What Good Is An 'affordable Home' When You Can't Afford A Deposit?

[cool_hand]

http://www.bbc.co.uk/newsbeat/article/34467791/what-good-is-an-affordable-home-when-you-cant-afford-a-deposit

Offering 20% discounts on "starter homes" is like offering money-off a Porsche or Lamborghini.

If someone can't even afford a second-hand banger, then a sports car - discount or not - is still way out of their league.

"I'm still unsure what 'affordable housing' relates to," says a frustrated Joe, who lives in Brighton.

He's confused because he feels like all houses are unaffordable, even the, er, "affordable" ones.

David Cameron has said he wants two hundred thousand new affordable "starter homes" offered to first time buyers by 2020.

"The fact that the government is thinking about affordable housing is good," says Matt, who's 26.

"But that still doesn't change the fact that we still need to save up a bulk sum to try and pay for the deposit."

The deposit - the amount you're expected to have saved (or been given) before a lender will give you a penny.

"If you're renting, as I do, you're paying out £800 a month roughly.

"It's very hard to save for a deposit when you're paying out that kind of money in rent alone," says Matt.

Before the last election Newsbeat carried out one of the biggest ever surveys of young adults and it suggested affordable housing is one of their top concerns.

It's become too much for 27-year-old Stacey: "I've given up because of the sheer amount of money that you need for the deposit."

She says she's stuck living at home with her parents and believes she is never going to own her own home before she's thirty - at least.

In Brighton, Joe says he earns an "OK" salary and he's managed to save £20,000.

The UK Council of Mortgage Lenders told Newsbeat the average deposit required for a first-time buyer this summer was 15.7%... so let's do the maths.

Based on the CML figure, Joe would be able to afford a house worth £127,000.

Figures by the Office of National Statistics suggest that's less than the average house price anywhere in the UK.

In Joe's region, the South East, the average house costs £354,000.

"I only had enough [of a mortgage] offered to me to buy a garage or an allotment down here," he says.

The ONS says the average price of a house sold to a first-time buyer in UK this summer was £215,000 - that would have required a deposit of £33,0000.

Joe thinks "you have to be in a stable relationship with a large household income" to afford that.

Matt has a suggestion: "I think lenders should be flexible with deposits.

"The buyer should dictate how much they would like to put down based on their monthly outgoings, rather than a set percentage."

Even if Stacey does get her own place she doesn't believe it'll be where she wants: "It's never going to be near my family and friends because the prices here, we're too close to London.

"I'd have to move way further up north to afford a decent home."

In June, a government minister admitted many young people are forced to move away from their family and hometowns to areas where houses and rents are more affordable.

Joe, is living with his mum at the moment - "it has it's perks," he admits! - but he says even if you could save enough for a deposit, there's still the business of actually getting the mortgage.

He remembers: "I went to my bank, explained I had no idea what I was doing, didn't know what half the stuff meant.

"All I got was a load of mortgage gumpf that meant nothing to me.

"It alienated me so much that I gave up after one meeting with my bank."

It all means he could be living with mum for a while yet: "I don't think I'm going to be looking into it again in the near future.

"Maybe I'll go off travelling, see the world, make the most of the money I've got because, by the looks of it, I'm not going to be able to get onto the property ladder."

"I'm nearly 27. It would be nice to have my own place and a place that I actually could call mine and make my own."

Usual rubbish by the BBC - according to them it's the dposit that's the problem not the price. W T F ?

Wake up.

Every other conversation I have now in London is about how F*ing ridiculous house prices are. It's almost becoming boring. At least the subject has finally entered the mainstream. All we need now is the mother of all crashes and a whole load of pain and hurt.

[South Lorne]

..count yourself lucky ...first time buying today is a loser's casino...don't be guided by financial illiterates....IMHO....

[steve99]

Yes but propper young people will get a deposit from their parents, grandparents or inherritence from their great aunt who they never met. In fact we sold our flat in outer London some years ago to a 25 year old who inherrited the lot from his grandmother in Australia who he never met. In Tory and rich people logic, this is the norm, they do not know or understand people who dont have these privileges, or fully beleive that the ungrateful peasants all have council house/flats for free anyway and have no business buying up 'our' housing stock. I actually shared a flat with some of these people 20 years ago, all of them eventually were given houses/flats/big deposits with an 'after all everyone I know gets a leg up in life' attitude.. dito their jobs,,, well 'daddy had contacts in the Beebers so it was natural that I gravitated there too' ie massive foot in the door.

[Blod]

So are the MSM about to see the elephant in the room? Houses prices.

We've helped them hide the truth by going along with the cr@p "build more" lie. We know builders just won't build at a "loss".

The Debt Industry Financial sector have been allowed to inflate prices by using cheap credit and now we are getting to the point where house price rises are greeted as a good thing whilst at the same time all admit there is a housing crisis. The expansion of the financial industry has been built on over inflation of property prices. If prices, and hence the interest generated had matched wage inflation, then houses would still be affordable. Admittedly the Financial sector would only be a fraction of it's current size but at least people could afford shelter.

Nowadays whenever someone mentions housing crisis I ask them "well do you think house prices are going to crash then?".

[olde guto]

Yes but propper young people will get a deposit from their parents, grandparents or inherritence from their great aunt who they never met. In fact we sold our flat in outer London some years ago to a 25 year old who inherrited the lot from his grandmother in Australia who he never met. In Tory and rich people logic, this is the norm, they do not know or understand people who dont have these privileges, or fully beleive that the ungrateful peasants all have council house/flats for free anyway and have no business buying up 'our' housing stock. I actually shared a flat with some of these people 20 years ago, all of them eventually were given houses/flats/big deposits with an 'after all everyone I know gets a leg up in life' attitude.. dito their jobs,,, well 'daddy had contacts in the Beebers so it was natural that I gravitated there too' ie massive foot in the door.

These 25 year olds with inherited deposits are going to become more and more scarce. Life expectancy is pretty much as high as it has ever been (80 years, but as you get older it increases). Lets use the traditional 25 year gap between generations (it's a lot more for kids being born today). So a 25 year old will have parents in their early 50's, their grandparents will be in their mid 70's. With modern healthcare and assuming they haven't worked in coal mine or something the grandparents have still got another 10-15 years to live. That 25 year old won't be inheriting anything until they are in their mid to late 30's and that assumes the inheritance hasn't been used to pay for care costs.

As for the BBC article, the message there was that "affordable" housing actually isn't, so implicitly housing is too expensive.

[iamnumerate]

Yes but propper young people will get a deposit from their parents, grandparents or inherritence from their great aunt who they never met. In fact we sold our flat in outer London some years ago to a 25 year old who inherrited the lot from his grandmother in Australia who he never met. In Tory and rich people logic, this is the norm, they do not know or understand people who dont have these privileges, or fully beleive that the ungrateful peasants all have council house/flats for free anyway and have no business buying up 'our' housing stock. I actually shared a flat with some of these people 20 years ago, all of them eventually were given houses/flats/big deposits with an 'after all everyone I know gets a leg up in life' attitude.. dito their jobs,,, well 'daddy had contacts in the Beebers so it was natural that I gravitated there too' ie massive foot in the door.

Why attack the Tories? I don't like them but the problem started before 2010, this board wasn't created in 2010. Do you know how many Labour MPs come from families of Labour MPs?

[canbuywontbuy]

Affordable doesn't mean "scraping every penny together for a deposit, then crossing our fingers for 25 years to repay the mega-loan on two incomes".

[Assume The Opposite]

In my part of the East Midlands, I'd have to earn £26k just to be able to borrow enough for a decent house. Ex council places are going for at least £90k and I've heard of people who bought them for under £20k during RTB. As Blod said, it's the financial sector driving up prices whilst sucking life out of the economy.

If people no longer accepted these prices as normal and our fiat currency has piss poor value we might see something exciting happen. Until then it's extend and pretend

[Guest]

I still want to know how old you have to be before you're expected to be able to afford a non-'starter' home. If I'm going to be spending £450k on one of these 'starter' boxes, where on earth am I going to get the extra money for my 'forever' home from?

As I'll be nearly 40 it'll be too late for a family either way.

Also, I don't understand, if a normal-sounding first-time-buyer has around £127,000 available to buy a house with, why don't first-time-buyer-type houses cost around £127,000? Why isn't the 'market' meeting this demand?

Edited October 9, 2015 by irrationalactor