Buying a flat as a singleton on average salary

katejo

Cakeguts wrote: »

People on low salaries have never been able to buy in London and the South East they have always either rented privately or social housing or they have continued to live with parents.

This has not always been the case. in 1993 I was earning around £14K. I bought a 1 bedroom flat for £41K on a single income. Now things are much more difficult.

OP. Take advantage of being able to live with your parents for a while and save hard. Rather than a studio flat you might like to try for a 2 bedroom flat/terraced house and let the spare room to a lodger to help with additional costs. You can take just over £7K rent per year tax free if you use the rent a room scheme. https://www.moneyadviceservice.org.uk/en/articles/rent-a-room-scheme-how-it-works-and-tax-rules . I have been doing that for over 10 years now. I sold my 1 bedroom flat and got a terraced house. The extra cash from the rent makes home improvements possible which I could not afford on my public sector modest salary. I earn a bit more than you but only just over £30K.

katejo

Kevie192 wrote: »

Why are you so fixated on wanting to buy property? Can't you just rent?

To want to buy something you'd actually want to live in, in the South East, on that salary is really just a pipe dream.

If I had applied your advice and carried on renting, I'd still be a lodger in someone's flat or house. To rent a 1 bedroom flat here would take around 60-70% at least of my take home pay, more once you add council tax. In comparison my mortgage is now around £500 a month including overpayments.
Even in 1993 when I bought my flat, I could not have rented a whole studio flat and saved towards buying.

ProDave

I have said this before. In spite of what people say it was NEVER easy to buy your first house down south.

In 1983 I was single, on an above average wage. I was only just able to afford literally the cheapest 1 bedroom house for sale in the county, on a grotty estate in a poor village. but I could not afford to be choosy, that or nothing.

I got the maximum mortgage I could taking into account a pay rise due (10% inflation was handy). That still left me short for the deposit so I had to sell my decent car and replace it with a very rusty £200 old banger.

Thankfuly the new build was late being completed so I had another 2 months to save up otherwise I would have been overdrawn on completion day.

I moved in with about £200 left in the bank. I could not afford ANYTHING new to furnish the house. My parents bought me a new carpet for the living room as a moving in present. All the furniture was begged or borrowed old second hand stuff. I found some second hand carpet for upstairs.

It was 6 months before I could afford the expense of having a telephone installed and probably a year before I could do anything other than "exist".

These days nobody wants to "go without" If I suggested you cancel your phone contract, your pay tv subscription etc, not even think of going out for at least a year to save money you would think I was strange.

So in spite of people saying "it was so easy back then" I can assure you it was NOT.

What is missing today, is inflation. That really helped to have high inflation and a salary that kept up with inflation, to rapidly deflate your debt. But then again I suspect you would be horified at 10% interest rates (even I had kittens when they touched 15%)

Smellyonion

Why pay 12% into a pension when your employer only pays 2%.

I would value home ownership into retirement.

steampowered

Op, personally I would cut the 12% pension contributions.

Not sure it makes sense to be putting that into your pension when you are a basic rate tax payer and scrimping for a property.

Just be prepared to hike your pension contributions back up significantly when you have managed to buy.

capital0ne wrote: »

Back in the day, I bought a two bed terrace house, no double glazing, no c/h 30 miles from work.

I'm afraid buying a 2-bed house within a 90 minute commute from work is a pipe dream for a lot of youngsters these days.

If you were buying these days it would have to be a studio with no double glazing 30 miles from work, not a 2-bed terrace.

The average house price to earnings ratio has gone up since your days, and the increase in the size of the required deposit has vastly exceeded increases in wages.

steampowered

AFF8879 wrote: »

Agreed 100%. I took this route and bought my flat in London two years ago, 20 mins door to door for work and an area I would have never have otherwise been able to afford. It is pretty much totally refurbished now, which has been great fun - not only do you get to add value/ increase your equity yourself but you can also style and decorate 100% to your tastes. Oh the fun I had flicking through kitchen and bathroom brochures on a Sunday afternoon

Though I would note, whilst it is great to buy a wreck and do it up, never settle for a shady area... you will need to live in this place so if you feel at all uneasy then it just isn’t worth it.

Not sure this is realistic advice?

20 minutes is an extremely short commute in London. Most Londoners have much longer.

An awful lot of people need to buy in the cheapest areas to have any hope of affording a property in London. This is why some of the worst areas in London (e.g. Barking, Tottenham) have had the biggest price increases during the past few years - people have been priced out of other areas - bear in mind the average deposit for a FTB in London is now about £100k.

The other option is to buy a bit outside London and have a 1 hour commute each way and spend several thousand a year on a train season ticket. Which is perfectly doable and a good option for many.

Cakeguts

katejo wrote: »

This has not always been the case. in 1993 I was earning around £14K. I bought a 1 bedroom flat for £41K on a single income. Now things are much more difficult.

OP. Take advantage of being able to live with your parents for a while and save hard. Rather than a studio flat you might like to try for a 2 bedroom flat/terraced house and let the spare room to a lodger to help with additional costs. You can take just over £7K rent per year tax free if you use the rent a room scheme. https://www.moneyadviceservice.org.uk/en/articles/rent-a-room-scheme-how-it-works-and-tax-rules . I have been doing that for over 10 years now. I sold my 1 bedroom flat and got a terraced house. The extra cash from the rent makes home improvements possible which I could not afford on my public sector modest salary. I earn a bit more than you but only just over £30K.

What you need to know is that there was a slump in house prices in the South East in the early 1990s and property was unusually cheap but it was not cheap before then or after then. We bought our house in 1989 and it was very very expensive and it was not a first house for either of us and still it was expensive. By the 1990s the value had dropped a lot but after that it picked up again and returned to previous levels and then increased until what we have now.



So anyone who bought anything in the 1990s in the South East got it due to timing. So those years were unusual. In the 1960s housing was very very expensive in London and people did not want to move there for work because they couldn't afford to live there. Basically unless you were extremely well paid you could not afford to buy anything in the South East apart from a few years in 1990s where there was a big drop in house prices which then recovered.

Red-Squirrel_2

AFF8879 wrote: »

Agreed 100%. I took this route and bought my flat in London two years ago, 20 mins door to door for work and an area I would have never have otherwise been able to afford. It is pretty much totally refurbished now, which has been great fun - not only do you get to add value/ increase your equity yourself but you can also style and decorate 100% to your tastes. Oh the fun I had flicking through kitchen and bathroom brochures on a Sunday afternoon

Though I would note, whilst it is great to buy a wreck and do it up, never settle for a shady area... you will need to live in this place so if you feel at all uneasy then it just isn’t worth it.

What were you earning? Just buying the fixer upper in the first place would be a massive stretch in most of the SE for people in ordinary jobs, there wouldn't usually be spare cash for work on it too!

katejo

Cakeguts wrote: »

What you need to know is that there was a slump in house prices in the South East in the early 1990s and property was unusually cheap but it was not cheap before then or after then. We bought our house in 1989 and it was very very expensive and it was not a first house for either of us and still it was expensive. By the 1990s the value had dropped a lot but after that it picked up again and returned to previous levels and then increased until what we have now.



So anyone who bought anything in the 1990s in the South East got it due to timing. So those years were unusual. In the 1960s housing was very very expensive in London and people did not want to move there for work because they couldn't afford to live there. Basically unless you were extremely well paid you could not afford to buy anything in the South East apart from a few years in 1990s where there was a big drop in house prices which then recovered.

Yes I am aware of that. I was only saying that it hasn't always been impossible. A chance conversation with an estate agent told me that my £41 K flat would have had a value of approx £65 K prior to the slump. That is still relatively moderate compared to the increase in value since then.
My parents sold a 4 bedroom semi in Kent for £37 K in 1982 and bought an Edwardian 5 bedroom period house for £49K (Rochester). My Dad was a senior teacher and my Mum had only been doing part time work.

greenorange

I'm 27, on £33k, live near Heathrow, and cannot afford to buy anything other than a parking space around here. I rent a 1 bed flat for £850/month.

My plan is to continue saving, working my way up the ladder career wise, once I'm around the £40k salary, move to somewhere cheaper like High Wycombe where you can buy a 1 bed flat for £170k, and commute to central London (30-40 min on train).

I assume even shared ownership is out of my price range, as £33k does not seem enough to buy/rent 50% on a £250k property.