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.

*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*.

After a few years if you have avoided negative equity you will own part of it though.

@Papatron I do understand home owners have to pay it back but for most people it would add a negligible amount to their mortgage. Renters have to agree a payment plan with their landlords which I can't imagine is very generous.

I feel like the government protects home owners a lot more in the UK.

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

Well we must be really shit with money because we have never been able to save that much money.
The only time we have had money put away is because I have sold a place

After 4 years of Dp being very ill, having to pay for his cancer treatment, him taking early retirement and having no money coming in as he was so ill and being lied for several months that cost us a lot of money any savings we had have all disappeared.

Not sure I have the nesting instinct.
I don’t really want to live in the UK. I have never really felt at home here. (Maybe it is because I come from an immigrant family I don’t feel settled) It is more of a mercenary thing of can we afford a place and as we have cats. Is it on a main road.
The house we live in we bought after doing a drive by.
It ticked the boxes of not being on a main road, it had a roof and walls and we could afford it.
We didn’t get to see the interior till we moved in.

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

Tbh in some areas of London and the SE and at certain times that could have easily been achieved on property costing a lot less than the equivalent of $5million
Especially if you had spent money doing a place up.

@Oliversmumsarmy I am an immigrant too but I think that's where it comes from.where I come from, government forces you to save 20% of your salary. Its automatically deducted from your paycheck and goes to an account you can only use for housing, medical bills, retirement. People usually save another 20% for emergencies; of course not everyone can due to circumstances similar to yours.. so average savings rate is actually 50%. In western countries ,there is the FIRE movement and people do manage to save 50%

What I am saying is when you look at a property, people should think about whether you can save 20%. This applies to whether you are considering relocation to purchase a cheaper property. If op relocates to buy a cheaper property, she should also consider whether she can save 20% in her new job and new salary after paying her mortgage and expenses. If she can't, then it's better to stay in Oxford and possibly get a higher paid role to enable her to save that 20% and still buy a modest 3 bed flat.. 20% is bare minimum, ideally it should be 50%

Desiring - re mortgage or rent holidays, I think for most people it will work in the same way.

So, LLs can take a mortgage holiday, delaying payments but still owing the money to the bank. Tenants, if given a rent holiday would usually have an arrangement that the owed rent would be added to usual rent over a longish period from a date determined. Neither tenant not LL 'gets away' with what they owe and it is simply deferred. Often the reason a LL takes the mortgage holiday, is purely because the tenant has asked for changed rent terms due to loss of job etc.

Re timescale for paying back owed money, given a mortgage is over many years, the owed money could be spread over many years and amount to little per month, although there would also be interest over many years too. Given that most tenancies don't last 25 years, it isn't possible to spread the 3 or 6 month rent holiday or reduced rent over such a long period, but perhaps over a year or two or some combination of monthly extra plus a lump sum at the end of the tenancy. The last option can be problematic in terms of retrieving that lump sum at the end of the tenancy.

Some people seem to think LLs should bear the loss if a tenant cannot pay - that whilst the mortgage company still wants its money after the holiday, a LL is unreasonable to expect the owed money at a later date....but why is this? What is the difference? I think LLs do need to be flexible with tenants who have lost their jobs but tenants need to recognise the costs the LL incurs remains the same and expect to pay later. The mortgage company haven't written off what the landlord hasn't paid. LLS are rightly under pressure to be flexible with tenants from government. What would happen if LLs were forced to give rent holidays which didn't need to be paid back? Well more LLs will find doing rentals costs more in mortgage payment than their income from rent and they are making losses and have to sell up. We know lots of LLs have already sold up because increased tax etc makes it unprofitable for many and the rental stock has reduced. Less rental stock leads to higher rents....and who loses out......tenants with less choice and higher rents. So a rental holiday with no obligation to pay back whatbis owed might look nice in the short term, but might not look so good a couple of years down the line.

OP I get you. You make plans but life throws curveballs in your way.
We were mid twenties me 24, husband 25 were able to save under €9000/yr and went house hunting in 2011and 2012 at the depths of the recession. Found our 'dream' house, put in an offer and then husbands dad was in a car crash, lost both kidneys, near death etc. husband had to go abroad for months to be with his dad and we pulled out of the sale. I was pregnant with baby and baby was born in 2013, and childcare kicked in house prices went up hardly any money left to save. We decided to have a second child and even more childcare.
We ended up moving 300km as I took up a job that involved working nights (I work in pharma) he works in telecoms but on a low wage. I worked shifts so had less childcare but I we saved like mad and lived in a shitty rented house (that we were quoted 400k to buy).
I'm ashamed to say we even raided my first savings of around 7k (I saved his child benefit since he was born) and ended up buying a new house as you get taxback of up to 20k for the last 4 years in Ireland. I really feel for you and yes we bought an overpriced house but at least we're not renting. We bought in 2018 so recent enough. No solutions here but posting to say I understand.x

Dear @Oliversmumsarmy

It really seems that you have no idea what the real estate business market is.
I live in Hertfordshire just because I found a job here.
my wage is just the minimum wage, I pay my room 650, I chose between paying 400 - 500 and living in the middle of the rats and dirt with 7, 8 people in the house, or spending little more and not having rats in the house. I walk to work.

Sure, right observation, do you advise me to move to a less expensive area?
okay, i'm going 20 miles maybe i can find a 500 pound room.
I am sure, no less, and in any case we always talk about a BEDROOM SHARING likely with the rats in the house.

to go to work I have to take a taxi ... sorry, it was just a dream, the taxi is only for the rich.

I will take the bus, the bus costs around £ 5 a day for 5 days a week. to the £ 500 rent I have to add £ 200 of travel.

Can you tell me where the advantage is?

@dontdisturbmenow
What I was trying to say was in the predicament the OP finds themselves if they wish to move outside of Oxford to have cheaper rent to enable them to save they would need to move a considerable distance, they would then spend all their savings on the cost of their new commute plus extra costs for the childcare to account for that extra time. It would be less convenient and bring no benefit, if they were in a position to buy it would be different but they are not. So therefore if they want out of the situation they are in they need to move. Oxford is not a place to live for low earners, tons of Jobs for low earners for this exact reason.
Making a sacrifice in order to buy a property I think it’s something most people except high earners have to do. Whether it be location or size no one would argue with that it’s normal and certainly I did that myself to a buy a house. By all means commute an hour but you have to be getting a benefit in return. Oxford will never be that place.

Minimum wage jobs people have never really eve rbeen able to afford to buy a house in the UK or flat excpet in a few rare cases eg when the Tory government brought in a right to buy for council tenants which actually gave a lot of people a lot of property security and was very popular and worked well (although I know a lot of people think we should have kept that council housing stock but for those able to buy a place that was beyond their wildest dreams of ever getting on a personal level they were delighted)

MaryK, I know how hard it is. It costs basically a day's wages for low wage people including my son one university holiday just to get the tube from zone 5 to inner london for a low wage job which just leaves 4 days of pay as a whole day takes your travel costs on the tube.,

We bought in 1984 even though London prices were so expensive compared with the North where we came from that teachers (mmy husband) at his school were offered a school flat as otherwise as London wages were not much more than elsewhere and nothing like enough to rent or buy a place. We started out in one of those school flats - I was pregnant and we had a mattress on the floor of the pretty grotty flat but it was okay and immediately started looking to buy as we both worked full time - trainee lawyer (me) and teacher head of dept him. We could have taken the easy option of almost free accommodation in a school flat but my husband had a house in the North he had just sold and he knew too many teachers who never pushed themselves to buy, lived in a school flat and then found they had just about nothing aged 60 when they were retiring and having to find somewhere to live at that point. So we bought that summer. My salary was £7500 a year by the time we bought as was his and the baby came a month or two later (I was 22 and took 2 weeks off work and then back full time - the time I took off was annual leave as I had not been employed 2 years so did not have the usual 6 weeks at 905 pay even)... 50% of each of our net salaries went on full time childcare so we were certainly not saving 20% of our salaries. Taxes were also pretty high in 1984. Let me check....

13 March 1984 vol 56 cc303-4
303

"Since we took office in 1979, we have cut the basic rate of income tax from 33 per cent. to 30 per cent. and sharply reduced the confiscatory higher rates inherited from the last Labour Government. We have increased the main tax allowances not simply in line with prices but by around 8 per cent. in real terms. It is a good record, but it is not enough. The burden of income tax is still too heavy. "

it is so hard to compare different generations really but I have children who are buying now so I do have some understanding of it - it is why I think my older son was foolish to be a post man after university and now drives groceries around and his sisters are a bit more sensible financially in being lawyers - it is just common sense that if you pick higher paid work you are more likely to get a better house etc or any house and that was the reason I expect my parents in the 1940s went into professions rather than say coal minding or shipyard work or being a servant - the kind of things plenty of their families had done. Nothing changes really.

@Desiringonlychild hardly! As a renter if your income falls below certain levels, universal credit includes a housing element to help you cover your rent. If you own and have a mortgage, universal credit will not cover this. I think after 3 months on benefits you can ask for a support for mortgage interest payment, which is a loan, only covers the interest on your mortgage and not the capital repayment. And has to be paid back.

How does that favour home owners?

DH and I in our 50s, bought first house nearly 30 years ago with a 10% deposit. We had both saved hard for years and years, and went without holidays and many other things. I'm thankful that we got onto the housing ladder when we did; I am sure that we will need to help DC to do the same when the time comes. But getting that first mortgage was hard to do, even then, and we had no help from anyone.

@raspberryk. UC doesn't really cover London rent. I have only lived in London and I do think the government has prioritized home owners over renters.

Some rent is better than zero mortgage - wherever you're located.

@Xenia I think you are a bit unusual because you had the kid and bought the house in your early 20s. When I was 22, I just graduated from law school and got married. Didn't have the money to even rent, let alone buy a house, have a child and pay for childcare.

At 27, I own a London flat. Could probably afford childcare on the basis we are saving £2k now but no savings whatsoever and might even lurch into negative territory. So I am waiting till I can pay for childcare and still have savings at the end of the month. A bit worrying now that I suspect a lot of childcare providers would close and this would mean childcare fees rise. But at least then I have the 20% savings buffer.

I hear you OP. When me and my ex split, we had a fairly good settement. 20 years ago it would have covered a deposit for a small 3 bed in my area, now its peanuts. So i rent a tiny 2 bed and my rent is 50% of my income. My salary barely covers basic expenses and i am not frivalous by any means. My income is too high to be entitled to social housing so thats not an option either.

ExH pushed me to share ownership etc and i pointed out the flaws of his logic. I still couldnt afford the deposit and loans to make up the diff means its no cheaper for anyone.

I hate at pushing 50 years old that i am in the private rental trap but i cant see a way out without a generous windfall or a significant fall in the housing market. I also hate that i have no security as a private renter. I feel like i am paying for the privilege of housesitting for my landlord. I can't make it my home and there is a constant threat of eviction hanging over my head due to the ability of landlords to evict for no reason at all. I need permission to do anything.. can i use command strips to put pictures up please? Can i replace the door in the kitchen? Can i paint the walls in magnolia as they are currently but just in case my shade of magnolia is too magnolia for you... can i breathe?.. .

Its not a good scenario for anyone.

@Oliversmumsarmy

Tbh in some areas of London and the SE and at certain times that could have easily been achieved on property costing a lot less than the equivalent of $5million. Especially if you had spent money doing a place up.

The capital gain is what you sell for minus your cost basis, which is what you paid for the property plus the cost of any improvements you've made to the property.

@DianneWhatcock - I totally agree that social housing should remain as that. Earlier I said that I think Councils should "buy back" houses on social housing estates as they come on the market when the second generation sell their inheritance. Over time each local authority would get their housing back - no more right-to-buy and people would have homes at reasonable rent. This will only happen if people lobby County Councillors, MP's etc and form pressure groups. Meanwhile only those with a right to remain and native people should get housing. The country is full and all those who came here by nefarious means should be deported, not given housing. The uk is going backwards towards Dicken's times and people in need of social housing should have a chance of a home. If they manage to save for their own home while renting fine, if not, they have a secure tenancy.

@Oliversmumsarmy. - what planet are you on?

I would have thought most ppl were aware it's hard unless they're very rich and out of touch. After all, a lot of older people see their children struggle with it so they aren't oblivious. Sounds like your friend is very unaware though OP. From what pps have said you are in one of the priciest areas. I thought where I am was bad (SW) but sounds like Oxford is worse!

Desiringonlychild

You grew up where it was normal to save 20%

My family have built up businesses and lost everything 3 times through war, flood and fire. And that is just immediate family.
It is like a family curse if you start to look at what has happened to older and distant family members

MissConductUS

So you can put down what you have spent on the place.
But I still stand by that in certain circumstances, in certain areas and in certain years it is possibly to make the equivalent of £300,000 over just a year without spending millions.
There was a house that was actually mentioned on a thread about strange houses.

I knew the house as I had viewed it and at the time made an offer on it. So I had an idea of what the new owners paid for it.
It really was the ugliest house and the lay out was incredibly strange

If I remember correctly it was sold for a bit less than the £550,000 price tag A little while later and a coat of cream paint everywhere (nothing had been changed or updated) it came to the market again with a price tag of £850,000 and it went

MaryKya

Are you saying that every house share that is up for under £650 has rats everywhere?

Sorry but what you say doesn’t sound right.

Even if £650 was the cheapest place that was habitable
You said you were paying 75% of your take home pay on rent.
Either you are under 18 or on an apprenticeship in which case can you afford to be picky.

Otherwise you must be only coming out with £866 per month
That I dispute is minimum wage.

@Oliversmumsarmy actually the 20% savings was popularized by Elizabeth Warren. www.investopedia.com/ask/answers/022916/what-502030-budget-rule.asp

Actually in singapore, people save 55% of income. Singapore became rich only in the 1980s, my mother was born in a studio flat and she shared a bed with 6 siblings. In my grandparent's generation, people sold their children as there wasn't enough food. We had the war when Britain lost us to the Japanese in 1 week and then the tumultous post war years when there were communist sponsored strikes and extremely high unemployment. Today it is one of the most expensive cities in the world.

Perhaps a sharper view of savings as a percentage of Singapore household income can be glimpsed from the 2012-2013 Household Expenditure Survey, from the Department of Statistics. That survey concluded that the average Singapore household spent S$4,720 on goods and services per month, against income of S$10,500. That’s an exceptionally high savings rate of 55%. Note though, this takes into account all sources of income including employer CPF contributions

www.dbs.com.sg/personal/nav/are-you-saving-enough.page?pid=sg-dbs-pweb-nav-featured-cardtile-others-are-you-saving-enough

www.businessinsider.sg/6-in-10-singapore-millennials-save-over-20-of-their-salary-most-on-track-for-retirement-report

Employer contributions to savings only account for 17% plus 20% by employee so people are still depositing an average of 18% savings out of their own volition. Singapore has roughly the same cost of living in London (if you scour mumsnet, you get lots of brits convinced you need six figure salaries to survive in singapore when most singaporeans don't earn that) and we don't have countryside or towns to move to, so whether you are a pauper or a billionaire, you are stuck with the same high cost of living. I really think the lack of savings is cultural cos its not like people in singapore have it easier.

Realistically speaking, the op has been shafted by right to buy. They are exactly the sort of family who should be eligible for council housing. One on minimum wage, one on disability benefits, and children. Thirty years ago they would have been in a three bed in Rose Hill or Blackbird Leys, and given the opportunity to buy it. Ironically, it was opening up the housing market to council tenants and them all selling and joining the merry go round that has contributed to even higher prices and no council housing stock. Private landlords aren’t altruistic in any way. It’s not home owners that she needs to be snarking at.

OP here - Wow, I didn’t expect this thread to be still going! Anyway, just read this www.theguardian.com/business/2020/may/24/most-ingredients-are-in-place-for-a-property-crash-later-this-year

@Boredfromboredshire what I have been saying all along..OP, I hope you would be able to buy a modest nice home for your family. I might have bought my 2 bed flat at an inflated price but tbh the prices increasing does not help me at all