I am a renter at heart. I like the flexibility of renting, of knowing that when things go wrong, or you run out of space, or you want a change of neighbourhood, city or country, it’s far easier to find a new home to rent than to have to go through the trials of selling and buying a home.
That said, does buying a house still figure into my plans for the future? Most certainly. Do I sometimes really hate having to answer to (often inconsiderate and bullish) landlords? Definitely. I spend a lot of time day dreaming about buying a house, being able to put my stamp on it and make it my own. I save diligently, in the hope that one day, when we know exactly where we want to live, we will have a good deposit to put towards our first home.
But it might not be that simple. This weekend I read that the property analyst Hometrack has warned that the ‘golden age of home ownership’ is coming to an end, and that millions of young people face a lifetime of renting instead.
This is hardly news to me or probably anyone my age. You don’t have to tell young people that getting the deposit together to buy your first home is one of the biggest financial challenges they will face.
The reality is that young people who live in rented accommodation, who are professionals and not claiming any benefits, and would ideally like to be able to get onto the property ladder, often simply can’t. A single person who is already having a large chunk of their wages eaten up by their rent, even on a good wage, will find it very difficult to save up the estimated £40,000 deposit needed in areas such as London to buy a home on the bottom end of the property ladder. Couples may have it a bit easier, but whichever way you look at it, it’s hard.
The Observer wrote: “Richard Donnell, director at Hometrack, said that, while the ‘long-term’ aspiration for people around 30 was to own a home, increasing numbers believed it would not happen in the next three to five years. “The argument is that we are moving towards a more European model, where first-time buyers are in their late 40s and come in with 50% deposits.”"
This may be all well and good, and perhaps entering the housing market at a much later stage is not so bad – much better than stretching yourself to unrealistic financial commitments to do it earlier. But what really gets me is that I feel like my section of society – young professionals, without kids, who earn decent money and are, really, a very slight drain on the resources our taxes pay for – aren’t being helped at all by the government to overcome this issue.
I don’t want a handout, what I would like to see is significantly increased stamp duty tax on second, third and fourth homes, so that the people who are buying reasonably priced properties out from under the feet of prospective first time buyers might think twice about it, and be disinclined to do so. I would also like to see better protection for renters, so that young people don’t feel the need to rush to buy because they are sick of the (often unpleasant) realities of renting in this country, compared to European models that are much more protective of tenants’ rights.
Do you ever doubt that you will be able to buy your own home?
I think about this all the time for my mates in cities like San Francisco or NYC. I don’t know how you could ever afford to buy there without some family money. And then you spent your whole life working just for a little apartment.
I don’t consider my renting money wasted, but I don’t think I realized the deep difference in my whole life once I truly had my home that I bought. It really made me grow up. I wonder what this will do to my generation in places like New York.
I so agree. I have been saving for such a long time, and owning my own place is still many years away – especially in London. It does make you fume with rage when you see older people who already have their own homes, buying up all the ‘doer-uppers’ and pushing up the market price. Not to mention that it seems easier for someone on benefits to own than someone who works – doesn’t seem right huh.
Would love to see something like the Oz system over here, with the first time buyers allowance.
For sure. Entry level for a house is 300k…and a 20 per cent deposit is $60k.
Very late comment but I just wanted to say this.
I started work at the age of 16 and from that first day began saving for a property. I worked 100 hour weeks, never had a holiday, never had a nice car, bought second hand clothes, didn’t waste money on any kind of luxury and it took me 8 years to get a deposit together. My first home was a tiny studio flat in a grotty area. It cost 10 times more than my salary and my deposit was over 50%. By continuing to live frugally I paid off my mortgage by the time I was 38. That was 24 years of real hard work and sacrifice that achieved that. I celebrated clearing that mortgage with my first ever meal in a nice restaurant.
Getting on the ladder is certainly harder than it has been for the last ten to fifteen years but those years were the exception, we are now heading back to how it always used to be. I think the problem is that over the last decade or two people have forgotten the basics of living. How many people start saving for their first home in their teens like we used to do? How many are prepared to go without and work 100 hour weeks like we used to? If you compare average wage to the price of the basic house or apartment it is no harder to buy a home than when I did. In fact, it may even be easier.
You young un’s are going to have it tough over the next decade or more, it’s going to be hard for you to adapt and make the necessary lifestyle changes, but it’s only going to feel tough because you’ve never had it tough before. You’ll survive though, and you’ll learn to thrive too, it’s just going to be a shock to the system for a while.
“How many people start saving for their first home in their teens like we used to do? How many are prepared to go without and work 100 hour weeks like we used to?”
I have worked since my early teens (earlier, if you count babysitting), but had to pay my way through college and uni. I left with minimal debt compared to my classmates, but education dissolved any potential house deposit savings. I didn’t continue with a Masters degree, as I just wanted enough to get into a job that would cover the bills (a degree was expected at the time and I wouldn’t have got the jobs I did without it).
Finding such a job today would be far more difficult. I count myself lucky that I am nearing 30 and wasn’t born 4-5 years later, as I would never get my job if I had to reapply now with the experience and education I had back then. I am watching my younger cousins go through this and it isn’t pleasant. I was able to get both a 9-to-5 and an evening/weekend job after I graduated, but getting either today is hard.
In fact, I count myself lucky that I have a job at all. Many of the people I grew up with, most of whom are either skilled in some trade or educated in a professional field, have struggled to find or stay in work. My current job is fairly stable compared to most (very rare these days), but I’m not on a brilliant wage. I have the choice of either working locally for half the salary or staying in my higher paying role with a 1.5 hour commute each way. I chose the more stable, long-distance option as I have faced redundancy once before and it was a horrible experience that I will do my best to avoid in future. I also enjoy my job and that makes the traveling more tolerable.
I share a small flat with another person in a cheap area and the rent and bills are still almost half my salary. I don’t drive so save a bit in transport costs, but this is still a quarter of my monthly pay. I also don’t go out much, as I get home too late during the week to do anything except eat, wash and sleep (which is actually a good thing, as I save money without trying), and weekends are mostly spent on housework, errands, seeing family and just having friends over or vice-versa (no clubbing or nights in posh bars, holidays abroad, gadgets, expensive clothes, etc).
Most months I save about £200 for a deposit. I turn 30 in a couple of years and have roughly £14,000 in the bank. But mortgage lenders won’t touch me and I know I have many years of renting ahead of me still. Fortunately I have no plans to have kids, so I am in no rush to settle down and can afford to wait for security without worrying about IVF later down the line. I also have a fairly good relationship with my landlord and am not likely to be kicked out for a few years (a constant and expensive problem with other places I have lived in).
So it doesn’t make a lot of difference how much you work and save. If the average house is too inflated and the banks won’t bridge the gap, then first time buyers have no choice but to wait till their 40s before they get a fixed address of their own. The only young people I know who are throwing their money away on gadgets, holidays, clubbing and clothes (very few) are those who have simply given up trying and don’t see the point (the ‘live now, as the future is going to be hell’ mentality). Those who don’t believe their savings will be worth anything later on and that they will never be allowed to retire. I try to be more optimistic, and have the back-up option of moving abroad with family if things don’t go well. But I can all too easily understand their fears.