Time to give council houses a chance

14 Mar 2017

A nation of homeowners

Ever since the 1980’s and the Thatcher era we have all strived to be a nation of homeowners. However, between 2007 and 2008, the number of first time buyers went into freefall decreasing by 47% bringing it back to early 1990 levels. This compares with 1991 where 67% of homeowners were between 25-34. By 2014, this had fallen to 36% following the 2008 crash. Likewise, homeownership for 16-24 year olds dropped from 36% in 1991 to 9% in 2014 and for the 35-44-year-old age group fell from 78% to 59% in the same period. It’s not difficult therefore to see the impact of the 2008 crash on confidence and the ability of young people to gain a foothold on the property ladder.

Young people higher risk?

Since the 2008 crash, if you are a young person under the age of 35, owning a home has seemed increasingly out of reach. Apart from a massive fall in house prices in 2008, the House Price Index has shown that prices have risen since by 7% with the greatest rise being 25% in 1988. It is true to say though, that salaries have failed to keep pace with such rises meaning private renting has been the only option for young people to get their own home. For young people striving to get on the property ladder, they’ve been forced to either move back in with parents or take out 100% mortgages over longer lifespans which are difficult to obtain. What has undoubtedly compounded problems has been the reluctance of the banking sector to lend to younger first time buyers because they are seen as higher risk.

Increased market confidence

Following the introduction of the Help to Buy mortgage subsidy stimulus, there has been an increase in first time buyers in the market. This has meant that first time buyers can obtain mortgages with just a 5% deposit. When the scheme as launched in October 2013, there were just 47 mortgage related products available and now according to Moneyfacts data there are over 200 related products. This coupled with a strong economy despite Brexit fears has certainly increased confidence in the market. First time buyers have also been helped with a government crackdown on buy to let investors which in the past has fuelled house prices.             

Time is of the essence

For young people, the priority should be saving for a deposit and focusing on gaining foothold in the market in an area they can realistically afford. That house prices continue to rise is a both a blessing and curse. If you are lucky enough to have a house you can rest on your laurels to some degree. However, if you are house hunting, this means that your choice in your price bracket maybe more limited.  Moreover, time is also of the essence as you can guarantee that in popular areas, suitable first-time buyer properties will be sure to fly off the market. Therefore, it is important to have a mortgage “agreed in principle” to act quickly.

Spread your net widely

Despite difficulties in affordability there is light at the end of the tunnel. For the first time since 1996 the proportion of mortgage loans given to first time buyers hit 53% in April 2016 according to the Council of Mortgage lenders figures. Buying a property is an exciting step in life and often it’s easy to get caught up in wanting to buy the perfect home. However, if you are struggling to find somewhere to buy in hotspot areas such as the south of England, it’s important to think outside the box. It’s often said that an increase in estate agencies and cafes is a sign of gentrification of an area and often those living in the area are surprised by this process because they’ve taken their area for granted. Gentrification can happen in the subtlest of ways and often in areas where house prices were on the fringe of affordability where people have been forced out of popular areas which are now out of reach. So, spread your net widely and make sure you consider all your options when house hunting. Don’t rule anything or out to quickly.

Ex council properties have a lot to offer

Many first-time buyers have fallen into the trap of turning their nose up at ex council properties due to the stigma attached. Sadly, such properties have in the past received bad press in some cases. However, this is often unfair, as ex council properties can represent extremely good value for money. They often have more outside space than newer properties and have more established trees and gardens making them more pleasant neighbourhoods. Moreover, they tend to be quiet neighbourhoods with older couples rather than young families where children have flown the nest. This means that couples who own ex council properties have likely lived there for about 25 years plus and having bought their property have also invested in it and added extensions or sunrooms and carried out extensive home improvements meaning that you don’t have to. Finding an equivalent property with the same space and specification for the same price might prove difficult in non-council properties. Moreover, having been council stock it’s more likely that the homes were well maintained and have been upgraded to the latest specification in double or triple glazing, are well insulated and meet current housing standards.

Value for money

A major plus for ex-council properties is that they are often cheaper than non-council properties and they have much more inside space than modern houses. Modern estates tend to have more houses per square foot and such houses are much smaller in relation to ex council stock. They’ve also been planned near to public transport with shared outside space in terms of parks. As such you can often get much more bang for your buck.

Affordability in Desirable Areas

Value for money properties are important, because it means that they’re more affordable but you have more cash to play with when considering renovations or development. So, if you want to live in a desirable area, but it’s simply impossible to find a property on a privately-owned estate, considering an ex-council apartment or house is a very good compromise. Ask yourself this, would you rather buy a small and expensive modern property with little or no outside space, smaller rooms and commute for 4 hours every day? Or would you rather live near the centre of the city where house prices are rising fast in a larger ex council property you can afford with more outside space close to a range of public amenities?