House advice and prices?

Hello, I would appreciate some advice from you guys, since I'm getting really desperate over here..

Currently I'm on spouse visa (will be applying for IRL this June) i earn £19,400 a year on my work and my husband is on benefits due a health problem earning only about £6,000 a year.
We are living with my in-laws (which are really nice people), we dont have any kids yet, but im getting really desperate to get out of here.. we live in a tiny TINY room and Im getting depressed of not having my own space..

I was thinking in renting a flat, but if we are planning to have kids in the future I would really love to BUY one instead.

That will mean saving up for about 3 years at least to be able to pay the down payment.. and im so unhappy here lately (this also affect our relationship) and I dont know if i should wait those 3 years or just get the flat..

Is there a better way?

I would like to know also how much is for the down payment (generalizing) for a flat or a small house in London or in the surrounding area (even in the outsides of London) so i get an idea of how much i need to save up

I have zero knowledge in houses and prices or anything at all.. so I really need some advice..

Thank you so much in advance!

I was thinking in renting a flat, but if we are planning to have kids in the future I would really love to BUY one instead.

That will mean saving up for about 3 years at least to be able to pay the down payment.. and im so unhappy here lately (this also affect our relationship) and I dont know if i should wait those 3 years or just get the flat..

Is there a better way?

I think it's going to be a case of working out your options and going for the one that will suit you best.

In terms of your current situation and the affect it's having on your happiness in the UK and your relationship, perhaps it would be best to just rent a flat to start with. That way, you can have your own place, without having to live in a small house with other people, and you can get your life in order living as a couple on your own. Then you can sort things out from there, and look into buying a house in the future.

On the other hand though, it may also depend on how much renting a flat will set you back and how much you will realistically be able to save towards a house deposit if you are renting vs. how much you can save by continuing to live with your in-laws... and whether or not you feel it's worth living with them for a few more years just to save the money, or if it will be better for your wellbeing to have the freedom of living on your own, just the two of you, during that time.

I would like to know also how much is for the down payment (generalizing) for a flat or a small house in London or in the surrounding area (even in the outsides of London) so i get an idea of how much i need to save up

I have zero knowledge in houses and prices or anything at all.. so I really need some advice..

House prices in the UK are generally really high, especially compared to the US. In London, it would depend on the area and size of the property as to how much it would cost, but in general, London and the surrounding areas are much more expensive than most of the rest of the country.

Up in Lincoln, where I live, I've seen small terraced houses on the market for £100,000 to £120,000. In Bristol, where I grew up, the same size houses go for more like £200,000. In London, terraced houses average £500,000!

You want to be able to put down as big a deposit on a property as you can - and it depends on mortgage companies/banks as to the lowest deposit they will accept, and how by a mortgage they can give you.

I'm not an expert by any means, but I would say you'd want a deposit of at least 10% of the property value, if you can save that much.

I started saving for a house deposit in 2011, while renting at the same time. By June 2013, I had £5,000, which is basically nothing in terms of property deposits. I have since been working abroad with my company, earning overtime and overseas allowances, plus I have had no living expenses for 8 months, and by March 2014, I should hopefully have about £25,000 saved towards a house deposit.

I will be renting a property when I get back to the UK in March, and then will consider my options for buying. I am tempted to leave it a bit longer, keep saving, maybe do another overseas tour next year to save a few thousand more, and then buy a house in a year or two. I will most likely buy a house in Lincoln, even though I'm not planning to stay there long-term, because it's where I currently work and it's the only place I can afford to buy a house.

If it were me in your situation, knowing how long it can take to save enough to buy a property (if not for my overseas work, it would have taken me several more years to save enough), I would probably focus on getting out of your in-laws house and into your own place first, and then think about buying later on.

Housing in London is very expensive.  Unless you have a massive salary (or savings or other sources of income), private renting will probably not allow you to save up for a deposit on your own.  

A one bedroom flat in Stratford is around 250k, a semi detached house in Ealing will set you back around 750k.  Where we are now in the southeast, a house is about 350-400k.  

DH and I make above average salaries, but with stupidly high rents coupled with other living costs (transport, food, gas, electricity, council tax, etc), we barely save anything at the end of the month.  The rent of a one bedroom flat in London now averages about 1,200 per month, not including council tax and utilities. Unless there is a bubble burst or we get a massive sum some other way (lottery, inheritance), we have given up on owning property in London, and most of the southeast England. (and there is that pesky credit score issue)

I would weigh the options of staying with your in laws for a while to save for a deposit and get your own space later down the line, or renting to get out and have your own space now but possibly not being able to save for a deposit later if you are unable to find cheap enough rents in your desired area.

The London housing market will make your hair curl its so harrowing and expensive, especially for what you get and the lagging wage growth here.  Couple that with external investment as a safe and growing investment, lack of inventory growth, and low interest rates, and I wonder how much longer these prices keep going.  Its almost as bad as Stockholm!

As a stop gap solution, especially as renting a flat can involve a few thousand in deposits just to get going, what about doing a flat share?  There are plenty around where you wouldn't be stuffed 10 to a house with a bunch of 22 yr old Kiwis.  Usually all bills are included so you wouldn't have that additional cost on top of the rent to bear.

Another possible stop gap - there are apparently folks who live and watch buildings (for free) for the owners so that squatters don't move in.  I just saw something in the papers a few weeks ago about this, so you may have to google to find out more.  Its a little odd, but it would be your own space (and free!)

Is there any possibility of you guys moving to another part of the country for jobs?  Or increasing your income in any way in the future?  Even flat sharing will be challenging on 25K a year if you are looking at around 750-900 UKP a month.

We would love to eventually own a property here, but since the credit issue will hold us back for a bit, we may as well save up deposit money, see where the market is (does it top out, deflate, etc), and then decide if it is worth putting money in here or buying something in the US or another country.  The time to buy a flat in the Southeast was 10 years ago, unfortunately.

The London housing market will make your hair curl

My problem is that I think UK property is overvalued. And I think that conditions have been in some ways manufactured to keep it that way: heinously artificial low interest rates, QE, lack of planning flexibility, etc. I don't know how free marketers can defend such governmental meddling, but for some reason they turn a blind eye when it comes to this. 

But London, too, is very unique. It is like Manhattan, Tokyo, Moscow or San Francisco; short of anarchic collapse, I don't know that they will ever be affected by economic forces.  If Manhattan or London property lost half their values in a couple of years,  I think the stuff going on in the rest of the world would be apocalyptic. Deflation itself (due to things like price stickiness), in any sense, is a really terrible sign of something fundamentally wrong in economics - and governments will do just about anything they can to keep it from happening - going to great lengths to prop things up. Japan has defenestrated an entire generation attempting to keep deflation away. The UK seems hellbent on going down the same path.

If you can afford to buy in London it is probably a very safe investment (assuming you can handle the coming interest rate increases). If you can afford to pay cash even better.

Chola, I would suggest getting out of London....it really is no place anymore for wage slaves like me and you. If I leave the UK it will be because of the housing situation.

 

It's a bit better in the North East.  You'd be able to afford a house with that sort of wage.  In London, you'd struggle to afford a garage sadly.

I'm going to second the idea of a house share.  It won't be your own place, but it won't be your in-laws, so it could possibly give you a bit more breathing room.  My partner and I used to pay £800/month (inclusive of bills) for an attic bedroom with ensuite in Zone 3 London.  However, I'd imagine that if you live further out, this amount would drop. I have a friend living out in Hertfordshire where she works (technically Zone 9), who pays around £400/month for a large double bedroom, with shared usage of the kitchen/facilities.

So when you mention you don't mind living outside of London-- I guess you should consider how far outside are you willing to go?  And consider the related questions-- How long of a commute will you be happy to undergo daily, and what's the easiest way to get to work from new place?  Have you considered the cost of the commute, and would you be taking public transport or driving?  For example, I pay over £300/month on my commute alone, but prefer public transport to being stuck in traffic on the M25 for a few hours a day...

I hope this helps you understand some of the things to think about, because sometimes just moving to a different part of the country isn't an option. (Though I sometimes for myself I wish it were!) If it is an option for you/your industry, it could be something for you and your husband to think more seriously about.

My problem is that I think UK property is overvalued. And I think that conditions have been in some ways manufactured to keep it that way: heinously artificial low interest rates, QE, lack of planning flexibility, etc. I don't know how free marketers can defend such governmental meddling, but for some reason they turn a blind eye when it comes to this. 

But London, too, is very unique. It is like Manhattan, Tokyo, Moscow or San Francisco; short of anarchic collapse, I don't know that they will ever be affected by economic forces.  If Manhattan or London property lost half their values in a couple of years,  I think the stuff going on in the rest of the world would be apocalyptic. Deflation itself (due to things like price stickiness), in any sense, is a really terrible sign of something fundamentally wrong in economics - and governments will do just about anything they can to keep it from happening - going to great lengths to prop things up. Japan has defenestrated an entire generation attempting to keep deflation away. The UK seems hellbent on going down the same path.

If you can afford to buy in London it is probably a very safe investment (assuming you can handle the coming interest rate increases). If you can afford to pay cash even better.

Chola, I would suggest getting out of London....it really is no place anymore for wage slaves like me and you. If I leave the UK it will be because of the housing situation.

 

I agree with a lot of what you posted regarding the questionable policies that are driving a lot of this.  In no way would I expect a massive correction, but I think a few people could get caught with their pants down once interest rates start to rise and that could maybe open up a buying opportunity.  Maybe.  Short of that it comes down to determining priorities and tradeoffs.  While this is a fantastic, vibrant city, its very much pay-to-play similar to other global hotspots.

BTW- what income multiple is suggested here for a loan?  And amount of a deposit?  I know that there were some instances in the US of needing very little to get a loan (like 5%), but here it seems to be much, MUCH higher.

Can I admit here that I am a Homes Under the Hammer addict? I would totally ship my retired father over to do drywall and fit cupboards and update a bathroom for a free three month vacation

Hi

A quick video that's been posted up giving you an outline of renting Vs buying

http://uk.finance.yahoo.com/video/loose-change-buy-rent-140219931.html

As per above from SoS, Aquila and the other responders, purchasing property in London is extremely expensive and beyond the logical reach of first time buyers as well as those further up on the ladder. Vast swathes of the rest of the UK are also beyond the reach of many, although the pricing is as overheated as London is. The South East isn't much different, so you do have to go to further away areas of the country where your combined salary could get you on the property ladder.

There's political, cultural/society, geographic and economic reasons as to why the property prices in the UK are beyond insane - for those on nominal salaries / basic rate of tax payers, purchasing remains out of reach, however high rate of tax payers  find themselves increasingly unable to purchase. Prior to the economic issues that began 6/7 years ago, with the availability of cheap credit and 'money' being thrown around everywhere, many members of the population overstretched themselves in buying a property - In 2002 when I purchased, I was offered an EIGHT times salary multiplier - being of a financial background for my IT career, I didn't take it, however other's did and were a big part of the reason the UK's financial issues occurred. It's now much harder to get funding/mortgages as the financial sector 'reeled' the other way after also being a big part of the reason of the financial woes. Although there's mentions of 5% and 10% deposit mortgages again, you'll need a long and squeaky clean credit history, evidence of (as best as) an income that appears to be stable long term. Seems these mortgages will also be perhaps fixed for 1,2,3,5 years to entice people in, and of course the ticking time bomb is to see where interest rates will be upon the introductory term end...

Recent analytics point to the fact inflation figures are around the 7.1% mark and the Bank of England has indicated that at 7% targets, they'll begin to look at raising interest rates. Quite how high they'll go compared to some of these mortgages remains to be seen - the hope being perhaps they'll not go past 5%..

For now, as per the video above, deposits required for more mortgages will be perhaps upto 25% of the property value - in London - an example of a 1bed flat in a middle of the range area will be perhaps £250K - then you'd be looking at a deposit of I'd say between £50,000 - 62500. You'd need to factor in legal costs, stamp duty, moving costs as well at the purchasing stage, and utility, council tax, maintenence, living costs once you are in.

My advice currently for you would be along the lines of above - House share or renting as it'll allow you to move from a personal situation you are very unhappy with.

Good luck!

Cheers! DtM! West London & Slough UK!

I agree with a lot of what you posted regarding the questionable policies that are driving a lot of this.  In no way would I expect a massive correction, but I think a few people could get caught with their pants down once interest rates start to rise and that could maybe open up a buying opportunity.  Maybe.  Short of that it comes down to determining priorities and tradeoffs.  While this is a fantastic, vibrant city, its very much pay-to-play similar to other global hotspots.

BTW- what income multiple is suggested here for a loan?  And amount of a deposit?  I know that there were some instances in the US of needing very little to get a loan (like 5%), but here it seems to be much, MUCH higher.

Can I admit here that I am a Homes Under the Hammer addict? I would totally ship my retired father over to do drywall and fit cupboards and update a bathroom for a free three month vacation

You can get 95% mortgages in the open market and also using Help to Buy etc.

Interest rates are higher than with a lower Loan to Value but still lower than the historical norm.