By Martin Williamson, Head of Residential Property, Latimer Hinks Solicitors www.latimerhinks.co.uk.
While first-time buyers (FTBs) are increasingly being incentivised to make that first move onto the housing ladder, with excellent schemes such as FirstBuy and NewBuy, many are stuck in the rental sector. One solution can be to live at home with parents for longer, or else give up a rental property to move back home, while saving up for a deposit.
With the average mortgage deposit now standing at £43,300 on a property valued at £173,200, the hurdle most FTBs face is clear. The analysis, from the consultancy Oxford Economics, says that the financial pressure on young people is going to get even worse over the next seven years with the average deposit rising to an average of £60,000. While the bright, but many would say reckless, days of 100% (or bigger) mortgages have long gone, and most likely will never return, there is much that FTBs can do to help themselves.
Living with the folks is an increasingly attractive option for many, including married couples. As long as all parties are happy with the arrangement, this often translates into an excellent way of saving up over a period of time for that crucial deposit. Living at home can also be a good way for an individual or a couple to get their finances in order to make themselves mortgage ready. If credit ratings are below par, then this is a great time to build up a good solid ranking, well in advance of approaching a lender. A good credit score, coupled of course with a sizable deposit, are king and queen these days.
To make the living with parents set up work, ground rules need to be set in advance. It sounds obvious, but before you even consider embarking on a house share arrangement, consider whether you have a strong enough relationship to bear months of living in close proximity. One of the things many people are starting to do to make a positive from their new living arrangements, particularly if this is going to be a more a long-term situation, is to help their parents improve the family home. A refurbishment plan can be as small-scale as modernising a childhood bedroom or tidying up a garden to re-decorating the whole house.
Whatever you decide, this arrangement will live or die based on whether or not you set up a workable budget, whether in terms of a peppercorn rent or a refurbishment project, before making the move. Also, a key thing to remember is to get clearance from the home owner, i.e. your parents, before decorating. Household arguments could well result from an ill-considered paint scheme.
You may even do such a great job in sprucing up your new home that you find it difficult to fly the nest the second time round. Although you will probably also relish the opportunity of helping out your parents while saving up that vital deposit for your new home.
Please note: This article is intended as guidance only and does not constitute advice, financial or otherwise. No responsibility for loss occasioned/costs arising as a result of any act/failure to act on the basis of this article can be accepted by Latimer Hinks. In addition, no responsibility for loss occasioned/costs arising as a result of any act/failure to act on the basis of this article can be accepted by the firm.