Stuck in a rut on the housing ladder!

With it becoming increasingly difficult for the first-time buyer to take their first steps on to the housing ladder, I cannot help but wonder where things are going.  “I can’t possibly afford a mortgage with the interest rates being as much they are” is a fairly standard situation.  This seems to be the same in all parts of the Country and the truth is things will only get worse as the interest rate is at the lowest level it has ever been and even more likely to increase over the next year or so. 

The average first time buyer isn’t generally too fussy with high expectations on what they would like to live in but looking at what is out there and the cost of the payments that are expected to be found, I can quite see what their predicament is all about.  Maybe this is just to reduce the disappointment factor!

The gap between what is affordable on the housing ladder for new buyers seems to becoming larger as each month passes.  Naturally, this is purely a supply and demand situation and, with the population getting bigger there is a call for more and more new houses.  Due to this need, with several people being after the same properties, the owners can naturally ask for higher fees.   It seems that the younger generation are facing a “double whammy” as the price of property continues to rise quicker than the average wage which is putting owning their own property further out of their reach.   

Recent research carried out by the respected analysts, Oxford Economics, project that the average house in England will rise from £245,879 this year to £331,387 by 2020.  In London this figure is expected to rocket from £452,400 up to £647,500 – 18 times the average London wage!

At the other end of the spectrum, the £146,000 average price in the north-east will rise to £171,400.

The National Housing Federation, which commissioned the forecasts, have warned that the widening gap in the supply of housing will mean that “an entire generation will be locked out of home ownership with nowhere to go”!

Even rented properties are expected to jump from £8,691 this year to £12,059 by the end of the decade!  The realisation that this is the only way couples will habitat in the future if something is not done about it is fairly evident to all.

“Goodnight, John Boy”

With rent costs being even higher it is not surprising that more and more are staying at home with their parents into their 30’s or 40’s.

Although there are several alternatives to buying a property, the one that is easily slipped into is being termed as “The Waltons Effect”!  This is because many young couples move into one of their parents homes while they save for a deposit.  This lifestyle becomes the norm as the reason they moved in gets put further on the “not so pressing” list.

In a report in the Daily Telegraph it was stated that “It might not be everyone’s dream scenario, but elderly parents in need of care and with rising household costs, means we are now seeing several generations of the same family living together”!

Lots of couples are realising that there are also many advantages with living with your parents.  In many of cases it is very convenient to have an ‘in-built’ baby sitter that can be relied on which wouldn’t be available should you live separately.

However, there are other things to consider when the idea of a ‘Granny annex’ gets some discussion especially when there is more than one sibling to be considered.  What happens when the house is eventually sold and your parents have paid for the annex themselves?  Would your Brother/Sister expect you to sell the property to enable them to have their inheritance?

There is also the matter of Capital Gains Tax, where an annexe is considered a separate dwelling and therefore the subject of an unexpected tax bill when the house is eventually sold.  You may also need to get advice on inheritance tax and how the house will be structured when it is sold.  Will it be classed as a single dwelling or not?

Another concern is if your relationship breaks down with your partner or anyone involved in this transaction decides they want to sell.  As with all things, they are fine at the onset but things may well change as time goes on.   'Food for thought'!