17 February 2015
Locked Out of the Property Market
A generation has given up on the dream of owning their own home as a result of the property boom, it has emerged.
The hopes of thousands of first-time buyers have been dashed by runaway property prices, the need to secure huge deposits and job insecurity, a study of 2,000 under 45s who have yet to buy discovered.
More than half (51%) of 25 to 45s thought they had little or no prospect of ever owning their own house.
The toll was particularly acute for people aged 35 to 44 who were still struggling to get on to the property ladder, with 40% believing they will never be able to afford their own home, while one in five said they have been left totally disillusioned by the current state of the property market.
Nearly one in three said they were having to cut back on essentials, such as food and heating, at the end of each month in order to save for a home.
A third had taken on extra shifts or another job to raise funds while a fifth have chosen to move back with their parents so they could get some savings behind them and nearly half questioned were going without holidays.
But a large majority of those questioned revealed they were not aware of or had not looked into other ways of getting on to the property ladder.
The survey by property law experts Slater and Gordon UK found that people who were actively saving for a place had managed to bank on average just £10,570 towards a deposit but needed at least three times that amount to feel they stood any chance of securing a home and affording stamp duty.
Slater and Gordon Lawyers Head of Real Estate Stephen Lintott said, “It can be incredibly dispiriting for people saving towards their first home to see an unrelenting rise of house prices. But there are a lot of schemes and incentives out there that people just don't know about. It is possible to do it with the right financial planning early on.
“The recent changes to stamp duty land tax may have helped in the short term, but in the long term the supply of housing needs to be boosted, perhaps by a reform of planning and tax laws, and the rental market needs to respond to changes in how people want to rent."
Just 39% of people trying to get a deposit together have managed to leave their savings untouched. Some 61% said the simple cost of living, such as everyday essentials, unexpected bills and clothes, meant they have to dip into their funds.
One in ten said they felt trapped by the high cost of rent while one in five said that buying a property was less realistic for them than previous generations.
But nearly four in five of under 45s had never heard of or explored the option of shared ownership schemes, 90% were in the dark about shared equity schemes. And two thirds of respondents had not contemplated or were oblivious to the Government’s much-vaunted Help to Buy scheme.
Some 86% of the people surveyed said the UK Government needed to do more to educate buyers about their home ownership options. Only 17% of under 45s now felt “optimistic” about their chances of owning their own home.
The earliest age at which the average buyer thought they would be able to take their first step onto the property ladder was more than 35 years and most expected it would take at least ten years of saving before they could turn dreams of being a homeowner into reality, the study found.
Stephen Lintott added, “A shake-up of the letting market would also help to ensure people have a decent choice as to whether to buy or rent, particularly longer term tenancies of high quality family housing.”
This view was supported by the research which found that 64% of respondents would abandon intentions of buying a home if better quality rental properties were available, while 60% said if longer-term tenancies were available in the private rented sectors if would influence their decision about whether to buy or not.
A third of under 45s said that stamp duty put them off purchasing and 60% said there simply were not enough good quality and suitable affordable homes being built.
Sacrifices made to get onto the property ladder:
- I've cut down how often I socialise and see friends - 47%
- I am going without holidays - 44%
- I don't go for meals out - 42%
- I've taken on another job or extra shifts at work- 34%
- I've cut down how much I spend on essentials like food, heating - 29%
- I've had to give up expensive hobbies - 21%
- I walk instead of taking my car or public transport - 21%
- I've moved back with my parents or a relative - 19%
- I've had to sell possessions - 14%
- I am actively saving for a property but I am not making any sacrifices - 14%
- I've put my wedding on hold - 7%
- I’ve had to sub-let my flat, share a room with a friend or stranger - 6%
- I've had to ask friends and family for money - 6%
- My partner has had to return to work - 4%
Slater and Gordon Lawyers have 1,450 staff and offices in London, Manchester, Liverpool, Birmingham, Sheffield, Milton Keynes, Bristol, Derby, Merseyside, Cambridge, Edinburgh, Cardiff, Halifax, Newcastle, Wakefield and meeting rooms in Bramhall, Cheshire and in Hull, Yorkshire.