Should I just give up on the idea of buying a house?

[radiateforme]

17k soon to be in the bank. Income of 25k per year. Have recently been in a situation where I've afforded 800 a month rent, plus 1000 childcare fees and bills etc. Bit of help from UC. Now live with family member to save a bit more. Feel like I've spent the last 10 years working my arse off, being frugal, saving, driving a crap car, and STILL cannot afford a house. The cheapest 2 bed near me that's suitable is around 160k. And that's a doer upper. According to the bank I can borrow 100k. Deposit of 15k, still 45k short. It's hopeless isn't it? Feel like it's just going to get worse and I'm better off just living my life, saving a bit, going on a couple of hols and getting a council flat (if I'm lucky). Feeling defeated as you can probably tell.

Why not buy something cheap in a random place and rent it out? Rent should cover the interest and some of the principal. It will go up in value over a few years, then you can use the equity to buy something you actually want to live in (or sell it). By that stage DC will be in school and you will have had some career progression so higher salary.

@KangarooSally

Why not buy something cheap in a random place and rent it out? Rent should cover the interest and some of the principal. It will go up in value over a few years, then you can use the equity to buy something you actually want to live in (or sell it). By that stage DC will be in school and you will have had some career progression so higher salary.

You need 35% deposit to do buy to let

@KangarooSally

Why not buy something cheap in a random place and rent it out? Rent should cover the interest and some of the principal. It will go up in value over a few years, then you can use the equity to buy something you actually want to live in (or sell it). By that stage DC will be in school and you will have had some career progression so higher salary.

This sounds incredibly risky and will likely affect any UC op does get if she owns a property she does not live in.

I think in all this, maybe you wont be able to buy in your area just yet. Thats the problem with some areas. Locals get priced out, and it is really hard to buy on local wages if you didnt manage to buy 20/25 years ago. You arent the only one in that position. Theres a housing crisis and its all sewn up. Even the 5% mortgages that the government keep advertising, dont actually exist when you search for one. Most places wont even do a 10% mortgage

Council housing is a very good option, if the housing is in a decent area. Its affordable rent and you have security of tenure for your whole life. You don't have to pay for repairs and maintenance, so you save money on that too.

In many ways, its better than buying.

In your situation I think I would buy a small one bedroom flat just to get on the ladder. Your child is only 2, you can share a bedroom or sleep in the living room. In a few years when your income increases and childcare bill decreases, you can buy somewhere bigger. What area are you in?

We live in London so it’s very hard to get on the ladder. We bought a third floor flat, no garden, one less bedroom than we need, not ideal with children. But it’s worth it to not be throwing away money on rent, and we’ll soon be in a position to upgrade to a house.

You don’t want to fritter away the 17k. You’re unlikely to save that kind of money ever again. Better to be on the property ladder with something small that’s not your dream home, and then upsize further down the line.

@Branleuse

I think in all this, maybe you wont be able to buy in your area just yet. Thats the problem with some areas. Locals get priced out, and it is really hard to buy on local wages if you didnt manage to buy 20/25 years ago. You arent the only one in that position. Theres a housing crisis and its all sewn up. Even the 5% mortgages that the government keep advertising, dont actually exist when you search for one. Most places wont even do a 10% mortgage

I think you're right. And with 17k in the bank I'll be on a low band for council housing, and will get 0 universal credit. So basically, I private rent until I've eaten enough of my savings to be poor enough to claim benefits again. Mad.

I wouldnt buy somewhere cheap in a random area unless you felt you could start afresh and still work there and make new friends.
Your child is certainly young enough to do that, but its a big deal. A lot of people do it though. I know lots of southerners that move up to the north for example, but they couldnt ever afford to come back.

@KangarooSally

Why not buy something cheap in a random place and rent it out? Rent should cover the interest and some of the principal. It will go up in value over a few years, then you can use the equity to buy something you actually want to live in (or sell it). By that stage DC will be in school and you will have had some career progression so higher salary.

Most landlords make tiny profits. You also need to be able to afford all the repairs and maintenance, don't even consider it if you don't have a lump sum to pay for this. It will also cost to get the flat to the standards needed to rent it out. Its not for the faint hearted.

I'm a lone parent working full time on a low income. I don't think I physically have the time or energy to be a landlord

And with 17k in the bank I'll be on a low band for council housing

Are you sure? When I was worked in this area we were not allowed to take into account income etc when assessing people for council housing. It was a while ago now though. If you are thinking about council housing get your name down now. The waiting lists can be long.

I would consider expanding your search area even further. Some places can be further in miles, but not take as long as somewhere closer if the roads are good, and the feelign that youre still maybe 20/25 miles from family at least makes it easy to visit, even if youre not round the corner and its still commutable

Can you put some of the savings in a trusted family members account.
Especially if you are living with them- maybe call it contribution to their costs.

I do feel for you.
I am fortunately in a cheap rental- but unfortunate that it’s pretty run down and landlord is sooooo slow at doing anything about it. I have been trying o save for years but life gets in the way and savings go up and down and never seem to get ahead.
We know if we did buy though that we would not be able to stay in our area we would need to move between 10 and 20 miles away to get something we could afford.
You might need to cast your net a little wider

@breathhold

And with 17k in the bank I'll be on a low band for council housing

Are you sure? When I was worked in this area we were not allowed to take into account income etc when assessing people for council housing. It was a while ago now though. If you are thinking about council housing get your name down now. The waiting lists can be long.

I was literally just quoted this this morning. They're so strict. Even with me leaving my ex due to domestic abuse proven in court, being on a low income, in 1 bedroom as a lodger with a toddler, and no access to the equity of the house I live in as my ex was continuing to be abusive and holding my equity hostage, I still wasn't eligible.

@Kona84

Can you put some of the savings in a trusted family members account. Especially if you are living with them- maybe call it contribution to their costs.

I do feel for you.
I am fortunately in a cheap rental- but unfortunate that it’s pretty run down and landlord is sooooo slow at doing anything about it. I have been trying o save for years but life gets in the way and savings go up and down and never seem to get ahead.
We know if we did buy though that we would not be able to stay in our area we would need to move between 10 and 20 miles away to get something we could afford.
You might need to cast your net a little wider

No because that's fraud

You are not a failure although I get where you are coming from. House prices are just ridiculous.

As much as I think that Homebuy and shared ownership is a bit of a con, Homebuy particularly would get you on the property ladder. And you are young enough that you can get a 25 year or more mortgage. You could then staircase or sell later on. But I would warn you not to do anything except decorate because the government ends up with far more than you do!

With your savings it's anything over £16k I think so if you were at £16k rather than £17k would you still be eligible for support?

I know it feels very bleak at the moment but you will get there.

you wont get a council place, as with the money, they will expect you to private rent

If you were already a rich person, the chances are that you would find ways to circumnavigate the system and the obstacles such as hiding money or finding who to transfer/gift it to legally, and you wouldnt feel like it conflicted with your conscience if it got you what you needed but unfortunately they rely on the relative honesty of the poor, and also the laws that keep the poor poor, because there is no benefit to them creating loopholes for us

Bit of a random thought but does your employer do loans for employees years ago it was a thing with one of my employers.

We are extremely lucky to have been one of the first in our county to use help to buy for keyworkers 18 odd years ago without that we would never have got onto the ladder. Once your are on OP & I'm sure you will get there it's much easier.

Help to buy houses go quickly so I'd also put your name down on contact lists so you can react quickly if any come up near you.

I really feel for you OP. You’re stuck in that middle ground of a mortgage being slightly out of reach, and having too much in savings to qualify for social housing. It’s worth keeping in mind that UC will disregard your house deposit funds for a set period, and even then, you will still receive a tapered amount once your savings fall below £16k.

Going on the housing waiting list is different to the rules for UC. You’d be expected to put a roof over your head with those savings.

This is why tax credits were so much better for those who were willing and aiming to improve life for themselves.

I've not read the whole thread so apologies if this has been said already. Could you maybe have a relative mind your kid even one day a week? That would save say £40 for one day a week, £160 a month, to put towards a deposit. I take it you're claiming childcare vouchers if these are available from your workplace? Sorry things are hard for you, it's so demoralising to be working full time yet finding things so tough in regards to finace, buying a house etc.

Absolutely. 115k where I live gets you a renovation project even for a 1 bed!
Yet you can get a 2 bed house for £160k in a nice area. Where is that area?

Haven’t read all the replies but I think you should be bloody proud of yourself OP. You have £17k in the bank!! That’s more than probably the majority of people, you have a job with prospects, again many don’t. You’ve had the courage to escape an abusive relationship, many don’t. House prices are absolutely mental atm, unless I could really afford it, I wouldn’t buy this year until (hopefully) the market stabilises a bit and you can get more bang for your buck. It’s disgusting, absolutely disgusting that so many in this country can’t afford to buy. Honestly, if I thought it would change anything I’d go into politics just for this reason alone.

Please don’t give up. Your salary will increase over time, your child will be eligible for is it 30 hours free childcare when they’re 3? And then obviously school so hopefully you can save a bit from that each month. Get yourself on the social housing list ASAP and keep your chin up, hard to see it now but you’re doing great! Keep going for just a bit longer!

What about shared ownership/Housing Associations?

It isn't easy with having a young child as childcare is so expensive, but one day they'll be at school and the costs will go down. I don't think having a child first/being a single parent before you buy a property has ever been an easy option, though I appreciate that some people have to do that now or else time would run out on their opportunity to have children.

Didn't realise you needed a higher deposit to rent out a place in the UK. Was probably a measure to reduce investment but it just means only more well-off people can invest in property which is a bit unfair :-(

Could you buy a very small 1 bedroom and live somewhat uncomfortably for a year or so, then move out and rent it out (thereby avoiding the 35% deposit required), rent a 2 bedroom and have to pay a bit more rent than you are now (rent for 2-bed + costs of ownership - rent received from 1-bed). It shouldn't require any energy as you would let a real estate agent take care of it. Then, several years later when DC is well into school (so less childcare costs) and you are on a higher salary, so you've been able to save even more, use the 1-bed as equity (or sell it if it is too costly in maintenance), and buy your own nice place to live in.

This is why tax credits were so much better for those who were willing and aiming to improve life for themselves

Absolutely.

OP, I really do feel for you. It just seems absolutely insane that savings are capped. How does anyone afford to save up enough for a deposit then?! Madness.