According to the National Housing Federation (NHF) there is an under-supply of houses, which is boosting rented accommodation, but killing home ownership.
In light of this, the government has made more public land available for building, with £4.5 billion being invested in new lower-cost homes over 4 years. This should create 170,000 new homes, but the NHF say that more investment “would stimulate a wider, faster economic recovery.”
Ownership has decreased due to the level of house prices, larger deposits and stricter lending regulations set by banks according to the NHF. I agree that it is a lot harder to get into the housing market and without a potentially crippling loan, it is not easy to save a deposit, especially as the cost of living is on the up…again! Over the last 10 years house ownership has fallen to 67 and could potentially plummet to 63.8 according to Oxford Economics.
The knock-on effect of this is renting increasing, but so is the price of renting. 1.5 million people are on the social housing waiting list, and I think homelessness or families sharing their homes could become a growing issue. What is even more alarming is that Oxford Economics also predicts average rent will go up 20 over the next 5 years, which makes me think how desperately I need to buy a house. You may be like me and feel renting is wasting money, you don’t have anything to show at the end of it.
The younger generation seems to be the people who are hit the hardest at the moment, with low earnings, pay freezes and possibly university debts to pay, renting a home is becoming more expensive and saving for a deposit is near impossible. So, what is being done to help, other than the land being freed?
There are numerous schemes put in place to help you get on the market, without using the bank of Mum and Dad. £250 million was announced in the government budget to help up to 10,000 people buy their first home and aid with the deposit.
One such scheme, the Firstbuy scheme, reduces the size of the mortgage to 75 with a government and developer “loan” to cover 20 of the property so you only have to come up with 5. This initial help should get you onto the market quicker and you don’t have to save up as much money to get there!
If you go to the Firstbuy scheme website you can get more helpful information including tools that tell you if you are eligible for the scheme, along with various calculators. I thought I would give it a go and see how much is a house in my price range. It suggested my maximum house price was £76,000, which isn’t going to get me a lot, but it is a start. Monthly payments were estimated to be £319 and I would only have to raise £3,000 deposit, which is a much more achievable amount.
There are other schemes out there too, one local to me is Orbit Homes, which offers to buy a percentage of the home you want to buy. For example, you may not be able to afford a £165,000 house as you only have £66,000, but the company will buy it with you, giving you a 40 share in the property value. You can then sell this on or buy the rest when possible.
Schemes like this are definitely required in the current economic climate as the amount of people who cannot afford to buy their home is alarming and many of us are worried about the future!
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