Louie, 24, a chef living in London, says a lot of people have “written off the idea of even considering getting a property” in their 20s. He is optimistic about the government’s new Your First Home scheme, which will enable people to buy a new-build property with a deposit of just 2.5%, supported by an interest-free equity loan. But he says a smaller deposit alone will not be enough for him.
As a result, he is studying an access course with plans to start a physiotherapy degree next year. He hopes that by the time he graduates and gains some experience, he will have a stable enough income and sufficient savings to put down a deposit. He says the new scheme “should encourage a lot of young people to buy earlier” and adds: “We are moving in a good direction, but I’ll still save and wait until around late 20s to early 30s to start [thinking about buying], just due to how much it may cost me.” Louie earns between £37,000 and £40,000 a year and shares a three-bedroom rented property with two friends.
But rent and bills take up an increasingly large proportion of his income, leaving little room to save towards buying a home. His landlord recently informed the household that their rent would increase by £200 a month in November. He has managed to build up some savings.
Since he was 18, he has put between 5% and 10% of his earnings into a stocks and shares investment account, and over the past year has also started making regular contributions to an Isa specifically for a house deposit. He earned £126,000 last year, but says that despite his six-figure income, he has virtually nothing left in his bank account at the end of each month. Graham says he was “hoping for real help with the cost of employing people” from the budget.
I don’t really do anything particularly lavish, but at the end of the month it’s all gone.” His mortgage payments have risen from about £900 a month to £1,300, while council tax, food, energy and other everyday expenses have also increased. Normally earning approximately £100,000 a year, he has increasingly relied on additional dividends from his business to cover rising costs. He is frustrated by the effective 60% income tax rate on earnings caused by the gradual withdrawal of the personal allowance on income over £100,000, which reaches zero when earnings reach £125,140.
Helen, 40, lives in south-west London with her husband and two children, aged eight and five. She is the main breadwinner, working in communications, while her husband runs his own architectural practice. Her house is in council tax band D, which means she will get a £100 energy payment this winter.
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