According to figures released from the office of national statistics today, the number of people aged between 22 and 29 who own a home has dropped. Ten years ago, 37% of this age group were homeowners, but in 2017 this had dropped to just 27%.
There are lots of contributing factors for the decline, and why purchasing a first home is difficult for lots of young people. House prices steadily increasing, and the amount of deposit needed are the two main barriers preventing them getting a foot on the property ladder.
So, what can you do to get over these two barriers and become a homeowner?
Rising house prices are good for those who own a house, but bad news for those trying to get on the property ladder. It means that first time buyers must devote a high % of their income to saving for a deposit and paying a mortgage.
When you are buying your first home you firstly need to establish what you can afford to buy. Your budget must be affordable, so don’t just think of what your situation is now, think ahead. Are you planning to start a family, change jobs, some changes may affect your income.
You may have an area in mind that you want to live in, but if house prices there are out of budget then you need to look elsewhere or for a smaller property. If you’re looking to discover if an area really is ‘up-and-coming’, take a walk around. Are there skips, scaffolding and houses being refurbished or renovated? These are signs that others are investing in the area too which means there may be an opportunity to buy before it grows in popularity and price.
The Government’s ‘Help to Buy’ scheme launched in 2013 and is available until 2020. It's open to both first-timer buyers and those moving home but is restricted to new-build homes. Under this scheme, the buyer is only required to raise 5% of the property value as a deposit. The Government will then lend you up to 20% of the value of a property in the form of an 'equity loan'. The remaining balance can then be topped up through a mortgage.
Help to Buy covers new build properties valued under £600,000 only
There is no interest to pay for the first 5 years
In year 6, interest, known as a 'loan fee' kicks in at 1.75%
When you come to sell your home, the Government will take back its 20% share
The scheme runs until 2020
Right to Buy
In some areas, if you rent from the council you may be able to buy your council home at a discount price. You will need to have rented the property for at least three years along with some other qualifying criteria which may vary with different councils so do check. For more information visit the website.