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How To Survive When Housing Costs So Much?


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Nah, when I were a lad back in 1977 buying a house were a piece of p155. I was clearing 200 a month and only paying out 100 a month mortgage. Of course we didn't get any help with childcare or tax credits though and basic rate income tax was only 33%. No car tax or insurance to pay either as it was the bus,pushbike or feet to get to work and do the shopping. Yeah we had it easy then not like you poor things today.

Bit sarcastic answer !!

So 50% of your take home pay went on the mortgage , only for the first year the fairy god mother of wage inflation kicked in after that and every year that followed . You might not have got tax credits but you would have got miras 33% of your mortgage interest paid by the tax payer.

You say income tax was only 33% yes but in real terms the cut from your take home pay going to the government was about the same then as it is now. Due to personel allowances being higher in real terms then so you started paying tax at a higher level of earnings , and NI the other tax on wages was only 6.75% . The rise in NI since then has wiped out any advantage in the income tax cut , as it is now 11% and paid from the very first pound that you earn. It amazes me how many people on low or average wages have been fooled into thinking that the govenment now take less form their wage packets than they did then . They just look at the starting rate of tax at 20% without looking at the NI and the lower level of earnings that income tax kicks in at.

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£500 rent is just the start. I'm finding that power + council tax + water rates is now coming in at about two thirds of rent, so with a rent of £500 which is not far off what I'm on, you're looking at £833 just to keep a warm roof over your head for a month. Second rule of thumb: your take home pay is two thirds the gross, so before tax you have to earn £833 x 1.5 = £1250 to cover this. Fifteen grand gross per annum gone before you you start looking at luxuries like food and transport. What you're supposed to save for a deposit with I do not know. I'm struggling on a decent wage, and I'm completely baffled how most people are managing at all, I really don't understand it.

THIS is the entire reason I came to hpc all those years ago! [2004 - although I followed from 2003 onwards].

I have been UTTERLY mystified as to HOW people get by - AND put up with this SCANDALOUS situation..........

Welcome to REALITY UK.... :rolleyes:

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...........easy credit provided by the banks together with extra low interest rates has caused a bubble that has benefited a few.....I am not happy with this, I know it can't continue like this,.......

...........easy credit LIAR LOANS provided by the banks together with extra low interest rates has caused a bubble that has benefited a few.....I am not happy with this, I know it can't continue like this,.......

:rolleyes::rolleyes:

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Due to changing circumstances, I might be taking up a full time job on a salary of £20,000 pa, which is about £1300 per month take-home pay.

Rental prices seem to start at £500 pcm for a studio / 1 bed. With bills, I reckon this would come to about £650 per month, just to put a roof over my head - half my take home pay.

This seems scarily high to me - leaves me just £650 a month to pay for everything....... Am I missing something? How do people make this work?

Ok, I could share a house, but at late thirties, this isn't very appealing and certainly not long-term. Or I could get partnered-up - but that's not always so easy! Or I could get a better paid job - ok, I could, but this isn't an option for everyone and £20k isn't so far below the UK average.

So my questions are -

Shouldn't it be possible to have a reasonable standard of living on a full time salary of £20k? (The IFS put this almost exactly in the middle of UK household income distribution.)

Shouldn't I expect to be able to afford a 2 bedroom flat?

Has it always been this expensive in the UK, or is it a recent phenomenon? And is it the same in other European countries?

Or should I just accept my lot, shut up and run up some huge credit card bills like everyone else?

No. On this money, why expect to afford a two bedroom place? You don't even NEED a two-bedroom place.

Living on your own, paying all the bills out of one (not very good) salary is always a stupidly expensive way to live, really. You'd be better off sharing a house with some friends - its way cheaper, and fun.

And £20K isn't much really. Is this likely to improve, or are you in some dead-end job? Whereabouts in the UK is this?

My first "proper" office job (IT support bod for a bank in London) had me earning £15K aged 24, but this was in 1992. I then bought a (very run-down) flat for £49K.

How much would be the equivalent of £15K back in early 1990s in "today's Gordo-devalued money"?

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Welcome to hpc from another 'first one' :)

Where have you been there last 5 years? How come you've only just noticed!

I'm also mystified how others have managed it? My only answer is that people are living on dual incomes when they can, at the cost of quality of life when they have kids, and also living off massive debt. However still doesn't help much when you see others around you apparently living the life of riley!

Some advice though. At only 20k salary you will be entitled to benefits (for now, might change when government get bury with the budget cuts knife) you should be able to get working tax credit, some housing benefit and council tax benefit. Unless you have savings of over £6000 check it out from your local job centre or on government web pages.

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Guest eight

The startling thing about the OP's position, is if he/she didn't bother to go to work, they would only be £56 a week (net) better off than claiming JSA and other numerous benefits. You could easily make that up on the black market.

And you'd have all day, every day to make it in too.

eight

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Many of these nations, particularly in SE Asia and South America are fast approaching a state where they are superior to the "first world"

This person has clearly never been to either of these continents, and if they have then it will have been to all inclusive or tourist resorts like Phuket etc.

The rest of Latin America is not like Chile and Singapore is a different world to the surrounding nations of SE Asia.

Edited by theworkingnomad
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Guest Steve Cook

No, it hasn't always been this expensive. A generation ago, it was vastly more expensive!

As a young graduate on average pay in 1983, my rent was two thirds of my after-tax income, and what that got me was a room in a flatshare, without luxuries like hot water. The remaining one third was approximately the same as the level of the dole at the time, and rather less if you factor in the costs of working - like travel, and lunch from the sandwich shop.

Other European countries? A couple of years later in Germany I was able to afford a very nice flat, and it was just under 25% of my after-tax income. What a contrast! The key difference is that the germans don't have the British fetish for low-cost housing. Instead they've built high quality since 1945, so there isn't such pressure on anything half-decent in their housing stock.

B*llocks

I began renting in in the north east 1982. The price of rents and also the price of houses was far more affordable in relation to average incomes then. We then had the boom of the 80's. However, even then the rent's weren't so extortionate. The prices whilst high didn't get as bad as they are now. And then we got the bust at the end of the eighties/early nineties.

This time around the cards are stacked even higher.

Edited by Steve Cook
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Guest eight

B*llocks

I began renting in in the north east 1982. The price of rents and also the price of houses was far more affordable in relation to average incomes then. We then had the boom of the 80's. However, even then the rent's weren't so extortionate. The prices whilst high didn't get as bad as they are now. And then we got the bust at the end of the eighties/early nineties.

This time around the cards are stacked even higher.

I began work at a factory in Newton Aycliffe in 1990. I was shocked to find that the shop floor staff were often earning £15k plus (at the time, a kings ransom, and vastly more than my apprenticeship was paying) with team leaders etc. on considerably more again. At this time a house in the area could be had for sub £10K - in fact at £10K you would have had a wide choice of places - not necessarily in everybody's idea of a nice location but probably just the type of area that you had grown up in.

Fast forward 20 years and the same jobs are mainly done by immigrant labour on agency contracts - I wouldn't be surprised to find out that they pay less now in actual terms, let alone real terms, than they did then. Meanwhile the same houses are now £80K - £100K, softening from a peak a few years back where you would have got nothing for under £100K. And these places haven't improved significantly in the intervening years, in fact in terms of petty crime, "anti social behaviour" etc. probably quite the opposite!

Still, that's 13 years of Labour government for you. And in Tony Blair's own constituency as well. No doubt he's proud of his "achievements".

eight

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Welcome to hpc from another 'first one' :)

Where have you been there last 5 years? How come you've only just noticed!

I'm also mystified how others have managed it? My only answer is that people are living on dual incomes when they can, at the cost of quality of life when they have kids, and also living off massive debt. However still doesn't help much when you see others around you apparently living the life of riley!

Some advice though. At only 20k salary you will be entitled to benefits (for now, might change when government get bury with the budget cuts knife) you should be able to get working tax credit, some housing benefit and council tax benefit. Unless you have savings of over £6000 check it out from your local job centre or on government web pages.

Benefits on £20k??? Seriously? I though it was like £15k and below...?

I'm sub-£30k and live at home - far too expensive nowadays. And £30k is a decent salary IMO - I hear tales of £60k+ on here but in general that's for a minority of people, so try not to feel too down about it.

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With my first salary after my post grad degree (conservatives in power) I could buy a house (and did) on three times salary. I probably was earning 1.5X average salary say 35k equivalent today. The house sold recently for over ten times the 35k so there is no way I could have bought that house today. I have a working class background and there was never a 'bank of mum and dad' but could buy under a tory government but would not have been able to under a labour government. So much fo the party of the working class.

You were at the right place at the right time. So wasI, but I blew it as I bought into the 'dreamworld for sale'. I'd of been much better off not going to Uni 1996, and just getting any job I could, and saved for a deposit for two years. A £40k mortgage, which in 1998 around here would of got you a very nice starter property indeed.

Fast forward to 2008, and average prices are £120k with a local annual median wage of < £17,000. Madness, and I refuse to buy into it any further.

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I am sympathetic to anyone like me on a low income, but really, rents are no more expensive than the cost of everything else in Britain, and they are a bargain compared with the cost of ownership. In real terms rent levels are much the same as when I first started renting 25 years ago, and the choice and quality on offer has greatly improved. I can remember cycling round London as a student in the 1980s trying to find a houseshare - it took weeks, whereas nowadays houseshares are ten a penny and it's much much easier to move around the country.

Not only does renting not tie you down with bricks and mortar, it's also much cheaper overall than buying, when you factor in all the costs, such as the capital embedded in the property which isn't earning you any interest, the savings on fees and stamp duty when you move house, the fact the landlord is unlikely to be making a profit and is just covering the mortgage, and that you get all the maintenance and safety checks for free. If I owned a house as a homeowner, I wouldn't just have to cover the mortgage, I'd also have to pay a fortune in stamp duty, legal fees and so on, pay to keep the place in a good state of repair, pay for house insurance, boiler safety checks and so on, never mind purchasing my own furniture. Rents also change very little from year to year, whereas home owners on variable rates are completely at the mercy of interest rates.

If you can't afford a flat, what's wrong with houseshares? The room rental is cheaper and you are dividing the nightmarishly expensive council tax and all your other bills between 3-5 people.

Edited by developer
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(...)

Other European countries? A couple of years later in Germany I was able to afford a very nice flat, and it was just under 25% of my after-tax income. What a contrast! The key difference is that the germans don't have the British fetish for low-cost housing. Instead they've built high quality since 1945, so there isn't such pressure on anything half-decent in their housing stock.

+ 1

I think our current high hosing costs are being caused by 2 main problems: one long term (quantity and quality of housing stock) and one shorter(ish) term, the bubble.

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If you want to know why the rent for a 1 bed flat is so high, try having a look at housing benefit for your area. What you'll find is that rents at the bottom end of the market track housing benefit very closely.

Bear this in mind when you're paying £150 a month or so in council tax to get a nice warm, fuzzy feeling inside.

+ 1

Housing benefits are in effect putting a floor under the rental market, propping it up - with your tax-money, of course, 'worldwindow' (OP). In other words, you are pricing yourself our of the market.

.

Edited by Tired of Waiting
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Guest Steve Cook

I am sympathetic to anyone like me on a low income, but really, rents are no more expensive than the cost of everything else in Britain, and they are a bargain compared with the cost of ownership. In real terms rent levels are much the same as when I first started renting 25 years ago, and the choice and quality on offer has greatly improved. I can remember cycling round London as a student in the 1980s trying to find a houseshare - it took weeks, whereas nowadays houseshares are ten a penny and it's much much easier to move around the country.

Not only does renting not tie you down with bricks and mortar, it's also much cheaper overall than buying, when you factor in all the costs, such as the capital embedded in the property which isn't earning you any interest, the savings on fees and stamp duty when you move house, the fact the landlord is unlikely to be making a profit and is just covering the mortgage, and that you get all the maintenance and safety checks for free. If I owned a house as a homeowner, I wouldn't just have to cover the mortgage, I'd also have to pay a fortune in stamp duty, legal fees and so on, pay to keep the place in a good state of repair, pay for house insurance, boiler safety checks and so on, never mind purchasing my own furniture. Rents also change very little from year to year, whereas home owners on variable rates are completely at the mercy of interest rates.

If you can't afford a flat, what's wrong with houseshares? The room rental is cheaper and you are dividing the nightmarishly expensive council tax and all your other bills between 3-5 people.

Show the numbers to back up your claim that in monthly cost terms, renting is massively cheaper than paying a mortage (This is not the same as tha fact that houses are falling in price and so renting, indirectly, can be cheaper)

show with the numbers how rents are the same or less per month now in relation to earning as compared to 30 years ago.

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Why are you going to take the job?

As someone else pointed out the difference between that income and benefits is negligable, it's simply not worth doing. Id take the details of this in and see the people hiring you, tell them how much they need to pay you to make the job worth taking. They up the salary to that level or you aren't taking it. Don't work for nothing.

Because he doesn't want to be a scrounger. And good on him too, as he will keep his dignity, and be able to build a career, and be in a much better position in a few years - not only financially but socially as well, as plenty of research shows.

BTW, isn't this obvious?!

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Because he doesn't want to be a scrounger. And good on him too, as he will keep his dignity, and be able to build a career, and be in a much better position in a few years - not only financially but socially as well, as plenty of research shows.

BTW, isn't this obvious?!

On the other hand... If you can't beat 'em (and it's become abundantly clear that you can't) join 'em.

Edited by BTL Cattle
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Guest DestroyBrown

+ 1

Housing benefits are in effect putting a floor under the rental market, propping it up - with your tax-money, of course, 'worldwindow' (OP). In other words, you are pricing yourself our of the market.

.

The govt has the power to undermine private rents. By buying up or building more housing stock , they can

a) cut the long term housing 'benefit' cost

cool.gif cause a lowering of rents through lack of tenant supply to BTL scum

What would happen to rents if HB was only 40 quid a week? Rents will drop. Rents drop so Joe has more disposable. Joes spends this disposable in the shops....god I'm a fekking genius! No, just common sense!

What disgusts me is hearing Brown shrug off housing as "somthing for the private sector". D1ckhead.

Edited by DestroyBrown
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But the key difference then was people could buy, feel poor for a few years and then watch as the mortgage became insignificant due to inflation.

Right now the prices continue to rise having already gone up stupidly in the last 13 years, but wages haven't risen anywhere near as  much.

Something will have to give, and its either massive long run deflation which will eventually hit housing or else its inflation which will eventually hit wages.

Bingo.

I get really narked when people [email protected] on about how hard it was to buy their first place in the seventies on a mortgage of 4K that was paid off in ten years due to wage inflation (erosion of debt).

We are presently in an engineered low-interest environment where taking on a big loan could be financial suicide.

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Due to changing circumstances, I might be taking up a full time job on a salary of £20,000 pa, which is about £1300 per month take-home pay.

Rental prices seem to start at £500 pcm for a studio / 1 bed. With bills, I reckon this would come to about £650 per month, just to put a roof over my head - half my take home pay.

This seems scarily high to me - leaves me just £650 a month to pay for everything....... Am I missing something? How do people make this work?

Ok, I could share a house, but at late thirties, this isn't very appealing and certainly not long-term. Or I could get partnered-up - but that's not always so easy! Or I could get a better paid job - ok, I could, but this isn't an option for everyone and £20k isn't so far below the UK average.

So my questions are -

Shouldn't it be possible to have a reasonable standard of living on a full time salary of £20k? (The IFS put this almost exactly in the middle of UK household income distribution.)

Shouldn't I expect to be able to afford a 2 bedroom flat?

Has it always been this expensive in the UK, or is it a recent phenomenon? And is it the same in other European countries?

Or should I just accept my lot, shut up and run up some huge credit card bills like everyone else?

Hi worldwindow,

I read most posts here. I think you have 2 options. The best one, by far, if you can, is to emigrate, either permanently, or at least for a few years.

If you can't emigrate, then I think the only solution is to consider the next 2-4 years as an investment on the rest of your life. I think you should share a flat for a few years, and in this period you should save as much as possible. Really radically. Just for a few years. You need to have some savings, to have more options, more freedom actually. The bigger your savings, more options you will have.

Properties should fall in the short and medium term. But you will need a deposit. Perhaps just 5-10% in a few years. If you save hard in these next years you may be able to buy when the time comes. Either way you will have more options then.

Also, you should always keep an eye on better jobs, career, etc. You may be able to improve your earnings.

Good luck,

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Guest DestroyBrown

Bingo.

I get really narked when people [email protected] on about how hard it was to buy their first place in the seventies on a mortgage of 4K that was paid off in ten years due to wage inflation (erosion of debt).

We are presently in an engineered low-interest environment where taking on a big loan could be financial suicide.

+1

My father bought his first 3 bedroom house for £4300 in 1967. He earned £1900 pa. He only started to struggle a bit when the kids came along.

The same house was valued at £240,000 in 2007.

All things being equal, he should have retired on £105k.

He was nowhere near that

Edited by DestroyBrown
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