Getting on the housing ladder is becoming increasingly difficult. As a consequence, more and more millennials find themselves perpetually trapped in an over-inflated rental market.
The typical Londoner spends more than a third of their monthly salary on rent and the widening gap between the expense of renting versus that of buying is costing British millennials more than £1,000 a year.
Craig Osborne, Director at SiteSales Property Group, offers his top tips for planning your route out of the rental market: “Though buying a home may seem like a distant pipe-dream for many young people in the UK, there are some practical measures they can undertake to put themselves in the best possible position to get on the housing ladder:
Have a plan in place for saving
“Having knowledge of the amount you will need to put forward for a deposit is a logical first step. For instance, a property on the market for £300,000 will require a minimum deposit of 5% (£15,000). Also, be aware there may be a host of additional fees related to valuation, surveying, brokering, conveyancing and land registry. I won’t administer patronising advice about how much you could save from cutting avocados or lattes from your diet.
However, by being more frugal and informed on your choice of service providers and companies/ brands that you use, and slightly adjusting your lifestyle, significant savings can be made. Creating spreadsheets or monitoring your spending with one of the arrays of saving apps can help you track your expenses and identify areas where you can make some efficient cost cuttings. By having set targets of savings each month as well as for the year, you can be one step closer to holding the keys to your dream home.”
Make the most of available schemes
“Understand and utilise existing government schemes designed to give people a leg-up on to the housing ladder. Shared Ownership, Help to Buy and localised council versions of these schemes can make all the difference when it comes to taking that first step on the property ladder so be sure to investigate whether you are eligible. A good starting point to find out more about what is on offer and what would be suitable for you is to visit the government’s Shared Ownership website.”
Consider your credit
“A credit score can tip the balance as to whether you are accepted or declined for a mortgage. There are many free-to-use online resources where you can obtain and monitor a copy of your credit score. To ensure yours is in tip-top shape, make all repayments in time, settle any outstanding debts at least six months prior to submitting your mortgage application and think carefully about what appears on the debit side of your ledger.”
Monitor mortgage offers
“There are a host of mortgage products on the market that provide either variable or fixed rates. Take some time to explore what type of mortgage best suits your needs. If feasible and affordable, speak to an independent mortgage advisor to get impartial advice and options based on your individual situation.”
“It’s important to manage your ‘wants’ and ‘needs’. Owning a penthouse apartment in South Kensington in London, or a luxury cottage in Devon may be your dream but a pinch of pragmatism goes a long way in the housing market. For instance, by moving a little bit further out of major cities or choosing to buy in up-and-coming areas, you could potentially get more for your money. Areas such as Acton, Peckham, Newham, Shepherd’s Bush and Stockwell in London, which are undergoing major regeneration and infrastructural investment, offer buyers a comparatively cheaper alternative to more traditional ‘aspirational’ hubs.”
Finally, be patient
“Buying a home is one of the biggest financial commitments you can make; be patient, get advice and understand what you are committing to. House purchases can sometimes take longer than expected for various logistical and legal reasons. For example, on average, it takes around four to eight weeks for properties to sell in London.”