Wednesday, September 13, 2006
The cost of housing
I had a conversation with a constituent last night that underlined the problems facing young people when it comes to getting onto the housing ladder.
My constituent's son is single and is 24 years old and working. He is earning £22,000 to £24,000 a year and has managed to save £6,000 towards a deposit. However, he has been told that the most he can raise by way of a mortgage is £65,000. That is nowhere near enough to buy a property in Swansea.
His only real option is to buy a house which will require a lot of work and do it up. However, no mortgage company will fund him to do that because they will not accept the property as collateral. His other problem is that there are no longer grants available to do the property up.
His options are limited. As he lives in an urban area then the Assembly's Homebuy scheme only applies in limited circumstances. In fact urban homebuy schemes in which a Housing Association buys a stake in a property which is recovered on re-sale, is only available at a rate of 30%, taking his affordablilty limit to just over £90,000. That gives a limited choice in Swansea but Housing Associations in urban areas are not really interested in homebuy and are even less interested in getting single people ont0 the property market. They are more likely to assist a couple.
The other option is shared ownership but these opportunities are rare, tend to be applied in accomodation for the over-55s and are snapped up very quickly. Low cost housing is also rare and it could be years before a scheme comes on line in Swansea.
In these circumstances the Plaid Cymru policy of offering a cash payment of £5,000 towards the cost of a home would be meaningless. It would have little or no impact on my constituent's ability to buy a home. In fact with a price tag of £75 million a year across the whole of Wales it would tie up a lot of resource with little effect, money that might be better spent on providing affordable homes to buy and for rent.
I do not believe that the Welsh Assembly has anything like enough resources to provide a solution that will help all first time buyers. However, a targetted scheme in which Homebuy is available at a 50% rate in urban areas might help, as might more use by local Councils of all the various mechanisms at their disposal by which they can encourage and require developers to build low-cost housing.
All of this of course underlines the problem identified by the Chartered Institute of Housing this morning. They have warned of a crisis because Welsh homes are increasingly unaffordable. They found that the average house price in Wales was £123,362, compared to an income of £29,241 and that for younger working households throughout Wales, the average house price to income ratio is now more than four to one. That is not an encouraging position for most first-time buyers and means that many may never be able to own their own home.
My constituent's son is single and is 24 years old and working. He is earning £22,000 to £24,000 a year and has managed to save £6,000 towards a deposit. However, he has been told that the most he can raise by way of a mortgage is £65,000. That is nowhere near enough to buy a property in Swansea.
His only real option is to buy a house which will require a lot of work and do it up. However, no mortgage company will fund him to do that because they will not accept the property as collateral. His other problem is that there are no longer grants available to do the property up.
His options are limited. As he lives in an urban area then the Assembly's Homebuy scheme only applies in limited circumstances. In fact urban homebuy schemes in which a Housing Association buys a stake in a property which is recovered on re-sale, is only available at a rate of 30%, taking his affordablilty limit to just over £90,000. That gives a limited choice in Swansea but Housing Associations in urban areas are not really interested in homebuy and are even less interested in getting single people ont0 the property market. They are more likely to assist a couple.
The other option is shared ownership but these opportunities are rare, tend to be applied in accomodation for the over-55s and are snapped up very quickly. Low cost housing is also rare and it could be years before a scheme comes on line in Swansea.
In these circumstances the Plaid Cymru policy of offering a cash payment of £5,000 towards the cost of a home would be meaningless. It would have little or no impact on my constituent's ability to buy a home. In fact with a price tag of £75 million a year across the whole of Wales it would tie up a lot of resource with little effect, money that might be better spent on providing affordable homes to buy and for rent.
I do not believe that the Welsh Assembly has anything like enough resources to provide a solution that will help all first time buyers. However, a targetted scheme in which Homebuy is available at a 50% rate in urban areas might help, as might more use by local Councils of all the various mechanisms at their disposal by which they can encourage and require developers to build low-cost housing.
All of this of course underlines the problem identified by the Chartered Institute of Housing this morning. They have warned of a crisis because Welsh homes are increasingly unaffordable. They found that the average house price in Wales was £123,362, compared to an income of £29,241 and that for younger working households throughout Wales, the average house price to income ratio is now more than four to one. That is not an encouraging position for most first-time buyers and means that many may never be able to own their own home.
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That is what the penultimate paragraph is alluding to, though I suspect you are referring to English policy. Welsh policy is similar!
We have been banging on about Community Land Trusts in Wales for some time but they are not so necessary in an urban setting. In Swansea for example the Council owns huge amounts of land and are able to encourage social and low cost housing, but it takes time.
We have been banging on about Community Land Trusts in Wales for some time but they are not so necessary in an urban setting. In Swansea for example the Council owns huge amounts of land and are able to encourage social and low cost housing, but it takes time.
>His only real option is to buy a house
>which will require a lot of work and do
> it up. However, no mortgage company
>will fund him to do that because they
>will not accept the property as
>collateral.
He may find that if he is prepared to renovate ecologically, the Ecology Building Society will be prepared to lend on a property that the big building societies would not look at. (www.ecology.co.uk)
OK, it does not solve the main political problem, but it is an option for those people who are able to put in the work.
- Frank Little
>which will require a lot of work and do
> it up. However, no mortgage company
>will fund him to do that because they
>will not accept the property as
>collateral.
He may find that if he is prepared to renovate ecologically, the Ecology Building Society will be prepared to lend on a property that the big building societies would not look at. (www.ecology.co.uk)
OK, it does not solve the main political problem, but it is an option for those people who are able to put in the work.
- Frank Little
Community Land Trusts are certainly one of the options and are policy for at least one other party in wales :)
Your constituent should shop around more regarding mortgages. On that income he should be able to get a mortgage worth £75,000-£82,000 with only a 3% deposit. Leaving him some cash for modest renovations.
I suggest he gets another mortgage advisor.
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Your constituent should shop around more regarding mortgages. On that income he should be able to get a mortgage worth £75,000-£82,000 with only a 3% deposit. Leaving him some cash for modest renovations.
I suggest he gets another mortgage advisor.
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