Will it soon be impossible for the next generation to buy a home?

There is increasing speculation at the moment of a lack of property or property shortage. Certainly it seems the governments quota for new properties is not going to be met this year. As someone that has been a renter for my entire professional life it begs the question will the next generation be able to buy a home without help from family?

I came pretty close to buying a property when my circumstances were different about 10 years ago. I had everything in place and was just looking for the right place. Of course that was back in the days of the 100% mortgage. Since then circumstances have changed and I don’t see myself buying a place anytime soon. Perhaps in the hazy future things will change again and I’ll be looking for somewhere for the long term. But at the moment it feels like there are just too many hurdles to get over.

How much?!

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This includes knowledge picked up along the way from articles, various friends, colleagues and family members.

Housing crisis what housing crisis

Given everything else that has been happening recently the housing crisis seems to have been brushed to one side for the moment. However, these major issues seem to be back on the agenda as Brexit takes a rest for a while. The Charity Shelter have found that in a recent study 59% of people under 45 years of age have been put off major decisions such as starting a family or getting a new job due to the housing shortage. With the average age of the first time buyer increasing to 38 this doesn’t look good for those looking to get onto the property ladder in the future. Remember the government saying they would provide a million new homes by 2020. At the moment that doesn’t look like happening.

Deposit, mortgages and fees

Added to this the difficulties being imposed on us by government and the private sector in buying a new home. Most first time buyers will have to save up money for a deposit while renting or living at home. This is becoming increasingly harder due to the cost of renting and not everyone can live with their mother until they are 38. Mortgages are still not that easy to get and the deposits most of the time are still sitting at around 15-20% mark. Which leaves a lot of people having to crawl on bended knee to the very depleted bank of mum and dad. The biggest problem I find is the level of fees and extra payments that are involved in the process of buying a house such as conveyancing fees, solicitors fees, stamp duty, agency fees and so on. You need savings just to be able to afford the fees that you will incur. Even though lower deposits are making a comeback, most people that rent still can’t afford to save for a 5% deposit let alone a 20% deposit.

Why is this happening

The gap between the earnings we make and property prices (that includes all the fees as well) is steadily increasing around the country. Salaries haven’t increased a hell of a lot which means that the cost of living in the UK as a whole is increasing as well. Add to this the increasing cost to rent and increases in council tax mean that people are not saving but looking to keep food on the table and a roof over their heads.

What can be done about it?

The government look like they are going to throw money at the problem. To both increase house building and ease general economic issues. But as well as this legislation needs to change at all levels. We still have legislation going back to post war times. The private sector is wary of buying land and building on it as where is the gain for them. So that leaves the government to step in and help out local housing authorities and smaller building companies. The government has also introduced schemes such as the shared ownership scheme. But these have their own pitfalls and are not suited to the majority of house buyers. Of course these kind of changes would benefit the future house buyers and home owners but probably not current homeowners and landlords.

I hope this has been informative, interesting and you liked reading it.

That’s all folks this week but I’ll be back again next week. Please subscribe to my Virtual Demon blog and I look forward to your comments and feedback.