HiPs innovative solution for property affordability, aims to make investments and ownership of real estate more accessible and more affordable for the majority of consumers. This is accomplished through fractional ownership and FCA approved flexible funding of debt and equity unique to HiP.
First-Time Buyers Property Ownership
All types of investors, borrowers and owners will benefit from HiPs solutions, but here we will focus on the group initially entering property ownership, the first-time-buyers, and how their financial situation has changed over time. Today younger people are less likely to own their home and more likely to rent privately.
This is due to house prices rising at a much faster rate compared to incomes, which has had a significantly negative impact on affordability, particularly for young people who are also starting or are in the early stages of their career.
20 years ago, the average house price in the UK was just over twice the average income, with the average property costing £65,000. Today the average house price in the UK, which is ca £220,000, is 4.5x times the average income for first time buyers (Sources: £220,000 is according to ONS, March 2018, the exact amount is £224k, but as these fluctuate we refer to approximate price level of ca £220k, the reference of 4.5x is from Bank of England, Financial Stability Report, June 2017). This means that property affordability has fallen by nearly half, leaving a vast demographic of particularly first-time-buyers in a desperate situation where purchasing a home is increasingly unattainable. In fact, of all renters who do not expect to buy a home, a majority state that ‘it is unlikely I will ever be able to afford it’ as their main reason. (Source: English Housing Survey, First Time Buyers and Potential Home Owners Report, 2014-15, Department for Communities and Local Government)
First-Time Buyer Numbers Declining
The effect of this is a continued erosion of young people’s wealth prospects and imposes restrictions on their life choices in a dramatic way. Not only are they not able to enter the housing market but they are also losing out on historically strong house price appreciation, which could have provided them with a way to build their personal wealth and become more financially independent.
This is no better demonstrated than by the fact that the annual number of young first-time-buyers in the UK has fallen by nearly 300,000 (Source: same as above English Housing Survey). Those that have been able to make their first steps on to the property ladder, have had to double, and in the case of London quadruple, their deposits in the past 10 years alone, as well as take on record high mortgage debt.(Source: Halifax, First Time Buyer Review, July 2017)
How To Help First Time Home Buyers?
Although the generally accepted belief is that this situation is not sustainable, very few real solutions have been proposed and even fewer implemented for how this affordability crisis can be resolved. (Comment: Help to Buy schemes are marginal and account only for ca 6% of first time buyer transactions, very marginal impact, removal of stamp duty is similarly a helpful but limited impact in relation to overall lost affordability) This is not only relevant to the UK as young people across the globe face the same difficulties in securing their home ownership, future financial wealth and life choices.
HiP’s solutions are aimed at the heart of this problem, not as a marginal or temporary solution as most proposed today, but one that is fundamental, lasting and resolves these problems for all. HiP’s fractional ownership and flexible funding can instantaneously reverse over two decades of a growing affordability gap. HiP allows access to property investments and ownership for a much wider demographic and at terms that are unique to each personal situation.