To look at it another way, take an example of buying a house for £300,000. Assume a 10% deposit (£30,000); paying 20% over valuation (£60,000); legal, LBTT / stamp duty and marketing costs (say £10,000). This means you need almost £100k, more than likely in cash, to actually secure the house.
The Housing Ladder
27 Apr 22
This is a true story, and one that is probably commonly known and repeated across the country. A family I know are trying to move to a particular area to buy a house. The problem that faces them is it isn’t easy to do; in fact it’s very difficult – almost impossible, it would seem.
The family in question presently live in a rented flat. It’s on the 1st floor, have a baby and toddler in tow, and so it’s less than ideal. They have been looking for a family house for some time and have their heart set on a suburb of Glasgow. They have the usual – but not unreasonable – criteria; good schools, greenspace, and proximity to their wider family and friends support network in mind. Both parents are working while juggling childcare, and they have a budget which should allow them to afford something like a 3-bedroom semi-detached property in the particular area.
They’ve offered on a number of houses in the last 6 months and have missed out when properties are going for in the region of 20% over home report valuation. This probably says something about home report valuations, but that is for another article. It’s fairly standard for houses in this area to have in the region of 15 – 20 offers in place at the time of closing date. The difficulty in getting onto the housing ladder when these barriers are in place is plain to see. To look at it another way, take an example of buying a house for £300,000. Assume a 10% deposit (£30,000); paying 20% over valuation (£60,000); legal, LBTT / stamp duty and marketing costs (say £10,000). This means you need almost £100k, more than likely in cash, to actually secure the house.
The family in question have taken a slightly different approach as frustration turns to desperation in the hunt for a new house. They started looking for family houses to rent in the given area. They have found that when houses come to the market for rental they are either being secured by others before even having a chance to view the property, or people are actually offering over the stated monthly rental to secure the house.
When this example is presented in the context of housing need and supply across the country, surely as a profession we can be doing something about it? Perhaps we need to start taking matters back to a very common denominator – i.e., how do we address the barriers that are making it near on impossible for people to buy or rent a house in a given area.
NPF4 in Scotland is the latest attempt by Scottish Government to deal with the issue of housing land supply. Consultation ended on 31 March 2022, with various stakeholders submitting representations challenging the position being advocated in the draft on housing land. If NPF4 is approved in its present form we could be looking at very limited housing land release across the country in the foreseeable future – certainly not significantly more than the present situation.
The above story is obviously just one part of the housing problem – affordable supply, elderly and care provision in an ageing population, education, health and other infrastructure constraints. And we haven’t even touched upon under occupation or buy to let, land supply is just one part of finding a solution to a complex problem. For now though, why don’t we just try and make it slightly easier for people described in the above article to live where they need? “Simple” answer – allocate more land and let the market build more houses?
We will of course be monitoring the outcome of the NPF4 consultation and would be pleased to assist clients on any queries they have in this regard.
