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?

[kentishgirl]

Sod the next generation, what about us? I'll never be able to afford to buy even a little one-bed flat! No way to save up that deposit while renting, and needing a mortgage of at least 4 times what I can realistically earn. Comes of living in the South East - but there are reasons I can't move away.

[JessicaMary]

Houseprice, yes I know. I knew that when I posted it. I've no axe to grind and quite open to ideas. I think there are hard times for all generations and for most average earners particularly in London it is hard to buy a present.

I see today's FT has a similar article.

I just tried to find it. I read it in the paper copy though. I am not sure it the one below but that's relevant too. I do think sold prices (Land Registry) in article below are always the ones to go by. Advertised prices can be very misleading:

" UK house price growth hits double digits

UK house price annual growth moved into double digits in April for the first time in four years, according to Nationwide, the lender.

The new figures suggesting the market is accelerating – prices were up 10.9 per cent on the year and 1.2 per cent compared with March – come a day after a senior Bank of England figure told MPs the housing market poses the biggest threat to the country’s financial stability.


Spencer Dale, who will take over as the Bank of England’s financial stability chief in June, said in a parliamentary hearing that policy makers could not afford to sit back and let the housing market gains spin out of control, adding that if they waited until they were sure that a bubble had emerged it would be too late.

While all of the most-watched indicators agree house prices in the capital are rising rapidly – Nationwide says prices in London in the first three months of the year were around 20 per cent higher than before the crisis – the situation in the rest of the country is less clear cut.

The data stood in contrast with figures released on Wednesday by the Land Registry, which record actual prices paid for properties, and which suggested March had seen a slight fall in prices compared with February, putting the annual rate of property price inflation at 5.6 per cent, nearly half that of the Nationwide figure.

And separate data out this morning from the Bank showed mortgage approvals fell for the second consecutive month in March to stand at 67,135, notably below the average of 70,363 over the previous six months. However, the amount of lending secured on property increased to £1.8bn in March, compared with the average monthly increase of £1.3bn over the previous six months.

Unsecured consumer credit rose to an 18-month high of £1.1bn.

David Tinsley, UK economist at BNP Paribas, said it was likely the Bank would be reassured by the fall in mortgage approvals, adding the figures “may suggest some reduction in the pace of the upswing in the housing market in coming months, which would assuage anxiety that the recovery is too lopsided”.

Robert Gardner, Nationwide’s chief economist, said the introduction of tighter affordability requirements as part of a mortgage market review, may damp the market slightly. “Underlying demand is likely to remain robust, as mortgage rates remain close to all-time lows and as consumer confidence improves further on the back of stronger labour market conditions and the brighter economic outlook.

“Nevertheless, house price growth is outstripping income growth by a wide margin. The risk is that unless supply accelerates significantly, affordability will become stretched,” he added.

Source: Nationwide

[JessicaMary]

Found it -this is the on you'll love from today's FT - home ownership becoming a fairytale:

"Home ownership ‘becoming a fairy tale’


Half of all 20 to 34-year-olds could be living with their parents by 2040 because of rising housing costs and a shortage of affordable homes, according to a report published on Thursday.

Already a quarter of that age group are living in the family home, according to data from the Office for National Statistics. Some 3.3m young adults lived with their parents in 2013 – a rise of 669,000 since 1996.


The report by consultants KPMG and Shelter, the housing charity, predicts the situation will become worse because of expected further rises in property prices.

“For many people, particularly those in their 20s, the aspiration of owning their own [home] is fast becoming a fairy tale,” said Marianne Fallon, head of corporate affairs at KPMG.

The “unstable” housing market was making it harder for employers such as KPMG to attract and retain skilled workers, she added.

The ratio of house prices to annual incomes for first time buyers rose from 2.7 to 4.47 between 1996 and 2013, according to the ONS.

The report sets out several proposals for how the government could speed up the annual supply of new homes, which is close to its peacetime low.

These include letting councils create “New Homes Zones”, setting up a National Housing Investment Bank to lend to builders and giving small builders government guarantees. It also calls for council tax to be charged on unbuilt homes, to force housebuilders to speed up their developments.

“Our chronic shortage of affordable homes means that a generation face a future of living in their childhood bedrooms into their 30s,” said Campbell Robb, chief executive of Shelter.

“The thousands of young people and families forced to watch their dream of a stable home slip further out of reach are already paying the price for successive governments’ failure to build the homes we need.”

The latest Land Registry data – which records prices paid for properties – shows values fell 0.4 per cent between March and February. Prices rose 5.6 per cent year on year, the figures show.

In London, prices were 0.6 per cent higher month on month, but 12.4 per cent on the year. Prices in Wales fell by 4.2 per cent in a month."
End

[JessicaMary]

I suspect most being helped out by parents are buying a £100k house or flat in very cheap areas. The help is 5% of that = £5k. Or a lady I saw was remortgaging to get a bit of equity out of her house to fund the son's deposit on his first property with his wife. I think his mother was an ex council tenant who had bought the property where she lives years ago.

If every 40 yars of home ownership in thelast 50 years has meant a couple build up some capital in their house IF they own one (most have never owned one I suppose although many aspire to) then there will always be a lot of parents about to remortgage of pay part of their pension (or savings if they have them - most people who work 40 years tend to have a bit of savings of some kind).

Mind you I never had any help from parents and one of my children has managed without as she has my extreme frugal gene (and to be fair a highest salary but always lives well under what she earns as I have always tried to do).

If there are now more first timers than 2007 buying that still might not mean much if levels have been really low since then.

My advice to those who can has always been buy as early as you can whatever it might be. Two of my daughter's friends had parents who bought them a house/flat at university as their start. I suppose we all try to help our children as best we can. My view has always been that the best thing you can give them is a good education and ability to earn their own living rather than cash when they grow up. You can lose all your money but no one can ever take from you your education.

[bedraggledmumoftwo]

Maybe not, but tony Blair certainly devalued it with the idea that everyone should go to university, leading to mickey mouse degrees and junior jobs now requiring degrees (and therefore thousands in debt), which would previously have been for school leavers.

[JessicaMary]

When were heading for tax simplification ( one 40% and one 20% rate rather than loads of different ones) we did have 40% capital gains tax and 40% upper tax rate and they were the same so there was no advantage in making something capital rather than income. That did work. Then they removed indexation for capital profits so taxed you on the paper gain rather than the real gain (which was silly) and introduced the different CGT rate which can be as low as 10% for many selling a business and is a maximum of 28%. So for example a landlord is advised to ensure their income expenses match the rent and they make no profit at all, plough money into improving the place and then if they sell pay just 28% CGT rather than 40% or 45% tax on the rent after costs as it comes in. However if we got 60% inflation over 3 years as we did in the 70s a capital gains tax on a gain which is not really there which just reflects inflation would be very unfair but is probably current law. Mind you I've only ever managed to make capital losses - I've lost accumulated so never had to grapple with paying capital gains tax. There is also an annual allowed for it of about £10k for each person in the couple selling the assets which most of us don't use each year.

[horsetowater]

Iseenyou that's really interesting about CGT - that will reduce demand in London. Less demand means less competition and less of an upward price trend.

Equally important is Labour's idea of imposing 3 year rental contracts. This will reduce demand for property ownership. People will feel less pressured to 'buy before it's too late'. This is the reason I think the most people go down that route (apart from recent low interest rates and all the other financial gains).

Once demand for OWNERSHIP drops, the prices may level out. Demand for housing will always be there but people won't be clambering over each other to buy, they will be more content to rent for longer. It's a smart move.

For too long the assumption is that the demand for housing is the issue, it's the demand for ownership that is the problem and demand for LOW COST housing that's the problem.

[JessicaMary]

Yes, the Labour plans are interesting. Most landlords I know like the certainly of longer periods and most of their tenants do not want to commit to as long as 3 years but that might just be my experience of Central London, transient 20 something single people who move out and in, live with friends, go abroad, not families renting in the provinces.

It would be a bit unfair if they removed the ability to let a place for a year or six months. You might be moving to London, not sold your house in Manchester yet so let it out for a year until you're sure London is for you and then want it back.

[JessicaMary]

In that case I don't understand it. If it can be for 3 yars but the land lord can serve notice to be in there after one month or 6 months that would not be a change in the law except to result in some pointless 3 year terms being granted.

I saw in today's paper they were building some kind of rough housing in one of the major US cities $5000 huts with shared toilets on site as so many people are sleeping rough with nowhere secure to leave their things. It certainly sounds an improvement on sleeping in cars in a US city I suppose.

[JessicaMary]

"Beds in sheds" is a huge issue out my way - if you look at pictures from the air over vast bits of outer London you see loads of gardens with these additional improvised rooms in (although I suspect mostly immigrants are in them). That breaches planning laws of course.

[JessicaMary]

So you could simply say to the tenant - I intend to sell (the tenant who has simply annoyed you) and he his wife and 3 children have to move out or move your family in for a few days? It sounds like Labour party window dressing in that case with no real teeth.

I supposed you'd have to guess inflation over 3 years and say in the contract what the rises are each year when you enter into the tenancy hoping you got your inflation forecasts right ( we had 60% inflation over 3 years in the 70s) and perhaps you could add that if your interest rate doubles (which is perfectly possible - it was not so many years ago many of us were paying 6%) the contract says then the rent could increase?

[bugster]

Just got through reading this thread late in the day. Some pretty radical views expressed! As a landlord I'm not too keen on Miliband's new policy on rent, mainly because I can't imagine finding tenants who'd want to commit to a 3 year tenancy. I think as this thread shows, most people aspire to owning a property so i wouldn't have thought it would be popular with most tenants. I was lucky enough to have a tenant for 10 years once, but he never wanted more than a 6 month tenancy as he never thought it would be long term. I would love the security of having them there for that period, provided they were good tenants! But from the new statesman article it looks as if it may just be that the tenants have the right to stay 3 years after a 6 month probationary period, not that they have to stay 3 years. The thing about banning letting agency fees makes no sense to me, not that i enjoy paying them- they are providing a service after all, why should they do it for free?

The article about the 28 year old who has to live with his parents because he can't afford to rent a place of his own on £30,000 is crazy. There are plenty of places he could rent on his salary within much better commuting distance than where his parents live. He must be extremely fussy/ inflexible, or spend a lot of money on other things. Maybe he just wants to save the rent money in which case fair enough, but he would definitely be able to rent at leadt a one bed flat.

[Thymeout]

Btw - have just heard on R4 that the ave age for first time buyers in London is 33 (not 39 as stated upthread). 31 nationally.

Other points of interest: lots of wasted space above retail outlets, specifically large chains, e.g. Boot's. V easy to create new homes by craning in purpose built pods on top of existing buildings. People would actually like to live in the high street, close to amenities.

Rental market abroad - yes, tenants have more rights and renting is more a way of life. But they also have more responsibility for the property. Far from calling in the ll if the fridge conks out, they often have to install their own kitchen and bathroom when they move in, and take it with them when they move out. Rental properties are more often the ll's pension plan than a speculative investment, which encourages stability.

The £250,000 stamp duty limit is too much of a slab. Should be graduated. And the whole process of buying/selling should be reformed to speed things up.

Marriage breakdown has increased pressure on entry-level buying. Two homes per family instead of one, children needing two bedrooms, one in each parent's house.

Nothing much (didn't hear all of it) on the specific concerns of OP. Generally seemed to be concentrating on improving supply and making renting more attractive.

[Thymeout]

Bugster - In the past, I think agencies were only allowed to charge a fee to landlords, not tenants. But now all sorts of add-ons have crept in so they are effectively charging tenants as well.

And if more families are going to be forced into renting through not being able to buy, I think 3 year tenancies are going to be v popular. It's much more difficult to move once children are settled in nursery and schools.

[JessicaMary]

Yes, I told someone the other day you cnanot charge both landlord and tenant and they laughed at me (I must be 20 years out of date). Normally "agents" in other areas act for one side or the other and only charge one side and charging both is corrupt. Yet estate agents do although it's more like £2k to the landlord and £300 to the tenant. However if they are paying to do a criminal records check and other fees which is not money the agent collects then it's not fair to say the agent is charging the fee. They are just passing on costs.

Yes the £30k man above is being silly. Lots of 20 somethings in London on that find a room to rent in a house etc.

[Thymeout]

Iseenyou - don't know. This was a suggestion made by Kirstie Allsop on the panel. But there's a shop near me, just a little independent outlet, where they've just converted the upstairs 'office' space into a self-contained flat. I suppose when it was originally built, pre-computers, they needed more room for general paper-related stuff. Now all the manager needs is a laptop.

JM - if it's the ll who needs the credit checks, then surely they should pay for it. There was a thread recently from someone querying the amount the letting agent was charging her, as a tenant. I think it was more like £500. On top of the deposit and a month and a half's rent upfront.

[Stinkypinky73]

I haven't read the whole thread but I am so worried about this that my DH and I have agreed to build three houses on our land (my bachelor uncle left me his house and sixty acres), just out of timber and not expensive, but to a high enough spec, so that they each can have one.

We are not going to tell them, however, until they reach 21 at least.

[Thymeout]

Lucky them! Was it a problem getting planning permission?

[Suzannewithaplan]

I like the idea of purpose built pods, presumably we should also be able to 3D print them!

[OldMrsSaucepan]

It's places like this which make me think WTF is really going on here. Why do we not have scheduled developments like these with low cost permanent housing for local families, who would otherwise be priced out of their area, rather than 2nd homes for wealthy retired people.

www.rightmove.co.uk/property-for-sale/property31589666.html

Factor in some self build opportunities and we could start to have some real opportunities for communities to create their own solutions to meet their local housing needs.

Why aren't the government coming up with schemes like this to make it relatively simple for people to buy into? Or even long term lease. Rather than all these mass developments which serve only to line the pockets of the developers.