‘The government's
official English Housing Survey showed that in 2012-13 the 4 million households in
England's private rented sector paid an average of £163 a week for their homes,
an increase of £10 since 2008-9, while the 7.2 million households buying their
home through a mortgage paid £149’
Source: http://www.moneycrashers.com/ |
Those with aspirations to get
become homeowners must be extremely frustrated as they hand over a high
percentage of their income to their private landlord each month, money which to
them (the tenant) is lost forever. At
the same time the cost of living continues to rise steadily and the ability to put
money aside for a deposit becomes even more of a challenge. The outcome of this is often many years in
rented accommodation, fundamentally paying somebody else’s mortgage for them,
as tenants try to claw themselves out of the ‘rent trap’ and into home
ownership.
Source: http://blogs.independent.co.uk/ |
The UK Government will
argue that their Help to Buy scheme has gone some way to addressing some of the
problems within the housing market, by making home ownership more accessible to
many who are caught in the rent trap described above. In part this is true as there is plenty of
evidence to show that the Help to Buy scheme is bringing first time buyers to
the market earlier than they would have been able to due to the requirement of
a much lower deposit (5%). In a further article in the Guardian Online (Link) the Government cite their flagship Help to Buy scheme as the main driver
for the recovery in the housing market:
‘The government's controversial Help to Buy mortgage guarantee
scheme has supported 7,313 home loans worth a total of £1bn since it was
launched in October, official figures show. The figures for the first six
months of the mortgage scheme, released by the Treasury, showed the mean value
of a property purchased or remortgaged through the scheme was £151,597, well
below the average house price of £252,000 recorded by the Office for National
Statistics’
In a previous article
earlier this year UK Housing Market – ‘Help to Buy’ aiding recover or papering over the cracks? I questioned the future for those using the Help to
Buy scheme to enter the property market early and in particular what could
happen in five years when they will be required to start to payback the 20%
deposit they have effectively borrowed; ‘after five years the help to buy loan will
start to attract a fee, which if added to rising interest rates is going to
impact significantly, particularly those at the lower end of the income
scale. This therefore begs the question,
is the help to buy scheme aiding recover or is it just papering over the
cracks?’
The Help to Buy scheme may
enable a certain amount of people to get out of the rent trap, however unless
these people can actually afford the repayments when interest rates start to rise and
they are required to start to pay back the 20% deposit as well as face cost of
living increases, then they are likely to find themselves back where they
started, or possible worse as they will be saddled with more debt.
Source: http://www.amaresearch.co.uk/ |
The answers to the
problems within the UK housing market are well publicised, however until a
committed strategic approach to house building is instigated, driven by the
government, then the situation is likely to get worse, resulting in continued
hardship and frustration for many would be homeowners. Note the need for a ‘committed’ approach by
the government and not the introduction of short term fixes, which is often the
case.
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