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Should young home buyers withdraw from the bank of mum and dad?

Money and home

Is the best way for parents to help their children onto the housing ladder not to help at all? Lynda Clark of First Time Buyer magazine explores the options for first-time buyers and their parents.

Getting on the housing ladder has never been an easy task. Even when I bought my first home some years ago it took years of saving to get enough for a deposit. However, on balance, I do think that hopeful young home buyers today probably have the biggest mountain to climb.

With our own impending pension pots looking a little less fruitful, and many of our generation now expecting to work into our 70’s, it does seem a little daunting that we as parents are also relied upon to give the generation behind us a financial boost onto the housing ladder.

The reality is that home buying today is a completely different place to when we were seeking out our first homes. Back then house prices weren’t as high, mortgages were easier to secure and lower deposit requirements ensured a more affordable monthly repayment.

Tips for first-time buyers

As a devoted mother to three adult sons (two of whom have made it onto the housing ladder) and as editor of First Time Buyer Magazine, I feel it my duty to share some ways that you may not have considered to help your children buy their first home.

While the market may be a tougher one and involve much more financial scrutiny, as well as dealing with house prices increasing at a faster rate than incomes, today there are actually many new innovative ways available that will reduce the upfront cost of buying a property.

  • One you may have heard about is Help to Buy, which is one of the most cost efficient ways to buy a new home with less upfront cost. Basically it means the government provides a loan, so you won’t have to.
  • Alongside this is the forthcoming Help to Buy Isa, a savings account for first-time buyers that could see up to £3,000 put in by the government.
  • Shared ownership is a great way to buy a portion of a property, without having to stump up the entire cost straight away.

Children moving back home

Of course, allowing your child to move back home is a more cost effective way to allow them to save for an all-important deposit. I did this myself and while I very much enjoyed this extra time with my grown up boys, it was also very nice to see them eventually find their own place – encouraging them to take responsibility for their own upkeep as well as giving my washing machine a well-deserved rest.

So there are many ways to help your children onto the housing ladder, without necessarily breaking your own bank. There’s a huge pressure on parents to support their grown up children onto the housing ladder, but a bit of guidance, support and perhaps even a little more time under your feet may be all that it takes.

Have you ever had to help your child onto the property ladder? Or are you a first-time buyer looking for help from your parents?

This is a guest contribution by Lynda Clark, editor of the First Time Buyer magazine, which is running the First Time Buyer Home Show on 10 October 2015. All opinions are Lynda’s own, not necessarily those of Which?

Comments
Member

Never mentioned in any discussion on the difficulties of getting on the housing ladder is the failure of recent governments to enable the colleges and universities to provide enough accommodation on campus or in separate buildings to house the higher intakes they attract. The student population then takes out three or fours years’ worth of housing supply in the adjacent suburbs that could have made small houses available to first-time buyers and held market prices in check. Norwich [with three universities and two large colleges] has roughly 10,000 students living independently off-campus which probably equates to 3,000 homes that could be suitable for first-timers.

Given that many people nowadays are not reaching the queue for a new home until they are in their mid-twenties, it is not surprising that in terms of size and standard of accommodation they want to start where the previous generation left off so they look for three bedrooms and off-road parking plus all mod cons indoors. Reality will temper these aspirations.

More could also be done to relocate jobs away from the metropolis and major conurbations so that people are not struggling to find a home in an over-heated property market. It’s not good for society that people are travelling for over two hours a day to and from work and then only getting enough to afford a shoe box.

Member

Where I live most affordable first time buyers houses are purchased by by-to-let investors letting them out to young people who are unable to compete in today’s market and are forced into paying unregulated amounts to callous and unsympathetic landlords.

Member

Beryl, the thing is the rent they pay is more than the mortgage if they were to buy. The deposit is the obstacle. One solution is still shared ownership – at least it gets you on the ladder with a smaller deposit and you then have a stake in the property. Another is to go back to building council houses on land bought at sensible prices to allow building costs to be as low as possible. This is in the gift of the council when granting planning permissions. But these houses need to be on short term tenancies for people who cannot, at the time, afford market rents. As soon as they can the houses should be re-let to others in need.
In London (and elsewhere if it is a problem) we should make punitive charges on properties that are purchased speculatively but unoccupied.

Member

Malcolm the whole property market is in need of regulation. People are using their pension pots to buy houses topped up with a mortgage to
supplement their incomes due to the present and enduring low interest rates. Problems could occur when predicted interest rates increase in the near future when banks could experience similar problems as 6/7 years ago with pensioners unable to keep up mortgage repayments and tenants unwilling or unable to pay the inevitable increased rents as a result.

Not everyone is happy to buy with a shared ownership with interest rates set to rise.

Member

Beryl, I don’t know what is meant by regulating the housing market. Maybe we should get away from the concept that home ownership is the UK’s dream. We need somewhere to live but don’t need to own it – many European countries rent rather than buy. That still requires the core problem to be solved – enough homes in the right places. Regulation might be to require developers to be given planning permission only if they build a decent proportion of small homes in terraces, maisonettes or flats, that keep the costs down. Local authorities have the gift of granting planning permission and should only release land on that basis. The alternative is for the government to develop this sort of housing. One restriction should be that if these artificially-cheaper (as in on subsidised land) houses were resold, a proportion of the gain went back to develop more such houses.

Member

Local Authorities currently grant planning permission to developers on the condition they build a percentage of ‘affordable homes’. Developers are currently experiencing problems
selling the more expensive 4 bedroom properties as prospective buyers are reluctant to move
close to social housing with all the problems that come with them eg parking etc.

Private landlords can charge whatever rates they
choose and let their properties to anyone with the ability to pay. There is a need for councils to return to the old system of social housing so that
people who are incapable of respecting their neighbours right to a peaceful existence are
sufficiently regulated, but without complete
reform and regulation in the private sector, landlords will continue to exploit tenants and
certain tenants will continue to make their
neighbours lives miserable with their unacceptable behaviour and lifestyles.

I don’t envisage the UK resorting to the
European system of renting. Maybe they are better regulated there which would explain why
it works.

Member

I think the ‘affordable homes’ policy [or ‘homes for the community’ as housing developers euphemistically describe them on their site layout plans] has generally failed. Each local council has its own policy and requirement; fair enough, that reflects local needs presumably, but it takes no account of commercial viability. Some councils require 45% of developments to be in the form of affordable homes. We have looked at numerous new developments over the years, not necessarily with a view to buying but just to see what new housing is like these days [and it isn’t progress in my view].

Developers first try to argue down their obligations to build affordable homes because a block of ‘affordables’ [which usually have to be built first] make it harder to sell the rest of the development. They build them with a grudge to the meanest specification without a garage or car parking space within the curtilage of each property leaving just a car park with 11 spaces for every 10 houses. It is rare to see designs that don’t discriminate these properties from the rest of the development. If the purpose is to assist first time buyers it doesn’t work, because the developers cannot stop the properties being bought up by buy-to-let landlords who just see the properties as a cash machine and look after the properties to a minimal standard. In our area rents are not that high because there is a surfeit of lets on the market. The consequences are foreseeable.

In many parts of the country that were well provided with Council housing, some of it to a very high standard, much of the local authority housing has become owner-occupied [under the right to buy] while much of the owner-occupied housing has become private rented in the form of assured shorthold tenancies, with the occupiers on two months’ notice. Not a good recipe for social cohesion and civic values.

There is clearly a need for tenancies and other alternatives to complete owner-occupation but the proliferation of short tenancies and delinquent landlords is impeding the supply of sufficient decent housing to meet the country’s needs.

Member

I agree wholeheartedly with your comments John. I have reached a point where I have become very weary of playing custodian to the privately rented house next door where the landlord refuses to fulfill his legal obligation to maintain the exterior of the property and the tenants with their 4 unruly children continue with their noisy and raucous behaviour. Complaints have succeeded to improve the situation on a temporary basis but after a while the old ingrained patterns slowly return to the status quo because neither landlord nor tenant give a hoot about the welfare of their long suffering neighbours.

I have finally decided to put my house on the market and move back to a detached property where hopefully I will enjoy some semblance of peace and quiet in my advancing years.

Member

What an odd statement: “lower deposit requirements ensured a more affordable monthly repayment”. On the contrary, the lower the deposit, the higher the mortgage and the higher the monthly payment. Leaving that aside, I had to pay a Mortgage Indemnity to achieve a lower deposit – and that wasn’t cheap – but I did it despite it being in effect wasted money. In fact, we had to forego most furniture to pay it (and we didn’t have a TV either). But, then, we had a house and the furniture (very second hand) followed later – and the TV came out of a skip until a year later we could afford to rent one (black & white). But we had a house appreciating in value all the while.

Helping your children onto the ladder is a no-brainer. Yes, of course. And as quickly as possible. If your savings are earning less than they require for a mortgage, then give them all the money possible – it’s you investing in your family’s future. One important caveat – you do not pay their deposit only for them to buy expensive TVs and phones and go on holidays or even for them to buy brand-new anything. Of course, if you don’t trust your own children, you have an entirely different issue.

Member

“Getting on the housing ladder has never been an easy task” Lynda says. Well it was when I was in my late teens and early twenties when many of my contemporaries were buying houses on new estates and flats in the suburbs. After two years’ hard saving [25% deposit] while working I was able to buy a flat before I was 21 [1968] and that was not unusual. Couples with both working could usually afford a decent starter home. But that was then, and perhaps my generation shouldn’t be so self-righteous and moralising to the current generation of house-hunters whose situation is far removed from previous times. I should not like to be in their shoes now.

Not everyone is lucky enough to have a Bank of Mum & Dad to support them. Death, debt and divorce – the three drivers of the property market – have taken their toll on that generation too, as well as redundancy, failing pension plans, and the elderly care crisis that has meant supporting their parents has overtaken funding their children as the priority.

We should not overlook the effect of longevity on housing supply. It is obviously a good thing, but the housing market has been consistently failing to keep pace with it for over a decade now. From a house-builder’s investment point of view, I should have thought building for the retired generation was a sure-fire winner. I think there are signs that this is starting to come about but only in the luxury and exclusive bracket; nevertheless it all releases family housing down the chain that takes the pressure off prices. Divorce and household division are other factors that soak up supply but I think that is offset by the tendency in some communities for large families to stay together under one roof.

Far be it from me to suggest that young people shouldn’t go on to higher education but it comes at a cost, in terms of housing setback, which intending students should take into account and consider whether apprenticeships are a better stream.

Although I believe parents should certainly do as much as they can to assist their offspring get a home of their own, for practical as well as parental reasons, perhaps grandparents need to stop living high on the hog and push a little more in their grand-children’s direction in their hour of need. Now I’m moralising again.

Member

HowardWhich3, it is an odd statement. The lower your deposit, the more you borrow, the higher your monthly payments. Not only that but the higher the interest rate on your mortgage so an even bigger increase in monthly payments. Perhaps Lynda phrased it badly and can tell us what was in her mind.

I bought my first house in the seventies. They were hard to get, mortgages were difficult to find, interest rates were going up. I found a property that was very run down and small, managed to get a mortgage through a friend of a friend on the board of a small local building society, and spent the next year learning diy skills from bricklaying, joinery, roofing and damproofing to get the house back to reasonable shape. Even so it had no central heating or double glazing but it was our home.
The next move at least generated a deposit to get a better property – well, same size but with potential to expand. Another 2 years spent hands on making it larger and more habitable.

It may be we should resurrect self-build projects where costs are kept down by doing appropriate work yourself?

Member

Hi Malcolm, I can confirm just bad phrasing and was meant to be in comparison with today. Comparatively, first time buyers today need a much bigger deposit than ‘back then’ in order to secure lower mortgage repayments…. hence the difficulty to get onto the housing ladder now.

Member

Malcolm – Being a keen DIY enthusiast I am interested by your suggestion that people could save money by working on their own homes. With any form of DIY work there is the possibility of substandard workmanship. I once saw a garage that had been extended by a previous owner without using proper foundations, and the new section was collapsing. On the other hand I have seen some ambitious DIY projects where people have put in extra care since they are not paying for the time the job takes. I wonder if there is a practical approach to largely eliminate DIY disasters.

Member

From memory the way it was done was to have professionals involved to supervise and advise. Therefore for organised schemes with multiple homes. But of course you need home owners with basic skills and dedication. However the standard of workmanship can often exceed that of many tradesmen – what they might lack in experience they make up for in diligence.

Member

I can see this working well for middle aged people with time on their hands but I wonder if it would work for young couples keen to get on the housing ladder. I hope I’m wrong.

Member

It depends how much effort you want to put into getting a home. Nothing is for nothing. My elder son spent a lot of his spare time remodelling and renovating his first house after he’d finished work, in between socialising. Perhaps we expect too much too quickly these days? If you want to become a “couple” you need to make suitable provision.

Member

I agree. You only need to look at the way that eating out and ready meals are taking over from cooking to see evidence that many don’t put in as much effort these days.

Member

As a lad from the slums of Salford it was hard work getting on the housing ladder but I have now provided the deposits for both my children and give them each a contribution to their mortgages monthly. Following my descent to warmer climes they will inherit sufficient at least to halve their mortgages and I consider that good value for the pleasure they and my grandchildren afford me now, besides fulfilling my definition of duty. It may not be fashionable but our relationship is summed up in one word – Family.

Member

Your family are extremely fortunate to have such caring parents Davy Nook. The fact that you have provided them with a home to call their own and not rented is commendable, I hope your generous family practices will continue through to your children’s children (grandchildren) keeping the old English saying ‘a persons home is their castle” alive and flourishing.

Member

Well yes there is a problem now for young people but unless I missed a post why doesnt anybody mention the fact that our own political parties (both Tory and Labour ) voted to sell council houses nationwide at mortgages set at very low initial prices. Of coarse the public “went wild ” on this (who would pass up a bargain ) but now the “chickens have come home to roost ” young people find there is little or none council houses to let ,some councils (a few ) have rent to buy a good idea it is only recently that the Scottish Government has realised the problem of lack of housing and is now helping local councils to build rent only houses as they put an end to buying your council house there a good while ago. Yes there are Co-operatives (private company and public help ) but not everybody is happy with them there . I agree with those helping their children ( unless they just use the money for luxuries as another poster said ) if you cant help them if you can afford it then who do you help ? Its a base in life (until they divorce ) and makes them feel more secure and relaxed. Many in the US just kick out their children and its nearly a crime in the US if you are still at home at 21 years of age you are ridiculed for it a nasty practice that is gaining ground here -reporter to young man – .your 22 why are you still at home ? Disgusting, unless your child has no intentions of making anything of their life or at least trying to get a job.

Member

I am not quite clear how this subject can proceed without the politics of immigration and our politicians becoming pertinent.

We also have the economic imperative of living where the work is. A two-bedroomed terraced house is £70,000 in Hull. Convenient to stations etc.

Perhaps Which? could advise us on what they do in the way of tele-working using conference calls etc to allow staff to live where they can afford to buy. The lowest paid Which? worker in London is probably on £22,000 so three and half times salary should be feasible.

And of course no daily travel costs and cheaper living. Perhaps a quick survey around the office for those that would like to own a property. And then HR [ sorry the Head of Talent ! ] may have a handle on existing tele-workers and were they live.

A concerted effort to use all the wonderful technologies may help move many thousands out of the London job/housing vacuum.

The selling of flats off-plan to the Far East market and them lying empty whilst a bankable gain is made should be stamped on and all empty houses/flats should attract swingeing local council taxation on an annual increasing basis.

The French actually have a law on building land which allows communes to charge significant amounts of 5euro per square metre doubling next year to 10euro. This dates from 2012 and is very sparsely used until now.

One cannot help but feel that this kind of stick, there is a carrot element also, would be very useful in some crowded conurbations. Tele-working though perhaps is a better long-term solution and taxation on heads on seats in central London etc and going out might help companies either relocate completely or disperse staff.

Incidentally off-shoring jobs would not count for this purpose as this weakens the UK tax base.

Member

Something that hasn’t been mentioned yet but which is a hot topic in certain parts of the country, including Norfolk, is second homes, and how they affect local people trying to get a foot on the first rung of the housing ladder.

There seems to be increasing prejudice against second homes, as though unlike having more than one car or luxury holiday or other enviable item, having a second home is seen as a bad thing depriving a needy family of a place to live. It’s worse than that: having a six bedroom house is OK but having two three-bedroom houses is not OK. I can understand it – there is a national shortage of housing, although there are places where there is a surplus.

People speaking in support of the second-home owners rightly point out that in many cases they have done up half-derelict cottages that had stood empty for years, that they have brought money into the district and spend their leisure time in pubs and restaurants supporting jobs and local enterprises, that they use the local shops and services helping to keep them going where otherwise they would be closing down, and that they pay the Council Tax at 95% but make scant use of the public services.

These arguments go back and forth but on one point most people are agreed: in places where second homes outnumber permanent homes, as in parts of North Norfolk, there is no doubt that demand has forced up the price of housing way beyond the reach of local residents who wish to buy a property in their own family area. Similar issues arise in parts of the West Country and other favoured locations.

There is no effective deterrent to second-home ownership even should it be desirable to curb it. They are predominantly owned by people with substantial financial resources for whom the price is a badge of status rather than an impediment. New houses cannot be built in these areas to provide for local people and to restrain house-price inflation because they are usually conservation areas or areas of outstanding natural beauty or villages with tight development limits chosen by the second-home owners for those very reasons.

A tiny two-bedroom flint-faced cottage in Blakeney within the AONB is currently on the market for £325,000. In flowery language the estate agents describe it as “a much loved second home” and say “the cottage provides the perfect Blakeney bolt hole”. A similar [slightly larger] cottage in Dereham in the middle of Norfolk is priced at £125,000 and might go for less. The young people lucky enough in so many ways to be living in North Norfolk cannot hope to buy a home in their home area unless they have a massive windfall, and what they would get is a chocolate box: pretty, but not big enough. I can’t think of any measure that could crack this particular problem. There’s only one politician I could think of right now who would propose banning second-home ownership but half his front bench probably have one too.

Member

Banning ownership of anything is not a great way to go in a capitalist society. If we all just want a nice cottage by the sea, then let’s build more so we can have one each.

Member

As to the comment that there might be one politician who would make changes but his comrades most likely have bolt holes also.
Up until more recent times and who I am and where I come from woulod have said I could never have brought myself to even suggest voting for such a person or party.
Both the Tory’s and Labour sold off just about everything there was to sell including our social housing
As to the comments about us more mature having to wait until we die to get a pension I am of the opinion that we worked, paid our tax and Nat Ins contributions to have a pension but what does repeated Gov’s do. Spend it all and more.
I have helped our 2 daughters with deposits on houses and I was happy to do so however it will eventually catch up with us. There is nothing now to fill the pot up again.
So should they not be in the bank of Mum and Dad?
Yes if you can afford it. No we couldn’t have afforded it if we had wanted to retire to the sun but it seemed like a good idea at the time and I’m happy we did help.
One always hopes one will win the lottery!!

Member

IN regards to second homes I stay in a small sea-side village having retired there and see first hand the anger of those locals born and bred here . Their sons and daughters cannot buy a home as they are owned by those using them as holiday homes in the summer many holiday makers rent them but its a totally different situation in the winter. One village near me is near deserted in the winter its like the Mary Celeste a ghost village no atmosphere ,in another the whole sea -front is holiday homes . The young people are forced to live with their parents or move away and a move put forward by the government like a certain ex politician who said -get on your bike . This is entirely down to you political/social view of how this country is run the actual people at the sharp end of this dont like it and thats why in many parts of the country the locals appear to be anti-social as they also see their traditional values being removed and a “city ” attitude installed and their family structure being broken after 100,s of years of social cohesion. Because of this shops have to rely on summer trade to tide them over the winter many fail and I see shops changing hands many times in the 23 years I have lived here all start off with high spirits but end up depressed and broke. So incoming money helping community –nope !

Member

What are the effects of taking a leaf from the French and have a regime of multiplying the rates on every property not occupied other than as a primary home.?

End of the world? Not really . Given how the Government has been content to bail out Banks and the shareholders thereof this would seem quite an equitable policy that multiple home ownership is actually bad for the country but good for some individuals.

You will appreciate that the vast majority of MP’s will be two home owners as will be most of the Lords. I suspect there may be a case for justifiable dual homes but lets face it the vast majority of multiple homes are people running a business renting out from the property portfolio that they have built up with cheap credit from the Banks.

Funny that the Banks will tell people they do not earn enough to have a mortgage for the house they live in – but where they are paying a higher rent. You have to love it.
So its either taxation or rent regulation needed to solve part of the problem for rural areas.

Member

Increasing the rates [Council Tax] on second homes is an interesting idea if it should be policy to penalise owners of second homes. At the present time second-home owners get a discount on their Council Tax in most council districts but the percentage varies; I believe the single person occupancy relief is not available with second homes though. Personally I don’t agree with penalising second-home owners and I believe there are more appropriate ways of matching supply and demand, even in areas where the property market is saturated with second homes.

It’s hardly the fault of second-home owners that (a) the rise in the number of new household creations has outstripped supply, (b) buy-to-let investors/speculators have been allowed to acquire a large proportion of the housing stock, (c) the population has been allowed to expand to put extreme pressure on the nation’s housing stock, and (d) the number of houses required to meet this expansion in both the public/social and private sectors has not been delivered.

To the extent that the conditions reported by Duncan above make second home colonies virtual ghost villages in the Winter months there is a case for assessing the causes of that and whether things are better or worse overall across the whole year than if the weekenders had not invested in the area. If it can be clearly demonstrated that second homes cause social or economic harm to communities then some numerical restriction might be the answer and new owners could be required to apply for planning permission to use a property as a second home. But if the second-homers retreated and the properties were left vacant that would be counter-productive.

Member

There is, or was, a restriction on second home owners in the Lake District I believe. I don’t know of it being used elsewhere so perhaps it was counter-productive.
London is surely a classic case of first home house prices driving out first time buyers; I do not know of a way to change this other than providing public housing rented at below market rates to those who are essential workers needing to live in London.

Member

That’s right Malcolm, and the Help To Buy scheme has had negligible effect in helping people get on the housing ladder in London.

Member

Holiday lets is another contentious cause of property shortages. Norfolk is peppered with them and the weekly charges in high season are staggering so there is clearly a strong demand. However, they also take homes out of the supply chain and they really can be completely vacant in the Winter months because in certain cases there are limits on how many weeks per year they can be occupied, so they get mothballed and are virtually dead as a presence in a town or village. Some of the holiday lets are more like cabins than dwellings but nevertheless they are occupying land that could accommodate normal houses or bungalows. The owners have them purely for investment purposes and rarely if ever occupy them.

I don’t feel so benign towards holiday lets as I do towards second homes but we live in a country where it is generally accepted that people can do what they like within the law with the money they have earned, won or inherited, and we don’t like the idea of totalitarian control.

Member

John, we have annually rented holiday houses in Devon. You only have to try booking one to see how heavily used they are, even in the low season. Whilst they take houses off the normal market they bring a huge income to local businesses and provide employment for local people. I wonder what employment would be provided in these areas if it were not for holiday makers?
We have visited in November and found it far from dead. Maybe Devon is different from Norfolk in the off-season but I suspect the economy in Norfolk tourist areas benefit heavily from holiday lets?

Member

It certainly does. The tourist industry is probably the biggest economic sector in Norfolk and a major employer, and there would be uproar if anything were to be done to restrict it or tax it out of existence. This why the district councils have to tread a very fine line in their policy approach to new homes, second homes, and holiday lets. I think Devon will be slightly different to Norfolk in the Winter months because its climate [except on the moors] is distinctly more clement. As was seen in early 2014, quite a few second homes and holiday lets on the Norfolk coast toppled into the sea and were washed away – as well as some permanently occupied properties unfortunately.

Member

The Snowdonia area is one of the great tourist hotspots in the UK, and certainly in Wales, and recent figures suggest that up to a third of all housing here is holiday-oriented. However, it’s not as seasonal as one might expect, since a different type of tourist – those seeking mountains and adventures – arrives once the main summer season is over. We have friends who own a holiday let near Llandudno, and that’s used almost every week of the year.

What has been happening in recent years, however, is a huge influx of workers from the EU – mainly Poland – and I believe now that without them the hotel industry (the second largest employer in the North Wales area) would certainly struggle, if not collapse. That’s led to a corresponding leap in the number of rental properties and that’s providing excellent investment incomes for the owners.

In the UK we seem obsessed with house ownership, but our nearest continental neighbours – the French – seem to think the opposite, and rental is the norm, as it is for much of Europe and the US. Perhaps the best way to help our children is to encourage them to consider a change in thinking – where ownership is not seen as the most important. Rental, after all, is a far easier system, and eliminates at a stroke the trauma of buying and selling a house. It does, of course, need a much firmer hand from the Government in controlling landlords and protecting tenants but properly regulated house renting is a far easier process than house buying.

Member

If renting is more popular in much of Europe and the US then who owns them?

Second holiday homes can sometimes be justifiable for example during downturns in the housing market, when banks are not lending and houses not selling. Problems arising from young people unable to stay near family date back to the industrial revolution when people making a living on the land moved into the city where more opportunities and jobs prospects were available. Young educated people today are probably replicating this trend in order to be able to afford a modern day style of living. With improved transport and infrastructure systems already in the pipeline this trend will probably continue in some areas but in places like Norfolk and holiday spots in the West Country and North Wales, these will probably be dependent upon the tourist industry and reliance upon the influx of immigrants and retirees to survive.

Member

Beryl, “Renting, who owns them?” Exactly – landlords with access to loans will profit by renting out at more than it costs them to repay. So individuals renting pay more than a mortgage.

This is a conundrum we need to resolve. Many people can afford the repayments but cannot save the large deposits now needed – that are often outpaced by house-price inflation. Lenders want the assurance that if a borrower fails to keep up with repayments and they repossess the house they can get their money back – hence the need for a substantial deposit.
How to avoid a deposit – or at least a large one? Maybe get a guarantor who will cough up if the borrower defaults?

Member

My mother and daughter live in Canada. I tried it but cant stand the place. Nothinng to do with apartments though.
I actually liked the apartments. Everyone was quiet and respected everyone else and weirdly that includes people from here.
Most people live in apartments blocks or Condo’s. Apartments are generally rented per month.
Condo’s are generally owned with maintenance fee which may cover elec/hear/water whatever you happen to be signed up to but they are very common. The owners are property investors or companies who mostly specialise in such buildings.
They build the mostly multi-story blocks with rent or sale in mind.
The Gov has not part in funding or supplying them
Yes there are town-houses there also but singles and couples with no family mostly dont own a house.
People will sell up the house if they ever had one once the children move out and that is actively encouraged there.
The idea of renting here is not popular and most folk aspire to owning their own property.
Most people here want given the choice a detached house.
Most folk would rather not have semi or terraced.
If the truth be told many folk go through live in misery just to be able to say they own a house of some sort. And there is I feel lies one of the problems for us in the UK
We want this entirely separate little property with a tiny garden and a driveway barely large enough for a car and often not large enough for 2 cars.
It takes more land, more bricks and nearly more everything to provide separate or semi separate housing.
People in many other places were brought up in apartments and accept that as the norm
Apartment style living is not looked down upon
Many well off families have spent generations in apartment blocks.
The wealthy and not so wealthy in the likes of Toronto or New York own or rent an apartment and most live there and many dont know much outside of their city area.
Yes there good address areas and poor areas but we’ll not cure that.
Apartment style construction is much cheaper for obvious reasons so rent or purchase price will be cheaper also.
Parking is often below the block or combined below and rear. That is if you need a car at all.
The people are mostly not interested in a garden and I understand why.
In actual fact the apartments are very roomy and parking is better than the little driveways we are used to here.
Its not so very different to renting or buying a flat say in London except the price of either rent or purchase in London England will be sky high most likely.
Big cities tend to be like that anyhow.
But most of the UK wanting these independent houses has an effect or land availability in what is an already very densely populated country.
Yes there have been council built flats here but unfortunately and I dont want to rattle anyone it would be known as social housing.
The tenants or at least a few of the tenants often had less than good manners and a terrible attitude to near everything and added to that some weird idea that the world was coming down on them and someone owes them something.
That I feel is a unique thing to these islands.
I have travelled the world and I have felt more at home the first time I was in Brisbane Australia than when passing through many UK towns.
Only in the UK would anyone be asked “wha you lookin at” or some other invitation to a confrontation.
So there are are social issues everywhere but stereotyping here is probably the main problem
rather than the actual quality of the property
Some people here have been brought up with the notion and it is just a notion whether you are in Tory camp or Labour camp that there is a them and us thing. Both sides propagate this myth and it is a myth.
Many other places dont have as big a them and us type culture and it is noticeable.
So on an engineering basis apartment style living is cheaper to construct, take up less land and to many better actually than a house but then we have this social problem that seems to turn much perfectly good multi-story living into dumps and I would not know where to begin to change that.

Member

DeeKay, my late brother lived in Vancouver for 56 years with his Scottish wife after spending 12 years in the Royal Navy and had 2 daughters who still live there. I visited them on a number of occasions in their own 4 bedroom home and there were no sign of any condos or apartments to be seen in the immediate vicinity. There are bound to be differences in other countries that one either adjusts to or one cannot. I too have travelled the world am all too conscious of the social divergence between nations and have met many charming and interesting people along the way.

The small development where I live used to be inhabited by predominantly retirees who had downsized and more or less kept a watchful eye on each other without intruding too much on their private lives. It is easy to see now which homes are rented and which are owner occupied by the state of their gardens and general upkeep of the exterior the latter being the responsibilty of the landlord.

I started married life in flats and moved away from my family in the West Midlands to the Manchester area until moving down to the South East where we worked and saved a deposit to purchase our first home, a 2 bed maisonette in Essex and gradually moved up the property ladder and a new environment with each successive promotion.

I am not in favour of paying out dead money and unregulated fees to landlords who are in a position to utilise the equity on their main homes to appease the banking fraternity and ensure safe return of their lending practices As Malcolm rightly makes the point tenants are indirectly paying the mortgage on the landlords property.

Maybe I am still living in the past but it is reassuring to me that when I ‘pop my clogs’I will be in a position to leave something behind for my remaining children to enjoy. It is a very nice
feeling 🙂

Member

According to theglobeandmail there are 15% of Vancouvers population living in high rise and Vancouver is sitting on a fault line with various restrictions around high rise development so its obvious you were in townhouse land per se.
Had you not moved and lived in a flat becoming part of the mobile working population you would not be where you are today.
But where are the flats or cheap rentals now for todays generation to be mobile. Jobs/factories seldom remain in the one area. If we are born in the wrong area we had to go after the jobs or sit on the dole.
Maggie sold all our social housing and like you I dont want to live where you state the grass is not cut rented or not.
Owning is a choice hard to ignore here now and without parents help some would never make it.

Member

I think two month notice periods are a problem. There are other tenancy structures but buy-to-let mortgages are predicated on the assured shorthold tenancy agreement.

Member

I wonder how many grandparents or even parents are worrying about Inheritance Tax rather than supporting those who cannot afford the deposit on their first home. These grandparents or parents might need that money in the future to fund long-term care but perhaps an interest-free loan might be a helpful solution to support the younger generation.

Member

A couple even if one partner has died can leave £650,000 without inheritance tax
By 2020 a couple can leave to the value of £1000000 to their children without inheritance tax so the best thing is to give the place to your kids even if you live for the next 20yrs in it.

If you give something to a friend or a family member who is not your spouse or civil partner, so that you no longer get any benefit from it, the value of the gift will still be included in your estate for Inheritance Tax – but only for seven years.

So, for example, if you give one of your children some money, and you live for another seven years , it won’t be counted as part of your estate when you die. SO start giving while your alive if you need to reduce a possible tax burden.

The wealthy may not avoid paying but the Gov make the rules we need to play their rules to our advantage. £200 for an accounts advice might be a very cheap price to pay for the knowledge. Also rules change all the time, every budget one needs to eep up with them and max out ever penney on it

Personally I dont think i’ll be running into the probvlem of leaving a milliion.

Member

DeeKay, I believe if you give your house to children and continue to live in it, you have to pay them the market rent. Otherwise it will not qualify under the 7 year rule and will be subject to inheritance tax.

Member

You can give them each moneys to a prescribed value each every year which after 7 years gets dropped of the taxable list per se.
So if you gave your daughter £3000 per year year for 20rs before you die she would have recieved £39,000 of the 60k tax free as 20 less 7 = 13 x 300 =39000
If at the time of death the estate has reduced below tax level, no tax
If the estate is still above the taxable level you have still reduced the taxable size of the estate by £21,000.
The estate will still have to pay the tax on the other £7k you gave your daughter but thats better than tax on 20k
This has reduced many estates perfectly legally to below taxable levels but its no use waiting to your 79 with an estate worth 2.5m
As to the house it is not as straight forward as one might imagine
Or at least that is what my chartered accountant put to me
Yes, You can remain in the house even at a reasonable rent. Reasonable being open to interpretation.
Or are you renting it with them footing the bill for everything as a normal landlord or perhaps they dont need it just yet and you have an agreement where you take care of the property in return for a much reduced rental value.
There are people staying in London properties for free in lue of taking care of the property. Completely legit.
Each person really needs to consult an accountant as everyone situation is not the same.
What I have learned is that the wealthy seem to get away with paying very little tax as they are very well advised.
So paying attention to rules is all important and its just not just as simple as reading something like this on line.
When running my own business’s I listened intently to my accountant
It may and often does take time to sort these things out and the sorting out often takes place over an extended time.
So this is why I would say get to work.
There’s no point giving your hard earned estate to people yo u dont even know
Gov is not silly it has it all worked out to their advantage either way
If you hold onto everything to the last Mr Taxman will relieve you of his share
If you share out the estate the next generation will spend the money bringing it back into circulation. Back in circulation means its doing the rounds which means tax is being generated
Owning your hose will most likely free them up and give them more security which in turn will bring more spending to the market
A country is just a big business. No one likes a businessman who wont investGet it distributed as soon as possible or at least start the distribution as soon as possible/practical bearing in mind the families ages and marriage status and of course how secure the marriage appears. We usually can read our children quite well.
It may seem a bit daft but if one is quite well off it might be no more expensive in the case of a divorce to have your son/daughter in law have the money than the tax man have it.
I can absolutely say Mr Tax Man will not remember you tomorrow.
On the other hand your divorced in law will probably bring up your grandchildren and they will benefit from the money. Certainly better seeing smiling grandchildren.
I would not throw away money rather than pay tax but I would gladly give it away to someone I know before Id see the tax man have it.
Yes you may have a complete disgust for this person who took your little boy or girl for a ride and divorced your child but logically that terrible person would be better kept under your wing and kept in good speaking terms with all.
They are my now most likely a parent of your grandchildren.
You cant shoot them or make them disappear much as you may think you’d like to do so.
Grow up and make maths work for you.

Member

I support giving people the ability to get on the housing ladder as first time buyers by means of a 20% discount, providing the house is not sold within 5 years (to prevent speculation). However, I hope the government (or any other group that gives the discount) retains that 20% share of the home and benefits when it is sold. Just as happens in part-ownership. What exactly does happen?

Member

I think the government [or other] get their share back [including any appreciation] which can then be reused to invest elsewhere.

Member

John, I have heard that there is nothing to pay back after you’ve had the house for 5 years. If this is so then I am against the scheme. I do not see why taxpayers should give anyone up to £90 000 towards a London house and then allow them to keep that plus the huge gain in value the house will make. The £90k plus proportionate gain should be returned to help fund other people – just as in shared ownership. But perhaps I’ve heard wrong?

Member

I have lost track of the various home buying help schemes. Under the Right to Buy equity loan scheme the government [through the Homes and Communities Agency] lends up to 20% of the property’s value in the form of an equity loan. The buyer puts down a deposit of at least 5% and gets a mortgage to cover at least 75% of the property’s value. It no longer needs to be a new home on a new build development.

The buyer takes out a first mortgage for at least 25% of the value of the property and this mortgage, together with any cash contribution, must be a minimum of 80% of the full purchase price. The maximum full purchase price is £600,000. The buyer’s cash deposit contribution must be a minimum of 5% of the full purchase price. The Agency provides an equity loan to fund the balance needed to make
up the full purchase price of the property, a minimum of 10% and up to a maximum of 20% of the full purchase price. The equity loan must be repaid after 25 years or earlier if the property is sold. The homeowner must repay the same percentage of the proceeds of the sale to the Agency as the initial equity loan (i.e. if the equity loan was 20% of the purchase price, then the owner must repay 20% of the proceeds of the sale which would include any appreciation). The equity loan is interest free for the first five years. After that, the Agency charges a fee of 1.75%, rising annually by the increase (if any) in the RPI plus 1%.

So in that scheme the government gets all its proportionate stake in the property’s value back when it is sold plus it gets a fee every year after the first five years. In return for the 5% loan it puts a second charge on the property [the first charge being the mortgage lender’s].

Full details of the 20% discount for first-time buyers of starter homes on brownfield land have not yet been released but it seems to be intended that the owners will be able to keep the full value of the property when they come to sell it. The drawback could be that they will be paying interest from day one on 95% of the purchase price unlike under Help to Buy on only 75% over the first five years [because of the government’s interest free period on their 20%] and the higher loan-to-value ratio generates a significantly higher monthly mortgage repayment.