... To ask what actually is an affordable housing?

[OftenHangry]

It looks like everyone has a completely different price bracket in mind when it comes to properties for sale. Obviously it's affected by where people live. I know you really can't buy 3 bed semi for 60k in London. Maybe a picture of it...

What is your idea of affordable housing?
Me:
Nort West - under 100k

because with 5% deposit it would cost about 8k to get into the property.
But I keep seeing these new builds labeled as affordable yet they cost double that!

Plenty of 3 bed with garden houses around me for much, much less (60k-70k), but staying on the market, because they need bit of work, I guess?

I am busy today, so if I don't answer, I haven't run. I will come back

shared

Shared ownership schemes.

The purchase price is cheaper, but I guess you still have to pay rent on top of that. I guess it gets you on the property ladder though.

I’m in the NE. You would only find old decrepit houses under £100k (or an area that isn’t hmm... very nice)
New houses, yes they will be more around the £200k mark

I'm not a huge fan of shared ownership schemes. Any of my friends who have bought their houses this way have not gone on to buy more of the house. So 7+ years later they still only own half.

I'm east Scotland (in a rural village, not touristy) and we have some affordable housing, 3 bed shoebox new builds starting at 170,000. (There are plenty of 3 bed properties on the market for far less, starting ar roughly 100k +).Since the median wage is 22500 it would be unlikely that a couple earning this would even qualify for a mortgage that size. Which begs the question, affordable to who?

3.5 times your wage would be affordable. Most housing in most areas is no longer affordable and hasn't been for many years.

My town has loads of houses for sale under 60, 80 and even 100k. My own house is a council house and I pay £90 a week for a whopping 5 bedrooms with a driveway and two gardens. The rooms are very generous-Master bedroom is 6 x 5.5metres and I love my house.

Given the chance to buy it ( we still have right to buy) and I will probably pay about 40k for it. We are very lucky that our council does reinvest the money from house sales into new property for rental and often buys cheap properties that need work and then rents them out or builds a new development. Our town has had three new affordable etsates built in the last 2 years that was a mix of council/HA and shared ownership.

"Affordable" housing is defined at 70/80% of the "Market Rate" for the area.
If new builds near you are marketed as affordable complain to the council. But probably they are comparing with the market rate for other New Builds, which tend to be inflated compared to other local homes.

We are on a joint income of circa 90K per annum. Our house was 400K (3 bed semi in a greater london suburb), on the face of it it's affordable, but the huge deposits, plus paying the mortgage on top of childcare, travel costs, utilities etc, means we are not as comfortable as we should be 'on paper'.

Because it's not just a matter of "There is the space available, someone somewhere just isn't letting it happen.", building fuckloads of houses on unused brownfield doesn't magic up the infrastructure that those families will need. The developers of new build estates where I live have been under fire recently because we're reaching a point where there are no more school places and people are struggling to get doctors appointments (or even enrolled at a reasonably local surgery). Their answer - "We didn't expect so many families with children to move in". They built exclusively 3-5 bed properties, with the odd block of 9 2-bed flats, or the odd row of two bed terraces that fit the requirements for the Help to Buy (Scotland) scheme, and didn't expect families with children to live there.

The official definition of affordable being based on a set percentage of the market price is silly imo.

For home buying - I would define affordable as a cost which can be managed on a combined household income of 2x the local median full time gross income. Eg if that's £21k then a couple with £42k between them with a mortgage for 3.5x that =£147k so an affordable house I'm such an area would be £163k assuming a 10% deposit, for a 2-3 bed home (that is the standard 2 decent sized bedrooms and a tiny box room)

For rental the cost would be to spend no more than 25% of 2x local median full time gross income on rent - so in the same area that would be £875 per month for the same kind of house.

Needless to say the official figures are way more expensive.

In case not obvious - autocorrect changed "in" to "I'm" above.

building fuckloads of houses on unused brownfield doesn't magic up the infrastructure that those families will need

That's poor management from the council. They are supposed to levy contributions towards schools and infrastructure as part of the negotiations when granting permission. I expect they decided to waive this as a sweetener to get the building going, and didn't think about how to fill the gaping hole in the plan.

Round here (lots of new-build springing up) the new 'affordable' homes are £520k for a two-bed.

Some of the older 5-bed properties in the same area are less than that.

Rather than describe 10% (or whatever) of their houses as affordable, developers should be obliged to declare the rest unaffordable.

I think on average wages upto £150k is affordable. £150k-£250k is affordable but stretching it a bit. £250-£400k is top end of affordable for those that earn a bit more and then once you get into the £500k territory you're well out of normal people's budget.

That's being sensible about mortgage payments along with living costs.

I earn good money compared to the average wage but going above £150k would have stretched my monthly budget more than I would have been comfortable with, with the H2B mortgage & 5% deposit, I'd have been looking at about £800pm just for the mortgage payment. On top of £700pm train fare, utilities and then living costs.

I was lucky and got my house for a song, they thought it had damp but it didn't - it just needed airing and ventilating properly. I paid £115k 3 years ago and put down £6k (more than I needed to as the original 5% was worked on the selling price of £120k and wasn't adjusted when they accepted a lower offer - the EA were worse than useless). Two that are the same as mine went for £225k a few months ago.

There are a lot of cheap (£100k-£200k) properties around here but the average prices are going up all the time and I think, will carry on increasing as the town's rejuvenation carries on. It's a very very trendy place to live atm and a complete fucking hipster town but well worth buying down here.

OftenHangry Thu 18-Oct-18 08:26:29
Re help to buy. You can get 5% deposit mortgage on old properties too. But it comes with higher interest until you get more equity. I think that's the difference between that and help to buy?

The higher rate is for 2 years then you can renegotiate your rate like normal. I tied in at about 2% I think for 7 years.

“HereForTheLineEyes

I'm not a huge fan of shared ownership schemes. Any of my friends who have bought their houses this way have not gone on to buy more of the house. So 7+ years later they still only own half.”

I don’t understand attitudes like this. Of course they still only own half, if they haven’t purchased more. Did they think buying 50% of a property would magic into 100% of a property somehow?

caprisunorgane generally they sell co-ownership to buyers like a first step, just to get you through the door and onto the property market.

You initially own half your house but as the years progress and you get pay rises etc you buy back more so that in a few years you own 60 and are renting 40, then 70/30, 80/20 etc ( or bigger increments if you can afford it) until you are just paying a full mortgage on a house you will one day own outright.

It was put to me as "buying more and more slices of the pie" when I was considering it.

It certainly wasn't proposed to me as "you own half now and you'll always own half" maybe other people have had different experiences but that's how I thought it was generally sold to people.

North East - 150k-250k 3 bed detached with large garden & drive. Can still get decent 2/3 bed houses under 100k but they’re just not for me. Won’t have a deposit for at least another 3 years though!

I couldn't afford and wouldn't have been able to buy my modest house on our current salaries. We saved and bought 1 bed, then 2 bed, flats first and worked up the housing ladder over 15 years, gained some equity, saved more deposit until we could afford a house in our mid 30's with our equity + savings giving around a 30% deposit and an affordable mortgage.

Where I am, in the recent past first or second time buyers have rarely expected to go into a 3 bed semi, they expect to work up to buying a house saving over many years. Even going back to my parents they never had a 3 bed house until they were in their early 40s and had 4 growing dc.

I'm my area houses are imo no less affordable than when we bought, but the new expectations of a first or even second time buyer having a 3 bed home on an average couple salary with no significant equity + deposit built up seems to be the problem.

Of course HereForTheLineEyes that’s exactly how it works- but you still have to pay for the remaining shares! The responsibility is all down to the home owner to pay for it. It doesn’t just happen!

Obviously your friends haven’t bought anymore share so of course they still only own half!

@Caprisunorange - it's not that anyone expects magic, but the promise that you can staircase up and buy additional bits of equity and gradually increase your holding is actually unrealistic for most. Many schemes will only allow you to buy 25% at a time which is a huge and unrealistic chunk. If they would accept micro-staircasing at 2.5% of total property ownership at a time, then people could consider trying to stretch to another chunk each time they rearrange their mortgage every couple of years.

It's also too easy to get trapped in a shared ownership starter home that the family is too big for, but with very limited opportunity to trade up as the slim assets you have are such a huge gulf away from the property you need.

caparisun

I don't want to speak for HereForTheLineEyes but i imagine the inference is that the shared ownership wasn't working out well for the people she knew. Not that they were sitting about scratching their heads over why their additional shares hadn't magically appeared

xpost with tenor

It would be ridiculous to buy 2.5%. The legal fees would be as much as the share. It’s a house purchase each time your staircase. And the barrier to all the things you mention are actually mortgage companies, not housing associations, since the only way most people can buy more shares is to remortgage when they earn more and can borrow more.

You have to know what you’re doing yes, and that includes having a plan as to how you’re going to buy the rest of it.