To worry how my children will buy a house

[Biggiebiggiecantuc]

I’ve been working in the head office of a large retail bank for the past 10 years.

I’ve worked with a bunch of slightly older colleagues who will blush when we discuss house prices. They mostly started working in the mid/ late 80s, after leaving school at 16/18, and were able to buy a property within 2-3 years of starting work.

Many have multiple BTLs and will head off into retirement in their late 50s with large final salary pensions.

I look at them with envy. I will need to find away to earn till I am in my 60s

However, I am terrified of what future my children will have. I jut don’t see how the will get into the property ladder. They, like me, are average. They won’t get into top city firms and earn £100k 2 years out of uni. Hopefully they will prove me wrong but I just see a future of misery, running just to stand still.

I have managed to save around £10k for them. A housing deposit. Is there anything else I should be doing to help them?

No, not everyone will be mortgage free by 50, but the average age of a first time house buyer is 35, so with a standard 25 year mortgage, that’s done by 60

Aren’t many buyers now getting much longer mortgages as prices are so high?

I think people want to start higher up the ladder these days. Look at tiny studio flats and start there.

Because it makes sense if you are older & the entry prices are already high & then potential stamp duty. Two of my younger colleagues skipped the flat stage & went straight to the house.

This may be so, but I think the difference is that people renting are ok doing so because they know that they are being offered decent accomodation and long term security.

@LadyGabriella which government? And what did they do?

I've explained upthread how we got to the place we are with house prices. I can't see what any government has done to make it so.

Fear of care home fees isn't a rational basis to not buy a house.

This point has been covered in detail on the Meaningful Money podcast I listen to. Only a tiny percentage of their clients had their assets significantly affected by care home fees. It's simply not an issue for most.

If the home is jointly owned with a partner the value is disregarded.

Plus most people don't need more than 1 to 2 years at most so the cost is almost always well under £100k. It's extremely rare to be 'wiped out' by care home fees.

It’s because they’re so much older when they buy due to the cost of raising a deposit / earning enough for a mortgage.

A tiny studio flat is all good and well if you are 23, not so much if you’re 33 and wanting a family.

Downsize?

It is stressful. I rent, and can’t see that changing anytime soon. My son is 1, and the fact that so many people my age (I am 26) will only have a shot at owning a home if/when they inherit from parents is just depressing. Husband and I earn well, but the cost of everything is so high that we can’t really ever save! We earn enough we could cover a reasonable mortgage but getting that lump for a deposit is just impossible. I wish I’d saved when I still lived with my parents, but you don’t think of the future as a depressed 18 year-old. Wish I could slap past-me sometimes and tell me to spend less on takeaways and clothes.

When discussing my house with my grandparents, they did ask why I don’t just buy one - they found it hard to understand why I’d spend £700 a month on rent if I could just buy one? They’d no concept of the cost of houses now and I explained that the house they bought for £2000 many many many moons ago would sell for a whole lot more now, let alone a bigger house geared towards families like the size my family would need.

You have to be able to find a rental and then be able to pay the exorbitant rent. More and more landlords are selling their properties so there are fewer available to rent.

Your younger colleagues probably had inheritance money

I only have one child so I can afford to help him he bought his home in the welsh valleys near the Brecon Beacons its lovely and peaceful there. I moved from the south east to Somerset so I could have a nicer house in a village.
I dont see the attraction of living in the south east tbh. The beaches and countryside are much nicer here. We're NHS so we can live anywhere.

@Preppingdonkey - few lenders will give mortgages that go beyond 25 years if you will still be paying it in your 60s. The vast majority of people get 25 year mortgages.

I agree it’s difficult everywhere but the difference in house prices in the South vs North isn’t proportional to the salary difference.

I moved South to North and live in Manchester now so I can see both sides. I earn 10% less than London colleagues but the cost of a house up here is 1/2 - 1/3 of the cost of a similar house in London. Even on the south coast where I lived before I moved here, a house like mine would be 50% more.

Buying retirement housing is often as, or more, expensive as the property being sold. Plus there are management fees, which are not affordable on a moderate pension.

Renting from a not for profit landlord works for some. Capital raised means the tenant can afford the rent and other charges without claiming benefits. Living in appropriate housing is shown to reduce the need for an expensive care home. With a growing older population more custom built housing for older people would help them plus free up more family sized housing to rent or buy. Just a thought.

There are retirees who wish to retire in cities where they have all the amenities & entertainment at their doorstep. The downsize buying option in major cities is usually far more expensive than the home they are selling. This is where investing savings money & renting a property becomes a good option which many of the retirees I know are really happy with.

What a miserable choice though. Do a job you hate for forty years for the security of a roof over your head.

Yet people in the 80s could earn enough on a non degree level job, often on one salary, to have a roof over their head, however modest.

Now it’s two incomes and two degrees to get that modest place.

I wonder if the government should push their housebuilding efforts into incentivising building companies and town planners to build retirement villages, with smaller, energy efficient homes where in-home caring services can be implemented more cost efficiently in a tailored manner, freeing up the larger housing stock for families and taking the heat of of the housing market?

You could incentivise the move by waiving any stamp duty fees?

Your choice to stay near where you grew up is a totally valid one.
As someone who's moved all around, here and abroad, I'm always amazed by how many extended families live near to each other in the area of the SE I live in.
But you need to recognise that the flipside of exercising your valid choice, is that you or anyone else making the same choice to stay in the SE to be with family will have a smaller house/larger mortgage/rent etc than if you had moved to a cheaper area.

With the possible exception of some small Cornish villagers or whatever- and even then I don't see how it would really work fairly- I believe that anyone who lives in the UK should be able to move to any house/flat they can afford to.

I think so and similarly one of the reasons we've only had one child is because we want to help her out with a house deposit.

In the budget private pensions are now subject to inheritance tax which will mean many more people (or their children) will pay this. I think this will encourage couples to downsize and give the excess equity to their children early. This should free up a lot of family housing.

I wouldn't worry too much. Depending on how old your children are, by the time they're qualified adults the effects of population collapse will probably have started to bite and they may find countries are offering them all sorts of incentives to move and become part of their workforce - houses, great salaries, pensions etc. If they want to have children they may be in even more demand.

We're all subject our circumstances. People who were born in the 60s took advantage of a world that had lost millions in the war. Your children will take advantage of a world that's not having enough babies. Most people make it work somehow, regardless of the circumstances.

If you have a child that is employable and saves and saves then I don't foresee a problem with their buying a house eventually. I have one child barely above min wage but already at 25 has a house deposit sum of money saved (literally never spends money, and worked various lucrative side hustles eg schooling or clipping people's horses at a decent rate double the min wage - issue is salary to be mortgageable , but is looking to double salary with a career change, which may well include a relocation = problem solved. She has a friend, also a saver, training to be a solicitor (so a few years in) already able to afford a mortgage and about to buy a (small) property in a cheaper but commutable area. They have a third friend who has barely worked since Uni, with a degree & masters in a specialist subject but disinclined to relocate for the work with overdraft, loan and living off parents goodwill.

This. Only a few miles from me there are still flats in a small town from 120k for a 2 bed. An hour away in a major city you wouldn't get one for double this. A 3 bed semi would still be less than 200k in some towns around here. A couple on average salaries could afford this. It really depends where you live. They don't need to live where they are born.

I am in my 60s with my own property that is now mortgage free. When I started work in the mid 70s the interest rate was around 15% and there was practically no rental property outside council housing which I would not qualify for. So the only option was to buy - just like the rest of my friends and co-workers. In order to buy we had to save for deposits and then budget for mortgage payments (50% of my wages at the time). This was done by working overtime, not going on holidays, going out once a week and spending practically nothing and cutting back on all luxuries for at least 7 years.
It was hard work with furniture being second hand and living hand to mouth BUT managed it. By studying for further qualifications as a social life my income rose accordingly to the extent that I could move to a better property on easier terms than when in my early 20s.
This was done by accepting that things would be hard and could not compare myself to people 30 years older but eventually things would be easier.
My nephew is in his early 30s and he and his partner rent property because they want all the expensive holidays, mobile phones, etc and doing without so they can have the property they wish to own. They are waiting for their parents to die so they inherit the property they wish to own, without having to do without the luxuries in life.
There will always be people who are better off than you, better looking than you, thinner,etc but there is no gain in life without having to struggle and cut your cloth accordingly and suck it up. Hard life lesson but you appreciate more.

It now makes more sense to rent when you are in your 70s, to reduce IHT and it gives you flexibility, so you can be close to your grandchildren/ children too and move into more suitable accommodation if health deteriorates. It's a shame retirement villages are such a rip off if you buy.