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Springfords gets out the crystal ball to see who are the new home owners, and what will the landscape look like in ten years time. Will the property ladder remain a mountain or will there be a new model for arming yourself with a roof over your head.
The Office for National Statistics says that the average London home buyer now earns £104,000 a year, and for first time buyers, the figure is £84,000. Hardly surprising then that that further research, conducted by PwC, claims that only a quarter of 20-39 year-olds will own their own home by 2025, representing a collapse from almost four in ten today.
Those fantasy figures from London do vastly skew the market. In the real world, like Newport - where you’ll actually find the ONS located, the picture is somewhat more realistic. A six-figure income isn’t a pre-requisite to home ownership in every part of the UK. It is possible to find affordable housing elsewhere in Britain, but that still doesn’t mean it is easy. For many young people, a new home of their own may as well be on Mars, such is the difficulty in climbing up the financial ladder from rental to ownership.
Buying a property has always been a big commitment, probably even more so now. Young people now are looking at a monthly mortgage repayment which equals the price their loved-up grand parents paid in full for the house in which their parents were born. It can be a sobering experience, comparing prices over time. That soaring cost, and the perennial concern over demand outstripping supply, contributes to the rising proportion of young people who rent a property. That’s set to rise from 45% to 59% over the next decade according to the predictions from PwC.
So you might be interested to know that we’ve helped a number of clients with a generational approach to property ownership. There’s nothing new about parents supporting their offspring’s university years by purchasing a property for their student sons and daughters. It’s lived in and looked after (well, usually looked after) by the kids for the duration of their course. Then the parents find themselves moving into the buy to let market, almost by default.
Many parents have entered into the time honoured tradition of buying property, which they rent to their children, thereby coupling the earning potential of the family with the desire to fly the nest.
Generation Rent from the Parents has plenty of social benefits too. With the family invested in the property, there’s an added incentive to maintain the property in better condition, with the consequent value improving over time. It’s kind of environmentally friendly for the neighbours as well.
Making such arrangements profitable can be tricky, but that’s what we’re here for. Springfords has plenty of experience in sorting out the taxing implications of being a landlord and a tenant, whether the two are related or not. You’ll be as safe as houses in our hands.