With start-ups and websites coming out of our online ears offering guidance as to what to watch for when renting for the first time, or applying for a mortgage, or budgeting properly to take that initial step on the ownership ladder, what’s the excuse for not knowing?
Apologies for sounding like the proverbial old fart here, but evidence from a trio of surveys suggests there is more than a little ignorance of what to do, when and how.
Survey one comes from The Legal Education Foundation and reveals that first time tenants are many times more likely to have housing-related issues – from debt to eviction – than their owner-occupying counterparts. Often this is down to ignorance of processes or rights and not down to more substantial issues such as poverty or rogue landlords.
Staggeringly, some 47 per cent of renters felt their housing problem is likely to be down to bad luck rather than something they could partly or fully resolve themselves.
Survey two is from Aviva and reveals that almost three quarters of first time buyers do not budget sufficiently to buy a new home – and not because of the sudden leap in payments to service a mortgage, but because they are simply unaware of typical transaction costs.
Specifically, the study suggests average FTBs save around £6,500 too little for the ‘best’ deposit for their home – often because they do not understand mortgages rather than because they cannot afford to save more – and FTBs also spend £1,680 more than budgeted for on essential repairs as soon as they move into their first home.
Survey three is the NatWest Millennials Home Buying study revealing, amongst other things, that 25 per cent of millennials actively looking to purchase their home have not heard of Help To Buy; of those who have heard of it, 44 per cent don’t know how to apply.
Meanwhile 41 per cent of respondents admit to not having any idea how much deposit may be required to buy a home even though, presumably, they could easily Google it.
OK, OK – I know, this is an unfair attack.
I’m from the golden generation who benefitted from extraordinary and never-to-be-repeated house price inflation and easily-available 100 per cent mortgages.
Therefore I no doubt had much more incentive to discover the nuts and bolts of house buying than would have been the case had I been born three decades later and faced with a slew of financial mountains to climb, from student debt to massive house price deposits.
So here’s an idea for politicians and policy-makers: why not bring an understanding of renting and house buying into the formal education process?
I’m not after turning 16 year olds into estate agents (we already have a few of those).
Instead I am suggesting a consumer-oriented practical component of every young person’s education, around the age of 16, explaining how to rent and how to buy – the rights they will have, a few basics about the differences between surveys and valuations, the lowdown on how to apply for a mortgage with or without parental financial assistance.
This need not be an alternative to academic or vocational education – just a short but highly practical addition to the syllabus to prepare people for what will be one of the biggest decisions of their lives, to move away from their parents by renting or buying.
We do the same within our structured education framework, albeit in a more nuanced way, when preparing much younger children to go out by themselves on busy roads, advising them how to respond to ‘stranger danger’, and even show basic courtesy and manners.
Yet we do nothing to educate teenagers how to make the best of renting or buying a home for the first time – surely something that falls under the category of David Cameron now likes to call “life chances.”
Would an occasional hour given to explaining one of life’s more daunting and expensive processes not help prepare people to make more of their opportunities?
It sounds a good idea to me – and might make reading those survey results a lot less depressing.
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