Homebuyers could be forced to put down a deposit of at least 15 per cent

ray123

Those who are living in rented accommodation have helped to create the massive boom in the housing market…

My idea of a FTB was someone living at home, having finished school/university, saving for a deposit together with their boyfriend/girlfriend. I should have been more specific!

For those renting private accommodation (especially those with a family), I agree that it would be impossible to save 30k in three years and I apologize if I caused any offence.

However, this idea of moving out as soon as possible into private accommodation has led to an imbalance in the housing cycle. This has led to an explosion of buy to let landlords (aka piranhas) and in turn helped to create the boom in the housing market. It has also led to FTB’s being priced out of the market and created the idea that property is an investment rather that a home. If people stayed at home and saved a deposit for a few years, this would help to put an end to buy to let landlords and In my opinion stabilize the property market.

For those who cannot afford to buy their own home, they should be able to rely on social housing rather than be fleeced by private landlords, but alas that whole system is falling apart!

The money that should be going towards our own deposit for a home is now paying off the buy to let landlords mortgage and leaving enough money over for a nice holiday to Barbados...

moggylover

ILW wrote: »

Why not save the deposit, get the house and THEN have the children. Just a suggestion.

Good idea, and what I did myself, but in all fairness life does not always work out like that and we all realise different needs at different times in our lives. To make someone pay as much in rent as they would in mortgage repayments just because they cannot save a hefty deposit would be wrong imo.

lostinrates

ray123 wrote: »

If people stayed at home and saved a deposit for a few years, this would help to put an end to buy to let landlords and In my opinion stabilize the property market. .

It would also put an end to a lot of ''social mobility'' as many people leave home to move locations for their careers. Not having access to private rented, especially for young professionals, would be very career and life limiting.

ukcarper

The big difference in the seventies was no private houses to rent

ray123

Very true. There is an aspect to which private rented accomodation is essential, but it should be for the short-term, eg university, job related, rather than the mid to long term.

lostinrates

ray123 wrote: »

Very true. There is an aspect to which private rented accomodation is essential, but it should be for the short-term, eg university, job related, rather than the mid to long term.

I'm sorry, I'm obviously misisng a step in your logic here, my apologies....

if you are renting for a career until you can buy, you need to simultaneously save....your job isn't going to relocated near your family for you to stop renting and save. (I am for saving for deosits, and think this should be a reasonable percentage of the purchase, but I recognise how hard this is.)

franklee

mitchaa wrote: »

Unless you are high earners, the above would be next to impossible. The requirement for 15/25% deposits would be ridiculous if you ask me.

Average family with 2 kids, 1 male earning average £26k income and paying normal 6% pension contributions and a P/T mum earning £11k with no pension, the income of £37k is as below

£1515+£790 = £2305

Typical 3 bed SD property = £750
CT and water rates = £150
Car expenditure incl petrol/tax/MOT/Servicing = £200
Necessary bills = £250
Food = £400
Child costs, clothing, leisure, school clubs = £200

That's leaving around £350 spare cash leftover however i've not taken into account birthdays, xmas's, holidays, adult leisure, any debts etc etc

These are typical incomes and expenditures of average families, so where on earth do you suggest that they find a spare £833pm from when taking into consideration all the above

For an average family to save £30k, i think you would be looking at closer to 10yrs, not 3yrs. What would be the point in saving for 10yrs, 10yrs worth of wasted rental and missed equity if you ask me.

This is getting ridiculous expecting everyday normal people to save 15-25%

Perhaps if you are living with parents, or in the military, £833pm savings may be possible on modest incomes but if living in the real world, and having to pay expenditure like above, not a chance.

These figures look about right to me and show beyond doubt that house prices are simply too high.

The salary multiples always used to be 3*higher salary + 1*lower.
So for your example family that's a loan of 3*26 + 11 = 89K.
Plus the deposit of say 20% leaves the average house price at about 110K if this average family buys the average house.

If the rent is £750 as you suggest then that makes a reasonable rental yield of 8.25% on the 110K, again making the house price of 110K about right.

How much is this house now? Well I'd guess a house of circa 180K round here gives a rent of the £750 pcm if the landlord is lucky, which is an expected by today's silly bubble standards 5% yield.

So I think the house price needs to fall from circa 180K to circa 110K, which is about by 40%. Course some of that may be done by inflation causing wage increases, or perhaps with a recession it may not.

StevieJ

ray123 wrote: »

For those who cannot afford to buy their own home, they should be able to rely on social housing rather than be fleeced by private landlords, but alas that whole system is falling apart!

The money that should be going towards our own deposit for a home is now paying off the buy to let landlords mortgage and leaving enough money over for a nice holiday to Barbados...

Funny how all roads lead back to Maggie :eek:

ninky_2

Dan: wrote: »

Stop mortgage lending altogether? Please explain

I was recently in Iran and was surprised by the numbers of people who own their own homes. And I’m talking quite poor people, my husband’s family who come from a village background and are now drivers / caretakers etc.
This is basically because Iran does not allow mortgage lending as we know it, due to it being against Islamic principles (earning interest from a loan is seen as usury). This keeps the house prices in check. “Loans” are still available but on a much lesser scale. You need to leave a certain amount of money deposited in the bank for a fixed period and then they will lend you the equivalent amount.
Similarly, for those who rent, the system is different. Renters pay the landlord a year’s rent in advance. The landlord is then free to use this money for a year (for investment, business etc) but must pay it back to the tenant IN FULL at the end of this period.
So business growth is slower but as a result is less boom and bust.
The Iranian govt also protects its car industry by limiting imports of cars (particularly any secondhand vehicles that could undercut the market). As a result, there are lots of old cars on the road but the new ones that you do see are generally local models. People moan but it’s providing jobs and helping the economy.
Although I think there are many hideous things to be said about life there, economically I feel that many are in a better position there than here (although because they don’t have as many shiney things or access to credit they might not see it that way). Pensions are good and many employers provide excellent health cover for their workers. The good diet and access to fresh food is just taken for granted as are shorter working hours, lots of public holidays - the govt often just announce extra ones at the last minute to mark some Islamic milestone which can make business slow….
They also have no McDonalds. At all.

They also have the largest uranium reserves in the world. Which is perhaps why they are becoming so interesting as other energy reserves are running out....

ukcarper

franklee wrote: »

These figures look about right to me and show beyond doubt that house prices are simply too high.

The salary multiples always used to be 3*higher salary + 1*lower.
So for your example family that's a loan of 3*26 + 11 = 89K.
Plus the deposit of say 20% leaves the average house price at about 110K if this average family buys the average house.

.

Average family doesn’t buy average house average house first time. I agree with your calculation but that should be for a first property what type of property that is open to debate when the above criteria was used it was probably a 2/3 bed terrace