To wonder how the next generation will afford a house?

[Housepricewoes]

DH and I want to move to what will hopefully be our family home, in 2 years. Work commitments means we can't do it sooner but I'm stressing about how much house prices might rise in that time.

That got me thinking about how today's children will ever be able to buy a home.

I know it's a very British thing to aspire to home ownership but rightly or wrongly it is the norm.

Many of my friends and extended family have only been able to get on the property ladder with a significant hand out from the bank of mum and dad, but unless their circumstances drastically change, they are not going to be in a position to do the same for their children.

What do you think will happen about houses with the next generation?

Where the fuck do you think a young person will find the 20 or 25% deposit to buy a BTL?

Not only that, no bank would give a BTL mortgage to someone who didn't already own property and who was sleeping on a friend's floor.

Natashabee asked upthread why people turned their nose up at shared ownership. I don't think it's snobbery, I think it's actually very risky. You own a small percentage of the property but have 100% responsibility for repairs, pay a mortgage on the bit you own and rent on the bit still held by the housing association. If you only own 25% you'll be paying a big rent. It can end up cripplingly expensive - all the burdens of home owning with the insecurity of renting.

I live in an area of London where 3 bed ex-LA flats would have set you back around £70k around 1999. The same old Council flats are now being marketed for £550,000. They are only going to BTL investors.

Iseen, that was my question. With help to buy in place to persuade banks to lend higher amounts, which are unaffordable if interest rates rise (obviously, otherwise the government wouldn't need to use their powers of persuasion in the first place) will this sticking plaster policy fail anyway? Will house prices drop as even help to buy doesn't make mortgages accessible to the majority it was intended for?

Shared ownership is terrible if you get stuck I. Negative equity as has happened to several people I know, and the HA often refuses permission to let the flats out if you need to relocate, you either do it on the quiet and risk breaching your tenancy or sell at a loss.
I wouldn't be averse to shared ownership but there is nothing to be had in my area.

Any couple earning the London average (£35k) can't do shared ownership. The max income is £60k, but it's not as if you can get much or anything for that on the open market. And that's for homes valued at £350k.

2 bed new builds eligible for help to buy are £350-450k so for the tiny 5% deposit and stamp duty, fees etc you're still looking at £30-40k or more.

I once saw some 'affordable' flats going for £280k ish and did the maths. Max come was £60k, if you can say you can get approx £180k mortgage for that you'd need another £100k upfront. Affordable my arse.

They have some shared ownership round here where max income is £80k and homes valued at £550k. Wouldn't qualify without kids though.

Sorry should have specified my figures are all based on London prices, zone 3-4, suburban type places.

"Not only that, no bank would give a BTL mortgage to someone who didn't already own property and who was sleeping on a friend's floor."
That's not so. My daughter owned no other property and was months into her first job. They need you to have a certain income from your salary, they add on the projected letting income and let you borrow on that basis. However you do need 25% of the purchase price which is why it's not been my first suggestion on this thread.

I am not saying everyone can buy but it is possible for a couple on full time earnings in many parts of the country including our Luton couple who work in London and buy their £100k flat for example.

Why are people cross when I just set out that plenty of people can buy if they are prepared to slum it or have an hour's commute like many of those of us who have succeeded had or have? If you don't want to buy don't but don't assume it's impossible if you make sacrifices.

Is part of the problem that people think they can just go out and buy their forever home which looks like something out of a magazine rather than starting really grotty and making sacrifices to get ahead? It's that deferred gratification issue again, I suspect.

The average London salary is about £26k so 2x that and you can get your starter 1 bed in Luton. If you are a professional it's totally different - you can get 5x salary like my daughter and husband and you can afford an awful lot more.

maria give it up.

If your daughter had enough of a deposit to get a BTL 'months into her first job' your experiences are alien to the majority of people.

You don't have the first idea how hard it is for some people and what is worse, you don't even attempt to empathise in any way.

Young couples who already have children have had another obstacle put in their way before they can by a property with the introduction of the MMR rules.

My thread was about how their children will ever manage given it's so tough now.

It seems clear you'll never have to worry about that for your grandchildren so potter off and eat your jam now that your tomorrow has come.

I hope this luton couple aren't commuting to central London. An annual season ticket works out at £400/month each.

What the bank will lend you is one thing. What you can afford should interest rates go up is quite another.

I'm also thinking that this lovely flat in Luton might be cheap for a reason and quite difficult to sell.

Now, now, Houseprice, they will all have couches to kip on, gratis, of course, whilst they pay mortgage on this BTL one-bed they bought in commuting distance of London for £52K joint income (make that one couch and one blow up air mattress).

*nikki, that's interesting about your deposit. I'd not really thought about a situation like yours, ie getting half your deposit from each set of parents but having to pay one half back.

I can see that people already have to or are going to have to take any options offered to them but I'd never pondered how that would affect other things.

Doesn't it create a weird atmosphere with you and your parents/ DH that you are busting a gut to pay his Dad back whilst your parents won't get anything back?*

It is an odd situation. My parents would never want anything back and just think DHs dad is a tightarse for not giving us the other half!

Hey ho they never see each other anyway

Maria, people are cross because your experience is not the norm and you suggest that it is all so possible if people just applied themselves a bit more and didn't buy the latest phone. 5 times salary is NOT the norm anymore, please educate yourself about the new MMR rules. It has been repeatedly pointed out to you by various posters that your so called "jam tomorrow" plan is no longer feasible in the current environment, you are not up to date about the situation here and now in London.

I wonder if punative taxes on foreign buyers who leave properties (esp new build or prime locations) empty for years on end purely as a safe haven investment would make an impact on the London/SE property market.

Here's a suggestion for non-citizen purchases.

1/ 70% capital gains tax if the property is left empty longer than 6 months (to allow for refits & major works). This is increased to 90% if the property is sold within 5 years of purchase

2/ 50% capital gains tax if the property is let for a period of 10 months in every 12. (To allow for breaks between tenancies for redecoration and marketing).

3/ 20% capital gains tax on every unit to be paid by the developer when the sale is to a foreign buyer so they stop marketing in Hong Kong and use the estate agents on Dalston High Street.

A non-citizen in this instance is someone who is not domiciled in the UK, and has no intention of doing so. An annual holiday to shop at harvey Nicks and Harrods could easily be accommodated by a hotel stay. People who come to live and work here like many from the EU could be given property purchasing rights same as the rest of us after 3 years (to prevent speculators only really).

In other countries you can often only make these kinds of investments if you go into official partnership with a bone fide citizen of that nation. (& in my scenario it's have to be a BRIT, not a random EU member!). here in Britain London property is used as a safe haven investment by every dodgy corrupt regime official from Saudi to Cambodia! Whole blocks in places like Bayswater or new Developments can be almost completely empty most of the year, while in more modest parts of the city working people are reduced to sleeping in sheds! It's so morally wrong that it does my head in!

You and I couldn't purchase prime property in Thailand without a local connection so why should every Tom, Dick and Harry purchase here? I'd feel very differently if ordinary people who actually need/want to live and work here could afford homes, but they can't. I moved from a one bed ex-council in a crappy area when my son was 9 to another part of the country as the living room as my bedroom thing wasn't working for me any more. I left behind neighbours who are still living like that & their kids are approaching their 20's!

Between government and rich foreigner market manipulation, ordinary hardworking families are stuffed at the moment and that needs to change.

Foreign buyers are not a problem for most of the UK. Even in London they are not problem in relation to prices of ordinary family houses.
What might help house prices being so high is free interest rates to be whatever level they will naturally reach (although that means the UK Government paying massively higher interest rates on its record breaking borrowings so I can't see them stopping state interference in interest rates any time soon) and stopping the state subsidy on low wages whereby those in work are paid lower salaries than market rates because employers know those people's wages will be topped up by housing benefit and tax credits.

I seen, HB did push up rent as it paid the median value thus making it the new floor value and each year this increased the prices. Thankfully the amount paid has been reformed but we are still left with high rents due to supply demand.

They will build their own.
Or camp in their parents' back garden.

Lots of LLs do accept HB, but they rent through the council so their properties are only accessible to those people accepted homeless or in housing need, which excludes most people looking on the open rental market.
They often get retainers or higher rates of LHA by doing this, or it's a way to get the highest possible rent for a substandard property.
LHA is calculated on the 30th centile of rents. But that becomes the 0 centile very quickly as LLs raise their rents to meet the maximum rate the council will pay, and open market LLs follow suit.

Depends. Some flats are brokered by the council who might guarantee the deposit if the tenant doesn't have one, but once the agreement is signed it's up to the tenant to claim LHA and pay the rent. Some properties are leased by the council so they pay the rent directly to the LL and the tenant claims LHA which goes directly back to them. Those properties attract a higher rate of LHA, I guess because there is more outlay and risk to the council.
I'm no mathematician but I believe that the LHA system will cause rents to rise year on year simply because LLs raise the rents to meet the threshold and therefore the threshold has to rise since it is supposed to be the 30th centile of average rents.

Certainly a lot of tenants are not allowed by their mortgage lender to take housing benefits tenants at all and so they do not otherwise they could lose their property.

On capital gains tax on second homes for people in the UK it used to be 40% but was brought down to 28% ( I think by the Labour government). 100% tax on a gain from one asset class would be pretty unusual in the UK. Mind you I've only sold buy to lets at a capital loss in a recession so no chance of any profit never mind a gain. I must be the worst investor in the UK.

Re holiday homes. Don't forget that in some parts of the country, these are an essential part of the tourism industry.

In Cornwall, most would not be bought by local people to owner-occupy. No jobs. Traditional industries have long gone. Even the fields you drive through inland are now owned by supermarkets. The main industry is tourism and the more places to stay for the punters who visit the tea-shops and gastro-pubs the better for the local economy.

Anything that hits the second home owner will have a knock-on effect. I know locals who move out and camp with Mum and Dad in high season, and locals who've made a pretty penny out of a portfolio of holiday lets in towns like Padstow. So it's not exploitation of the indigenous people by rich outsiders. (Sometimes it feels like the other way round!)

Seeing everything through the prism of what's good for the owner-occupier is understandable, but housing is much more complicated than that. We do need a private rental sector, for a start.

How big is a 64 sq.m flat? Teeny tiny?

Doing the maths on some local flats we could do help to buy on.

Five% deposit plus stamp duty is £33,000.