“You will never own your own home”. We heard this for years before the bubble burst and now in 2014 it is rearing its ugly head again, with house prices on the rise. So, what does it really mean for the generation of renters or their landlords, and how does it affect you if you need or just want to sell?
Apparently the bubble is growing again. According to new research, the average mortgage loan taken out in February 2014 by new entrants to the market was £119,000. Typically, loans amounts are granted based on around 3 times the annual salary. This simple equation tells us that successful applicants would need to earn around £40,000 a year just to be in with a chance of getting their mortgage. This is way north of the average salary which is currently £26,500 and so, unless you have a deposit saved of around £40,000, you will never own your own home and a life of renting awaits you. Or so it seems. We take a look at this from both tenant and landlord perspectives.
Is it so bad? Well it depends who you ask. If you have been saving for years thinking the dream was just around the corner, then this new bubble is a disaster. Saving and paying rent can be tough. No doubt you’ll start to feel like the goalposts are forever being moved. However, renting gives you the freedom of choice - which property, how long you stay and where you live are just a few. You also have the freedom to look around and live wherever your work may take you. Hold fast and keep going. Save, save, save and use the valuable position you have in the market to your benefit. There are many schemes, including the governments ‘Help to Buy’ initiative, which are aimed at people like you who have had the foresight to get some cash in the bank. Bide your time and pick the right scheme for you. In the meantime, as a long term tenant, you are a huge asset to the investment landlord.
If you’re an Investment Landlord this news may seem positive and should make your job much easier but don’t be complacent. There are a lot of tenants on the market and equally a lot of properties available for their consideration with the exception of premiums. The key is to make sure that your property, or properties as the case may be, is/are up to standard (and boy have the expectations gone up a notch). A long term, trusted tenant isn’t so easy to come by and even harder to keep, so keeping on top of everything is still a must. Tenants are much more inclined to sign extended agreements knowing a house of their own is out of reach. Cutting corners and getting greedy could cost you that elusive tenant and result in more vacant periods or more tenant changes.
You may be an accidental landlord and find yourself with a signed tenancy, unsure on whether now is a good time to sell and confused about how you go about selling. Firstly if you have been biding your time waiting for the perfect moment to sell, now could be just right. With schemes such as ‘Help to Buy’ and banks loosening their lending criteria, the market is definitely in better shape and full of opportunity.
Be wary of the commitments you have with your current tenancy before doing anything and make sure you have a good agent that will work hard for you and advise you on your contractual obligations. Makeurmove now offer property sales and have a number of packages available to meet your requirements, take a look on the link below.
Alex Hargreaves, Head of Property Sales, Makeurmove.co.uk.
For further information visit Property Sales Services
Or for info on Help to Buy visit Help to Buy