My Room Or Yours?

Most of us with brothers or sisters can relate to the feeling of freedom you get when you are finally old enough to have a room of your own. No longer having to listen to their music, watch their TV shows or sleep with the pillow over your head just to drown out their snoring! So why are so many people going back to room sharing as a way of living in their 20’s?

After a decade of rising prices buying a property has become a fading dream for many in their 20’s. Because so many have turned to the rental market landlords began to increase their rents, which created a boom in the flat-share market. Now even having a room to yourself is out of reach for many and they are turning to room-sharing.

Many property and social networking websites have seen a faster growth in room-sharing sections and postings than those for traditional rentals and flat-sharing. There is no doubt that many have been priced out of the traditional purchase and rental market, but another major factor in the growth of this sector is immigration.

Hundreds of thousands of European Union citizens every year come to the UK to live and work. In the last few years many have come from the former communist states that have recently been welcomed into the Union. Many head for the bright lights of London to seek their fortune. But with lower incomes and fewer savings than their British peers, affording somewhere to live within a commutable distance of work has necessitated this back to basics approach to co-habitation.

Now, sharing a room with a total stranger might not be for everyone, but if you need to live in the big city and you’ve a job that does not pay enough for you to afford a room of your own then there are a few rules that seem to be very important to follow:

Firstly, it’s all about respect. Much like all co-habitation arrangements, whether you’re co-buying, flat-sharing or room-sharing (and especially if you’re bed-sharing, yes there are some adverts out there looking for bed-sharers as well, in a totally residential capacity of course!) it’s all about respecting their space, even if in the case of room-sharing that’s quite restricted space. Having friends over? Let your roomy know about it in advance. Having your girl or boyfriend to stay? Give them time to buy ear plugs or arrange to stay with a friend overnight! OK, these are silly examples, but you get the general idea. With less space to call your own a person can become quite territorial, so it is essential that you counter the lack of space with an exaggeration of your natural polite respectful attitude towards others.

Most flat-sharing arrangements between strangers are formed from a small advert on a website or in a newspaper, a single meeting and a ‘gut feel’ about that person. I dare say it would be similar with room-sharing, but unless you already know the person or know people who know the person it might be sensible to take a little more time to get to know them first. Go for a drink with them and your other flat-mates, ask for references from previous landlords or roomies, and research whether you have mutual friends who could vouch for them. If you’re looking to move into a room-share then it is also essential that you are prepared to be open and honest about yourself and offer whatever peace of mind they might ask for because sharing your space with anyone, especially in such close quarters as room-sharing can be a daunting prospect.

I have to say that I hope room-sharing does not become socially acceptable on a wide scale. I feel it is a step too far for people to be forced into youth hostel style living in the long term as their only way of affording where they have to live. We all need our private space, whether that space is afforded by our homes or just a room in a shared property. But for room-sharing to be considered acceptable for anything other than a short term solution to extreme circumstances would mean that the British property market was not only in dire straights, but beyond that so far as to be worrying.

The "Buy Now" Culture Is Back, But Are They Right?

"House Prices To Soar Again" was the headline in today's Daily Express. Could there be any scarier news for first time buyers already struggling to afford their first home? It is reported that the Centre for Economics and Business Research predicts price rises not only for 2007 but for the next three years. If the property boom does continue off into the distant future what will become of those pinning their hopes on a crash as their only way of affording the first rung on the ladder?

Economists are saying that because of high employment, a strong economy and confidence in the property market prices will just carry on increasing for the foreseeable future.

Over the last year the Bank of England base rate (the rate that lenders follow for their mortgage interest rates) has increased three times to attempt to slow the pace of the market. Even making every penny borrowed more expensive to repay has done little to slow things down. In fact one property statistics website is even saying that prices have risen faster than at any point since 2003 when the last property boom was in full swing.

The first thing to say about all this is, "don't panic". The "experts" have been predicting the burst of the "property bubble" for years and that didn't happen, so there is no reason to believe that they will be any more accurate at predicting long periods of rising prices and market stability either. However, because enough of the "experts" are now predicting steady growth we can be fairly confident that a crash is not on the horizon anytime very soon.

What this means is that now might well be a good time to get on the ladder if you can. If the market does go up then you'll be sitting on an asset that's rising in value every day (£1,000 a month is the prediction for this year reported in the Daily Express), and if it stays steady then you are saving yourself money you would otherwise be wasting on rent each month.

If you cannot afford to take the first step onto the property ladder on your own then why not consider co-buying? Combine your budgets, divide all your costs and own your own home far sooner than you could do alone. Check out www.sharedspaces.co.uk for this and other options to save money when buying your first home, because if the experts are right this time you may well kick yourself later if you don't.

Co-Buyers of the South-East - We need your help!

We have been asked by a National TV channel (their South Eastern division anyway) whether we could help them find co-buyers for a Current Affairs show they are running in the springtime. The show they are making is about young people who are finding it difficult to get onto the property ladder (something that will strike a cord with anyone who comes to SharedSpaces.co.uk).

They will be doing a feature on co-buying with others and would like to chat with anyone who is looking to buy with someone else. Their preference is for anyone who has already found someone to buy with or a group of people who have actually bought together.

It does not matter whether you are friends, family or buyers who have met by chance or through SharedSpaces.co.uk. Please do get in contact if you can help us to help them with this.

You can contact us using the Contact Us form on the website, email us at contactus@sharedspaces.co.uk or call us on 0870 3456 567.

We look forward to hearing from you.

Happy New Year To All First Time Buyers

As 2007 looms what are your property dreams and how likely are you to fulfill them?

2006 had a shaky start with predictions that the property market was running out of steam. However, not even two interest rate rises and market crash predictions could cause this to come true. The property market has recovered it seems, and is moving on in leaps and bounds, showing the best November in years. The traditionally quiet as a church mouse month of December has seen property flying off the proverbial shelves.

As we all know, the more people there are out there buying property, the better the market is and the more prices rise leaving the lesser spotted first time buyer in their dust. But it's Christmas time and to add to the unseasonably warm property market there are also thousands of city workers who have just been paid their December bonuses. According to a recent report that's around £8.8 million, of which it is estimated almost half will go into the property market. Buy-to-let investors, second homers and first time jobbers bonuses in hand will ensure a buoyant January through February. In the natural order of things the market should be quiet over this period, but spurred on by the trends of 2006 and the positive predictions for 2007 these cash rich city folk will be sure to push on with their property plans.

So it's crystal ball time again folks, lets see what the 'experts' say will happen in 2007, and whether there is any good news on the horizon for first time buyers and others looking to get onto or move on up the property ladder.

I'm afraid it's a little like the weather forecast in Arizona, sun, sun and more sun (if you're already on the property ladder that is, otherwise it's very overcast). Yes, although a few pundits predict just a 4.5% growth next year as the result of a slow down at the end of the year, the RICS and the Council of Mortgage Lenders, two of the most important crystal ball watchers out there, predict a 7% rise in the value of residential property next year. Wonderful for all you home owners (sunbathers). But, for the rest of you already struggling to get onto the property ladder it just means waving goodbye to the idea that a change in property prices would bring you closer to affording your property dreams.

So with a runaway 2006 and predictions for a popular 2007, market confidence at a high, and cash rich city folk on the loose, prices are guarantees to move further and further out of reach of many first time buyers. Not all doom and gloom though, for we Brits are an innovative lot and whilst the Government has been patting itself on the back for promising 35,000 new homes through their HomeBuy scheme over two years there are moves in the private sector to help the 100,000 plus of you each year who find that you cannot afford to buy.

Way out front is the growth of the co-buying 'sector' which has built from nothing a few years ago to an acceptable 'option' for first time buyers today. The trend towards first time buyers clubbing together to afford to their first property and benefit from multiplied buying budgets, shared costs and the ability to afford somewhere bigger, better and sooner than they could alone has spawned a number of organisations to follow in the footsteps of the UK's original 'co-buyer network' www.sharedspaces.co.uk .

With the New Year SharedSpaces will be launching it's new website offering information and advice to anyone who wishes to co-buy, co-invest or co-rent (flatshare). More information, more advice, simpler navigation, and new partnerships with other organisations that will be able to help you onto the property ladder.

Board Stupid!

I love this story in yesterday's 'London Lite' newspaper. It reports that estate agents in Hammersmith will now be required to apply for permission from the council to put up their 'For Sale' boards because so many people have complained about conservation areas in this borough being blighted by board blitzing. Could this be the start of a National cull on the estate agent's favourite advertising tool?

I have some first hand knowledge of this as in my dark and distant career past I spent three years as on of London's finest... no not a police officer, but an estate agent in the Docklands and North London, so I know from first hand experience that there are two things more dear to an estate agent's heart than anything else; his commission and his boards. 'Sell the board, always sell the board' my old manager used to say. Woe betides anyone who failed to get a board outside a property they gained instruction on. There's nothing finer for a branch manager's ego than to be able to do a walkabout around his area and see more of his boards up than anyone else's. It's a kind of status symbol, an estate agent hierarchy indicator.

This fixation on boards stems from the tradition of buyers choosing their agent by wandering around an area and seeing what boards were out. They would then contact the agents whose boards were either larger in number, or were in the locations they wanted to live in. However times have changed and the majority of people now are happy with virtual wandering instead. A very high percentage of those surveyed over the last few years have said that they would be searching through the major property portals on the net as part of or the entirety of their search for their next home. Also of course nobody registers with just one agent in these enlightened times, it's far more productive if you register with all of them.

That being said, if you know exactly what house or what road you want to buy in you may go the old fashioned route. Also it is true that at some point we've all called up the agent whose board has gone up on the house next to ours so we can sneakily ask what it's on for to discover how much ours might be worth now. Then again our buying habits have changed so much over the last 10 years that the 'For Sale' board has become near redundant to the process.

It's not R.I.P. yet for the 'For Sale' board though. They are after all the advertising banners of your local estate agent. They indicate and imply size and status of the agent, the more boards there are the better that agent MUST be. This could influence your decision on who to buy or sell through.

But something sinister has been stirring for some time now and being a London lad all my life I've noticed that some agents have become a little over zealous with their board presence. I'm sure the rules when I was an agent were that no property, including a block of flats, could have more than one post outside it with agent's boards on it. That means a maximum of two, one of either side of the post. But more and more I have seen three or more nailed to the same post, on two or three posts leaning at precarious angles and in varied states of disrepair. There are also unscrupulous agents who will put up boards on properties they do not have for sale, who will put them up at the end of a road so no-one is quite sure which property it is meant to be outside, and that will mass their boards outside a property they all have for sale.

I have to say that I have never liked the 'For Sale' board. Whilst I completely appreciate its role and purpose I do not feel that it's the miraculous selling tool that the agent will try to tell you it is to keep his manager from berating him for not selling it to you. They clutter up our streets and make pretty little roads look untidy, or indicate by their numbers that streets or areas are undesirable as it looks like everyone's trying to leave them. I feel the £150 removal fee the Hammersmith and Fulham council has said it would charge any agent that does not comply with their new rule might hit where it hurts, and could at least reduce the advertising clutter that blights so many of our roads today.

House Prices Still Rising

November is always a funny month for the property market. It's not quite Christmas (although of course the shop windows and TV advertisers have been trying to convince you it is since August) when the market's traditionally as quiet as ... well, a winter's eve, and it's certainly not still in the heady days of the late summer boom. In fact in November the market tends to lean heavily towards the winter downturn as those in the property industry batten down the hatches until mid January when the lesser spotted property hunter emerges from their short hibernation.

This year things seem somewhat different. HomeTrack, the property industry's price statistics website have reported a 'house price acceleration' this month as prices are bolstered by a reduction in supply as it's sellers that seem to have gone into early hibernation this year. They've reported that average property prices rose by 0.6% in November, not surprisingly with London up front rising by 1.2%. This all goes to contribute to creating the highest annual rate of growth seen since August 2004. Can nothing stop this rampant market?

November through to January is supposed to be sleepy time, a time when only those with a damn good reason for moving buy or sell. A time when estate agents dip into their savings as the commissions dry up, and the general public's only property thoughts can be summed up by whose house are we going to have the biggest feast at this year.

I'm not a believer in the property bubble, nor do I harp on about price corrections or housing market crashes, but a slow down would be nice so that those left at the back waiting to step onto the ladder have a chance to catch up.

OAP, But Still Paying A Mortgage

As the Bank of England put up their base rate by another quarter percent this month, it’s not getting any easier for young people to afford their first homes, but not to worry the mortgage lenders of the UK have been working on this problem, and after years in some dark basement tinkering with the figures and playing with the numbers a cry of ‘Eureka’ could be heard throughout the lending world as one clever sole cracked the problem. Well, maybe I should have left it at ‘cracked’ as a better way of describing it. The thing that amuses me is how fast a bad idea can spread between institutions desperate for the business of the illusive first time buyer, as there seems to be a glut of mortgage lenders jumping on this insane band wagon.

The solution they were so proud of is the 57 year mortgage. Yes you heard/read me right. Not content with the 25 year mortgage that most people take up in the UK they have come up with a brilliant plan for would be home owners. Why not charge you a tiny bit less each month and you could carry on paying them into your old age.

It sounds like a good way of keeping the costs down, surely if you’re going to be paying off a mortgage over such a long time the monthly costs that can cripple some new home owners should be far lower…shouldn’t they? Actually on a £150,000 mortgage (if you’re looking to buy in the South East of the country you’ll be laughing at this point at the shear silliness of the idea of being able to find a property for that figure, but bare with me, it’s just an example) the saving is less than £175 a month, but as you are paying the loan off for more than twice the time the amount you’ll repay is over £275,000 more in the end than you would pay for a standard 25 year mortgage.

Before you run out and get one of these just stop and think for a moment. If you take this mortgage out at the tender age of 18, you’ll not pay it back until you’re 75 years old, and by then you’ll have paid back almost £600,000 for a £150k mortgage. If you retire at 60 or 65 you’ll have to hope that you’re property is worth quite a bit more than you paid for it because you’ll still have 10-15 years of payments still to make.

Of course there are other far more responsible (slight sarcasm) lenders who are offering just 40 or 50 year mortgages, but I think you get the gist of my opinion on this by now.

Understandably this new mortgage type was met by experts with an element of disbelief. Words like “false economy” and “madness” were thrown around like a dog with its favourite chew toy and it’s not surprising to this observer. With the Bank of England predicted to raise its base rate once again at the beginning of 2007 it is possible that first time buyers though desperation might consider one of these mortgages. Please don’t, or if you do make sure they do not lock you in so that in a few years time you can convert it to a sensible mortgage, one where you’ll only pay twice as much as you borrowed in interest!!

More Than 50% Of All First Time Buyers Now Pay Stamp Duty

According to the Council of Mortgage Lenders (CML) 56% of all people buying their first homes now pay more than the £125,000 stamp duty threshold for them. As property prices continue to creep ever higher this percentage can only go up. Surely this is just another blatant indication that the current stamp duty tax is outdated, unfair and negatively contributes to the affordability crisis faced by first time buyers in the UK today.

I’ve been thinking about this for all of 5 minutes since I read those statistics in the newspaper today, but let’s do some basic mathst: Approximately 1.5 million properties are sold each year, according to the CML around 35% of them are sold to first time buyers and 56% of these are subject to stamp duty. The average value of a first time buyer home in the UK is around £200,000 so we can assume that at the 1% stamp duty level the Government is raking in a monumental £588Million from first time buyers this year alone!!!!

Surely that’s wrong. Affordability has been the buzz phrase of 2006 and the Government has made so much noise about their HomeBuy scheme and just how much money they are putting into it to help our first time buyers.

Hmmm, the Government promised us £970Million in the 2006 budget to build 35,000 new low cost homes for their affordable housing scheme, but surely basic mathematics tells us that making first time buyers immune from the ravages of this tax would cost around half as much in lost taxes but would help almost eight and a half times more people.

This may sound a little radical, but at the end of the day we have a hugely outdated tax that has in no way kept up with the cost of the commodity it is taxing meaning more people now must pay more money to the Government whilst suffering from an increasing inability to afford to buy in the first place.

Whist we’re on the subject of stamp duty tax thresholds, is anyone else baffled by why stamp duty percentages go up in tranches? 1% for properties sold at £125k=250k, 3% for properties sold at £250k-500k, and 4% over this. Having such a slab like system has resulted in price ‘no man’s land’ areas. Because of this the price regions just below a threshold are filled with properties whose owners have found that they have no choice but to drop their price below the threshold to sell so are undervaluing their homes, but this also makes things more difficult for those genuinely at that price bracket to sell, as they do not seem as good value for money as properties worth thousands more than them that have been forced into that price range. The flipside of this coin in that there are also plenty of property owners that go the other way and are forced to avoid the ‘no man’s land’ by opting to overprice their properties. When compared with those properties genuinely in the same price bracket they do not stack up and what’s worse is that if they do find a buyer their mortgage lender is quite likely to down value the property and the sale will fall through anyway wasting much time and money on all sides. The problem is that if the property was put on the market at it’s genuine price the increase in the tax bill for the property being over the threshold will be almost as much as the value of the property over the threshold giving any buyer a nasty taste in the mouth.

Surely it would be fairer for everyone to pay a single percentage, I mean, the more expensive the property the more tax the Government will gain anyway because it’s a percentage after all.
If you combine the first time buyer immunity to stamp duty with a single percentage stamp duty tax for all properties with now lower threshold, then assistance previously aimed at first time buyers can be diverted to assisting families with housing needs to get a far fairer property market than the one we have today, but that’s just my opinion.

First Time Buyers Borrow Record Salary Multiples

According to the Council of Mortgage Lenders (CML) first time home buyers are now on average borrowing 3.27 times their annual income which is the highest average multiple on record. Not surprising when you consider the £29k minimum the RICS (Royal Institution of Chartered Surveyors) says they need to have saved up to pay the deposit and stamp duty on their first home alone.

Are they being serious? How many people do you know who do not yet own their own homes but have £29,000 stashed in the bank? The single biggest hurdle for a first time buyer is finding that deposit money. I come from an era long long ago way back in 2001 when all I needed was a mere £15,180. I only had to wait until I was 31 to do so, and rely on some fortuitous timing with my career change into IT and an increase in mortgage lender acceptance of contractor’s incomes. Without all of that coming together I could well have still been one of the victims of the affordability statistics.

There is a glimmer of hope though. In 2004 the Halifax reported the lowest number of first time buyers in a quarter of a century, and at rock bottom they hit just 27% of the home buying public. Those figures have risen over the last year or so, helped I’m sure in no small amount by the rise in the acceptance of co-buying, a reported rise in assistance from mum and dad, and the higher public awareness of the Government’s HomeBuy schemes, to a level in the late 30%’s (keeping in mind that the 20 year average says there should be around 45% first time buyers buying in the market place). Unfortunately in recent months this has started to slip again and we are back down to the mid 30%’s. Not drastic so long as the downward trend does not continue.

Property prices have continued to rise in the majority of regions around the country and the result has been first time buyers looking for other routes onto the property ladder than traditional means. Many families are beginning to help their kids out by refinancing their homes and putting the increased value of their properties to work for them. The flat-sharing market is still booming as people co-rent to save on living costs hoping to build up their property pot of gold to the magical £29,000 level. And more and more innovative ideas are appearing on the market to help the first time buyer into their own homes. I was talking to a new home builder today who was looking into setting up their own private shared equity scheme to help people buy their new homes in Manchester’s city centre. More and more new home builders are having to consider innovative ways of presenting their property to the starter end of the market, and this can only spell good things for the property newbie out there.

With November on the horizon and the New Year looming, what does 2007 have in store for the property market? Another small rise in the Bank of England Base Rate? Maybe. Property prices continuing to rise slowly but steadily? Probably. An increase still further in the gap between the property haves and the have-nots? Quite likely. But one thing is for sure, we live in a country that is waking up to the realities of an affordability crisis, and we are not sitting back and accepting it. The thinking caps are on and more and more solutions for our first time buyers are surfacing every day to counter this problem.

Buying A University Pad For The Kids

The happy day has come and little Jonny or Jenny is ready to leave the washing machine and food service that is home in favour of life in the real world... ok University first for 3 or 4 years, then the real world. Thousands of young adults head off to higher education each year for an experience that can cost their parents an absolute fortune. (To sound a little older than I really am) Back in my day, we got a University Grant to pay for our accommodation on and off campus, our books and some money in the bank for expenses like... er... paper and pens and other essential things that all students spend their money on (stop the laughing in the back). Today of course there are student loans which mean graduates leaving University enter the 'real world' with the albatross of debt already firmly fixed around their necks.

Buying a home for your kids when they head off to university may sound a little drastic, but there are some very convincing financial arguments to persuade you that it is something to seriously consider.

Buying a property in the right location within your financial means is almost always a good investment. If it's located close to a University campus you will have a steady flow of potential tenants on your doorstep to produce an income. Because you selected the property and ensured that it was safe and sound you can sleep easier knowing your kin are not in some rat infested death trap that they found the day before their semester stated. Buying a 3 bedroom house will enable you or them (given lender permission of course) to rent out the other two rooms to classmates to supplement the mortgage payments. Then when their time at Education High is finally over, you can either continue to rent the property and keep it as an investment or sell it and with a little good luck and judgment have made a profit over the three or four years that you've owned it. With this profit you could potentially see your kids leave University one step ahead of their peers, debt free and unburdened to launch into the real world.

OK, nothing comes with a guarantee, and you've all read the small print on any mortgage agreement or heard it on the TV in an advert for a lender telling you that property prices can go down as well as up. Whether you do or do not make a profit on a property is governed a little by your research and care when searching for the property, not over spending, and buying a home suitable for the purpose of housing students, but quite frankly it mostly depends on luck as nobody can truthfully tell which way the market will turn over a 3-4 year period, but for all the other reasons mentioned it is still well worth considering.

Another thing to consider is that buying the property jointly with your kids can also be a way of giving them valuable real world responsibilities. Give them the job of finding and choosing their tenants, dealing with estate agents or University administration, paying the mortgage and collecting the rent. They are young adults after all, they can handle it, and you are always there to lend a parenting hand if need be. There are some tax issues that you will need to investigate before doing any of this, and you should speak to an accountant about them, but all in all buying a University home for your kids seems like a good option.