buying a house

As crazy as it sounds, it can actually be cheaper to own your own home than rent. New research just released by the Halifax has shown that for first time buyers owning a property is £670 cheaper per year than renting. So not only are you lining your landlord’s pockets you’re emptying your own.

The research has found that a first time buyer purchasing a three bedroom house in the UK is paying out on average £666 per month. In contrast, the rent on a similar property would be 8% more at £722 per month. For many of us stuck renting, for now at least, this could be quite depressing. The bright side is that if you’re currently saving hard for a deposit, there is light at the end of the tunnel. Once you get into your new home, you might actually be better off. That £700 could buy a nice little holiday or perhaps a new sofa.

If, like me, you have a few years before you’ll have a house deposit in place, you might share my concerns that with rising house prices you’re never going to have enough to buy the property that you want. The number of first time buyer house sales has decreased over the last few months, although there are still more people climbing onto the first rung of the property ladder than this time last year. Figures from the Housing Market Report state that in July 2015 first time buyers accounted for 23% of all sales, compared with 24% in June and 29% in May. However, in July 2014, only 20% of sales were made to first time buyers.

Mark Hayward, National Association of Estate Agents managing director, is alarmed that the number of sales made to first time buyers is falling. “With reports of house prices increasing and expectations of rising in the future, first time buyers will continue to be pushed out of the market,” he added.

Not the most encouraging of remarks, however I don’t think I’ll ever be put off from buying a house. I know that being secure in your own home relies on you being able to keep up the mortgage payments but I don’t feel happy with the idea of bringing up children in a rented property that the landlord can literally just turf you out of whenever they feel like it.

In a world of increasing property prices and increasing numbers of people having to remain in rented accommodation, I really wish someone would look at assured shorthold tenancies and do something to make the tenant feel more secure. During the run up to the general election, the Labour party talked about introducing secure 3 year tenancies as standard. This pledge alone almost made me vote for them.

Plus, I like the idea of owning my own home and not having to pay rent when I get old. I can’t imagine there’s going to be a state pension by the time we get to retirement age and having to continue to pay rent each month could be really stressful and potentially impossible for many.

For those of you already paying a mortgage, how do you find it compares to your previous monthly rent? Or perhaps you’re looking at mortgages at the moment. How do your monthly repayments stack up? Let us know in the comments below.

The Help to Buy ISA was announced in the Government’s Budget back in March. It aims to give first time buyers’ deposits a boost by giving them an additional £50 for every £200 saved. Read what the Budget 2015 means for first time buyers to find out more.

From 1st December 2015, the Help to Buy ISA will be available and six banks/building societies have already signed up to the scheme. These are Lloyds, Barclays, Natwest, Nationwide, Santander and Virgin Money. It’s possible to open the account with £1000 and earn an additional £200 from the Government that month. After your first deposit, it’s only possible to invest a maximum of £200 per month so it’s worth opening the Help to Buy ISA with that maximum amount.

The maximum contribution from the Government is £3000. You’ll need to pay in £12000 to get this, which gives you a total of £15000 towards your deposit. The bonus will only be paid to you when purchasing a house so you won’t be able to use your Help to Buy ISA to get free money to do whatever you like with. Shame…

The lenders will set their own interest rates so once they’re released it’ll be worth shopping around for the best rate. It’s also not possible to have more than one cash ISA (which the Help to Buy ISA counts as) during one tax year. This means that in the year that you’re planning on opening a Help to Buy ISA you need to make sure you don’t open, or pay into, another cash ISA.

Martin Lewis, founder of MoneySavingExpert.com, predicts:

“Banks that want to sell you a mortgage may well offer stronger rates for Help to Buy ISAs than normal ISAs, in the hope that they can cross-sell you their mortgages later on. This is especially likely because you can only put a relatively small amount in a Help to Buy ISA each year, so it isn’t that expensive for them to pump out loss leading rates. Only time will tell though.”

The Help to Buy ISA will be available to open until December 2019. Once open you can keep it indefinitely. What’s great is that you can have one per person, so if you’re saving as a couple to buy a house so can each pay in £200 per month and each benefit from the bonus. I plan to do this with my husband so we can save more quickly. We’re aiming to have enough money for a deposit in 2 years. But that’s only because we’re planning on moving away from Kent to somewhere we can actually afford to buy a house. This BBC calculator is pretty interesting as it shows you where you can afford to live: As you can see, this rules out most of the UK for me! We might move to Yorkshire, where it’s possible to buy a lovely 3 bedroom house for £140,000.

Critics have pointed out that £12000 isn’t enough of a deposit for most people and that’s probably true. But don’t forget buying as a couple gives you £24000, which is much more like it. Yes, in some areas this still isn’t enough but you can still save additional money in another savings account if you want.

What do you think of the Help to Buy ISA? Will it help you? Let us know in the comments below.

Last month, the Prime Minister announced that 200,000 starter homes would be built to help young people onto the property ladder. But what the hell is a starter home and what’s it got to do with me you ask? Well, don’t get your knickers in a twist, I’m about to explain.

The Starter Homes scheme is a government initiative to a) increase the number of houses being built in Britain and b) to help more people buy their first home. The Tories do seem pretty obsessed with people buying houses which I suppose reflects society. I think it’s pretty much hard-wired into British people that homeownership is a necessity, whereas in other European countries they are much more content to rent forever. Perhaps they don’t have assured shorthold tenancies which give them hardly any security in their homes.

“Hardworking young people want to plan for the future and enjoy the security of being able to own their own home. I want to help them do just that.” – Prime Minister David Cameron

How will the Starter Home scheme work?

Well there are limited details available at the moment but basically the government is loosening planning requirements to allow developers to build on brownfield land and save on costs usually incurred by having to provide affordable housing (i.e. social housing and shared ownership). As the house builders will save money, they’ll be able to discount the homes they build by at least 20%.

Starter homes will only be available to first time buyers under the age of 40. Also, there’ll be a cap on the value of the home of up to £250,000 outside London and £450,000 inside London. You’ll still need to raise a deposit and get a mortgage but the discount should help you to find a more affordable home.

If you want to sell up within 5 years, you’ll need to offer the discount to the buyer, which basically means you have to repay the 20% saving you made. So this scheme isn’t for you if you think you’ll want to move on pretty quickly.

I’m interested! When can I buy a starter home?

Firstly, you have to get in the queue behind me! The government has said that building could start within months, which is suitably vague bearing in mind we could have another political party in government in May. David Cameron’s pledge is to build 200,000 discounted homes by 2020, which is fantastic news if you’re hoping to buy a house in the next 5 years. So far, more than 30 house builders have said they support the plans.

You can actually sign up and register to you interest on the New Homes website.

Are the homes cheaper because they’re crap?

Apparently not. A so-called Design Panel has been put together including some world class architects who have suggested some designs for the house builders to consider for their starter home developments. The image used above (copyright Farrells) is one of these designs.

The idea behind the starter homes is to build attractive, well-proportioned and high quality homes that ‘meet the demands of modern life’. Although I’m not sure what that last statement is supposed to mean.

Is this just pre-General Election bollocks?

Both the Financial Times and the Guardian have suggested that the announcement is the Prime Minister’s attempt to “woo” voters. The problem is that there is going to be a General Election on 7th May and the Conservative / Lib Dem coalition could be out. Who knows what the government is going to look like come 8th May. Will it be red, blue, yellow, green or, God help us, purple?

If the Tories don’t win, or become part of another coalition, the starter home scheme might not go ahead, which would be a real shame. I really don’t know who’s best to vote for this year, but I hope whoever wins will be on the first time buyer’s side when it comes to housing.

Do you think it’s right that we seem to be obsessed with buying houses in this country? Should we learn to love renting? Tell me in the comments, I’d love to hear what you think.