I'm a bit skeptical of that claim - can you give an example of buying a 1 mill property with just 50k down? Who'd lend under those terms?
IFS: Home ownership has collapsed...
- Thread starter Uther
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I'm a bit skeptical of that claim - can you give an example of buying a 1 mill property with just 50k down? Who'd lend under those terms?
I'm pretty sure you could do it but you'd need an extremely high level of income. Probably somewhere in the region of £250k per annum.
Soldato
Caporegime
Arbitrary numbers plucked from thin air are just as daft an idea. In your example above, as a joint application with the wife we’d have a lower maximum mortgage value at x2.5 than I’d have on my own at 4x.
There’s absolutely nothing wrong with the “affordability calculator” approach we have now, although I guess a safety net to counteract massive hikes in base rate could be factored in.
Also in response to the need to have a huge deposit, the likelihood is that you’ll only be on your first mortgage product for a few years anyway, your property (should) increase in value, and come the end of your initial deal, you’ll probably be in a better LTV band anyway. Jump on the ladder as soon as you can afford to, don’t keep saving and saving for no gain.
Soldato
I borrowed 4.66x my salary last year. Had to go for 30 years rather than 25 to pass affordability but it won't make a difference once I can start to overpay considerably in a couple of years.
Glaucus is right though. No one needs a 50k deposit to buy their first home. They just want to make their bed in areas where houses are stupidly expensive.
Glaucus is right though. No one needs a 50k deposit to buy their first home. They just want to make their bed in areas where houses are stupidly expensive.
Soldato
Indeed, we remortgaged after 3 years of our initial purchase. House went up in value, mortgage dropped from 4.3% over 30years to 1.9% over 25years.
Soldato
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As a gradutate tho, don't you avoid income tax or NI and get stuff cheaper as still classed as a student?
No.
Also, depending on when you graduated and how much you’re earning, you may also have a Student Loan to pay off as well.
Associate
Those are the sorts of numbers I faced as a FTB in 1997, the property prices were considerably cheaper as a result. So yes, lenders ditching the tried and tested method of using annual multiples of a borrow's salary and adopting the‘affordability’ measure has been an absolute disaster for subsequent home buyers. Strangely enough the more money you can borrow the more expensive the item you want to purchase tends to be.
I have never seen an interest rate rise during my mortgage period either, it went from just over 8% down to 1.2%.
Associate
The houses would only sell for the amount people could borrow or have in cash.
Caporegime
The stuff people believe about tax is utterly bizarre at times.
Caporegime
Nope. Lol
Caporegime
Which means no one would sell as no one would want to sell a house for less than they paid for it if they could possibly avoid it. The market would grind to a halt.
Anyone got tales of moving to a cheaper area to take advantage of cheaper prices? I wince when people talk about £350k for a first home. You don't need to spend that even in West Sussex though, you can get something decent for less. You can easily get a 5-bed detached with a double garage my way for that, just looking at one now with over 2,500 sqft for £335k, there's another for £310k. And that's asking price, you'd be able to knock some off that.
Don't think that jobs aren't available or salaries aren't as high either. I work in Derby and saw that the city was top of the pile for earnings once housing costs had been deducted. Obviously, it's difficult matching London salaries, but the assumption that salaries are less outside of the south doesn't hold. I'm originally from Nottinghamshire, moved to Gloucestershire as a grad, then eventually moved back and earn more than I did down south, and housing is a lot cheaper.
Anecdotally, there do seem to be more people from (I presume) Kent/Essex and parts of London moving up here for the prices (older/middle aged folks), and I don't blame them.
Maybe some of the younger ones will follow suit? Anticipating responses on quality of schools etc, the differential still holds even when considering properties in areas with "Outstanding" schools, though prices typically will be higher than I quoted earlier. They're still less than many equivalent southern areas. You can have the pick of the best suburbs and buy a larger/more modern property, i.e it's a lot cheaper to live in a leafy, desirable Nottingham/Derby suburb than the equivalent in Bristol. Still have outstanding/private schools, great transport links, low crime, characterful housing stock, good bars/restaurants, etc </sales pitch>.
Don't think that jobs aren't available or salaries aren't as high either. I work in Derby and saw that the city was top of the pile for earnings once housing costs had been deducted. Obviously, it's difficult matching London salaries, but the assumption that salaries are less outside of the south doesn't hold. I'm originally from Nottinghamshire, moved to Gloucestershire as a grad, then eventually moved back and earn more than I did down south, and housing is a lot cheaper.
Anecdotally, there do seem to be more people from (I presume) Kent/Essex and parts of London moving up here for the prices (older/middle aged folks), and I don't blame them.
Maybe some of the younger ones will follow suit? Anticipating responses on quality of schools etc, the differential still holds even when considering properties in areas with "Outstanding" schools, though prices typically will be higher than I quoted earlier. They're still less than many equivalent southern areas. You can have the pick of the best suburbs and buy a larger/more modern property, i.e it's a lot cheaper to live in a leafy, desirable Nottingham/Derby suburb than the equivalent in Bristol. Still have outstanding/private schools, great transport links, low crime, characterful housing stock, good bars/restaurants, etc </sales pitch>.
That does sound pretty exceptional though Dis, to be renting and still able to save approx 50% of your take home pay every month for two years, leaving about £800 / month to pay the rent, bills, food and live on.
Permabanned
What about the effects of immigration on the housing market, that taboo subject most skirt around in a cloud of political correctness and an unwillingness to grasp a hot potato?
Some salutary figures here:
Housing
Housing: MW 430
The Need for Housing
1. The UK has a housing crisis. Put simply there are too many people chasing too few homes. In 2004 the Barker Review estimated that 240,000 additional homes needed to be built in the UK every year to cope with demand. However, in the last ten years an average of just 165,000 have been built (find the latest statistics on house building here).
2. The House of Lords Select Committee on Economic Affairs has now concluded that 300,000 new homes would be needed annually in the UK. The government has committed to building one million new homes across the UK by 2020, which the House of Lords Committee said ‘will not be enough’.
What is driving demand for housing?
3. The Department for Communities and Local Government make projections about the future growth in the number of households in England. Their latest statistics project that if net migration to England was to continue at 233,000 a year (it is currently 300,000 and has averaged 208,000 in the last ten years), then 240,000 new homes will be needed each year for the next 25 years to keep up with demand, 45% of which will be due to future migration. We will therefore need to build one home every five minutes just to house future migrants and their children.
4. However, these DCLG projections only account for the impact of future migration. The existing migrant population - who number 8.4 million in England – will also be driving future household formation but this has been misleadingly designated as ‘natural change’ among the existing population as a whole rather than as also partly due to previous migration. (To read our paper on the impact of immigration on housing demand in England see here)
5. The demand for housing is closely related to the number of households (a household can vary from one person living alone to a family with children or a group of unrelated people sharing a common space like a kitchen or living room). Household formation depends on changes in the population’s age-structure, social changes including trends in cohabitation, marriage and divorce, and the birth and death rates. It is also influenced by the availability and cost of housing. For much of the 20th century the number of households rose faster than the population and the average household size fell. However, recently average household size has changed very little so population growth is now the key factor driving household growth (see here).
6. One way of measuring the impact of immigration on housing is to look at the additional number of households formed that are headed by an immigrant. There is wide variation in the size of immigrant households but, on average, household size tends to be greater amongst the non-UK born and they are also more likely to live in overcrowded conditions. So, person for person, immigrants have required less housing than those born in the UK.
7. However, official Labour Force Survey data shows that over the last ten years 90% of the additional households created in England were headed by a person born outside the UK. That is 1.1 million additional homes out of 1.2 million between 2005 and 2015. In London in the last ten years, all of the additional households have been headed up by someone born overseas.
8. That is not to imply that most newly built housing is occupied by migrants, indeed many migrant households move into existing urban areas. The majority of new migrants to the UK, live in the private rented sector and that sector has grown as the migrant population has grown. Indeed in 2015 there were 2.2 million more households in private rented accommodation in England compared to 2000 and almost half of all private rented households in England now have a non-UK born heads of household, compared to one quarter in 2000. (Link to new paper)
9. Over time patterns of accommodation change and migrants who have been in the UK for a long time are likely to have similar levels of home ownership to the UK born.
~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~
Source: https://www.migrationwatchuk.org/key-topics/housing
A formidable amount of affordable housing in the UK is now rented out by private and government landlords to the vast and ever expanding immigrant population rather than being up for sale.
Some salutary figures here:
Housing
Housing: MW 430
The Need for Housing
1. The UK has a housing crisis. Put simply there are too many people chasing too few homes. In 2004 the Barker Review estimated that 240,000 additional homes needed to be built in the UK every year to cope with demand. However, in the last ten years an average of just 165,000 have been built (find the latest statistics on house building here).
2. The House of Lords Select Committee on Economic Affairs has now concluded that 300,000 new homes would be needed annually in the UK. The government has committed to building one million new homes across the UK by 2020, which the House of Lords Committee said ‘will not be enough’.
What is driving demand for housing?
3. The Department for Communities and Local Government make projections about the future growth in the number of households in England. Their latest statistics project that if net migration to England was to continue at 233,000 a year (it is currently 300,000 and has averaged 208,000 in the last ten years), then 240,000 new homes will be needed each year for the next 25 years to keep up with demand, 45% of which will be due to future migration. We will therefore need to build one home every five minutes just to house future migrants and their children.
4. However, these DCLG projections only account for the impact of future migration. The existing migrant population - who number 8.4 million in England – will also be driving future household formation but this has been misleadingly designated as ‘natural change’ among the existing population as a whole rather than as also partly due to previous migration. (To read our paper on the impact of immigration on housing demand in England see here)
5. The demand for housing is closely related to the number of households (a household can vary from one person living alone to a family with children or a group of unrelated people sharing a common space like a kitchen or living room). Household formation depends on changes in the population’s age-structure, social changes including trends in cohabitation, marriage and divorce, and the birth and death rates. It is also influenced by the availability and cost of housing. For much of the 20th century the number of households rose faster than the population and the average household size fell. However, recently average household size has changed very little so population growth is now the key factor driving household growth (see here).
6. One way of measuring the impact of immigration on housing is to look at the additional number of households formed that are headed by an immigrant. There is wide variation in the size of immigrant households but, on average, household size tends to be greater amongst the non-UK born and they are also more likely to live in overcrowded conditions. So, person for person, immigrants have required less housing than those born in the UK.
7. However, official Labour Force Survey data shows that over the last ten years 90% of the additional households created in England were headed by a person born outside the UK. That is 1.1 million additional homes out of 1.2 million between 2005 and 2015. In London in the last ten years, all of the additional households have been headed up by someone born overseas.
8. That is not to imply that most newly built housing is occupied by migrants, indeed many migrant households move into existing urban areas. The majority of new migrants to the UK, live in the private rented sector and that sector has grown as the migrant population has grown. Indeed in 2015 there were 2.2 million more households in private rented accommodation in England compared to 2000 and almost half of all private rented households in England now have a non-UK born heads of household, compared to one quarter in 2000. (Link to new paper)
9. Over time patterns of accommodation change and migrants who have been in the UK for a long time are likely to have similar levels of home ownership to the UK born.
~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~
Source: https://www.migrationwatchuk.org/key-topics/housing
A formidable amount of affordable housing in the UK is now rented out by private and government landlords to the vast and ever expanding immigrant population rather than being up for sale.
Caporegime
It’s what I did, granted I didn’t have to actually move that far, I just crossed the border from Cheshire into Staffordshire Moorlands, meant I could go from needing to spend £275k~ for what I wanted (driveway for 3+ cars, garage, corner plot, 3 bedrooms), to spending south of £150k. This was only two years ago, but our house is now valued at £20k higher than our purchase price. Suffice to say we’ve just changed our LTV band from the 90% we were on to 75%. Continuing to pay the same monthly payments as before so reduced the term also.
Win win, and in a few years I’ll be able to move back to my hometown and not have to stretch myself to do so.
Eh???
Why would you avoid income tax or NI? Students aren't exempt from either of those, they just get a council tax exemption in most circumstances.
What makes you pretty sure out of interest? (I'm curious as to whether this can be done)
I'm quite lucky in that my patch at work covers both Wales and England.
Managed to pick up a 3 bedroom semi detached with a nice sized garden for 135k last year. But the boys who work in England are paying 280k for the same sized house.
End of the month my out goings are a lot less than theres.
Maybe we need a rise in working from home/hot dealing so the work force can move to more reasonable areas.
But again some people I.e. my sister have to life in posh areas even if it's outside her means.
Managed to pick up a 3 bedroom semi detached with a nice sized garden for 135k last year. But the boys who work in England are paying 280k for the same sized house.
End of the month my out goings are a lot less than theres.
Maybe we need a rise in working from home/hot dealing so the work force can move to more reasonable areas.
But again some people I.e. my sister have to life in posh areas even if it's outside her means.