House nightmare destroys new homeowner’s dreams

It is a catch 22 situation. Rents have quadrupled. A housing shortage is compounded by almost 2 million substandard homes. More than 800 000 of these homes have been listed as ‘not suitable for human habitation.’ So, what does a landlord do with a home that cannot be rented? They sell it.

Although the average home can cost more than £200,000, a substantial number of home buyers are buying homes without researching them. This isn’t a sign that UK adults have lost a few grey cells. Homes are selling so fast that homes sell before an appraisal can be done.

Homebuyers are putting their investments at risk by cutting corners and rushing into the exchange of contracts, according to a survey by AA Legal Services.

One in four Britons, 28 per cent of home buyers neglect to commission a structural survey of a prospective new property. Only 14 per cent consult an independent conveyancing service.

As a result, new homeowners are plunging into a lifetime of debt. Think of it. You take a 140% mortgage, or an interest only mortgage, and then are confronted with ‘unexpected’ costs like mould and mildew removal or a structural integrity problem.

“I’m very worried that so few take steps to protect their investment and ensure that their interests are represented,” commented James Molloy of AA Legal Services.

“With home buyers stretching themselves to the financial limits to afford their home, many are cutting back on the relatively low costs of basic legal and social inspections.”

“New home owners who do not carry out basic checks, face discovering too late that their dream home could actually be a financial time bomb.”

The pressure has increased as sellers are desperate to sell their home before the government introduces the HIP legislation on house buying on June 1, 2007.

The Home Information Packs will provide buyers with a pack of documents that offer detailed information about the property. Unfortunately, the packs increase the cost of selling a property.

This has increased the number of vendors trying to force the sale of their property before the law comes into effect.

“Agents have been suggesting to potential vendors that they will save money by putting their homes on the market before HIPs are introduced,” said Richard Donnell, director of research for online property Web site Hometrack.

The problem of substandard housing hit the financial community with many young couples maxing their mortgages to buy a home, with nothing left to fix up their homes.

The government is hoping that the HIPs will prevent homebuyers from becoming the victims of unscrupulous sellers. Despite ‘buyer beware’ or maybe more appropriately, ‘act in haste and repent in leisure’ many homeowners are trapped.

Not owning a home can drastically decrease your chances of accumulating wealth in your lifetime. However, buying a substandard home instantly results in a lifetime nightmare with no end in sight, and no chance of waking up for a few decades.

Despite recent reports that the housing market will crash, the current housing crisis will continue to drive up the cost of housing in the UK. The demand for housing far surpasses the supply. This will continue to drive up the cost of housing in the UK.

The National Housing Federation, representing not-for-profit Housing Associations, warned that the country faced a “housing time bomb” unless investment in affordable homes increased dramatically.

There has been an “explosion of housing need” under Labour. There were a staggering 1.6 million households on council (public) housing waiting lists. This number is growing at 8 percent a year. Many more consumers have become so discouraged they fail to register.

In 2006, 17,000 families lost their homes to mortgage repossessions. This is a 65 percent increase from the 2005 figures.

Reports continue to cite figures of people who are unable to save enough money for a down payment, with many of them unable to qualify for a mortgage no matter how much of a down payment they save. This has lead to some startling figures.

Official homelessness increased 14.5 percent between 2000 and 2005.

More than 1 million homes in are deemed to be unfit for human habitation, yet more than 90 percent of these are occupied and 800,000 more homes are empty. These are in terrible condition, in areas of high unemployment and crime, and many have few amenities.

Until the government, or private sector, steps in and repairs homes, or builds new ones, the problem will not vanish. Unfortunately, most private sector companies are building one and two bedroom lofts, while 260000 families are on waiting lists for homes with 3 or more bedrooms.

As much as we all hate government intervention, it looks like thousands of home buyers will benefit from the new HIPs program – at least, they might in the long term after they finally own their own homes.