It’s estimated that a third of millennials – those born between 1980 and the mid-90s – will rent their homes for life rather than being able to afford to buy their own. 40% of this younger generation are still renting homes at the age of 30, which is twice as many as the previous generation, according to a new report by the Resolution Foundation.
Struggling to step on the property ladder
Various factors mean that it is harder than ever for first time buyers to make their home-owning dreams a reality. Following the financial crisis, house prices have risen much higher than earnings, making it difficult for young people to save for a decent deposit. Added to this, mortgage criteria is much stricter since the crash in 2008, making it more difficult for first-time buyers to satisfy lender’s requirements. Bigger deposits of at least 5% are now expected and those looking to borrow are likely to have their finances very carefully scrutinised before any agreements in principle are given.
Stuck in a cycle of renting
With more people renting, average monthly rental costs have risen too, meaning that the bulk of earnings for most will be spent on making monthly payments. This leaves little in the budget to put aside in order to build up a deposit, not to mention other significant expenses when buying property such as legal fees. The situation has left many aspiring home owners feeling like their home-owning dreams are out of reach and signifies a shift in the traditional home owning culture of the UK, compared to some of our European neighbours where renting is more common throughout life.
According to the report, the number of families with children who are renting has also more than doubled in the past 15 years – from 600, 000 to 1.8m today, demonstrating that many are unable to buy by the time they are ready to settle with a family. It highlights that this may cause children instability in their lives, due to short-term let contracts and rental properties that are substandard – with one in four properties in the sector failing the decent homes standard.
Help to buy
There are, however, still options to explore for those looking to invest in a place of their own in the form of various Government backed schemes. The Help to Buy (Scotland) Affordable New Build Scheme is available until 2021 and asks for just a 5% deposit, with the Scottish Government providing a 15% equity loan, interest free for five years, meaning you only have to qualify for a mortgage of 80%. This is available on new build homes under £200,000.
The Help to Buy ISA boosts deposit savings by 25%, enabling deposit savers to set aside £200 a month tax-free. The Government will top up to a maximum of £3,000 on savings of £12,000 when buying a house.
Information about the Scottish Government’s Low-cost Initiative for First Time Buyers schemes is also available here, helping people to buy from the open market as well as to purchase new build properties from housing associations and councils, subject to application.
With a range of affordable homes ideal for first time buyers, we’d welcome enquiries from those looking to get a first step on the property ladder in Glasgow and the west. Get in touch with our friendly team today!
Vanilla Square – highly personal sales and lettings! Whether selling or letting property, you will always be liaising with one of our business partners, which makes our service that much more responsible and approachable. When you instruct us, your property will reach a wider audience as we are one of the few agents who are present on all the major property portals to offer sellers and landlords maximum exposure. If you’re looking to buy, sell, rent or lease your property, or you’re simply considering the idea, contact us by calling 0141 229 0210 or pop into our new office at 711 Great Western Road. One of our partners will be delighted to help and provide you with impartial, expert advice.