddyholder Tue 29-Jan-13 14:50:54

Yes I know. I have spoken to a few letting agents and they are sooooo picky. The deposits etc are huge and some of them require your annual salary to be 3x the annual rent which for many is unrealistic. And even if you do manage to scrape them together once renting at the current levels you save nothing and indeed many people are living on overdrafts within 9-10 months of signing a tenancy agreement.

runningoutoftime Tue 29-Jan-13 14:52:32

We have just bought our first home and DH is 34, I'm 32. We've had no parental help but we're very lucky that DH got a well-paid job a few years out of university. His salary is well above average now, and we were able to put down a 40% deposit, but it still required compromises. We rented just a furnished room in a shared house until we bought this place rather than rent our own flat, and it's just a two-bed flat without any outside space (albeit in an expensive part of the country).

We don't have a car, and if we do have children, it will be just the one. DH has saved most of his salary since he first began working and he's never spent much on consumer goods, clothes etc. Many of his colleagues on similar salaries are still renting in shared flats, it's not uncommon at all for young professionals to do this in London.

I have a much lower salary than DH and come from a working class background - if we'd both been on this wage we wouldn't have been able to consider buying. Amongst my friends from a similar background, a few have bought but all with help from family, a higher earning partner, buying their council flat at a discount, or have moved further out to a cheaper location.

SomeBear Tue 29-Jan-13 14:58:32

That's a good point about financing care later in life, hazleweatherfieldgirldetective. If you have no large asset to sell or re-finance, what will happen to those who can no longer live in their privately rented housing independently? Rented houses cannot be adapted so easily - not many landlords will willing allow a stairlift / downstairs bathroom / wheelchair accessible doorways to be added to their properties? Care homes and sheltered accommodation are astronomically expensive and the population is getting increasingly aged.

RedToothBrush Tue 29-Jan-13 15:43:34

As it goes I'm not really much older. I'm in my 30s. We compromised and bought shared ownership after living at home (with DH) until I was in my late twenties and we moved on from there. Not the easiest or fun thing to do for several years by any stretch of the imagination.

We'd managed to save 10% deposit rather than get a 100% mortgage at the time which we could have done, as we felt it foolish have a 100% mortgage at the time as we did feel the market was likely to crash. And we took out a 35 year rather than a 25 year mortgage so it allowed us to be flexible in either sticking to the minimum payments if we were struggling financially or overpaying to build up more equity (which is what we were able to do in the end). We both had well below average incomes at the time and needed to buy in an area which isn't the cheapest due to where we both worked because we both commuted some distance in different directions.

It felt like the least risky option. We bought at the very height of the market in 2007 and our fears did prove to be correct, but the truth is you can't live your life on 'what ifs', you just have to get on with it. Hindsight is a wonderful thing.

I thought at the time and I still think, that if you are buying a house a deposit of at least 10 - 15% is very, very wise just to protect yourself but I don't think people necessarily understand why I feel like that or why having a little bit of money in the property to start with is to your advantage (Compound interest on 10k over 25 years for starters). We have friends and family who bought at the same time and didn't do this, and have had problems as a direct result.

Being risk adverse we figured we'd either have that option of buying the second half of the house at a lower price or if the value of the house went up, we'd have more equity to put into another full ownership house if we moved. We'd also have the chance to extend our investment without all the costs of moving if thats what we wanted. In the end it went down in value, but we only lost half what we would have done if we'd have owned the full property

The irony for us, is that even though we thought we were being smart, had we waited we would be much better off now (to the tune at the very least £10k even if we'd rented over that period) and it would have been just as easy, if not easier, for us to get a mortgage for the same amount as our house is now worth. Again the benefit of hindsight is a wonderful thing.

As it was we found when we were trying to buy the second half of our house, we weren't eligible for a lot of mortgages as 'second time buyers' even though it was still our technically our first house! And even fewer mortgages as there were weird restrictions as we were buying out a shared ownership property. We found we had to put down a bigger deposit than if we were first time buyers. We spoke to several banks about getting the mortgage and they did find our situation extraordinary and very surprising. It wasn't something they had experience with at all and we got turned down flat by a few who actively said, they would have taken us without hesitation if we had been first time buyers given our financial situation. All very frustrating. We had great fun sorting it all out.

I do think at the moment the situation is that if you bought in the last 10 years its actually more difficult to get a mortgage than if you are a first time buyer as there is a strong chance you will be in negative equity or lost a lot of any deposit you did put down and therefore even more stuck than first time buyers. So being on the property ladder isn't necessarily all its cracked up to be.

So this is why I do stress patience is a virtue here. It puts you in a better position in the long run; everyone thinks about it as a race to get onto the property ladder and I really don't think it is. We saved a deposit at a time when you didn't need to because we felt it gave us that security we wanted in such a big investment. I do think you have to take years to plan and do it unfortunately.

The thing is the market is highly unlikely to start accelerating upwards any time soon in most places, so its a good period to be saving for a deposit. The biggest thing is finding a way to compromise so you can do that. Whether that be to live at home or rent somewhere cheaper and not as nice as you'd live.

All that said, I will admit it is virtually impossible to buy on a single income or in the SE/London though and I don't envy anyone trying to do so.

forevergreek Tue 29-Jan-13 16:03:11

The problem is that in London/ south east everything is so expensive and ATM everyone wants 25% deposit. So on a £200000 house ( not that you can find any), you need min £50k deposit

amillionyears Tue 29-Jan-13 16:06:39

This may be a silly question, and one that I knew the answer to 3 or 4 years ago, but why are the mortgages lenders asking for a 25% deposit?
It used to be 10% didnt it, not so long ago? Or even 0%.

ethelb Tue 29-Jan-13 16:14:26

@amillion because not asking for a big deposit meant a higher risk, which is why the international markets crashed. Or something grin

Yfronts Tue 29-Jan-13 16:21:29

I first bought when in 2000 and paid a deposit of 5k. I managed to save 5k over the course of 6 months living at my parents house. I paid them 30 pounds, gave myself 30 for bus fares/basics and put everything else into a bank account each week. I was very very lucky!

I plan to allow my kids to live with us and save also. 50k deposit would be quite a few years of hard earning.

I know lots of other people don't have this option.

amillionyears Tue 29-Jan-13 16:30:30

grin

The cynical me is thinking.
The banks and other financial institutions in this country get bailed out by the Gov if they get into financial difficulties - the Gov "prints" money, by letting the banks add on a few 000's to all their balance sheets.
And for some reason, which I have yet to fathom, it doesn't seem to stoke inflation.

So..it isnt all the world if only say a 10% deposit was asked for. Yes, there may be a few more people who then had a mortgage but couldnt keep up with it. But I dont think there would be a huge number, and if there was, well the Gov is always at the ready to do a bit more printing.

amillionyears Tue 29-Jan-13 16:32:33

Forgot to add the cynical part.
At the moment, only the quite well off of the young can get the 25% deposit.
Is there a political reason for that?

TheFallenNinja Tue 29-Jan-13 16:32:36

Renting in the UK is shit, you get treated like a pauper when you go to an agent and landlords take the "lord" part all too literally.

You get nothing for your money and repairs take an age. It's a ball ache having to ask for something as simple as a satellite dish to be fitted without some debate or piss arsing around waiting for a decision and don't get me started on if you have pets.

It's wank over here. Massive deposits ridiculous checks including bank statements from forever ago.

ComposHat Tue 29-Jan-13 16:41:01

*This may be a silly question, and one that I knew the answer to 3 or 4 years ago, but why are the mortgages lenders asking for a 25% deposit?
It used to be 10% didnt it, not so long ago? Or even 0%*

Because everyone, Banks included, were seduced by the myth that property prices would keep on going up and up and up. So there was no need to ask for a large deposit, as in the worst case scenario they could repossess the house and they could sell it for more than the debt they were owed. Of course they were fuelling this boom with wreckless lending to anyone who asked for a mortgage. They were even offering 125% mortgages at one stage.

Except of course it was a fools paradise and property prices outside the South East have been in a slow decline for about half a decade, the banks are shit scared that if the owner can't keep up payments they could end up repossessing a house that is less than the value of the mortgage. So they insist on a hefty deposit to ensure that they aren't left in the shit.

chickensarmpit Tue 29-Jan-13 16:44:59

The amount of houses that are snapped by btl owners in area is pathetic. As soon as a house pops up for sale it's gone. Young families aren't getting a look in and that's not fair. Many houses in my friends street are owned by the same man from London. He buys them, gives them a lick of paint then rents them out at stupid prices. Why? It's just pure greed. I live in a small village and my generation have bean out priced by these btl who are just after a quick buck. Something needs to be done about this now. A home is to nest, not to invest!

amillionyears Tue 29-Jan-13 16:45:56

Thanks for that Compos.
So really, large deposits are here to say for the forseeable?
Beacuse, personally, I cant see house prices generally on the rise for another 5 years.

chickensarmpit Tue 29-Jan-13 16:47:55

Don't get me started on homes under the hammer on bbc1. That program angers me.

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