Stress testing

Posted on: 23 July 2014 by Steve Wanless

Finally – and fortunately – we have confirmation that our obsession with property ownership has gone too far.

property ownership

Forget the madness of £140m price tags on London flats, 30% annual increases, sealed bids way over the asking price or the successful buyer paying estates agents “finders’ fees” as well as the seller.

None of the above compares with the revelation that buying-and-selling a house is now regarded as one of life’s most stressful experiences; worse than divorce, losing a grandparent, being made redundant, becoming a parent for the first time or going bankrupt.

The recent survey, commissioned by estate agents EstateDirect.com, shows the extent to which property purchase today has become an emotional ordeal; 2000 adults were asked to rate a series of stressful events on a scale of 1-10.

Buying or selling came out top at 8.8, with the survey also concluding that selling was more stressful than buying. Divorce and being made redundant were next at 7.7 and 7.6 respectively, with planning a wedding coming in at 5.0.

The survey also demonstrates the benefit of getting an Independent Financial Adviser (IFA) to act on your behalf, especially with regard to obtaining a mortgage. It was clear that those who tried to navigate themselves over the various hurdles can find trouble and strife at every stage.

The survey went into more detail by asking the adults to list the 20 most stressful aspects of a selling a property.

Interestingly, problems regarding getting the finance only came in at a lowly No 16, despite the recent headlines over the introduction of the Mortgage Market Review (MMR), affordability and lenders putting applicants’ spending under a powerful microscope.

“Mortgage lenders incompetence” was No 11, with “endless phone calls” at No 5 and “all the documentation to complete” at No 4. But the main gripe at No 1 was “slow solicitors.”

It is clear there is stress at every stage of the buying and selling process. Recent legislation has only increased the time scale and extended the stress period. Yet, for all these problems, there is very little sign of the desire to buy abating.

Even when not in ownership or in the buying-and-selling process, we are fantasizing about the day when the roof over our head is ours. That’s one of the reasons that one in four of 22-30 year olds are still living at home as they save for that special day.

A report by the Institute for Fiscal Studies (IFS) claims that owning a home is a fading dream for the young; yet, it does still remain a dream. The number owning a home at the age of 25 (21%) has halved in the past 20 years.

The IFS said that the falling rate of home ownership among younger workers was storing up huge costs for the state in the future. The housing benefit bill could soar as many are forced to rent during their retirement.

This decline is not a recent phenomena brought on by the financial crisis of 2008. One of the report’s authors, Robert Joyce, pointed out: “Since the 1970s, home ownership has tended to be falling with every successive generation. It looks like the younger generations are going to be accumulating less wealth than their predecessors did.”

The Office of National Statistics (ONS) has just revealed that the cost of a home for first-time buyers has finally breached the £200,000 price tag. The average UK home is now £262,000 (London £492,000).

Small wonder that youngsters need a helping hand from family and friends to step onto the first rung of the property ladder.

Recent research from Santander found that 77% of property purchases planned in the next two years would be made jointly, with 39% being made by friends, family members and unmarried couples. That is largely down to “affordability”.

The Bank of Mum & Dad has a history of helping with deposits, as well as acting as guarantors for loans.

The UK’s latest mutual, the Family Building Society, is attempting to live up to its name by offering lower rates by using cash deposited in relatives’ accounts as security. The relative could also choose to waive interest on cash deposits to cut the family-member’s interest rate further.

If the borrower loses their job through no fault of their own, the building society guarantees to pay the mortgage for six months.

The mutual will also offer specially-tailored products for older generations, such as “divorced dad’s mortgages” and assistance in financial care for aged parents.

Mark Bogard, the Family BS’s chief executive, explained: “Parents want to help their children, but do not want to give everything away. They are worried about living until they are 90 and needing the money when they are older.”

It appears that we are prepared to attempt to overcome whatever obstacles are put in the way of buying a property, however stressful and painful. For the majority, the ordeal proves worthwhile, especially if we remember that we are investing in a home and the future, rather than a house and a plot of land.

EstatesDirect.com Top 20 Property Stresses

  • Slow solicitors
  • The risk of it falling through
  • The huge sums of money at stake
  • All the documentation to complete
  • Endless phone calls
  • The survey
  • Difficult vendors
  • Difficult estate agent
  • Being gazumped at the last minute
  • The disruption it causes to your working day
  • Communication problems
  • Difficulty with estate agent
  • Mortgage lenders incompetence
  • None/nothing was stressful
  • Local searches
  • Bank/finance problems
  • Land registry problems
  • Lost documents
  • Postal delays
  • Difficult buyers

For a free, no obligation initial chat about your individual finances, call us on 0800 0112825, e-mail info@wwfp.net or take a look at our website www.wwfp.net.

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