Stuck in the rent trap: How one middle-class family kept remortgaging their home to pay the bills, until they could no longer afford the repayments
Last updated at 9:54 PM on 22nd February 2012
There’s a house we drive past every day on the way to school. It’s a solid Edwardian home on three floors with a slightly imposing presence and bags of kerb appeal.
A large hedge and trees shield it from view but this doesn’t stop the children from urging me to slow down so they can get a proper look.
I, on the other hand, stare fixedly ahead. It’s not that I don’t appreciate the double-fronted windows and the lovely Camellia bush framing the porch. But the truth is, I am beside myself with envy.
Locked out: Shona and Keith with Annie, Dolly, Flo and Monty and their former home
Three years ago this was our family home. We all remember how it felt to live there and it still seems like a cruel joke that someone else’s car is parked in the drive. And why did they have to paint the front door that horrible colour
You might ask why, if I love this house so much, isn’t it still mine I ask myself the same question every day. But the 2008 property crash happened. And through a combination of bad financial planning and events beyond our control we were forced to sell.
Now, it seems we shall never own another home again. Like thousands of families in Britain we spent years climbing the property ladder when times were good, only to find ourselves — in the recent tough climate — sliding spectacularly to the bottom with a resounding thud.
Today we are living in rented accommodation. After two decades of slogging to buy a house, maintain it and give our children security for the future, we now find ourselves, in our early 40s, paying a private landlord 2,000 a month which leaves us with a big fat zero in our bank account.
According to research only 66 per cent of English people now own their home
Yet figures out this week show we’re not alone. According to research released by the Department of Communities and Local Government, only 66 per cent of English people now own their home — the lowest percentage since Margaret Thatcher was in power 25 years ago.
The survey also revealed that one in three live in rented accommodation — the biggest share of the population since 1988, when the movement towards owner-occupation was at its height. How we have ended up in this position is one thing. How we are going to get out of it is another. And it’s a dilemma which keeps me awake churning over our finances, wondering what went so wrong.
Certainly, we overstretched ourselves when we bought our lovely period home for 419,000 in 2002. But with mortgage companies practically throwing loans at us in a rising property market, we slept soundly at night, smug in the knowledge the house was making us money.
We’d bought it from an elderly couple who had lived there for 30 years, raising their own family within its solid walls. Even though the house badly needed modernisation (there was, for instance, no kitchen sink and the plumbing was ancient) we fell in love with the colonial-style verandah running along the back which in May would be canopied by the most glorious wisteria.
Heavily pregnant at the time, I wandered dreamily through the vast, airy rooms imagining my children growing up here. In truth, I imagined us growing old there too. Besides, with the crisis in the UK pensions industry in full swing it made sense to put everything we owned into a house. But over the next seven years we steadily, and stupidly, stretched ourselves too far. It started with the thousands of pounds we spent renovating. When we ran out of money we didn’t worry — we just remortgaged.
The valuer had barely been in the house for five minutes yet we were able to borrow a further 80,000. Looking back I don’t think we fully appreciated what we had. We were lulled into a false sense of security about our wealth. Whenever we overspent we just remortgaged without comprehending the consequences of taking yet more equity out of the property.
In our defence, we weren’t spending the money on expensive designer clothes, luxurious holidays or flash cars. Much of it was going on school fees and upkeep of the house. By the beginning of 2008 we had remortgaged three times, taking out a staggering 500,000 loan on a house that wasn’t worth much more. Our interest-only mortgage payments had soared to nearly 3,000 a month.
Just 10 per cent of homeowners are aged under 35, according to latest figures
Which would have been just about palatable if the market hadn’t crashed. Now we were faced with the fear of living in a home we could no longer afford that would probably plummet in value. So, just before Christmas that year, we made the heartbreaking decision to put our home up for sale.
Deep down we hoped nobody would bite. But when another family fell in love with the house, as we had, we knew we weren’t in a position to turn them down.
What we couldn’t have predicted is how events would unfold next. We didn’t have much equity but we were still confident we’d be able to buy another house. Not having a hefty deposit had never stopped us before.
But mortgages suddenly dried up overnight and lending shut down. Even more infuriatingly, interest rates were slashed and we calculated — with grim faces — that if we hadn’t sold, our monthly mortgage repayments would be a fraction of the rent we were now being forced to pay. It’s a trap many like us have fallen into and one, according to experts, which will continue to shut millions of families out of the property market for some time to come.
‘It’s a totally dysfunctional situation,’ believes David Orr, chief executive of the National Housing Federation. ‘Home ownership is increasingly becoming the preserve of the wealthy. And for the millions locked out of the property market the options are becoming increasingly limited as demand sends rents rising.’
Of course, there are many people worse off than us. We do, at least, have a roof over our heads and the upside of renting is that, when it leaks, somebody else pays to fix it. But the stark reality is that we are also stuck with no hope of getting even a big toe back on the rung of that property ladder.
For a family with four children (Flo, 13, Annie, 11, Monty, nine, and two-year-old Dolly) living in the South-East it’s a minimum 450,000 for a four-bedroom house (we need five but I don’t want to sound fussy). Most mortgage companies won’t consider lending unless you have a deposit of 20 per cent and even then the rate isn’t that good. This, in case you haven’t figured it out, is a whopping 90,000 on a 450,000 house.
With no savings and monthly outgoings that would make your eyes water, we don’t stand a hope of putting this sum aside — even if I shop in Aldi for ten years and buy our clothes from a charity shop. And what I could never have known is how soul-destroying it is to raise children in a house that is not your own. Sometimes it feels like we are guests in the one place we should feel ourselves.
So when Dolly draws on the wall with crayon or Monty spills juice on the carpet I know at the end of our lease these normal spots of family life will be totted up as wear and tear and added to our bill.
I miss marking the children’s heights on a wall, to look back on in years to come. And, last year, we couldn’t bury our beloved Labrador in the garden when he died. I’m pretty sure that digging graves for family pets is not permitted in the tenancy agreement.
Perhaps, fundamentally, neither my husband Keith nor I imagined how it would feel — at this time in our lives — to be back at square one with nothing to our name, just like when we met in our early 20s. It’s easy to argue a house is just bricks and mortar. But it’s a home I desperately miss. A home we can all call our own.