Remember how excited everybody got about those flatpack Ikea homes a while ago? Well they’ve built the first ones in Gateshead, and the company marketing them in the UK claims they represent affordable housing which will be within the reach of somebody earning £15,000. OK, so assuming our low-earning friend was somehow able to muster up a £10,000 deposit, that still means they’d need a mortgage of £90,000 - which according to my calculations is equal to SIX times their salary, double the traditional benchmark of three times salary for mortgage lending.
Let’s assume an interest rate of 6%, this means monthly repayments of £587. Somebody earning £15,000 would take home £997, leaving them with £410 after their mortgage. I’m not sure if that technically qualifies them as living on the poverty line, but after bills and other living costs it’s unlikely to leave them with much spare cash for savings or even modest luxuries like the occasional night out. All for the sake of “getting on the property ladder at any cost” - even if that property is little more than a plywood box.
The merits of these flat-pack homes are debatable. Personally, I don’t think they’re such a bad idea - they’re just priced about three times higher than they should be. Affordable they’re not.
