Let's do the math for Kirsty regarding an affordable home

[kirstyalslap]

I'm sure everyone has heard that kirsty Allsopp has came out saying that people can afford homes if they only cut out netflix, the gym and takeaway coffees.

I just worked out a meal deal costs £3 a day. X that by 5 days a week 52 weeks a year is £720. Netflix is £8 for 2 screens (?) so times that by 12 months is £96 a year.
Let's add a £20 takeaway every 2 weeks for good measure. £520. Gym costs £14 a month so £168 a year.

So in one year of cutting back on netflix, lunch for work and takeaways I can save £1504
Wow
Now I need 14000 for a deposit so I'm only 10 years away (probably a little but more actually including fees.)

Right now let's think about increase in property value.
My parents bought their house 8 years ago for £90 thousand. A massive 2 reception with 4 bed and 2 huge gardens with a drive.
Bad condition.
Last year the neighbours sold for £230k
This year the other neighbours has been valued at £280k. My parents are thinking of selling for approx £290k.
So in 8 years their house has increased by £200k
(this hurts me as I started saving 8 years ago, nearly 9 and was looking at saving for a smaller house for about 80k needed 4k at the time and had a 5 year plan to get there. No family helping with deposit)

£90k now would get you nothing at all.
Also you need a 10% deposit.
Also rents back then was £500pcm for 2 bed flat. Now they are £700+pcm for same flat.

So how can we do it? How? Please tell me!

Oh also, everyone I know saving for a house has already cut out take away, meal deals, gym (first to go come on!) and much much more.
Batch cooking, shopping around for deals, having friends round rather than going out.
Every thing is rising in price now, I don't know how my children will afford to live away from us, it is scary because as much as we are okay now, we won't be able to have 3 grown adults living in one bedroom until they are in their 30s! Or will it be 40s or 50s by then?

@Mariposista

I cannot stand her 'live with your parents and save on rent' idea. And what about those parents who would quite like to enjoy their retirement/middle age without adult children living in the house for free?? (and I say this as the child, not the parent!)

Never has a stable comfortable middle class upbringing been quite so obvious...

I tend to completely ignore any financial advice that tells me to stop doing things like buying coffee and gym memberships.
If that’s where you’re starting from, you already think I have more money than I actually do.

People who got a leg up from their parents should just be grateful, not condescend to the rest of us.

@kirinm that isn't representative of London right? My flat in zone 3 north london (walkable to cherry tree and highgate woods and near 3 Outstanding Schools) cost me £392k in 2019. There are flats for £600k but they are above average. For a city of such extremes in wealth, there are flats going for £10 million but I am not looking at them!

But houses in very average or even deprived areas in London carry a significant premium. £600k would be cheap even in zone 5¬

I think the problem with what she said is that (a) it's too simplistic and (b) it doesn't acknowledge that it is is SO MUCH harder to buy a property now than it used to be.
She really needed to put some numbers alongside her claims - the non-essentials/luxuries that people could sacrifice (and which DH and I sacrificed when we were saving, and still do in many ways) and what those can add up to, which can be far more than you've listed, OP; and also what the true cost of buying a property is, what kind of property (our first one was a studio flat), where, all the additional costs, what income is needed to sustain the mortgage etc.

Eg Sky £26/m = £312, lunch £3/working day = £750, 1 coffee out £3/working day = £750, 2 takeaways £10/m = £240. We're already at more than £2k per year of non-essential spending. There are lots of other things that are non-essential and add up - eg subscription lifestyle boxes, non-essential clothing, magazines etc. And, adding larger sums that some people will spend - eg holidays, non-essential car etc - and that annual number swells massively. For some, it could reach £4-5k per year.

Let's say one was willing to settle for a 1-bed, obviously it varies HUGELY depending on a lot of factors, but let's say it's £350k. I generally add 8% fees roughly for a purchase, so with 10% deposit + 8% fees = so you'd need £63k minimum. To save that in 5 years you'd need to put aside £12,600 per year, which is very difficult to do, and still a big gap from the amount discussed above, saved by cutting out non-essentials.
But I think what Kirstie has in mind is buying a place in a relatively inexpensive part of the UK, which just isnt feasible for a lot of people (but would bring costs down to say £200k rather than £350k, which brings the necessary deposit/fees amount down to £36k, or a savings requirement of £7,200 pa over 5 years - still tough, when you're paying rent all that time - who can live with their parents Kirstie? not many people).

So I get what she's saying, there is a lot of non-essential spending going on, and sacrifices that could be made; but she needs to accept that there's still a huge gap between that and being able to afford current property prices.

All my friends had help (gifted deposits, accommodation whilst they saved, inheritance) or bought when 100% mortgages were a thing. Deposit required was the real limiting factor for us, our mortgage when we took it out was only 2x our income but we didn't have the deposit to get a larger mortgage.

I feel for people who are paying crippling rents whilst being told they can't afford a mortgage where the payments would be way under their rent.

And if everyone moved to the areas where those are the prices, the prices would push up.

We can't afford to live in city DH works in - so like many he has a long commute across the border - and that has affected prices here. We couldn't afford this house if we were buying now - it's gone up at least 50 k since we bought it nearly 7 years ago.

There are still other areas we could afford further out, smaller house or less good area- but if it continues to rise then I'm not sure where ours kids might have to look.

Stuntbubbles
This type of thing is £90,000 in town near me. Obviously needs renovation but would be a solid family home in a decent area near park etc. Not near station but easy access to motorway.
www.rightmove.co.uk/properties/109782722#/?channel=RES_BUY

I was told I could get a mortgage for £95k in 2008 with a 5% deposit. Except the cheapest flats I could find nearby were 110/115k. I couldn’t save the deposit. when I was at school one parent died and the other was a violent alcoholic. So I lived in a bedsit instead. So there was no chance I could live with my parents after Uni. I had a 10 year old car to get to work otherwise it would have been a two bus journey to get to work taking 1.5 hours each way. I had £20 each week to spend after rent/bills/food/petrol. That sounds like alot but it had to cover clothes, shoes, socialising, Christmas presents and unexpected costs such as a new tyre or MOT fail.

OP, you've completely ignored the fact that Kirstie also suggested moving back in with parents. (If possible) I know that doesn't suit your OP but if you add in what you would save doing that then it would make a massive difference.

"If possible" is the biggie here. Lots of kids never return home after Uni because there aren't any decent jobs in their home town - they mostly end up living in London/SE or other big cities where the jobs are located.

I've just done the maths, and since 2016 I have spent £51,600 on rent.

£51,600.

That's honestly made me feel a bit sick. That's far more than I've managed to save

One of my kids liked saving money and had stashed away over £5k all from working before she was 18 or 19. She generally didn't work term time apart from babysitting (where she could revise once the kids were sleeping) and then during the school holidays she would do event work and work in coffee shops.

She still went on holidays, went out and bought herself clothes. Presumably this wouldn't be possible for everyone (so many MN'ers seem to live in extremely rural areas with no jobs and no transport ) but if kids really wanted to save I bet some of them could.

Having said that my kids had help buying their first homes and all their friends did too.

So if they need to save £14000 as per your example it would take less than 18 months.
The average house went up £24,500 last year. By the time they’ve saved, they’ve missed the boat.

Though of course if your starting point is hair extensions and cocktails, you can cut back and save. My starting point was cutting my own hair and sharing a supermarket bottle of wine occasionally with housemates: there was nothing to cut back. (I inherited and used it to get on the ladder.)

It's all very well for Kirsty to say everyone who wants to buy a house should move to do it. She really means out of London and the SE. However, if all the nurses, teachers, transport workers, carers, retail staff etc, etc moved up north who would actually provide these services?

It's six of one, half a dozen of the other. Some people definitely want the insta life and then moan that they can't afford the house they want (especially in London) but overall, looking at the figures, it's not just about cutting cloth.

The UK population in 1980 was 56 million (London c.6.8 million) which rose to 58 million in 1995 (London c6.9 million). The current population is 68 million (London c9.3 million - ouch)

There has also been a massive rise in single person households (study done for or by the Row rise in the number of single person households (doubled from 1971 to 2005 with an estimate on that (Rowntree foundation) study to have double again by 2021 couldn't find a more current statistic but you get the point)

Trying not to generalise as don't know how ubiquitous it was, but it's not that long ago since mortgage companies wouldn't take a woman's earnings into account (or more than a token %).

People are living longer, life expectancy of 74 in 1980, 77 in 1995 compared to 82 now.

No wonder people could buy back in the day and some are struggling now in places regardless of their financial choices, it's no conspiracy by the elite.

I expect that the Honourable Kirstie Allsopp, as the wife of a property developer, and daughter of Charles Allsopp, 6th Baron Hindlip, a former chairman of Christie'sshe would know all about making ends meet on a modest income .

Yes she's an absolute privileged idiot.

Tbh It seems only really possible to save if you are in a couple, both working, no kids. That way you can cut your rent & bills in half while working together to get a deposit. I saw a YT video where a guy said he and his wife (no kids) managed to save for a deposit by living on only one salary and saving the other salary completely. They did this for about 2-3 years and managed to get a small house. Not sure where I'm going with this as it doesn't help young people unless they have a decent (steady) job and are in a strong relationship. So many jobs are min wage zero hours contracts these days how anyone can do even this much is hard to imagine.

I lived in a cheap area and lived in a really shitty flat for a few years to save. I was lucky finding both of those.

I also did do things that are commonly suggested, but they are really
small Potatoes compared to the 2 big things!!

I enquired about a mortgage in the 90s and got some good advice - which is unusual these days. One of the things that stuck in my mind was this : if you need to give things up then you can't afford this mortgage. Because , if interest rates rise or inflation really kicks off - what are you going to give up that you already haven't?

I think some of your calculations are a bit out because £3 is the cheapest meal deal- buying a coffee and croissant for breakfast and then a meal deal from pret as some of my colleagues do is more like £11-13 per day. I know lots of people who have netflix and now tv and Amazon prime video (and Spotify or other music streaming service) plus the TV lice1nse so a good 40 quid spent per month (lots more if they have sky). There are no gyms for 14 quid near me - cheapest are about 18 but lots of people spend way more than this.

Plus the "big" savings - the main difference between my friends whi have bought and those who haven't are whether they lived on their own in nice flats in good areas in their 20s, or in grotty flatshares/with their parents. Also if they had kids early. Plus things like holidays -I know lots of people in their 20/30s who have a good 5 or 6 holidays a year. Cutting those to 2 would easily save two grand a year.

So, coming from the perspective of someone who has done it, and knows a lot of others who have, most people (particularly without kids) could probably meet a 14k savings target (or more) within 5 years....but not easily and it would take a lot of cutting/limiting of treat spends, not just the odd coffee/avo toast once a day. And of course there are areas in the country where even that wouldn't come close to the deposit needed, or even if you raised a really good deposit your income wouldn't be enough to get a big enough mortgage.

I 100% agree with your end point though and I saw on the paper alongside her comment, that her first house would cost £111k with inflation now whereas current average price for a house is £250k. Also that she acknowledges she had family help (from her father the baron)!

Personally what I think we should be doing is making rental more secure I know for a few people they have been in their private rental home for 10 years plus but they are the exception to the rule.

Regarding not knowing how kids will ever move out. I'm seriously looking into building tiny homes - they can be classed as not needing planning permission with the right dimensions.

My mum agrees with her. I don't. I have a professional job and lived with my inlaws in a joint family situation. Dh paid the mortgage and bil bills whereas fil paid for the food and dh and bil both made a contribution too. My money was my own and I worked full time earning a good income. I saved a deposit and money to furnish our home. Did we get any money off my parents or inlaws no, they've none extra to give. Had we rented whilst trying to get a deposit together it would have taken longer as part of my income would have gone on bills and food so we are lucky to have been able to have that arrangement. Not everyone has the space to house adult kids or even the inclination. I did hold off on having kids till I got the deposit together but it only took me a year and I was under 30 for someone in a lower paid job it would have took. I had a similar only deal and Netflix but no sky. I would still buy my lunch though and would have a takeaway once a week.
p

I mean to put in my garden for the kids.

It probably was possible for many still when Kirstie's generation were buying their first homes. When the previous owners of my house bought it in the 1990s, they paid something like £80k. Houses on this street are now going for £350k for "needs updating" (read: needs rewiring, new bathroom, new kitchen, completely decorated and the boiler will probably break next year too) type houses and well over £400k for anything that's already been updated in the past 10 years.

*sim only deal