The housing market is an unfriendly place for low-budget first time buyers.
House prices have skyrocketed, growing 6.5% on average across England and Wales in the last year.1 Plots have gone from plentiful and low cost, to sought-after and pricey. Once low-income areas – especially in London, like New Cross or Hackney – have been gentrified, making areas of affordable housing harder to come by.
Be Prepared to Get Gazumped
High-budget developers have mastered the shady practice of ‘gazumping’ and outbidding buyers desperately trying to get onto the bottom rung of the property ladder. These houses are then rented for as much as possible after a brief renovation, taking yet more suitable properties off the market for potential first-time homeowners.
The Buy-to-Let Nightmare
The buy-to-let market has boomed and rents are rising at an alarming rate. According to the National Housing Federation2, private renters in the UK pay the highest price for housing in Europe, with an average of around £730 per month. This is around a 40% portion of the average income.
With a high portion of income taken up with paying rents, tax and bills, let alone agents fees and repetitive moving costs, it is incredibly hard for those on starter salaries to save for a house deposit.
Help to Buy?
Thankfully, the Government has launched various schemes to try and tackle the issues facing first time buyers. The trouble is, house prices are still just too high.
The five per cent deposit scheme is – in theory – a fantastic idea, as it means I could be looking at a budget twice as much as I could afford otherwise. Unfortunately, I can’t access the full sum from mortgage lenders as my salary caps down what I can realistically pay back, meaning most properties are still out of my reach.
The ‘shared ownership’ schemes, to me, feel too close to renting. Plus, I fail to see how I can afford to pay back a mortgage and ‘rent back’ a property at the same time, when I can barely rent comfortably now.
Do We Care? (Spoiler: Yes)
Recently, Naomi Cleaver suggested that “Young people are not as absorbed by the need to own property as people of my age,” when proposing ‘student-style accommodation for adults’ in a recent interview.3
The response wasn’t fantastic. ‘Young people’, as we are apparently collectively known, do want to own our own homes, but we’ve had the realistic nature of that dream kicked into us and frankly, pining over what we can’t have isn’t very productive.
While some promising schemes have been proposed, including affordable pre-fab options, the key here is to make us feel valued and considered by the housing market, which isn’t happening. Just because we’re ‘young’ doesn’t mean we all want to continue living student-style once we start working. Surprisingly, some of us do actually want to grow up.
For those of us looking for independence, renting a room halfway between a hotel and student accommodation is far from giving us that.
With the housing market in dire straits, and wild, innovative proposals for solutions from developers, think tanks and government bodies popping up by the day with little follow through, it might be time to take matters into our own hands.
Self build is by no means an easy task, but perhaps it could offer a financially accessible solution to the current housing market. There are a lot of different options out there, and a self build home may be a more viable prospect for a first time buyer than I first thought.
This series will explore the feasibility of self build on a low budget as a way to get on to the property ladder in a fluctuating market.
1. Figures from Home.co.uk Asking Price Index 2015 in association with Calnea Analytics Ltd
Featured image: David Holt