Can’t afford a house? Here are some of your options

Everyone seems pretty agreed on this whole housing crisis thing. Renting, saving, buying – it’s unaffordable.

There are a lot of schemes out there to try and support people with their housing costs. From benefits to help cover the cost of private rents, to incentives to get you to start saving for a house. The problem is, they're pretty confusing, they all apply to different people, and lots of them have very similar names. Here's a run down of a few.

Living in social housing?

Social housing is normally operated by a local council or a not-for-profit organization (a housing association, for example). Homes are rented out at a lower price, to people on low income or without much money in savings (less than £16,000).

It's up to the council to decide who does and doesn’t get social housing. The problem is that there aren’t enough social housing properties for people who need them, so waiting lists are long. The government covers the shortfall by paying housing benefit to help people cover the cost of renting privately.

For those people who do have a social housing property, in England the government’s Right to Buy scheme lets local council housing tenants buy their homes at discounted rates. The government says it can offer a discount of anything up to £104,900 in London (£78,600 outside London). The Scottish and Welsh government have both ended their Right to Buy schemes for council tenants.

The government has expanded the scheme, and since April 2015 anyone who’s been a social tenant for more than three years is eligible to buy their home. (It used to be five years.)

You still need to prove you can afford it and raising the money is your responsibility, so you’ll probably still have to get a mortgage (a big loan from the bank) to help cover the costs.

Struggling to pay your rent?

If you’re on low income, or claiming other forms of benefits, you might be eligible for housing benefit. Housing benefit doesn’t always cover your full rent – if you’re renting somewhere like London, for example, where it’s difficult to find affordable privately rented properties. In that cas,  there’s another type of payment you can apply for – the discretionary housing payment – which could help.

If you’re under 35 and not living with a partner or a child, the maximum housing benefit you can apply for is the rate of a single room (or bedsit) in a shared house, rather than a whole flat.

But renting can still feel unaffordable for a lot of people, even if they don’t qualify for the actual benefits. A recent study showed that one in seven people in the UK spend more than half their income on rent (a third is what is generally considered affordable). In London, the average rent for a one bed property is now over £1,100 a month, more than 60 per cent of the average under-thirty's post-tax income. That makes it pretty difficult for anyone to save enough money to get out of the really expensive rental market, and to buy their own home.

Trying to save to buy?

If you live in London, a new scheme called London Living Rent is offering newly built lower rent properties for people on a ‘middle income’. Average rent is £930 a month for a two bed home, roughly a third of standard rents. You’re eligible if you earn a combined household income of less than £60,000 a year. You also need to prove that you can’t afford to buy a home in your local area. The scheme was launched in April 2017, and the people responsible for it (City Hall – where the Mayor of London works) is currently allocating councils with the money to build the new properties.

Another government scheme is Shared Ownership. If you can’t afford to pay the repayments on the full cost of a mortgage, you buy a portion of a house, and pay rent on the rest.

You can then buy more and more of the home as and when you can afford it. Shared Ownership is basically the cheapest way to get a roof over your head, other than social housing – and if you’re a candidate for shared ownership, you’re not going to be eligible for social housing.

The problem with Shared Ownership is you take on all the annoying bits of owning a home (fixing the boiler, for example). And, TBH, it’s all really confusing. When you enter into Shared Ownership agreement, you enter into a really complicated contractual arrangement over who owns what, who’s responsible for what, how much you have to pay to buy it back, what money you get back if you decide to sell.

A 2015 report said it’s “a lengthy, complex document which is not necessarily easy to translate". Even the lawyers aren’t sure what a lot of it means in a practical sense.

If you just want to save to buy a house, the average deposit (the actual cash you need to put down for your bank to agree to lend you the rest) is £32,899 (16 per cent of the value of the house). In London, that rises to £106,000. Which means unless you’ve got a kindly aunt or something, it will take you a looong time to save.

The government Help to Buy schemes are designed to reward you for saving. If you take out a Help to Buy ISA, for example, the government will give you £50 every time you save £200. You can only take that money out after you’ve paid your deposit, so you can’t put it towards that, but you could put it towards other moving costs.

In terms of long-term solutions, the government also says it's building more houses, which will decrease the demand and should in theory bring prices down. Otherwise, see you in like 30 years, future homeowners of the UK.