Pitfalls of Diligent Saving

Hawley_Gryphon

As a bit of a P.S. if I may, I have to say, the one thing that does rankle a little from amongst all of the comments is the phrase "home ownership is not for everyone".

There's something about that turn of phrase in this context that rubs me up the wrong way. Normally when one says that something "is not for everyone" it's a taste and preference thing. "Marmite is not for everyone", "Swedish Death Metal is not for everyone", "The Cats movie is not for everyone."  That works, that makes sense, but "home ownership is not for everyone"?

On the one hand I could look at it and say "ok... yeah some people might not fancy the idea of being tied down, having a property, putting down roots, taking on responsibilities, some people want to be able to up sticks and move at a moments notice without relying on estate agents and selling fees"  but... that then assumes that home ownership is something people could choose to opt into or opt out of depending on whether they're a "home ownership" kind of person or not. Which isn't the case. 
So the other way of reading that phrase, and the only way it really seems to make sense in the context of home ownership is that it's not FOR everyone. It's for the elite, the rich, the jammy, the lucky, the privileged and, every now and again, I guess it could also for the people who scrimp and save for most of their working adult life - maybe.
 
Home ownership SHOULD be for everyone. 

[Deleted User]

MoneySeeker1 said:

Getting_greyer said:

I agree the assumed income from interest is ridiculous. The reason is either a snide way of paying out less or some really smart reason I can't think of. 

If someone is getting income support and housing benefit etc. Are they likely to be offered a mortgage anyway? 

There needs to be some line drawn in the sand though reference assets.  Is it right to give some type of benefits to someone who has a significant cash pot ?  

Actually I know exactly what OP means and I used to fear for my savings whilst I was still in work and it meant I never dared get much in the way of savings (ie in case they got nicked off me by Government rules). I certainly feared unemployment and wondered how on earth I was supposed to show that savings weren't for "me" - they were "house deposit savings" and I never did work out how to get round that.

There should be some official way it's possible to put aside house deposit money without it counting as "personal savings". The only way I managed to put any savings to one side in a way the DWP couldnt touch if it came to it was to put it into extra job pension and they knew that I, provably, couldnt get at that money myself until it came to retirement. At which point I could - and did - get my savings safely back.

It was upsetting to have to spend what little money I had - whether I wanted to or no - in order to make sure I "kept" it myself.

I don't understand your view on savings are not for me but for a house deposit as if somehow the house deposit is not for you.

[Deleted User]

Hawley_Gryphon said:

Gosh, thank you for your comments and suggestions everyone. I had thought that the MSE website would have notified me that people had replied to my post! 

I've read all of your comments, thank you for your support and understanding for the most part. I get that when the word "benefit" is mentioned in any capacity there can sometimes be a negative reaction or a connotation of implied scroungers. I am employed and a full time single parent to a school aged child. The rent and bills eat up 45% of my take home pay and benefits each month, from the remainder I put 36% into savings and the other 19% is for groceries, clothing, cleaning supplies, packed lunches, school dinners etc. I cut my cloth accordingly to what I have available and we're used to really appreciating what we've got.

We've got a saying we like in this house "use it up, wear it out, make do or do without."

Currently it's costing us £500 a month for the 2 up 2 down we're renting, I've looked at mortgage calculators and it seems that mortgage repayments are cheaper than paying rent. I'm anxious about the added costs and responsibilities that come with home ownership, I'm not particularly handy and I dread the thought of dealing with unscrupulous trades people. However, my landlord is one of those "absentee" types who doesn't get anything done so I'm not much better off here. At least I'd be able to do something about repairs if I was in my own home.
Anyway, I'm still climbing every mountain and fording every stream and since I last posted I'm now up to £17,000 towards my house fund! Yey!

You can do something about repairs in a rental property too.  If a landlord won't carry out repairs then tenants have avenues available to them.  As a home owner if you haven't got the money to carry out repairs then you haven't got the money or you need to borrow it from somewhere.

Post 2: Repairing Obligations: the law, common misconceptions, reporting/enforcing, retaliatory eviction & the new tenant protection (2015) plus the Homes (Fitness for Human Habitation) Act 2018

You're clearly on a low(wish) income if you're in work and in receipt of some housing benefit.  Currently if you were to lose your job or your income drop then the household income would be further topped up with benefits after using some of your savings to tide you over.  If you were a home owner then there would be no housing benefit if you lost your job.  At best you'd be eligible for Support for Mortgage Interest which is a loan and only covers the interest portion of your mortgage payments.  

I don't understand this view that the government doesn't want you to save.  If that were wouldn’t be a £16,000 cap on savings nor would there be initiatives such as the Lifetime ISA to help people save for their first home or retirement.  You won't always be in receipt of certain means tested benefits when your child grows up so your income will at some stage drop.  It could well be the case that home ownership works out to be less expensive as you'd be chipping away at the mortgage as time goes on whereas rents are most likely to continue to rise.  Then again you might find your income dropping so much without tax credits, etc that home ownership just wouldn't be affordable although I suppose you could always consider taking in a lodger.

If you can rent a house, albeit a 2 up 2 down, for £500 then you can't be living in a very expensive area.  Is the money you've saved so far not enough for a deposit?  Have you spoken with a mortgage broker to find out how much you could potentially borrow?

numbercruncher8

If you want to own a home, you can - there are a few parts of the country where a £16k deposit and a minimum wage job will buy a property, and the mortgage will be less than the £500 rent you are paying. There are also schemes which also facilitate buying (although the value is pretty dubious). Of course, that may not be in the same area which you live in.

In most cases (for the employed and with savings) home ownership is a choice, a taste and preference thing. For instance, hundreds of thousands of Londoners, rent in the capital because they cannot buy there. They could buy somewhere cheaper out, but for their lifestyle or job it is either not practical or has other trade-offs such as commute time or social life. Nevertheless, it is a choice not to buy.

Maybe it should be rephrased, owning the home you want, in the place you want is not an entitlement. I would say if pushed few of us do but have bought the best we can with the money we have.

That said I have some sympathy. One of the trends that is unseen over the years that that the cost of housing has morphed to assume joint rather than single incomes. Things become much easier if you have two earners in the household. 

jimbog

Hawley_Gryphon said:

 It's for the elite, the rich, the jammy, the lucky, the privileged and, every now and again, I guess it could also for the people who scrimp and save for most of their working adult life - maybe.
 
Home ownership SHOULD be for everyone. 

There are places in parts of the north where you can buy a house mortgage free for £17K 

Nebulous2

Property ownership has never been there for everyone, however whether it should be is a different thing. Everyone should be entitled to a home certainly. Where I grew up houses were selling for £2-3000 immediately after the war. They were being bought by extended families and people were living with more than one family in each house. 

They then built a council housing estate further up the hill, and people were remarkably pleased to get a house for themselves, even if it wasn’t ‘theirs.’ That reduced pressure on the rest of the village and I can remember houses selling in the 70s for £600. 

If I remember correctly after the big council house sell off home ownership got up to about 70% but has fallen back since then. 

Davesnave

jimbog said:

Hawley_Gryphon said:

 It's for the elite, the rich, the jammy, the lucky, the privileged and, every now and again, I guess it could also for the people who scrimp and save for most of their working adult life - maybe.
 
Home ownership SHOULD be for everyone. 

There are places in parts of the north where you can buy a house mortgage free for £17K

Would you want to live there though?

Without casting aspersions on anyone, what numbercruncher said is correct; that ownership has morphed from where it was maybe 40 years or so ago to something that assumes two incomes. This has has tended to push up the price of houses under governments of both colours.

However, I disagree that ownership is for everyone. The expectation of good, fairly priced living accommodation should be there for everyone, but that doesn't mean ownership. Some people lack the personal qualities to achieve high incomes, but that shouldn't bar them from a decent standard of living. The problem is not that ownership costs so much; it's that renting at the cheaper end of the market comes with too many problems.

SpiderLegs

Hawley_Gryphon said:

 Home ownership SHOULD be for everyone. 

It most definitely should not.

AdrianC

Davesnave said:

However, I disagree that ownership is for everyone. The expectation of good, fairly priced living accommodation should be there for everyone, but that doesn't mean ownership.

Let's not forget that what we've got used to in current lifetimes is actually the historical oddity.

zagubov

I'm with many other posters here on this. In Europe you can rent good spacious property securely cheaply for your whole life and then so can your children and their children.
We used to have a system like that.
Back then being massively in debt wasn't for everyone (it was shameful).
It was deliberately dismantled to incentivise us to to acquire debt that meant we couldn't unionise our workplaces and employers would have us over a barrel.
This was done so effectively that we see it is the new normal.