I am sick to the back teeth of these news stories you see, of smiling 23-year-olds in tabloids, who boast about managing to buy their own 200k four-bed house just a few years after hitting puberty. AREN’T THEY IMPRESSIVE? (Yep, buckle up for a rant!)
I’ve written about this before in the Huffington Post (Renting is not dead money). That for most people, homeownership in their 20’s is a fool’s errand. Renting when you’re young is a brilliant thing.
And then I saw this story on Twitter which irritated me. Some things before we move on – I have nothing against this woman. I am happy for her if she’s happy. It doesn’t even really matter what her story is – I have an issue with this general narrative papers push.
It’s the ‘it IS possible to own a family home in your 20’s – you’re just not doing enough’ vibe that makes me want to spit teeth. And I call BS on that.
The well-paying, full-time job in your early 20’s
There are two things that you’ll find all these stories have in common:
- They have a good full-time job (often it’s a couple with two jobs)
- They have to live with their parents and pay no, or minimal rent
There’s often a wealthy family behind them too, but I’m leaving that out as plenty of these storys brag about no help from their parents.
Let’s talk about the full-time job bit. As we all know, a full-time job isn’t a given these days. I personally hard the hardest time of it in my early 20’s, with redundancies and long term unemployment.
We all know this meme…
The living with mum and dad bit
I see it all the time now, people living with their mum and dad, all through their 20’s to save money. The WHOLE of their youth, they have lived with their mam and dad.
Their parents and grandparents were probably shacked up with two kids by 24, but it’s not that weird to see someone 33 living at home – saving up for a house these days.
OK – If you are someone who loves living with your parents – knock yourself out! But if you’re someone who is holding off on wanted independence, for this dream of owning a home, because renting is ‘dead money’ – have a rethink.
You can’t afford a house – sorry
You can’t afford it. Sorry. I’m going to explain why that’s not a bad thing in a bit, but I’m going to use Martin Lewis’ maths here – because it was never my strong point in school. I couldn’t do my eight times tables now with a gun to my head, even with years of my mum forcing me to recite them in frustration. Ah well!
For most young people, owning a home, especially if you don’t have big deposits from your parents or do not have a partner, is practically impossible. You can cut out all the avocado toast and coffee you like.
Check out the article for the full story, but the short version is – a very normal millenial (in London though!) records her spending for a month, then Martin Lewis decides where she can cut back to buy her first home.
Here are some interesting bits from the article:
One point he is firm, however: while it is possible to be approved for a mortgage with a deposit of only 5%, to be able to truly afford a properly I need at least 10%, ideally 20%. But that’s a very difficult amount to save when you’re already paying rent.
She then tells him what she earns (it’s decent!) and what the average price of a one-bed flat in South London costs (it’s a lot) and here’s what Martin Lewis said:
There you go! Piece is over. You won’t get a mortgage, full stop – I don’t care what you spend. It’s going to be virtually impossible for you.
I’m being a bit dramatic here – sure. I managed to get one (as a couple). There are also Government schemes to help you with your deposit – check out Bronni who added 10k to her deposit for free.
Why renting is good
Look, this isn’t totally a bad thing. You don’t have to do extreme things to buy a house young. Renting is good. Plus, you can save while renting.
And before you say, ‘Lotty – all well and good YOU saying that literally in the house you OWN’ and yeah, I bought a house at 31 – just!
I lived in a houseshare for eight years with my boyfriend. The rent we were paying was pretty low (well, it was ridiculous for one room in a big house – but an article about greedy landlords will come another day), so we did manage to save up a lot.
My boyfriend has always had a well-paid job – whereas I have moved around, been able to take risks, sometimes earn more/often earning nothing!
We also had help from our parents (don’t go thinking they’re super-rich and covered us – but there was help – which is not what everyone will get!).
In fact, the day after we signed for the house – I was made redundant. It was a week before my two year anniversary at the job, and they got rid of me before I had any real rights. I didn’t get anything out of it (which is why I started this blog really!)
Anyway, got a bit derailed there – renting at times SUCKED. Here are some highlights (or lowlights?)
- The time I thought I got TB because I was coughing up blood. Found out there was a load of mould down the side of the bed where my face was.
- The time we realised our housemate was throwing out my plates instead of washing them up.
- Ugly-tray-gate (I can’t even get into this right now, but a shelf in a kitchen and an UGLY – yes I said ugly if you’re reading – tray, sparked a year-long war).
- Worms started living on the ceiling and would drop on you now and then.
- Another housemate would walk around the house naked and drunk. Once I was invited me to join her and ‘the old man’ she had brought back home at 3 am. Reader, I locked the bedroom door and wondered what I had done in a past life to deserve this renting nightmare.
BUT – it was also SO much fun too. There were highs and lows – but if you think owning a home is all sunshine and rainbows, you couldn’t be more wrong.
Here are some of the things that prove renting isn’t dead money.
- You don’t have to live with your mum and dad. I could break this down more, but is that needed? Adults need to be in control of their own space.
- You LEARN important financial lessons. Bills, rent, fixing things – all that stuff. But also, getting someone to pay up for washing up liquid. Dealing with the consequences of someone moving out and you being responsible for those financial repercussions (ahem, tray-gate recall there). Calling up handymen/learning to give your landlord grief. These aren’t nice things, but they train you up to be financially resilient – for when you do own your own place.
- You don’t have to pay for things when they break. My boiler has cost me £2k in plumber fees so far and it still doesn’t work properly.
- You can leave and go live somewhere else. You’re not tied down. You buy a house – you lose A LOT of freedom.
- You can’t afford your rent anymore – move out (there is even housing benefit to help out). Own a home? Oh, that’s some repossession-level drama there.
- The housing market is unstable. You just don’t have to worry about it.
Why owning a home when you’re too young is dangerous
I’m sure there are going to be a load of people who owned a home in their early 20’s who disagree with me, but I worry about people settling down JUST to own a home.
Home-ownership is overrated. Especially if you’re with another young partner. You’re locked in – financially for 30-odd years with someone you likely met in your teens if you account the years of saving.
Most of us couldn’t dream of being with our first partners now for all that time. Youth is for transition/mistakes/risks – not mortgage payments with the person you fancied in year six.
If you can afford it/if you love living at home/if you’re so sure all the sacrifice is worth it – go for it. Do what makes you happy.
But don’t let stories in newspapers of young people sacrificing their youth (travelling, late-night parties, fun housemates, FREEDOM), make you feel bad for not doing it too.
I know this post will be controversial, and there will be lots of people who will disagree – so let’s debate (nicely)!
Hi, In the 1980s people in their twenties were buying their own homes (not outright necessarily, but they were taking on mortgages) . There was still alot of variation in house prices throughout the country, and so there were properties for sale that were affordable. House sales hadn’t slowed, or stagnated, and people could easily sell their homes and buy different houses, even in their twenties.
There wasn’t quite the same interest in owning several properties that we’ve seen in recent times, and I think that there were still ‘fair rent’ laws and fair tenancies then, so buying-to-let might not have seemed so lucrative. There was lots of interest in decorating, and it could be lavish, but there wasn’t so much concern with ‘property development’ as generally, people were buying in order to live in their homes. Builders had plenty of work and didn’t need to be property developers, and people had plenty going on workwise and were more obsessed with ‘business development’ than with renovating their homes. There were if course many low-paid and unemployed people, but as rents were managed, benefits more accessible, and council housing more broadly and widely available, there seemed to be less of a squeeze on people’s prospects in their twenties.
Social mobility was ‘on the up’ as education and training were still well provided, as long as people wanted it. Evening courses were cheap (subsidised) and plentiful. Even the Open University was more affordable. Banks gave out cheap loans and the whole country loved it and was using them, as credit flowed. It was ‘normal’ to use credit, and totally weird to borrow money at more than 10% apr. Interest on savings was better than today… much better. Even the Post Office had accounts paying up to 10% pa.
People in their twenties who didn’t want to buy a house in Britain because they were busy having a great life in the Greek Islands, could buy a property abroad, open small businesses, or buy a boat, or possibly just live on some wealthier person’s yacht, or just sail yachts from marina to marina for other people as a job/way of life. The Greek Islands were a big go-to place then. I’m not at all sure whether it was ordinary people’s debts that lead to Greece’s massive financial problems, or mismanagement by the executives, but no-one in their twenties from Britain would have predicted Greece’s recessions. Instead, young people had years of adventurous living in the Med.
The more corporate minded could find work and it was easy enough to start a business (all the rage in the 1980s). As business was literally booming, even many dinky start-ups had customers, and it was possible to expand and thrive. So young people would have had opportunities to jump on the roller coaster/train somewhere. This was a time when numerate young people in particular could really advance, and it didn’t matter whether their parents had been working class. The old social support system was still in place so there was better public funding and no austerity, yet there were also many, many new openings in the jobs market as successful big businesses had an ongoing positive effect on other businesses.
Basically, I think that people in their twenties could have it all a few decades ago – far fewer stayed in their parents’ home as it was easy to move out and rent somewhere – and buy somewhere too. But go a bit further back in time, and you find that young married people were living with their parents, at least for a while because until they had saved enough to move out, they had nowhere else to go.
By the way, having to work out how much you could save by cutting out Costa coffee/avocado toast didn’t exist as a concept in the 1980s/90s. Sure, people on low incomes had to budget, but coffee and fancy toast out wasn’t part of the budget as more people ate at home/took packed lunches/ate in subsidised canteens and cafeterias. Exec types might have had nice lunches in restaurants, courtesy of their companies, but this hadn’t become a mass experience. When banks assessed mortgage applications they usually wanted to know what household expenses were like rather than how much people were spending in trendy coffee bars. As for pubs, food was often limited, and the thought of drinking tea and coffee in them was still a little odd ☺
And – people could and did fill their Tesco shopping trolleys to the brim. The big supermarkets were living it up. Tesco was super successful. It was practically a demi-god in the popular imagination. Town centres were heaving with shoppers, many of whom trotted about in camel-hair coats, carrying several smart carrier bags in each arm. In these conditions people in their twenties could aspire to all sorts of material wealth, and independence, and often did. The film, Working Girl (Harrison Ford and Melanie Griffith in the lead roles) captures the time well. It seems exaggerated but isn’t – it was spot on.
But to finish …. renting was good for young people both because it gave them a chance to spread their wings, develop a social life, experience, and maturity, and because it was affordable and managed, with a social security safety net in place, which, in the 1980s, co-existed for a time with a booming, expanding economy.
And now?
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