To think most property owners don’t understand how hard it now is to buy a house

[Boredfromboredshire]

DP and me earn 40k between us and our rent is 1200 a month for a 3 bed house. We don’t have rich relatives, we are in our early 40’s and circumstances (ill health) meant that we didn’t buy a house before. We can’t save a deposit & houses are expensive by us. We have stable jobs & our kids are happy so moving in the current uncertain time’s isn’t an option. Life has happened to us & some of it has been out it control.

Cue well meaning friend (who bought their house for peanuts) asking me why we couldn’t afford a house when we could get a house in a cheaper area for ‘only’ 400k. I’m so fed up of it. We really want a home of our own & we would move but in the current recession, it’s not a good idea to give up a job. And we can’t afford to save. My friend (whose deposit was 12k can’t understand it and looks on pityingly while telling me the house they bought for 120k is now worth 700k.

For many of us, the housing market is closed for ever. I’m so tired of the pity and the complete cluelessness- I quite often feel utter despair about it. It makes me feel such a failure for no real fault of our own. Some people were lucky because they happened to buy at a particular month in time & then some of us couldn’t & it’s over.

I don’t think people who own really understand what it’s like. Low interest rates, cheap mortgages, everything weighted in favour of owners while renters are treated like the Victorian poor.

Aibu to be sick of it. We are a normal family in normal jobs.

@TheGuruishere also i own a 2 bed flat in zone 3. If i had bought a house outside London, would it have been that easy in 10 years time to move back to zone 3? there are so many people on mumsnet who regret moving out of London and wish they could move back, but can't.

my MIL earned so little but she held onto her terraced house in zone 3 London. That enabled me and DH to get jobs in the City and stay there for 3 years. Now cos of that we are obliged to look after her and have the means to cos we live a 20 min bus ride from her, so in a way, by ensuring the social mobility of her children, she has helped ensure her pension. If she had lived in the middle of nowhere, all her children would have dispersed the minute that they qualified for university. That is assuming they could get into university as DH and his siblings went to a very good Jewish school which they wouldn't have been to attend if they hadn't been based in a Jewish area in London. Social mobility is highest in London children for a reason.

@Oliversmumsarmy we should buy exactly what we need. A place with manageable commute to work, accessible to the schools we want. We should buy something and still be able to save 20%-50% of earned income. my parents have always saved 50%, and i save 20% after mortgage bills and expenses.

It is going to be inconvenient for someone with the childcare arrangements to commute more than an hour
Yes, well mainly chose the 'inconvenience' to be home owners.

We're back to people suffering from that sense of entitlement that seems to affect too many.

People want children, however many they wish whenever they want. They want well paid jobs with little experience or education. They want work to offer exceptional flexibility to accommodate them and ideally work part-time.

Yet they also want to be able to buy a house big enough for all their children, with a short commute because well...they deserve it and it is otherwise unfair.

Well life doesn't work this way. Yes, some are very lucky and privileged. Most don't and make compromises, be it wait to have children and/or stop at one. Work ft or even two jobs. Start with a house/flat with many compromises on location, space, neighbours, work required and yes, do commute for 1 hour and often more, having no choice but to have their children in before and after school.

Who do they think are three kids who attend these clubs or are dropped off/picked up by childminders? Oh yes, those whose parents both work ft and commute to be able to afford their home.

But this is based on an American system with their property tax and CGT if you don’t live in a house long enough or capital gains tax on profits over a certain amount.

Yes technically your house is a liability but you do need to put a roof over your head and I can see if you are going to have to pay CGT on a property then it might as well be one that is earning you money as opposed to one that doesn’t.

Yank here. Paying CGT on a home sale is almost unheard of here, as a married couple only need to live in a house for 2 years to exclude up to $500,000 in capital gains. This might be possible for a $5 million estate, not a normal house. And even then they would only pay tax on the gain that exceeded $500k.

This is guidance from the IRS:

Topic No. 701 Sale of Your Home

A house is an asset, not a liability, unless you owe more in mortgage debt than the house is worth. And even in that situation you receive valuable housing services from it or could rent it out to create income.

@Oliversmumsarmy

www.mrmoneymustache.com/2015/07/27/rent-vs-buy/

www.mrmoneymustache.com/2013/09/04/how-and-how-not-to-buy-a-house/

Good article! I bought only for the schools/security. Its an emotional thing, i think women are hardwired to want a nest of their own ( like the mother bird would painstakingly build her nest and decorate it with little flowers). Its a very human need, and thats why i pushed my DH to buy even though he didn't want to and wanted to wait for a crash. Eventually he did because he knew it would make me happy. Having a place of his own also makes him happy now that he lives in it ( I guess men are not exempt from the nesting instinct!).

But we shouldn't confuse our nesting instinct with whether it is a good financial decision. I like owning because i like the feeling that it is my own. That doesn't make my home an asset.

I find it laughable that people "need" to rent really expensive terraces in naice towns because children "need" gardens. There are entire countries out there where most people live in flats, just like they do in cities, and those children don't seem to have suffered excessively.

The whole "can't rent and save" argument only really applies if you have the triple whammy of low salaries, children and an expensive area. If you are a young childless professional on 30k+ living in a sharehouse or 1-bed flat, of course you can save, and quite a high percentage of your salary too. But I agree that a typical working-class person shouldn't have to couchsurf or live off beans for 10 years to save for 10% of a house.

And how can a place feel really, truly, your own when you can be turfed out as soon as you stop paying? Anything bought with a debt, like phones and cars, isn't really yours until you pay that debt off.

@redgirl ok but there was LOADS of properties for under her current rent rate...there's nothing wrong with an hours commute (a lot of ppl do it!) and if the OP WANTS to save to buy then some sacrifices are necessary.

Yes, there are emotional factors too particularly for the British. Some people in Italy spend more on clothes a month than rent, might be happy to live in flats or with parents into their 40s (that is a terrible generalisation about Italians of course but there are cultural differences at play just as back in 1900 just about no one in my family would ever dream of owning anything as they were too poor and most people rented from private landlords).

It has been interesting watching my adult children. They cannot do the intermediate moves we did buying in 1984, 1987, 1990 and lastly in 1997 ( terraced, semi, detached, large detached) as I got promotions at work and then started to work for myself so my income got more and more which was the real way that was afforded). The reason it is different now is stamp duty even with the new bands and rates is so high if you live in London compared with Newcastle where I am from (a huge injustice that it is higher because you have had to pay more for the same space!). So both daughters ended up being tenants whilst letting out their first place. One has bought a house this year and sold the flat. The other is moving into one of the 2 flats she lets out in August and will still be landlord of the second one although the u8ltimate plan is when she has children etc probably to sell both flats and buy one place in which to live - being a landlord makes just about no profits now for those with loans, interest not offsetable against rent and property prices dropping and last week both tenants needed her to pay a workman to go in to do stuff. It is stamp duty rates which have caused these issues. Even in 1997 my diary which I recently scanned was moaning about "high" stamp duty on buying this house. I expect today stamp duty would be as much as a small house if I swapped this house for a similar value penthouse flat.
My older son bought (and moved counties) last year and he got a detached 3 bed new built house for the price of his 2 bed terraced as he moved further into the country (could move job with his work under a scheme they have so that worked well).

I agree owning a home is about a lot more than money and even if you lose money on it as plenty do you have had that security.

MaryKya

Dd has friends who live in Central London and not so Central London they pay between £550 -£650 per month (bills included) depending where they live.
We live on the outskirts of London and rooms are nearer £400 per month.

Either where you live if it is taking up 75% of your income is too expensive and you need to look for cheaper alternatives and commute in or your job is not paying you the minimum wage.

It doesn’t add up.

@BeijingBikini its true, it isn't mine, it belongs to the bank. But the government in this country goes to further lengths to protect the home owner rather than the renter. they have 6 month mortgage holidays now but what about the renter? they still build up arrears.

But that doesn't make a house or flat you live in an asset either..We aspire to own for other reasons other than financial. For example with kids, its a lot more disruptive if your landlord decides to sell up.It can be stressful esp if your kids are settled in school or applying for a school near your current home. If you own, you can mitigate the risk of losing your home by having emergency savings. Granted if you are high earning, that is less of a consideration.

@MaryKya 75% of your salary really doesn’t add up. I’m currently looking for someone to take over my room in a 3 bedroom flat share. It’s as Central London as you can get and a lovely flat in a very sought after location and it’s only £690 a month

@MissConductUS where would you live if you rented out your home? you would have to either buy or rent another one.

Also for most of us on this forum, we bought our home for the purpose of living in them. It isn't an asset. Its an expense but a valid one as we all need shelter. However, it should never be treated as an asset or pension nest egg

Very few people can afford to live exactly where they want and to make no compromises on travel to work, or schools or proximity to family or other things we value.

People who have a good grasp of the reality of their income and property prices in different places usually quickly see the possible combinations of compromise and having what you want within those limits. Only wallies continue to insist on everything, which is impossible - so in this case, a property in Oxford with a short commute to work and closeness to current schools and with 3 bedrooms. Most people with a household income of three times that of Op will struggle to get everything on the list and have to compromise on some aspects.

Lots of good suggestions have been made, but lots of objections too to the suggestions that might make home ownership on £40k possible

• living an hour away would mean too lomg a commute
• it would mean seeing the kids les
• it might mean living in an area which is not very nice
• it might mean getting a different job
• it might mean more childcare is nededed
• it might mean living somewhere away from family or friends

None of the above are entitlements and in order to buy most people compromise on quite a few of them. To be honest, only those with no grasp of reality or no interest in actually helping Op find a way to secure home ownership, but instead just an interest in saying it's impossible, continue to raise these objections.

The smug homeowners who just don't understand what it's like for Op made many of those compromises and probably continue to. Bitterness can cloud the way people view the world and make them think everything was easy for others and not see the hard choices lots of people have made.

There might be a basic human right to shelter, but there is no entitlement to home ownership nor to a property in the area of choice, to have a garden or to have X bedrooms or be close to work or family.

£40k will not be enough - this is a low income for 2 adults in their 40s and why anyone would think they could afford a 3 bed house to buy in one of the most expensive UK cities is ludicrous.

But homeownership is not an impossibility with significant compromises. Most people who buy have made the compromises necessary for their income. If op will make those and make a plan, owning a home can be possible,, but exactly the same as for others,mid she won't she will remain in rented. It is not that she has zero choices.

People, stop saying the bank owns the house ffs.

You have the deed, you can go and refurb, drill holes, sell, and generally do whatever the hell you want. You have the deed, which has a charge on it, but you are the owner.
You have borrowed money and offered a house as a security on that loan. You own it.

It deleted DS on what you are willing to sacrifice, We saved like stink and finally got a loan for the remainder of the deposit for our first home. It was either that or continue pay £1k a month rent. South east, commuter area. I put off having DC to enable us to buy, you’ve already got the DC, I don’t think if we had DC we could have bought.

My lovely friend rents in London but owns a property in Manchester that he rents out, to get an asset, could that be viable?

But homeownership is not an impossibility with significant compromises.

Yes, quite. The mental gymnastics of "we can't rent and save because we earn minimum wage but must live in a 3-bed terrace in Zone 3" - REALLY? Do you HAVE to? You couldn't possibly live in a 2-bed flat in Luton, have your kids share a room and commute in?

Wombatchocolate made a much more articulate response along my lines. Sorry for typos

You own it.

You own it but the bank has a legal right to take it away if you stop paying them. It might be ownership on paper but that wouldn't feel like true ownership to a lot of people.

I got on the housing ladder by choosing to go to university To increase my job prospects, spending very little when in my first job, and prioritise saving for a house. I also had a plan to buy a house before any other big life moves, like marriage and children.

I think it would be much, much harder for average people to Save for a house after having children. That has to be the biggest barrier.

Yeah ok. You don't own it.

@OmgThereAreNoPlanesAboveMeNow its still a liability. I am the owner of my 2 bed flat, but the £1000 mortgage payment is an expense every month. i am not earning any money from my flat, i am 1000 pound poorer every month due to it. Its an expense like groceries, essential but an expense nonetheless. It is an expense I am willing to take on as it is manageable and good for my mental health and security.

If we treated our houses as the expenses that they are, maybe we wouldn't have a housing bubble like the one we have.

Boredfromboredshire in your position I would look at train commutes that go into Oxford station.

I wouldn’t rely on anything that involves the road that goes into Oxford even outside of rush hour the traffic is truly horrendous.

Oxford station if I remember correctly is walkable to the University or could a bike be left chained up at the station to get around with during the day.

I think you are used to pretty buildings and quaint terraced houses which you aren’t going to get in places like Didcot but you stand more chance of buying because a 3 bed house within a few miles of the station is less than £250,000 and if you go further afield but still within commuting distance Banbury is under £200,000.

They might not be as pretty or as convenient as Oxford but they are a start and the money you save on renting will give you more choice in the future

I haven’t read the full thread and I know how illness can impact finances but what sort of deposit do you have?

@Desiringonlychild I think you were meant to tag someone else

"[homeowners] have 6 month mortgage holidays now but what about the renter? they still build up arrears."

A mortgage holiday doesn't mean you don't have to pay off your mortgage it just means you miss some payments and the amount is added to what you owe. In other words the homeowner builds up arrears. It's just a landlord will want the money fairly soon whereas the bank is going to take it back over the the remaining mortgage term.