Posted on Monday, January 23, 2017 by Venn Group — No comments
As someone who works with the housing sector, it is difficult to go a day without reading a new report on the subject of home ownership. Whilst homelessness currently seems to be the key issue within the sector, homeownership is a topic which resonates within our office of (relatively) young professionals as they look to take their first steps on to the property ladder and often comes up as a topic of conversation.
When it comes to home ownership, I was incredibly lucky. As a member of the last year to go to university with the lower fee structure I was not riddled with debt when I left. When I was first looking to buy a house, there were various first time buyer incentives available to me from government backed schemes which minimised the deposit I needed to have available. Perhaps most importantly however, I had an excellent relationship with the ‘Bank of Mum and Dad’. Now, having spent almost 10 years on the property ladder, it amazes me to see the difficulties that my colleagues face in this process.
The greatest obstacle still, as far as I can see, is the deposit. This will come as no great surprise to most people, but with the on-going increase of the cost of renting within the private sector, combined with the continual decline in the availability social housing, being able to put any kind of money aside at the end of every month is a luxury few can afford. Figures from the English housing Survey 2013-14 show that an average of 47% of household income is spent on housing. One of my colleagues worked out that she had spent close to £80k in rent over the course of the past eight years. As deposits go that would be fairly sizable!
The critics of homeownership will say it’s not wasted money. Where would she have lived for the last eight years without those payments? Whilst there is some truth behind that question, I can’t help but look at that £80k and think how much better off you would be having sunk that into a mortgage rather than paying off someone else’s. Also if the barrier to homeownership is not income but savings then the impact on social mobility is surely obvious? You go to school and get good grades, attend university and attain a degree, use this to secure a well paid job….. but still cant afford to own your own property for perhaps a decade, unless your parents can lend you circa £45k (based on a recent Halifax estimation for the South East).
Shared Ownership is a fantastic option for those who can access it. In an office of 25 people we have two people whose homes were sourced this way and they can’t speak highly enough about it. Their experiences with Housing Associations have been excellent in both accounts. The changes in Right to Buy will likely help some of those already in social housing in due course but ultimately does little for those in the private sector. I have seen news on new ISA savings accounts, which don’t really seem to address the problem, and there has recently been talk of different types of tenancies, some effectively offering hire-purchase on your home with payments going towards the long term purchase of your home. Personally I think that the more options we have the better, one size never fits all.
So what is the answer? There obviously isn’t an easy one, otherwise better mind’s than mine would have thought of it by now. Regardless of your personal housing status it is a conversation we should be having at a national level. The options we have at present quite simply aren’t cutting the mustard and left to their own devices rental and ownership prices will only go one way. Are there innovative schemes out there that I am unaware of? If so please let me know. I am sure my colleagues will be thankful!
Ross Wilkings – Venn Group