I’ve just been watching the news. They’ve been talking about a new government backed scheme whereby you could buy a house with a 5% deposit. They showed a housing development where a two bedroom end of terrace was priced at £120,000. Which means the government or god knows who will help you get a mortgage if you have a £6000 deposit.
The local estate agent chipped in how fantastic this scheme was and how people who rent are wasting their money.
But if you can’t win the lottery /the bank of Mum and Dad can’t cough up / Mum and Dad die and leave inheritance then you have to rent. Once you start renting, the rents are so high you do not have enough money left over to save up £6000.
It wouldn’t be so bad if the example house wasn’t one in Pontypridd. I’m sure it’s a lovely place but I don’t want to live there. There is no way on earth I would pay £120,000 to live there.
It’s all gone out of balance if you ask me. There is a whole generation who can’t scrape together a deposit for house; there is another generation who have seen the value of their property go up by 17 million trillion % and then there are those who can afford to buy multiple properties.
My landlord bought the house I live in now at some point in the past and now I rent it from him for nearly £500 per month. I’ve been here over 3.5 years so I’ve contributed over £21,000 to this man’s mortgage / pension fund / children’s inheritance.
The house next door is up for rent at the rate of £675 per month. It’s a two bedroom, terraced house! I’ve met the couple who own the house next door; they bought their house the same month I moved into my house. I remember the house was on the market at around £108,000. They were both retired and planned to use the house as a pension project. When it was first rented out the rate was around £580 per month, so to date they have already received around £24,360. At the current rate they are asking they will be getting £8100 a year. Even if the rent never increases again the house could be paid off in full in just over 10 years.
If I was part of a couple and we saved £200 a month it would take 2.5 years to save £6000 and we might get the pleasure of living somewhere like Pontypridd.
If the Government really do want to get people in their twenties buying properties then they need to do a lot more than offering 95% mortages. What they actually need to do is stop Landlords from making indecent profits out of their tenants. But then if rents came down to an affordable level then maybe people wouldn’t mind renting at all and would decide that they don’t want to buy a property after all!
It seems never ending.
But if being a landlord became a much less profitable business then maybe they would give up and put all their houses up for sale.
Maybe then the housing market would be flooded with properties and then house prices would drop dramatically and you could afford to buy a house not in Pontypridd.
Not such a bad plan after all.
If things go on as they are things are only going to get worse. I know only a handful of people in their twenties who have bought their own homes. The rest are resigned to renting. From what I can gather it takes around 25 years to pay off a mortgage. Maybe when the people in their twenties get to their thirties they will have saved up a deposit. That’s fine because they will be 55 when they pay off their mortgages. But if they don’t then they may miss out on property buying altogether because who wants to take out a mortgage at 40? Can you guarantee that you will still be working and earning enough when you are 65 to pay off a mortage?
Ah hang on a minute, maybe that’s why the pension age keeps getting pushed back?
I don’t know what the answer is, I’ll just keep buying my lottery tickets while not living in Pontypridd.