Challenges in Home Acquisition for Young People in England: An Analysis of Political, Economic, and Socio-Cultural Factors

Key housing challenges for new buyers in England

There exist numerous uncertainties in the acquisition of homes by young people in England. The intrinsic nature of such decisions imposes critical challenges on individuals seeking to purchase homes for the first time. The challenges rest upon the political, economic and socio-cultural perspectives that restrict young people from transitioning to their own residential spaces (Mackie, 2016). Failure to incorporate essential elements of home-ownership before a purchase may aggravate poor decisions that may lead to disastrous consequences. Key issues experienced vary based on financial capabilities, ideal locations, inflation, and terms of acquisition and government policies. According to (Mackie, 2016), there is less documentation of housing policies concerning the acquisition of homes. The absence of comprehensive policies constraint young individuals from transitioning into their privately owned homes.

Less government involvement in shielding new homeowners through appropriate strategies, further escalates home-purchasing concerns. Moreover, an increase in housing prices confines individuals from acquiring homes that suit their interests. Affordability dilemma in the country further persists due to increased demand which leads to a subsequent rise in the price of homes. In addition, gradual inflation has tremendously impacted the housing and infrastructure sector simultaneously over the years. The close correlation of inflation rate and house prices poses significant financial constraints on new home buyers (Nguyen, 2018). Moreover, inflation influences the economic status of individuals seeking to buy ideal homes which in turn confines them to inappropriate tenures.

Additionally, obtaining ideal real estate platforms for their approach can lead to future consequences concerning the purchase of a particular home. The growing trend of online involvement in finding the appropriate platform may direct an individual to malicious real estate firms that may provide substandard dwellings at a higher price. Misinformation might thus cause future drawbacks whenever legal agreements get implemented in instances where the suitability of a particular home is questionable. Also, (Hilber&Shhni, 2016) postulate housing shortages as a challenge facing millennials in acquiring houses. Further emphasis attributes the cause to the fixed planning system and financial centralization by the government.

State of the property market

The status quo of the property market converges in various similarities across the globe. The volatility of the segment varies immensely in the country based on individual policies and economic diversification. There exists a nominal rise in housing prices over the financial years. The looming Brexit uncertainties might further cause a significant increase in pricing of houses. According to (Delmendo, 2019), the average price of a home stands at approximately £216,800 in the latest financial year's report. The cost varies in different regions based on population density, cultural perception and the availability of general infrastructure integrated into the surrounding. Variation of the price of homes gets attributed to the current housing policies available. Various regions exhibit simultaneous rise and fall of prices; for instance, London registered a partial drop in house prices while the outer metropolis indicated a significant reduction in price according to (Delmendo, 2019).

Further exploration of the housing policies can primarily play an active role in stabilization of house prices to ensure that young individuals transitioning into new homes are less affected. The evaluation of the sector can get sustained through intense involvement by the government and private sectors. Additionally, the nature of property market concerns itself on the zonal differences in the country which impacts the state of the sector. While there might be intense market research in price variation based on geographical positioning, face-value analysis can provide valuable information on the state of the housing segment. The country's robust property market diverges the housing sector into regions where people possess solid economic stability and in areas where the help-to-buy system gets implemented (Flanagan, 2015).

In addition, prospective homeowners seeking to acquire homes in regions where interest rates are high might get locked out due to escalation of the price of houses in such areas (Flanagan, 2015). The historical view of homes in such areas might prompt a spike in the cost of homes in adjacent regions. The gradual benefits accrued by culturally appealing homes in terms of bank and land interests prevent new homeowners from purchasing homes in the areas. Finally, the property market has received an enormous housing shortage due to the rigid system of government in housing policies (Hilber&Shhni, 2016). Furthermore, fiscal centralization has aggravated the limited availability of property for the first time homeowners to acquire.

Features of housing policy schemes

General acquisition of a property requires a grand amount of finance. There are various strategies to aid individuals with financial limitations. Numerous public and private institutions caution people interested in purchasing properties through financial support ranging from government incentives on property acquisition to bank loans. Firstly, (Whitehead, 2006) postulates the implementation of the land-use approach in the provision of cheaper housing facilities. The recently adopted policy aims at linking the benefits of developing cost-effective houses through a proper land-use policy. Further, the use of deposits has gained popularity in England among low-income earners.

Secondly, the government's compelled help-to-buy scheme allows first-time buyers to acquire a home with little deposit without compromising on the mortgage terms and conditions (Abgarian, 2020). Also, shared ownership bears significant benefits for low-earners. The incorporation of the strategy allows individuals to share the cost of a property with subsequent rice in cost of shares. In addition, the shared ownership strategy can integrate individuals with permanent disabilities to purchase homes easily with no disruptions of mortgages terms.

Finally, Starter Home Schemes highlights the payment of at least 20% deposit to acquire an entirely constructed house. The scheme benefits individuals below 40 years, a domain that mainly consists of first-time homeowners (Abgarian, 2020). The availability of the schemes allows various individuals to acquire homes at a sustainable price with partial monthly payments. The strategies are flexible in the selection of a mortgage consultant due to their extensive nature. Intense consolidation of such schemes in the country will benefit numerous young people seeking to acquire homes. Also, there will be an increased transition by millennials with the ardent desire to live together through ideal schemes like Shared ownership.

Case

The property market in England accommodates individuals of all nature, such as the disabled and couples. Property acquisition has got stimulated in recent years due to uncertainties and shared risks. An individual's annual earnings and financial positioning influence their possibility to acquire a particular property. The vast extent of the property market integrates numerous schemes in the purchase of property in England. Lucy and Ben can acquire a two-bedroom bungalow (Tims, 2013) with the provision of customer bargains based on the preferred region in South West of England. An average house costs about £216,000 (Delmendo, 2016), which is a figure below the joint mortgage value when calculated using £60,000. There are several mortgage options available for the duo from which they can make a selection such as the Fixed Rate Mortgage which operates based on regular partial payments with no fluctuation in interests (Hayes, 2019). Also, balloon Mortgage exhibits advantages for individuals with a proper saving culture.

Additionally, Joint Income Mortgage provides an elaborate framework and terms for couples under the Joint Residential Mortgages (Mugleston, 2020). The latter displays a specific and precise benefit for couples with a joint annual salary and deposit before the purchase of a property. Finally, Government-Backed Mortgages are highly beneficial for first-time homeowners. The mortgage option encourages the purchase of homes in rural regions which is in consistency with the area of South West of England. The government also clears defaulted balances without the need for an auction.

Conversely, the coronavirus pandemic has caused massive financial redirection of funds from various sectors. The financial shift might thus lead to the withdrawal of the government from involvement in shielding defaulters who might then need to handle the situation in their own. In Lucy and Ben's scenario, Joint Income Mortgage would provide ideal benefits despite the switch from the traditional simple mortgage calculator in determining the amount to be provided (Mugleston, 2020). The duo's affordability index is high due to limited outgoings from their incomes. The outgoings that determine the suitability of a couple to a mortgage gets based on debt payments, educational finance and the possible impact of volatility of interest.

Various lenders implement different multiples on the amount of income (Mugleston, 2020). For instance, £60,000 will attract a mortgage of £240,000 when calculated using a multiple of four. Also, some lenders will use a factor of six which will entail a total mortgage of £360,000. Simultaneously, some lenders have no set maximum of a specific factor based on a complete in-depth affordability evaluation. The couple will thus benefit massively from the Joint Income Mortgage. Further, based on actual market research and reliable references, the current interest rate is set to stall at 0.1% as unanimously decided upon by the top officials of the Bank of England. The decision rests upon an exclusive market forecasting conducted in this coronavirus pandemic period that has massively downshifted economic progress.

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References

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• Flanagan, O. (2015). House prices: Regional variations and the impact of help-to-Buy. [online] statslife.org.uk Available at https://www.statslife.org.uk/economics-and-business/2407-house-prices-britain-s-regional-variations (Accessed 29 July, 2020)
• Hayes, A. (2019). 16 types of mortgages. [online] doughroller.net Available at https://www.doughroller.net/mortgages/16-types-of-mortgages/ (Accessed 29 July, 2020)
• Hilber, C. A., &Schhni, O. (2016). Housing policies in the United Kingdom, Switzerland, and the United States: Lessons learned. SSRN Electronic Journal. doi:10.2139/ssrn.2778463
• Mackie, P. K. (2016, April 25). Young people and housing: Identifying the key issues. https://www.tandfonline.com/doi/full/10.1080/14616718.2016.1159273
• Mugleston, P. (2020, June 22). How much can a couple borrow for a joint mortgage? [online] onlinemortgageadvisor.co.uk Available at https://www.onlinemortgageadvisor.co.uk/mortgage-affordability/joint-income-for-a-mortgages/ (Accessed 29 July, 2020).
• Nguyen, J. (2018). Is there a correlation between inflation and home prices? [online] investopedia.com Available at https://www.investopedia.com/ask/answers/correlation-inflation-houses.asp. (Accessed 29 July, 2020).
• Tims, A. (2017, September 20). What will £200,000 buy you in the UK property market? [online] theguardian.com Available at https://www.theguardian.com/money/gallery/2013/jan/23/what-200000-buy-you-uk-property-market (Accessed 29 July, 2020).
• Whitehead, C. M. (2006, December 22). Planning policies and affordable housing: England as a successful case study? https://www.tandfonline.com/doi/abs/10.1080/02673030601024580?src=recsys&journalCode=chos20