It’s no secret that the UK is suffering from a housing crisis. Getting on the property ladder has never been more difficult. Unless you have a good job or financially secure parents there is a chance you won’t. You may be thinking “Its ok my parents will leave me money when they pass on”, well try getting a mortgage from Santander or any other high street bank when you’re pushing 60. There’s no guarantee you’ll pay if back before you die so they will simply turn you away. So how did this happen and how can we solve it?
The decline of house building
House building has been in decline for decade. If we look at the 70’s there were about 350,000 new houses being built ever year. Guess how many there are now…about 130,000. Now add that to a growing population with the elderly living longer and mass immigration and it’s a classic supply and demand scenario. More and more people want a house but less and less are being built. Planning laws are making it increasingly difficult for housing developers to buy land to build new homes on. The CBI estimates that Britain needs to build 240,000 new houses a year to keep up with population growth.
Impose a mansion tax – Tax the wealthy when they purchase a large expensive house, this will help lower in price of larger houses and this should cascade down. Less money flowing into the property market the cheaper the houses will become.
Control buy to let – Ban landlord from owning over a set amount of homes. Again controlling the amount of people who can or are willing to buy a house will lower the demand for properties and then in turn lower the cost of homes for first time buyers.
Relax the planning laws – If developers can build in the country side where land is cheaper then these houses will be cheaper. Again if we build more houses then the supply will increase and the demand will decrease, resulting in cheaper homes.
Subsidise mortgages – The government could strike a deal with the big banks (Santander, Halifax etc) where they pay part of the interest on the mortgages, making the monthly payments much more a affordable for first time buyers. They could also provide some of the deposit required at perhaps an interest free rate.
There are many solutions however keep in mind the people who make these laws are the ones that stand to lose the most if property values stagnate or even decrease. If you would like to see how long it will take you to save for your deposit or how much your monthly mortgage payments might be then a great mortgage tool to use is www.ultimatemortgagecalculator.uk. It’s very visual and has some great explanations for technical terms first time buyers might not initially understand.