Location, Frustration, Dejected
Leave school. Get a job. Buy a house. Get married. Have children. That’s what everybody does, right?
At the ripe old age of 17, I, like so many others, truly believed I knew it all. Looking back, it has to be said my naivety was almost endearing.
What I should also add, however, is that my carefully mapped out, and well thought through timeline, had to be signed, sealed and delivered, by the time I reached 26-years-old – 27 at a push.
How hard could it be?
The reality faced by many young people today, however, is far from my blissfully ignorant, childhood dream, as reaching just one of the above milestones has become an achievement in itself.
What was once considered by our parents as an invaluable life investment, the property ladder is for millennials, a long-gone relic of the past.
And the bad news just seems to keep coming.
Two years ago, media reports revealed that the average millennial could spend up to £53,000 on rent before the age of 30.
And just last month, young peoples hopes were dashed once again due to further revelations that one in three Brits will never be able own a property in their lifetime, according to the Guardian.
For us Scots, however, all is not lost. With renting properties now the only viable way to fly from the nest, Scotland has made changes to the protection and welfare of tenants over the last few years.
The creation of a Private Residential Tenancy agreement in April 2016 heightened security somewhat for renters. Private tenancies are now open-ended, with no fixed six-month or year-end dates.
The change in legislation also allows rental prices to increase once every 12 months, and the owner must give the tenant three months’ notice before the change.
The Scottish government has also announced its plans to increase spending on affordable housing, which should see more cost-effective homes made available for those stuck in the renting rut.
But what can be done for disheartened millennials now who are trying to make the first great leap from home turf an establish ourselves in the property market?
Property gurus Kirstie Allsopp and Phil Spencer say there are four common blunders made by first-time property buyers that can hold them back in their search: a lack of preparation; uncertainty of finances; a disregard for previous selling prices and average area costs; and understanding the difference between want-to-haves and must-haves.
I spoke with five property hungry, Scottish millennials about their experience of getting onto the property ladder.
David McArthur. Joint property owner with girlfriend. Location: Temple, near Anniesland, Glasgow.
“We bought a place in Temple, in September 2017, and got the keys in November 2017. The process was quite frustrating, as it felt like it took quite a while for us after we started viewing houses. As we are both teachers, we had to do viewings late at night, and as a lot of viewing times were inflexible, they would end up being at awkward times. There was a lot of choice in terms of property for us, however, we couldn’t compete when houses went to closing dates, as we were always outbid by a significant amount over the asking price. Stress levels were high at points, especially when we lost out on a few houses in a row, and it felt like we weren’t making any progress.
“On first glance, costs were affordable in the areas we were looking. However, house prices seemed to go for a nominal figure, as it turns out the public were willing to bid well over the ‘value’ of the house to secure it.
“In the current market, we feel like we got value for money with our house, as we got it a lot cheaper than a lot of places nearby. It did need cosmetic work done to it but did not need anything structural or at a great cost.
“The best advice I could give through my experience is to be patient if possible. You may be part of a long chain of people trying to buy and sell houses, and unfortunately, you are at the bottom of the ladder in a sense. You are waiting on everyone else having something in place before you can view their house on the market, or potentially buy it. However, most people I know, who have bought a house as a first-time buyer, has an ‘I got lucky’ story. We were much the same, as there was a house very close to ours up for sale at the same time, and everyone seemed to be attracted to that as it was in ‘move in’ condition. This drew the attention from our property, and we managed to secure it before the closing date on the more ready property had passed.”
Rachael Grimley. Currently renting. Location: Cramond, Edinburgh.
“I live in a privately rented flat with my boyfriend of seven years, who moved with me due to my circumstances. We live in a one bedroom flat and pay £620 a month on rent, which is good for Edinburgh, but we are on the outskirts. The rent we pay is around £200 more each month than what we would pay if we owned the property, and paid a mortgage, which doesn’t help with saving for our own house.
“Finding a place to rent was extremely stressful, as I hadn’t rented previously. We struggled to be considered without a previous tenant’s reference, and subsequently have ended up in an area that wasn’t our original choice. We viewed four properties whose owners chose other couple over us, as they had a tenancy reference and went through letting agents.
“We found our current flat on Gumtree through a private landlord which I was nervous about as I’d heard about lots of bad experiences but was getting desperate as my new role in Edinburgh started three weeks later. We also had to put down a guarantor, as we had no previous tenancy reference. Thankfully, this wasn’t a problem for us but could be for others.
“I’m currently saving for my first home and joined the help to buy account scheme with Barclays as they had best rates at the time. I read about this scheme on Money Supermarket, and currently save around £200 a month. I set it up a couple of years ago and think it’s a great scheme to get involved in as early as possible, considering the maximum limit you can pay in each month, allows you to receive maximum benefit at the end. Fingers crossed it will set me up for when I return to Glasgow in 18 months to buy a flat or small house.”
Lesley Smith. Property owner. Location: Larkhall, South Lanarkshire.
“I bought a little miners cottage in Larkhall and I am just here by myself. Finding a place was pretty stressful, as I was buying myself, with a 5% deposit, and had a fairly limited mortgage allowance, so had to look for places around £100,000. I found that houses were being listed as offers over £95,000, so they’d come up in my searches, and I’d go and view them, but it was very quickly made clear that the sellers were wanting a lot more than that.
“I had put an offer in for a few places valued at around £95,000, but they ended up selling for around £10,000 more than the value on the home report. The mortgage company also doesn’t cover that extra amount, so I was quite disheartened at losing out on lots of properties purely because I didn’t have a huge lump sum to go over. I eventually managed to get my current house, as it had been on the market for some time and went to a fixed price to sell it quicker – so less fuss regarding making offers.
“Because the seller wanted the sale to go through quickly, I went from putting in my offer, to getting the keys within six weeks! Phoning lawyers, banks and estate agents which are only open 9am till 5pm, it was pretty tricky getting it all sorted by myself whilst still working. I would have the lawyer phone me to say the seller hadn’t completed something, so I would have to get back in contact with the estate agent, who then had to get in contact with the seller, to then phone back the lawyer. So, long story short, it was a lot of back and forth between different parties, whilst on a very quick time scale.
“I got great value for money with my house, however, that was due to patience and being really careful not to overspend. I’d tell first-time buyers not to be tempted to overspend straight away. Houses are given a value for a reason, and although you may be tempted to put in a higher offer, it might not be worth it when the rose-tinted glasses come off. It worked out for me; I missed out on many houses, but ended up with something better, for less, and without needing a large lump sum to secure it.”
Jamie Taylor. Joint property owner with fiancé. Location: Anniesland, Glasgow.
“The process of finding a place took around four or five months of searching and viewing for us. The biggest issue I had was falling for every place I viewed because I liked the idea of owning a flat over liking the actual property. Looking back, I’m definitely glad I waited out, and got advice from my partner and parents. In terms of finances, I didn’t have a huge amount of wiggle room, which I suppose helped me narrow my choices down. I was also sure that I wanted to stay in the west of the city, as this was where I grew up, my friends were, and job is, which narrowed it down again.
“In terms of value for money, I was really lucky. The woman who was selling the flat took a real shine to my partner and I, so said that if we put in an offer on the day we viewed, she would accept £5,000 under the valuation price. She had already paid her mortgage off, and had another place lined up, so I think she just wanted to whole process over.
“The process of getting a mortgage was definitely the most stressful part, but again I was lucky, as I had been saving since I started my first part-time job, so had built up a larger than average deposit. I contacted a mortgage broker who researched the best deals for me based on what I had and was able to pay a month, and he found me a great deal. He guided me through the whole process including all the legal aspects around proof of funds and the likes, and all I had to do was hand over copies of documents.
“I’d recommend taking out a help to buy ISA that will help top up your hard-earned savings, and also take as much advice as possible. Some will be bad and based around trying to make a sale or get your custom, but most of it is really useful, even if it is from parents or friends who own properties.”
Jennifer-Rose Coulter. Two times joint property owner with husband. Location: Overton, Greenock.
“My husband and I bought our first house in August 2015, which was a three bed, end terrace in Overton. We were lucky enough to have a really good credit rating, so we got a 95% mortgage. The reason we jumped in so quickly was because we were renting a flat, and our downstairs neighbour was an absolute nightmare. So, this gave us the push we needed to go out and buy a house, and we pretty much bought the best house we could afford at the same time as saving for our wedding! We have just bought our second, four-bedroom detached house, but despite the house being significantly more expensive than our first, our monthly mortgage payments are less than they were for the other house! It is unbelievable the difference a decent deposit makes!
“High loan to value mortgages are great if you want to get your foot on the property ladder, but if you want to climb the ladder, then be prepared to overpay on your mortgage, as you might find yourself stuck if you want to move in a few years! If I hadn’t sold the house for a decent profit, we wouldn’t have been able to afford this bigger house right now. Also, when we bought the first house, we anticipated that we were going to be able there for around five years. As we were only there for two and a half years, and had taken out a five year fixed rate mortgage, we had to pay a £3000 fee to the bank as an early repayment charge. So, on buying your first property, really think about where you will see yourself in the future!
“Buying our first house was easy as we had no ties really. We picked a move in date and paid the lawyer, and that was all we had to do really. Second time, not so much! We had put our house on the market in February when we heard about a new house possibly coming up for sale in late spring (it is currently my mum’s hairdressers house), so we took a gamble on selling ours to potentially get a private sale out of it! Thankfully, that gamble paid off, but we won’t be in the new house until August this year, which means we are living with my parents for now, which is again very stressful! Add to that the £7500 in fees we had to pay to sell (bank, lawyer, estate agent), so ultimately it has been a very expensive process.
“In hindsight, if we had just saved a wee bit longer for a better deposit in the first place, we would have been a whole lot better off. There were tons of choice for us when buying our first place, but then again, we weren’t being quite so specific as to what we were looking for! You really have to have a clear idea of what you want when buying first time, and don’t just get caught up in the excitement of buying a house and settle for something less than perfect.
“When you have no ties to a property already, that is really the best time to be fussy about what you want! You can afford to be picky as a first-time buyer, so choose wisely.”