New mortgage regulations have recently come into place stipulating that the lenders must ask more probing questions to ascertain the risk of the debtor. The questions are focused on regular payments that the applicant makes including gym memberships, haircuts and even regular takeaways. This is all in an effort to reduce the risk of lending money to an applicant unable to meet the mortgage payments, and to avoid another recession sparked by collapsing banks. This begs the question however, as to whether this entire process is becoming a bit too much.
The concern is that first-time buyers are finding it increasingly difficult to get onto the property ladder. With graduate salaries remaining relatively low, increasing amounts of student debts, and more pricey essentials such as food, the reality is that young people have to wait a considerable number of years before they can begin to think about finding their own home. House prices also rose by 1.9 percent in February this year, with the average first-time buyer house coming in at £143,906. Whilst March this year may have seen the number of first-time buyers at its highest since 2007, it’s still a minefield to find a mortgage that you have the capability to pay off. These stricter mortgage regulations are surely going to not only lengthen the process of getting a mortgage but also put first-time buyers in increased difficulty. Stable and safe banks are key to a better economy, but the way things are going, the UK could end up joining some of its European neighbours by becoming a nation of renters.
It’s certainly a worry for current students, on top of everything else we have to deal with. Being an impatient person, the idea of finding myself a full-time job and a house of my own is very appealing to me at the moment – despite the fact that I still have a year left at university. However, as soon as I start looking at what my potential salary could be – provided that I miraculously find myself a job – I’ll be lucky to be able to afford to feed myself, let alone find my own place. The ongoing housing boom in the UK is pricing normal graduates out of the possibility of owning a house for many years to come. The joy of my parents finally paying off their mortgage at the end of this year is slowly being replaced by the realistic situation that something miraculous would have to happen for me or my brother, who has just graduated, to buy our own homes.
The nub of the issue is whether becoming a nation of renters would really be such a bad thing. Very often there is a negative stigma attached to renting a house – from dodgy landlords to squalid conditions to benefit claimants not being allowed to rent. Certainly on my own estate back at home, the attitudes towards the renters in our street are pretty poor, and the landlords aren’t as efficient as you might hope. However, many European countries have renting houses as the norm. In Germany, for example, people still rent well into their 30s, and certainly don’t seem to get as frustrated as some if they can’t get on to the property ladder.
Continental rents haven’t increased as much as they have here, and good quality homes are provided at affordable prices. In the UK, concerns have been raised over the quality of rental homes, with many pushing to change the law. The NUS in particular has been vocal about the increasingly poor conditions of student rented accommodation in relation to the rising cost of living that is squeezing out student loans.
Whilst no-one wants to be constantly paying a landlord for the privilege of living in their rental home, renting surely isn’t such a bad thing. Mortgage difficulties and a lack of available cash will push many of us to rent indefinitely, yet you can still make a place your own. Renting a home also gives you the flexibility to move, which isn’t so easy to achieve once you’ve bought a house, and it also avoids having to scratch around for a deposit. Students should be embracing the opportunity to rent, giving us the time to find a stable job with a big enough wage and avoid the repayments. The new mortgage rules may be another hurdle to jump through, but take your time and you’ll get that dream house. I hope.