First-time buyer blues? In St Albans and Harpenden, that’s nothing new
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For young people on a modest salary, owning a home in St Albans or Harpenden may seem impossible in the current climate. But as Richard Burton knows all too well, this is nothing new.
A few days after Margaret Thatcher found a home in Downing Street, I tried to buy one of my own. My first, in fact, after years of renting. Prices had been rising month-on-month throughout the year and for a young couple with no account at a Bank of Mum and Dad, trying to settle in St Albans was no mean feat.
I knew that better than most. Rising house prices were all anyone was talking about and I spent my days digging out stories that showed the different fortunes between those on and off the housing ladder.
They would typically involve the proud owner of a three-bed semi bought for £2,000 in the 60s now going back on the market for 10 times that amount. Or a young couple competing to get an offer accepted on a flat, only to be gazumped while they were struggling get a loan.
But that was then. Far easier these days for aspirant young couples, surely?
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Back to the scenario: We moved into a city centre two-up, two-down we managed to casually rent for all of £25 a month. The landlord would pop into the Blacksmiths every few weeks and I’d pay cash over a pint.
All the time, we were continuing to save and reach the magic number we needed for a deposit - about the price of a decent holiday in today’s money. So when the landlady decided to sell, we were ready.
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The problem was, she had managed to add another £2,000 to the valuation in the few months we’d been there and it went up by another grand by the time it went on the market after the agent mentioned the word “achievable”.
Having slipped beyond our reach, someone else offered the full price over the first weekend and there were two other bids in the wings, lest the yuppies with deep pockets dropped out.
In the meantime, we put in a bid for one we could still afford - a Wendy House of a cottage in Wheathampstead – and, once again, lost out to someone “in a better position”. They then fell victim to the mortgage squeeze themselves and the agent rang and said, “it’s yours - but they want another thousand for it”.
That was the reality, although history doesn’t always tell it that way. These days, couples get rather dewy-eyed when someone tells them they could once get a starter home for under £25,000 at around the time those of us not clever enough to do the Rubik’s Cube were asking who shot JR.
But not when your weekly earnings would net you the equivalent of two family days out at Whipsnade and prices were going up in the time it took agents to measure up and type the details. Not only that, but demand was outstripping supply like toilet rolls, mortgages were impossible to get without hefty deposits and no one would lend more than two-and-a-half times your earnings.
We had no choice but to do what many had done before - look for jobs that paid more in an area where houses cost less. Luckily, newspaper jobs were easier to get than houses. I was offered senior reporting roles on evening papers in Cambridge and Northamptonshire.
I badly wanted the one that involved dreaming spires, receptions on college lawns and assignments by bicycle. But I had to settle for a creaky room above a shop in a town on the A6 surrounded by shoe factories. Why? Guess which had the cheaper houses?
Just as well as it turned out. The first year of the Thatcher government – and the first of my mortgage - saw interest rates hit 17 per cent!
The only way back was to climb two ladders – the career one that landed me an editorship within five years and the property one that meant trading down to a dilapidated bungalow and spending weekends eating like students while gutting the place and, eventually, extending.
Only a decent profit on that – and a job in Fleet Street – meant I could finally return to Herts and start the process again. That, and the offer of one of the very first low-start loans meant I could actually upgrade on the Northamptonshire detached I was leaving. Risky at the time, but this was the 80s. We were all going to be millionaires this time next year.
I’ve heard similar over the years from others who chose the exodus route. Others already settled north of Milton Keynes chose to stay put. As the printing revolution saw media jobs aplenty in London, many of those in the northern offices of the likes of the Mail and the Mirror left their families behind in their comfortable homes in Manchester and Cheshire and commuted down, partly thanks to the fact that many were still on four-day weeks.
Retelling it years later when my eldest was leaving university, two high-fliers that had graduated to senior management – both regular TV pundits, one with a couple of successful novels under her belt – told me they had handed their kids six-figure sums “to get them started”.
That made me realise, for some, there really is a Bank of Mum and Dad, especially if they themselves bank at Coutts – or their partner does PR for another one in Canary Wharf.
But for thousands of us, the reality of becoming a first-time buyer in an area where houses have been calculated as among the costliest per square metre in the country suggests little has changed.
A few recent initiatives have helped to address that balance for first timers. The Government introduced a starter home scheme in 2014, using mainly old industrial sites to build homes for twenty-fortysomethings at a 20 per cent discount.
Then there was the shared ownership scheme – part-owning, part-renting – which lets first timers borrow enough for up to 75 per cent of a home and pay rent on the rest.
And Help to Buy loans saw the government lending up to 20 per cent of the price of a new build property – 40 per cent in London. It also gave access to better mortgage deals and delayed interest payments.
One couple who took advantage of that were Aidan Hawes, 30, head of commercial development for a technology company, and his wife Rochelle, who swapped their rented flat of three years in Clapham for one in Taylor Wimpey’s Beaumont Gardens project in St Albans.
The scheme meant they only had to find a five per cent deposit for a brand new home in what was a refurbished coat factory in Sutton Road.
Rochelle, 28 and an executive assistant, said: “We loved the development as soon as we visited the show home. It was in the early stages but as the existing shell of the factory remained, we could really visualise what the possibilities were. We took away a brochure and put in an offer less than a week later.
“The process was very easy. We were kept up to date and the sales team went out of their way to push things through as soon as possible.”
They were fortunate in that they managed to secure their deal before the housing market was all but shut down in March. Now it has reopened, many banks have changed their attitude to lending, fearing a collapse in house prices and are demanding more cash up front, something that could impact heavily on first-timers dependent on raising a deposit.
The number of mortgage deals for customers with a 10 per cent deposit dropped from 780 to 87 in one two-month period from March to May, according to finance comparison site, Moneyfacts. And the number involving five per cent dropped from over 300 to a mere 30.