Property prices have risen faster than salaries in recent years. With many people facing financial hardship due to the disruption caused by the coronavirus pandemic, this has made it harder than ever for first-time buyers to get on the property ladder.
And despite record low interest rates, homeowners who have suffered a significant loss of income during the pandemic may struggle to keep up with mortgage repayments in the months and years ahead.
So, is there a more affordable way to live than buying a bricks and mortar home? Maybe, if you’re able to think outside the box and willing to make compromises.
Houseboat
Living on the water seems idyllic to many people. But is it as romantic as it sounds? And more to the point, is it a cheaper way to live than buying a house on dry land?
If you love the water you can enjoy all that it has to offer every day — boating, swimming or just taking in the view. Depending on the type of boat you buy, you may also be able to up sticks and have a change of scenery by moving to a different location when you get bored. If you opt to moor your boat somewhere away from the cities, it can be a tranquil and healthy existence — think of all that fresh air! Friendly and supportive communities often develop in areas where full-time houseboat dwellers live too. And, if you’re looking for a fresh start and a simpler way of living, the relatively small space a houseboat provides will force you to adopt a more minimalist lifestyle.
Now for the important bit. The costs. Buying and running a houseboat is typically considerably cheaper than buying and running a bricks and mortar property. Some companies sell bespoke houseboats for as little as £60,000. And older boats can be purchased for even less. After a quick online property search, we found a one-bedroom houseboat in excellent condition on sale for £35,000 in Canary Wharf, London. Compare this to the average price paid for a house in the capital — £698,216 — and it’s not hard to understand why a growing number of people are choosing to take to the water permanently. Added to this, there is no stamp duty to pay for houseboats.
But, you will have to factor in the cost of mooring your boat and getting a boat licence. These vary significantly depending on your location and the size of your boat. However, this is unlikely to outweigh the savings you make on buying the boat and running/maintaining it. A boat is a lot smaller than most houses and has no garden, which means that heating and lighting it will cost less and there is not as much to maintain. One major stumbling block to buying a houseboat for many people on a budget is the financing. You cannot get a standard residential mortgage to buy a houseboat. There are marine mortgages available, but these generally have to be repaid in a relatively short period of time (around ten years is common) and a larger deposit (around 30%) is required. This may not be a problem if you are downsizing from a larger home that you have built a decent amount of equity in or own outright — selling a house for cash is the best way to raise the funds for a houseboat — but it could put the houseboat dream out of reach for first-time buyers.
A Van
“Van Life” has been steadily growing in popularity in recent years. Since COVID-19 landed on our shores, demand for van conversions has soared. And this isn’t just about glamping and luxury staycations, many people are turning vans into permanent homes as an alternative to an expensive housing market. The subreddit community #VanLife has grown to 1.3 million members — a 130% increase since January 2020. Research by online retailer Very scrutinised online search volume for key terms such as “van life” and “van conversion” which revealed that residents of Bristol, Manchester and Edinburgh have the highest level of interest in this way of living. The retailer also crunched the numbers to compare the cost of renovating a house with converting a van — the latter is a steal at around £5,000, whereas renovating a house costs an average of over £28,000.
For those who love the idea of living freely, constantly travelling and leading a minimalist lifestyle, the appeal of van life is apparent. However, it’s not for everyone. You’ll have to adapt to living in a very small space and the things many people take for granted in a house may become rare luxuries — showering, for example (many vans, even luxury conversions, do not have space for a shower or even a toilet!).
A Caravan or Park Home
Caravan sites are often located in scenic holiday destinations which makes them an attractive prospect for people seeking alternative permanent accommodation. There’s also the option to move your home to a new location if you so wish. This lifestyle is especially popular with retirees and families because of the safe, supportive communities that develop. Furthermore, most park homes are single-storey, making them easily accessible for older people and children. The prospect of downsizing can be a major draw for retirees. Once children have flown the nest, having less to clean and maintain is appealing to many parents!
Caravans and park homes are generally much more affordable than a traditional house. Both the purchase price — some sell for less than £100,000 — and the cost of running/maintaining them will be lower because of their comparatively small size and modern construction. However, your home is likely to depreciate in value over time, whereas bricks and mortar properties generally increase in value allowing the owner to accrue a healthy amount of equity in the property. Also, if you buy a park home or static caravan, the freehold remains under the ownership of the site owner, and they might also require you to insure your caravan too, perhaps prompting a search for something like “how much is static caravan insurance?” ahead of the purchase. As a result, it is not possible to use a mortgage to buy such a property. So, while caravans and park homes may be a more affordable option long-term, you’ll need a sizable lump of cash to buy one and you’ll need to accept that it will not represent the same financial investment as owning a traditional property.
Which Option is Right for You?
If your budget doesn’t stretch to a bricks and mortar home, or you want to simplify your life, maybe enjoy the experience of doing something a little different. One of these alternative lifestyles could be just what you’re looking for! None of them offers a perfect solution; there are pros and cons to everything. Consider your budget, the compromises you’re willing to make and the lifestyle you want. Is there a match with one of these types of alternative accommodation? Remember, your next home doesn’t have to be your forever home. It could be a stepping stone to the bricks and mortar property you dream of.