"The Families Priced Out of 75% of England’s Property Market”
Families on low to middle incomes are being increasingly priced out of England’s property market as values rise, warns the homeless charity Shelter. Up to 1.8 million households with an income of £20,000 to £40,000 could find themselves stuck on the lowest rung of the property ladder, or face years of renting because they can’t afford the repayments for a three-bedroom home. The charity says that these ‘forgotten families’ are priced out of 78% of suitable housing available and that they need a drastic expansion of shared home ownership schemes to ease their plight.
These claims come on the back of house prices having risen by £10,000 over the last 12 months – according to the Halifax house price index. The market has certainly picked up in recent months, with demand being fuelled by lower mortgage rates and the Government’s Help to Buy scheme, which offers interest free loans over five years, helping homebuyers to get a property with a deposit as low as 5%. However, Shelter says that this first stage of Help to Buy, where deposit-boosting loans of up to 20% of the property’s value are available, is too limited in scope.
The second stage of Help to Buy doesn’t excite Shelter either; the idea of compensating the lender for losses on extending mortgages requiring 5% deposits doesn’t solve the root of the problem, which is too high house prices. It says that many families will have no choice but to bring up their children in private lets, paying out ‘dead’ money in rent and facing the insecurity of short term lets.
The Council of Mortgage Lenders (CML) figures show that first-time buyers take out an average loan of £120,000 with an individual or joint income of £36,520. In London this figure is almost £200,000 against an income of £52,130. There aren’t many crumbs of comfort in social housing either, as it’s clearly massively over-subscribed. Fewer than 50,000 family-sized social homes became available in the last twelve months and there are 1.8 million households on the waiting list.
Sources: thisismoney.co.uk, cml.org.uk (image courtesy of theinvestingsite.com)