July 18, 2018

The Housing Ladder

Average house prices in London are hovering around £400,000. That isn’t a typo. It really does say four hundred grand. And for clarity, the start of the sentence doesn’t say ‘posh gaffs in Highgate’, it says ‘average house prices’.

Assuming you’re a first-time buyer and assuming you can get a mortgage, you will need a deposit (cash in the bank) of around £80,000. Again, not a typo. You really do need AT LEAST eighty grand in the bank by your late 20s or early 30s.

On an average London wage and eating nothing but cold Tesco Value beans out the can and drinking home-brew vodka distilled from potatoes, it will take you the business end of 10 years to save up. If in the meantime you’re a paid-up member of Generation Rent with the cojones to order a Domino’s every so often, forget it.

But wait. There’s worse news. According to new research from Bath-based L&C Mortgages, by 2027 average deposits in London could rise to a totes ridic £245,000.

Daylight Robbery…

Research from the Institute of Fiscal Studies back in February showed how the house price explosion above the growth in income is literally robbing an entire generation of the chance to own their own homes. In the late 1990s, home ownership for the 25-34 demographic earning between £22,200 and £30,600 was around 65%. Today that same figure (with the salary range adjusted for inflation) is more like 27%.

Andrew Hood, a Senior Research Economist at the IFS put it pretty bluntly; ‘Home ownership among young adults has collapsed over the past 20 years.’

In a startling revelation, Richard Partington writing in The Guardian said that ‘those on middle incomes have seen the largest fall in ownership rates, those in the top income bracket have been least affected.’

WAIT. What? So you’re saying that if you’re loaded, you don’t have to worry about house prices because you already live in a castle with your own pastry chef and a room solely set aside for wrapping presents? Thanks Rich. Are you going to shock us with the ‘fire is hot’ and ‘grass is green’ revelations next?

Getting on the property ladder is hard.

In fact, many young people have given up. In a poll by travel firm Contiki back in December 2017 it was effectively implied that younger people are giving up their dream of owning their own home and choosing to spend their cash on exotic holidays instead. Contiki’s Donna Jeavons said ‘With housing being so expensive, many young people are opting to live in the moment and pursue other goals first.’

However, just like the Premier League financial bubble and Nigel Farage, it can’t carry on like this, can it? Something has to be done about it, doesn’t it?

But What?

Well that’s the $64m question (also incidentally the cost of a four-bed semi in Dulwich Village) but it appears all is not lost. If you haven’t got eighty grand in the bank, there are options.

The government has a series of schemes for first-time buyers that help with the extortionate costs of owning your own home…

Help To Buy
For new-build homes under £600,000, the Help to Buy scheme (only available until 2021) is for both first-time buyers and existing homeowners. It allows you to borrow 20% of the purchase price interest free for the first five years, as long as you have a 5% deposit. If you’re in London the amount you can borrow goes up to 40%.

Right to Buy/Right to Acquire
A Thatcher legacy, Right to Buy allows qualifiable tenants who rent from the local council to buy their home at a discount. Caveats include tenants having to have rented from the public sector for three years and the size and location of the property you want to buy.

Right to Acquire is for Housing Association (HA) tenants who don’t qualify under Right to Buy.

Shared Ownership
This where you buy a share of a home from (usually) the council or a HA and rent the rest. You need a mortgage for your share (between 25% and 75% dependent on how much you can afford) and you pay a reduced rent on the bit you don’t own.

You can then buy some or all of the remaining share. You need to be earning less than £90,000 and military personnel get priority.

There are various other ways to finance a home and there is some very useful information about the ways to jump on the property ladder from the Government’s Money Advice Service website.

Quick Question – What On Earth Does This Have To Do With Recruitment?

Well, that’s a valid point and we’re glad you asked.

It won’t come as a massive surprise to know that there’s a drastic shortfall in the number of available homes in England, to the tune of four million. Property Wire report that according to research by Heriot Watt University, the National Housing Federation and homeless charity Crisis, we need to build 340,000 homes a year until 2031 to meet current and future demand.

In a VERY small way, we like to think we’re contributing to the process. We supply property managers, home ownership & leasehold staff including Right to Buy and Right to Acquire and all of the associated admin and office support staff.

Check out our vacancies here if you want to be part of the (admittedly, long) process of putting roofs over the heads of people who need it most.

Catch you soon.

The Liquid Team