Why Home Ownership?
Ever since Thatcher encouraged home ownership, in the seventies and eighties, by giving people the chance to buy their council houses, we as a nation have been obsessed with home ownership.
An Englishman’s home is his castleOften paraphrased from a quote by Sir Edward Coke
Seen as an aspirational objective, we strive to own the roof over our head and the bricks and mortar that keep it suspended there.
Our economy is very much driven by the housing market, which is partly why we all consider our home to be our biggest asset.
In turn, this has led to the steady and continued rise in house prices. More information on which can be found here.
We can see from the graph above, since 1980 there has been a steady and unrelenting rise in the rate of home ownership, which peaked in the early 2000’s.
So why has the rate of home ownership fallen in the last decade?
This is a phrase that has become so common over the last decade-and-a-half that we now have a dictionary definition for is, as follows:
noun: Generation Rent
A generation of young adults who, because of high house prices, live in rented accommodation and are regarded as having little chance of becoming homeowners.
“it feels as if many of us in Generation Rent will never know what it is to own a home”
This chart shows us that since 2004, despite our aspirations, there has been a fall in home ownership in all age groups except the over 65’s.
This chart provides us with an indication of why rates of home ownership have fallen.
The house price to earnings ratio is calculated by dividing house price by gross annual residence-based earnings and this provides us with an indication of affordability. The higher the ratio, the more difficult it becomes to afford to buy a house.
As we can see from the charts above, as affordability has become more difficult, property ownership levels have started to fall resulting in generation rent, which has affected people in the 25 – 34 year-old age group the most!
What if there was a solution to this puzzle, which would allow home ownership to be more affordable and not just exclusive to the wealthy?
We at Golden Egg Property Ltd are based in the north west of England, where, according to Zoopla, the average price of a 3-bed semi-detached house is currently just shy of £190,000.
Meanwhile, most mortgage lenders will demand that buyers save at least 10% of a property’s purchase price. This means that to buy that average 3-bed semi, in the north west, you’ll need to be setting aside roughly £19,000. By the time you have factored in solicitor, broker and valuation costs, it’s unlikely that you will see any change from £20,000!
By working together with property professionals, like us, your dreams of home ownership can become a reality, without the need to save such exorbitant sums of money first.
We can also facilitate this irrespective of whether you have had previous issues with bad debt.
Rent to Buy
Rent to buy basically does what it says on the tin!
Once you have found a property that you like, a small deposit gets you in! The emphasis here is on the word small because it is nothing like the amount that you would need to save were you to buy the property outright.
Once you have moved in, super-rent allows you to live in the property and treat it as your own form day one, whilst knowing that enough money will be put aside for your mortgage deposit when the time comes.
One of the great advantages with rent to buy is that it gets you in to your ideal home sooner than if you were to wait until you have saved the required deposit of 10% of the property value.
Eventually, you will be expected to take out your own mortgage and buy the property in your own name, buy the beauty of rent to buy is that your deposit money will have been saved for you and the period of time over which that money is saved is flexible.
This flexibility is dependant upon your personal circumstances, what you can afford to pay each month for your rent and of course, the value of the property that you are buying.
From the day you move in, you will know how much you are going to pay for your property, irrespective of how much house prices increase in the meantime.
You will also have the sure knowledge that when the time comes to apply for your mortgage, the deposit will have already been paid, which our solicitors will confirm with your chosen lender.
Want to Know More?
If you would like to find out more about getting on to the housing ladder, please click on the link below and submit your details. (We promise not to bombard you with emails)!