Comment by dogma1138 | Hacker News Reader

Comment by dogma1138 | Hacker News Reader

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The median price for a property in London is £600K, the average is over £1M today.

That means that normal people cannot afford to buy anything in London even with HTB which is a terrible policy the people who can afford to use it are already in the top percentiles.

A £600K property as a first time buyer requires you to have about £100K to get on a property ladder.

10% deposit for a 90% LTV mortgage is £60K, stamp duty is £17,500 (£20K from end of Sep 21) that’s already ~£80,000 then you have mortgage fees, legal fees, furnishing costs (since new builds don’t even come with blinds)…

The average salary in London is £41K, that leaves you with take home pay of about £30K after tax (if you have no student loans).

So a house hold of two people living in London has about £60K per year if both earn the average pay, £25K or more of which would go to rent per year, another £4000 will go to various utility bills and council tax, another 5-5.5K would go for travel (assuming you live within zone 1-4), then you have food, clothing and other living expenses, so if you are somehow lucky and can save up £10K per year that’s 10 years to save up enough for a median property which is most likely a 54 sq/m flat.

Add kids to this mix and well you are royally fucked.

Why is it reasonable to assume that people earning an average wage should be able to afford a home in the most desirable city in the UK, and one of the most desirable cities in Europe if not the world?

I mean, nobody complains in the US if the average family can’t buy a home in Manhattan. That’s just unreasonable.

> earning an average wage

Average wage in London, not average overall.

The idea is that two people on an average London wage should be able to afford to live in an average home in London. The truth is they can - if they can get the deposit together (which is trivial if you have parents you can live with for a couple of years, but if you've moved to London for work and your family lives 300 miles away your deposit savings go on rent). Perhaps they can't live in the most desirable parts of Chelsea, but there are affordable houses in the London area for a couple of 41k each.

Personally if I had to work in London, I'd look at buying a 2 bed house somewhere like Leighton Buzzard (30m Euston), Gravesend (22m St Pancras), Tonbridge (35m London Bridge), for about 250k.

"Why is it reasonable to assume that people earning an average wage should be able to afford a home"

Whats's next, "why should an average person be able to afford an education or healthcare"?

> even with HTB which is a terrible policy the people who can afford to buy are already in the top percentiles

What a load of rubbish. HTB really helped us when buying by giving 5 years of interest free

We bought a 240k house with a 12k deposit and 48k htb. Moving costs etc meant we had to find about £17k, which we borrowed.

Assuming you do that now, HTB means paying £647 a month on the mortgage and £330 a month on repaying the deposit. Total of £977pcm.

After 5 years we sold for 240k with £48k htb and £160k mortgage, leaving us with 32k in equity. We could have remortgaged and repaid the htb at that point for a total outlay of £911pcm (with about £500 in fees)

With two earners on a middle 28k a year that's falls into well into the "affordable" bucket.

Even in London, a 600k house with htb will mean a £30k deposit (a problem) and a £330k mortgage. Two people on 41k each can borrow up to £368k with nationwide which gives an idea about affordability (you'll have to knock some off for things like service charges which are ubiquitious in new houses)

And 41k a year with a coalition loan means you have £30,310.51 per year after student loan, not before. If you still have a labour loan from pre-2012 you'll be paying an extra £600 a year.

All that's assuming a 600k loan. Reality is that help to buy homes aren't that expensive. This is a decent sized 2 bed flat for £375k.

https://www.helptobuyagent2.org.uk//property-search/property...

Personally I think you'd be crazy to live in London when there are far more reasonable places to live just half an hour out of a one 1 station and far far less cost, but it London is affordable for people with two London incomes.

If you're single on minimum wage and wanting to live in central London? Well tough. Move somewhere else. Plenty of choice for houses in Crewe and Stoke, and plenty of minimum wage jobs.

> you'd be crazy to live in London when there are far more reasonable places to live just half an hour out of a one 1 station and far far less cost

How much cheaper would it be? I've just moved to London (living in zone 2, going a bit further didn't strike me as much cheaper).

Depends how often you need to be in London,

2 bed terrace, £270k https://www.rightmove.co.uk/properties/111488087

40 minutes to Fenchurch Street (little less for Docklands), £65 per week//£2600 per year.

2 bed 230k https://www.rightmove.co.uk/properties/112846073

22 minutes to St Pancras, £127 per week//5k per year

If you can get a 2 bed house that close to central London at those prices that's great.

Only issue with those is the c2c and great western thameslink etc for a season ticket (to get into London for work) you're paying (for that first property in Grays): £3,872.00 per year (includes tube travel) since domestic rail prices here are just ridiculous (lowest subsidies per passenger mile in all of Europe)

Also, presuming you don't work at Fenchurch Street, the commute would be anywhere from an hour (to Fenchurch street) to an hour fifteen minutes (nearbyish tube stations).

HTB is a disastrous policy that did nothing but to increase the prices of properties.

People could borrow much more than they could because the government covered 40% in London and 20% outside of it.

Look at the new developments in London, the price is well just under the HTB limit for the handful of HTB flats, then there is the shared ownership racket too.

And commuting towns aren’t that cheaper either, and that is even before you account for the insane costs of rail passes.

> HTB is a disastrous policy that did nothing but to increase the prices of properties.

It let me buy a property which I wouldn't be able to without HTB, therefore your statement is objectively wrong.

> And commuting towns aren’t that cheaper either

Plenty of 2 bed houses in daily commuting distance for £250k - easily affordable on a London wage.

> It let me buy a property which I wouldn't be able to without HTB

Possibly you're taking the wrong counterfactual here?

"If I hadn't HTB but everyone else did" vs "If no-one had HTB".

It's possible you're quite right about the first, but it tells us little about the second. Possibly in the presence of HTB, prices just rise again until they reach their equilibrium of just-barely-affordable.

House price doesn't matter, it's the deposit. HTB may have pushed up the house price by say 30%, but it meant the deposit was lower (12k rather than 18k) and the repayments were lower for the first 5 years.

House price does matter. End of the day with the bump-ed up H2B house prices...sure you can afford it w/ lower deposit thanks to gov assistance...but it's not free money. You still have to pay it back, so the seller is making an extra 30% of our backs bc they bumped the prices thanks to this scheme that was meant to "help" people.

People don’t pay them back no one can pay back 40% after 5 years assuming they bought in London.

If they do pay it back they do it by remortgaging so the builders win, the banks win, the tax payer pays for any HTB loans that aren’t repaid and the tax payer gets shafted with higher housing costs.

The deposit doesn’t matter, what matters is the total loan amount.

For a £500K flat you need a £50K deposit but you also need a household income of £100K or more to be able to borrow £450K as banks cap the maximum amount they’ll loans at 4-4.5 of your annual income.

So HTB didn’t only increase the prices it also pushed people to take on loans that they normally would not be able to afford.

HTB has definitely increased the prices of HTB eligible properties because they realised that buyers could afford a bit more w/ Gov assistance and so sellers are squeezing people for it.

Really, HTB should not have had a restriction on new builds. It's laughable because the restriction would make sense if the Gov was allowing anyone to actually build new properties.

I think you're FYIGM'ing. Idk where you're finding these decent 2 bed "houses" (I think you mean flats) in London for "250k". Hell even a 2 bed flat is mostly around the 350-400k mark in most of London, unless you want to raise your family in Croydon or something lol

It’s not that buyers could afford a bit more, buyers could afford essentially to pay double in London.

This isn’t because of the deposit but because HTB essentially allows you to buy a property for double the price in London.

Most people couldn’t afford a 500K property not because they can’t save up £50K but because they won’t have a salary north of £100K for the bank to loan them the rest as lenders cap the loan amount at 4-4.5 times your annual salary.

So now people that earn £50K can buy a property that only people that earn £100-120K could regardless of their deposits.

For 250K you’ll find shitty property that would require a 2-3 hours of daily commute that will cost around £5000 annually per person working in London…

The problem with HTB is that it sustains inflation. Essentially it subsidises continued property prices' growth, which, in my view, is rather nonsensical economically.

As for saving for a deposit, I think an issue is also that many people seem not to have been educated about the benefits of saving at all. Bluntly, many young people I see find the money for short term consumption and don't save anything.

When I was young my outgoings were mainly the cheapest rent I could find. And maybe a slice of avocado toast once a week /s

This is because rents rise to the amount someone is willing to pay, which is basically what they earn, because they have to live somewhere near work. If they get free board then they can swiftly build up savings and buy a house and continue the cycle of wealth. If they have to pay, they're screwed.

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