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Britain Can Still be a Nation of Homeowners Despite Tough Times

Posted: 13/10/2012 01:00

If research for housing charity Shelter is to be believed, we Brits are in danger of losing our status as a nation of homeowners.

A YouGov poll shows 59% of adults who do not own their own home now believe they will never be able to afford to buy locally.

The figure, according to Shelter, has risen from 50 per cent last time the charity asked this question just three years ago.

Depressing reading, and another sign the housing market is in a real state of flux.

But should young people really be throwing their hands in the air and giving up?

With the greatest respect to Shelter, who do a brilliant job and are rightly concerned about the dangers of young people becoming homeless in a deep recession, I would argue not.

The bottom line is that it's always been hard getting your foot on the housing ladder.

A few years ago, before the residential property bubble burst, it looked for a while like first time buyers were in danger of never having the chance to become home owners.

Prices were rising so fast as to be out of nearly everyone's reach. It was crazy. When I bought MY first house my mortgage interest rate was 15%. That's not a typo - It was FIFTEEN percent.
The good news is that current market conditions mean first time buyers might actually be in a better situation. For starters, they may be the only ones with access to financing, and in some cases are looked on more favourably than established buyers.

They also have a number of other key advantages: they don't need to sell, so there's no chain; they have a lot of support, including from lenders believe it or not, because they've always been viewed as needing that bit more help; and they may still be young enough to benefit from the Bank of Mum and Dad; and able to really add value to a cheap deal.

If you buy a new-build property for instance there are deals that are only available for first time buyers. There are mortgage deals that are only available for FTBs.

I'm not saying in any way, shape or form that it's a doddle, but it's just not easy for anybody and in certain cases first time buyers can use their unique status as an advantage.

So don't give up hope, don't throw your hands in the air in despair and give up. Be creative.
It might not be as easy as it once was but if you're inventive it's still possible.

Imagination really comes into its own in choosing what you buy, how you buy and where you buy. This is how it works.

What.
Buy something you can add value to. Don't go for your dream home first time. It almost certainly ain't gonna happen. Don't be put off by grubbiness. If it needs work, good, if it needs a lot of work, even better - you can really increase value. You've got to look for something you can do up and improve.

Remember to be flexible. We all had to start somewhere. Set your sights at a realistic level and get something to get you going.

Where.
If you live and work in the Greater London area - and some other cities - it's very difficult. Prices have fallen the least and there's still high demand. You'll have to be flexible and look to buy outside your area, maybe dramatically so. Even if you're not going to be able to live in it yourself, owning a home still gets you onto the ladder.

For starters, you can do it up, add value, rent it out and make money. You can still buy a house in some parts of the country for £20,000. If you've got time and energy then there are always possibilities.

Look to areas where it may not be fashionable and trendy right now, therefore prices are low, but in the near to middle distance future things are on the up.

Areas of regeneration are good for starters, where there are new transport links, where other people are putting money in infrastructure. Look for the 'Waitrose affect', buy near a new supermarket or where one is planned.

How.
Look for deals which are aimed specifically at FTBs. Go to a good independent mortgage broker who can look at the entire market.

The number of products out there is a fraction compared to before the crash, but a good broker will be able to guide you to the best for your circumstances. Some will take into account your parents' home and they can act as a guarantor, and put up an asset rather than cash. Obviously there's a risk involved, but it's a way of them helping without parting with cash.

Look to buy with friends - that's what we used to do. Just make sure there's a proper contract drawn up in case anyone bows out or runs away.

Buy at auction. Why do virtually no first time buyers buy at auction when prices are virtually 15 to 20% cheaper? Auctions are brilliant for deals if you're prepared.

How about borrowing from family or a friend for your deposit then in six months time when you've done the work, refinance and give them their money back plus a little extra? Treat it like a business and put together a proposal.

It's all about getting your foot on the ladder and my own view remains we can still be a nation of homeowners no matter how hard it is.

I don't want to come out as not being sensitive to the concerns of brilliant and hardworking organisations like Shelter.

I'm trying to encourage people not to give up hope. Don't believe it's going to be impossible.
Of course these surveys make hard reading because you're thinking you'll never be able to afford a house.

It's just not necessarily true. So don't stop looking, don't stop putting money aside for that deposit, and don't stop dreaming.
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