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Debt is not holding back graduates in the US buying a home, new research shows
Having a lot of student debt doesn't greatly reduce young people's chances of home ownership in the United States, as long as they graduate, a new analysis has found. The findings challenge a popular concern that giant student loan payments are holding back people from home ownership. As it turns out, graduates' debt loads don't materially hurt their chances of buying a home, especially if they get at least a four year degree. Overall student debt has only a small negative effect on the odds of home ownership for a person with a bachelor's degree or higher, according to the research from real estate firm Zillow. The chances of a married couple with no student debt owning a home are about 69.8% if at least one of them has a bachelor's degree. If the same couple has $30,000 in student debt, their homeownership chances drop slightly, to 67.7%. ‘The income advantage of getting a degree pays off in terms of being able to buy a home in the long run. Student debt isn't the evil-doer it's made out to be, at least not when it comes to homeownership,’ said Zillow chief economist Svenja Gudell. ‘As long as students stay in school and get a degree, student debt doesn't deter them from homeownership, although it is possible that student debt could delay home ownership. People in their 20s and 30s are renting longer because they're delaying marriage, paying a lot in rent, and struggling to qualify for a mortgage when they finally find an affordable home. Add to that list that they are paying off student debt,’ she explained. The research also found that the least likely to own homes are people who have student debt, but no degree. In fact, a couple who borrowed more than$30,000 for school but never graduated has a less than 40 percent chance of home ownership. Graduates with advanced degrees are the most likely to own a home, even if they racked up a lot of student debt. For example, if a couple owes $50,000 in student loans, but one of them has a master's degree, they have a 75% chance of home ownership. A similar household with just $10,000 in loans and only a bachelor's degree has just a 69% chance of home ownership. Student debt has the greatest impact on the home ownership rate of people with two year associate's degrees. A couple with AA degrees and no debt has a 70% chance of owning their home. That declines significantly as debt grows. If the same couple has $50,000 in student debt, they own their home only 57% of the time. Getting an associate's degree improves chances of home ownership until a person has borrowed $70,000. After that, their chances of home ownership would have been better without a degree and no student loan debt. Getting a bachelor's, master's or doctorate degree, regardless of debt, increases the chances that people will… Continue reading
Row breaks out over issue of retirees downsizing in the UK
Older home owners in the UK should not be forced to downsize just to let the younger generation onto the housing ladder. Saga, a services and advice provider for people aged over 50, has hit out at remarks attributed the Financial Conduct Authority, the UK’s financial watchdog, that retired people should not continue living in properties that are too big for them. Lynda Blackwell, head of mortgages at the FCA, is reported to have told Ministers that they need to address the situation in the UK where retired people continue living in the family home once their children have left. She explained that the current housing shortage could be addressed by these so called ‘last time buyer’ moving to smaller properties to free up homes for people lower down the housing ladder. But Saga believes it is a form of bullying. ‘If people have saved and paid for their house over their working lives, it's down to them if they want to fill it with family or live on their own,’ said Saga’s director of communications, Paul Green. ‘But setting the generations against each other or talking about tackling older home owners is not just unhelpful it's insulting,’ he added. He explained that recent research carried out by Saga in association with Wadswick Green retirement village clearly showed that two thirds of older home owners would like to consider moving home ready for retirement but are prevented from taking that step either because there aren't sufficient appropriate properties to move to, or the costs to move far outweigh any benefit from doing so. ‘One of the solutions Saga has researched is allowing one stamp duty free move for those rightsizing for retirement which, according to independent economists CEBR, would release 111,000 family homes onto the market,’ said Green. ‘This is a win for older home owners who want to downsize, but also for younger families that want to move up the ladder and also for the exchequer. The research shows that by giving this tax free move it would be counterbalanced by an estimated £461 million of stamp duty that would be generated by the house sales that might otherwise not have taken place,’ he explained. ‘If we want to tackle the housing crisis we need to do so holistically. First time buyer schemes for the young are a good start, but we need to consider incentives to help encourage those that would like to move, to take that step. The FCA are right, we definitely need to do more and do it better, but using divisive language will only alienate the very people we need to help and encourage,’ he added. Continue reading
UK landlords left fuming over new smoke alarms laws
Landlords in the UK have criticised what they claim are unnecessary delays in the introduction of legislation which will make it compulsory to install smoke and carbon monoxide alarms in private rented homes. Draft regulations were published earlier in the year to require private sector landlords to install at least one smoke alarm on every storey of their rental property from 01 October 2015, providing local authorities with the power to fine landlords who fail to comply £5,000. However, the UK’s upper house of parliament, the House of Lords, has rejected the draft legislation at is final stage on the basis that the proposed introduction is less than three weeks away, that the government has not done enough to inform landlords of the changes, and that the legislation is poorly worded. The British Property Federation (BPF), which represents residential landlords and has supported the draft legislation, has warned that by the time the legislation is approved, landlords will be left with mere days to comply with the legislation, risking the £5,000 fine. The BPF has issued further concerns that information about the impending change in legislation has been poorly disseminated, and that many landlords may even be unaware of the changes and the potential fines. ‘We have been fully supportive of the campaign to make smoke alarms compulsory in private rented properties, and are therefore extremely disappointed to see this unnecessary delay in proceedings,’ said Ian Fletcher, director of policy (real estate) at the BPF. ‘The original timeframe for the legislation was tight, but allowing time for a further debate in the Lords is going to make this even worse. Coupled with the fact that there has been no publicity on the changes, we are worried that many landlords are going to be caught out by the fine as a result of government’s disorganisation and lack of clarity,’ he explained. ‘It is particularly frustrating that one of the reasons that this revocation has happened is because the introduction is worded poorly, as there has been no consultation on this,’ he added. Richard Lambert, chief executive officer of the National Landlords Association (NLA), described the situation as ‘farcical’. ‘These regulations are poorly worded, badly timed and being tabled with just days to spare before they are due to come into force on 01 October,’ he said. ‘As we understand it, there will be no guidance from the Government explaining how to comply before then. How can a landlord about to let a property on a tenancy from the start of October be expected to comply with these new requirements if they’ve not been told what they are and what is expected,’ he pointed out. ‘Given that there is no Government budget for marketing these new laws, and so it is relying on industry organisations and professional advisers as the main route to compliance, it’s shoddy, to say the least,’ he added. Continue reading
