'Generation rent' excluded from home ownership

dtsazza

ruggedtoast wrote: »

Assuming thats the case, and its quite probable working in publishing she makes nothing like that much:

Even in an absolute dive like Borough the cheapest ex LA studio flat rental I could find on Rightmove was £850.

Add:

• £130 council tax
• £120 utility bills
• £200 food
• £50 clothing
• £30 travel out of area
• £15 tv license
• 20 phone and internet
• 100 a month student loans

With no other unexpected expenses, and spending absolutely nothing on socialising, that leaves a grand total of £85 a month disposable income while she's sitting in her 6ft by 4 ft box listening to police sirens and chavs fighting.

See, this is why a real SOA would be interesting.

I think it's fair to assume that the reference to "half her pay" means half her net pay, so student loans would have already been factored in. (Otherwise you'd need to add larger expenses for tax and NI as well!)

Also, £200/month food for one person seems extremely high to me. I don't think it'd be difficult to halve that and still eat reasonably. You could of course go even lower (a couple of my flatmates had a few weeks of spending £20 on food for the pair of them, and it wasn't that bad) depending on how much of a sacrifice you're willing to make. But £200/month is either treating yourself food-wise, or getting £4-5 lunches from Pret. Not that those are particularly bad per se, but they are discretionary expenditure which could be eliminated if you really hate the wasted money of rent.

So now Sarah has around £300/month free after those expenses. She can spend £100/month on socialising, buy a £50 pair of headphones to block out the sirens and still put £150/month towards a deposit.

Granted, saving 10-20% of a London house price at £150/month is going to take a while, but it'll take a lot less than £0/month. (And if she's dedicated, she can put all or most of her superinflationary pay rises into increased spending)

And if she can house share, she can probably get a 2-bedroom place for £1000-1100 (plus halved council tax and reduced bills) and thus put another few hundred towards saving.

ruggedtoast

GlynD wrote: »

It's no different now than it ever was. Rental has always been the ordinary working man's lot. It's only the more recent generations who benefited from Mrs Thatcher's "right to own" policy who seem to think they MUST own a house. My advice is to save. If you can't save enough to buy a house then you can't afford it and that's just a fact of life.

I'm not trying to be nasty to anyone by saying all that. Nor do I want to sound like my dad but if you can't afford to have something, you have to do without. It's as simple as that. Today, people seem to think society owes them something - it doesn't and the quicker you face up to that reality the happier your life will be.

So working class and lower middle class people should just accept a falling standard of living while the upper echelons grow richer than they have ever been?

I suppose if you need heart bypass surgery you'll be paying your own way then, and not being a burden on the NHS; or does that only apply to other people?

ukcarper

If she is taking home £1700 a month her salary would be about £27k when has some earning just above national average wage been able to buy a place in central London.

ruggedtoast

dtsazza wrote: »

See, this is why a real SOA would be interesting.

I think it's fair to assume that the reference to "half her pay" means half her net pay, so student loans would have already been factored in. (Otherwise you'd need to add larger expenses for tax and NI as well!)

Also, £200/month food for one person seems extremely high to me. I don't think it'd be difficult to halve that and still eat reasonably. You could of course go even lower (a couple of my flatmates had a few weeks of spending £20 on food for the pair of them, and it wasn't that bad) depending on how much of a sacrifice you're willing to make. But £200/month is either treating yourself food-wise, or getting £4-5 lunches from Pret. Not that those are particularly bad per se, but they are discretionary expenditure which could be eliminated if you really hate the wasted money of rent.

So now Sarah has around £300/month free after those expenses. She can spend £100/month on socialising, buy a £50 pair of headphones to block out the sirens and still put £150/month towards a deposit.

Granted, saving 10-20% of a London house price at £150/month is going to take a while, but it'll take a lot less than £0/month. (And if she's dedicated, she can put all or most of her superinflationary pay rises into increased spending)

And if she can house share, she can probably get a 2-bedroom place for £1000-1100 (plus halved council tax and reduced bills) and thus put another few hundred towards saving.

Yes, I can barely imagine the kind of decadence that would require someone to spend six entire pounds a day to feed and water themselves. It's probably technically possible to eat grass if you chew it enough, she should do that too.

And yes, you can house share and cycle 20 miles a day instead of taking the train but at some point, usually around mid to late 20s, most people decide they have had enough of slamming doors at 2am, other peoples pubes in the soap and acrimonious house meetings about who used the most gas or didnt do their dishes.

There is no reason for people to live like this. We have spare land, we have builders, we have the means to make the builders build on the land and the wherwithal to make an affordable train service so the people who live there can get to work.

But none of this will happen because it might make house prices go down.

It is utterly senseless.

GlynD

ruggedtoast wrote: »

So working class and lower middle class people should just accept a falling standard of living while the upper echelons grow richer than they have ever been?

I suppose if you need heart bypass surgery you'll be paying your own way then, and not being a burden on the NHS; or does that only apply to other people?

What falling standard of living? The SOL is better than it's ever been. I've merely pointed out that if you can't afford something, don't buy it. The most basic of financial advice.

As for the NHS - what have my rights to NHS treatment got to do with buying a house and the standard of living?

chewmylegoff

FTBFun wrote: »

And an example of someone refusing to make any kind of compromise:

Sarrah Laspa, a 29-year-old who has lived in London for seven years, regards rent as "wasted money" and would love to buy her own home, but has no disposable income left at the end of every month with which to save a deposit. She lives in Borough, a central area of south London, which is within walking distance of her legal publishing job and spends half her monthly income on rent.
"I could live further out, but then I would have to pay for public transport which would negate the benefits of cheaper housing," she said. "And being single, it would be pointless living in the middle of nowhere."

It's probably more of an example of someone who has unrealistic expectations of being able to buy a property as a single person on a relatively low wage.

I reckon the most she is earning is going to be £1,500 (net) - the basis for this is that if she is flatsharing then she won't be paying more than £750 in borough (which isn't actually an expensive area really). this grosses up to about £24,000pa.

[i assume she is flatsharing. if she isn't, then she is making a choice to rent her own place at the expense of being able to save.]

so she is paid not much more than half of the average salary in london.

a single person paid not much more than half of the average salary in, say, birmingham, is going to be in the same boat, buying wise, i would have thought.

so i'm not really that surprised that she can't buy a house, and it doesn't really say much about the market that she cannot.

ruggedtoast

chewmylegoff wrote: »

It's probably more of an example of someone who has unrealistic expectations of being able to buy a property as a single person on a relatively low wage.

I reckon the most she is earning is going to be £1,500 (net) - the basis for this is that if she is flatsharing then she won't be paying more than £750 in borough (which isn't actually an expensive area really). this grosses up to about £24,000pa.

[i assume she is flatsharing. if she isn't, then she is making a choice to rent her own place at the expense of being able to save.]

so she is paid not much more than half of the average salary in london.

a single person paid not much more than half of the average salary in, say, birmingham, is going to be in the same boat, buying wise, i would have thought.

so i'm not really that surprised that she can't buy a house, and it doesn't really say much about the market that she cannot.

All fine if you have secure tenancies, but the majority of people working in London earn nothing like enough to buy there. Those coming in at the bottom look forward to a lifetime of 6 month ASTs and the anxiety of perpetual transience.

Surely even the most ardent free marketeer can see that this isnt helpful in the long run.

Callie22

GlynD wrote: »

It's no different now than it ever was. Rental has always been the ordinary working man's lot. It's only the more recent generations who benefited from Mrs Thatcher's "right to own" policy who seem to think they MUST own a house. My advice is to save. If you can't save enough to buy a house then you can't afford it and that's just a fact of life.

I'm not trying to be nasty to anyone by saying all that. Nor do I want to sound like my dad but if you can't afford to have something, you have to do without. It's as simple as that. Today, people seem to think society owes them something - it doesn't and the quicker you face up to that reality the happier your life will be.

Fair enough - but can I have the same security of tenure that was available to previous generations who couldn't buy? Can I have the same access to state-subsidised housing that my parents and grandparents had? Give me some security of tenure, a reasonable guarantee of quality and fair rent and I'll quite happily rent for the rest of my life without saying a word. However, it's a bit off to say 'well if you don't earn enough/can't save then do without, it's what everyone did before' when previous generations had more opportunity to have a long term home, even if they weren't earning that much.

FTBFun

I agree fully with what's been said about long term tenancies btw - if we had a similar system here as they do in Germany for example I doubt I would have bought in the end.

chewmylegoff

ruggedtoast wrote: »

All fine if you have secure tenancies, but the majority of people working in London earn nothing like enough to buy there. Those coming in at the bottom look forward to a lifetime of 6 month ASTs and the anxiety of perpetual transience.

Surely even the most ardent free marketeer can see that this isnt helpful in the long run.

well, firstly i'm that the fact that she cannot afford to buy a house in central london as a single 29 year old on a relatively low wage in what i expect is a pretty junior role does mean that she is locked out of ownership forever.

working in london will give her the opportunity to build her career, gain experience, and increase her earning power. that's the point of working there in the first place. in due course, she may well be able to buy a property in london or thereabouts.

in reality, you'd have to be extraordinarily unlucky (or the worst tenant in the world) to be moved on every 6 months when you're renting. for me it has normally been my decision to leave rather than the landlord's decision to kick me out. i have enjoyed the flexibility of renting in london for the last 10 years - living in different areas, easily upgrading the standard of my home when my salary increases without having to suffer significant moving costs, having my landlord fix my boiler etc. most of my friends rent, and are happy to do so at the moment. i expect most will buy outside london proper in due course.

there is obviously a completely different demographic of people who are "doomed" to rent forever if they decide to stay in london. better security of tenure for them may well be a good thing, although i don't think that 6 month ASTs are the biggest issue faced by these people.