Posts with tag: affordability

30-Somethings Leaving London as Housing Becomes too Expensive

Published On: September 27, 2016 at 8:35 am

Tags: affordability,Generation Rent,housing crisis,London,private rental sector

High housing costs and unstable private tenancies are forcing 30-somethings and young families to leave London, according to a worrying report from tenant group Generation Rent.

The organisation has analysed Government data, which shows that net migration from the capital among 30-somethings and young children has soared by 41% since 2012.

In 2014-15, 65,890 adults aged between 30-39 moved out of London to another part of the UK, compared with the 35,480 30-somethings who moved into the capital, according to internal migration data from the Office for National Statistics (ONS). This net loss of 30,410 people compares to 20,590 in 2011-12, when 58,130 30-somethings moved out and 37,530 moved to London.

30-Somethings Leaving London as Housing Becomes too Expensive

There has also been a similar rise in the amount of children being moved out of London, with 26,920 more under-10s leaving the capital for another part of the UK than arriving in 2014-15, up from 19,980 in 2011-12. Young families have long been the most common group to leave London, however, the faster growing rate of 30-39 year olds moving out of the capital suggests that many are making the decision before they start a family.

Generation Rent believes that London is becoming a turn-off to younger age groups, as the net migration of 25-29 year olds dropped from a high of 11,680 in 2013-14 to 9,990 in 2014-15.

This exodus occurred during a period when house prices in London surged by 37%, compared to 16% across the UK as a whole, and rents rose by 10%, compared with 4% outside the capital.

Of the people leaving London for another part of the UK, 64% moved to the South East and East of England commuter belt, while 12% moved to the Midlands, 11% to the north, 9% to the South West, and 5% to Scotland, Wales and Northern Ireland combined. These proportions have remained fairly consistent over recent years.

Generation Rent’s report comes as a warning to the Mayor of London, Sadiq Khan, who is being given the task of keeping housing costs down to avoid even more Londoners leaving the capital, which would impede its economy and weaken communities.

In the report, the group calls on Khan to ensure that his housing policies tackle the affordability crisis and allow people of all incomes to continue living in the capital.

Generation Rent’s recommendations include:

Homes let at the London Living Rent should be targeted at tenants for whom the median London rent is over 30% of their income.
Khan should commission a large-scale investigation into different forms of rent control for the wider private rental sector.
In his negotiations with the Government for additional powers on housing, Khan should demand powers over landlord licensing and indefinite tenancies in the private rental sector, to ensure that private renting is a genuine long-term option in London.
Khan should push for the largest possible grant allocation for a new generation of social housing and roll out his priority for Londoners pledge, to ensure that residents get first access to new homes, rather than absent investors and landlords.

The Director of Generation Rent, Betsy Dillner, comments: “Growing numbers of Londoners are giving up on the city and its extortionate housing market. London is an incredible city, and the decision to move away isn’t taken lightly. These people are leaving friends and family in order to find a home they can afford, and some are leaving their jobs. This should worry everyone in London, from employers facing a loss of skills, to communities losing valued neighbours, and particularly Sadiq Khan, whose housing policies will need to stop this exodus.”

Landlords, what did you think about this reported exodus and how would it affect you?

Just 16 Areas are Affordable for Single First Time Buyers

Published On: February 20, 2016 at 3:48 pm

Author: Em Morley

Categories: Property News

Tags: affordability,first time buyers,housing,property ladder

There are only 16 areas in England and Wales that are affordable for single first time buyers on an average income.

Generation rent is well aware of the sky-high deposits required for getting onto the property ladder, while house prices continue soaring.

Having to save these huge deposits is making it increasingly difficult for couples to buy their first home, meaning that those on a single salary are facing even more hurdles.

Recent research by Savills found that there are now just 16 council districts in England and Wales, out of a total of 348, where a single buyer earning an average salary is able to buy a moderately priced property.

Where can a single first time buyer purchase a home?

Position	District	Region	Income needed for single buyer	Income needed for two buyers	Average house price	Average salary
1	Blaenau Gwent	Wales	£13,333	£8,571	£75,000	£19,400
2	Burnley	North West	£15,022	£9,657	£84,500	£20,184
3	Merthyr Tydfil	Wales	£15,822	£10,171	£89,000	£19,930
4	Hyndburn	North West	£15,991	£10,280	£89,950	£19,660
5	Pendle	North West	£16,356	£10,514	£92,000	£21,180
6	Stoke-on-Trent	West Midlands	£17,067	£10,971	£96,000	£19,236
7	Rhondda Cynon Taf	Wales	£17,244	£11,086	£97,000	£20,788
8	Kingston upon Hull	Yorkshire and the Humber	£17,511	£11,257	£98,500	£17,796
9	Blackburn with Darwen	North West	£17,778	£11,429	£100,000	£18,345
10	Neath Port Talbot	Wales	£18,667	£12,000	£105,000	£20,412
11	County Durham	North East	£19,556	£12,571	£110,000	£21,468
12	Barnsley	North West	£20,000	£12,857	£112,500	£20,396
13	Copeland	North West	£20,978	£13,486	£118,000	£29,190
14	Liverpool	North West	£20,978	£13,486	£118,000	£21,184
15	Wigan	North West	£21,333	£13,714	£120,000	£21,788
16	North Lincolnshire	Yorkshire and the Humber	£21,867	£14,057	£123,000	£22,835

Unsurprisingly, Savills’ study found that single buyers are priced out of Greater London, the East of England and the South East, where house prices are continuing to soar.

Just 16 Areas are Affordable for Single First Time Buyers

The 16 most affordable regions are either in the North West, North East, Yorkshire and the Humber or the West Midlands in England or in Wales.

And Savills believes that now is a good time to purchase. The Head of Residential Research, Lucian Cook, explains: “While our five-year mainstream house price forecasts for the North East, North West and Wales are lower than the UK average, all areas are expected to experience positive growth to 2020, ranging from 12% in the North East to 14.8% in Wales.”¹

Blaenau Gwent in south Wales is the cheapest place to purchase a home, with an average price of £75,000. To afford a typical two or three-bedroom terraced house in this area, a single buyer would need to earn just over £13,000 per year. As the average salary in Blaenau Gwent exceeds this by £6,000, it is considered the most affordable place for single first time buyers to get onto the property ladder.

The highest average house price of the 16 locations is in North Lincolnshire, at £123,000. Buyers here must earn close to the average annual wage of £23,000 to qualify for a mortgage.

Liverpool is the most expensive of the areas for single buyers, as they will need an income of £20,978 a year to buy a £118,000 home.

Lenders are more likely to consider couples on two salaries, as they are considered lower risk buyers. Purchasing as a pair almost halves the amount each person needs to earn a year, taking the required salaries to just £8,571 in Blaenau Gwent and rising to a maximum of £14,057 in North Lincolnshire.

The individual incomes needed by a couple are not exactly half of the amount needed for a single buyer, as the loan-to-income ratios for single and dual earners are different – usually three-and-a-half times the income for dual earners and four-and-a-half times for single workers.

¹http://www.homesandproperty.co.uk/property-news/buying/uk-house-prices-the-most-affordable-areas-for-single-buyers-in-england-and-wales-a99016.html

House Price Forecast for 2016

Published On: December 4, 2015 at 4:35 pm

Author: Em Morley

Categories: Property News

Tags: affordability,house building,house prices,housing,housing crisis,property market

UK house prices are set to rise by between 4%-6% in 2016, as growing affordability issues and the chance of an interest rate increase slow the property market, according to Halifax.

The mortgage lender found that demand for homes has risen in recent months, but the amount of properties coming onto the market has remained at a record low.

Surveyors and property portals have seen a shortage of homes for sale, which is pushing up prices. They report a vicious circle, as prospective vendors wait until there are more homes up for sale before putting theirs on the market.

The Halifax report is the first 2016 forecast to be published by a major lender. Its Housing Economist, Martin Ellis, says there is little reason to expect the trend to change in the coming year.

House Price Forecast for 2016

“As a result, the substantial imbalance between supply and demand is likely to persist, maintaining upward pressure on house prices in 2016,” he adds. “On average, UK house prices look expensive compared to incomes, but valuations are supported by the low levels of property for sale, low levels of house building and exceptionally low interest rates.”

However, Ellis does expect growth to drop from its current level.

Halifax’s latest monthly house price index put the average property value in the UK at £205,240, a 9.7% rise on the same period last year.

For next year, Ellis says national growth is expected to slow to between 4%-6%, adding more than £12,000 to property prices at the top end of the market.

In London, he predicts the slowdown will be sharper. House price growth in the capital has already eased since autumn last year, when Halifax’s index put the average annual increase at 21%. This autumn it fell to 13% and Ellis expects growth to drop to single figures in 2016.

He says the national decline will be fuelled by continuing affordability problems, which have caused prices to rise the equivalent of 5.31 times average earnings in the UK and those in London hitting a record high of 7.96 times wages. And despite mortgage rates sitting at new lows, buyers must save much larger deposits to secure a loan.

He states: “With house prices continuing to increase more quickly than average earnings, it is increasingly difficult to get on the housing ladder.

“This ongoing development, combined with the growing prospect of an interest rate rise, should start to put the brakes on house price growth during the course of 2016.”

Halifax’s monthly data is based on mortgages it agrees each month, adjusted to reflect the sale of an average home. Rises have surpassed the 3%-5% predicted by the bank a year ago, the result of interest rate rises being postponed, the continued decrease in the cost of mortgages and a lack of supply.

Further into the future, Halifax expects growth to sit fairly in line with earnings, which have started to pick up recently. However, much will depend on whether the Government fulfils its promises to build more homes.

Ellis says: “Levels of house building remain well below those required to keep up with the pace of household formation, but we do expect improvements over the medium term. An upward trend in house building would help to bring demand and supply into better balance, helping to constrain upward pressure on house prices.”¹

Halifax’s forecast for next year is in line with the prediction released by the Office for Budget Responsibility (OBR). It expects growth of 4.8% in 2016, followed by a similar rise in 2017.

However, the OBR says changes to landlord taxes added uncertainty to its predictions. In April, buy-to-let investors and second home buyers will be charged an extra 3% in Stamp Duty. Read more here: /16883-2/

The changes could cause a rush in activity before the hike is introduced, pushing prices up in the short term.

¹http://www.theguardian.com/society/2015/dec/04/uk-house-prices-set-to-rise-further-as-demand-outstrips-supply

Questions to consider when buying property

Published On: May 5, 2015 at 4:23 pm

Author: Em Morley

Categories: Landlord News

Tags: affordability,homebuyers,potential buyers

Choosing a new home is one of the biggest decisions that a person can make over their liftetime. Often though, having had only a couple of short viewings and without asking necessary questions, potential buyers are forced to make a massive financial choice very quickly if they are looking for a prompt move.

With that in mind, Landlord News has devised a list of questions that all people must consider before purchasing a property.

Money Matters

Is it affordable?

It may seem fairly obvious but interested buyers must make sure that they can afford a property before making an offer. If a person attempts to purchase a property outside of their price bracket, they will encounter problems later in the process. This could be when applying for a mortgage or when monthly repayments become too steep.

People must consider two things, which will ultimately shape their budget. The first will be how sizeable their deposit is. With rates having tumbled over recent times, mortgages are available for as little as 5% deposit. However, the more money that a person is able to save will be reflected by increased options. By saving enough for at least a 10% deposit, these savings will influence and cap how much can be borrowed.

Monthly installments

The second factor that will shape a budget is how much a lender can afford to repay each month. By making a list of all incomings and outgoings, a person will be able to ascertain how much money will be able to be paid towards mortgage costs. Additionally, this will assist in helping to decide the size of a mortgage that can be afforded.

When working out monthly sums, the costs of actually purchasing the property must not be forgotten. Mortgage fees, solicitor’s costs, surveying charges, removal costs, stamp duty-the list can be extensive and costs can spiral if people are not well-organised.

What if rates increase?

The implications of any rate increases must also be factored into a budget. Rates are widely expected to rise during this financial year. Despite rates being forecasted not to rise above 3%, potential buyers must prepare for the significant increases of 6% and above. This will leave money aside for any unexpected price hike.

Life changes

Savvy homebuyers always think about affordability during the entire period of owning a property. Of course, some things that life throws at us are unavoidable but if buyers know that their lives are about to change in the near future, they should factor associated costs into their budget. For example, if a person plans to have a child in the coming months after moving into a property, affordability during maternity leave must be considered.

Property predicaments

Will it work in the long-term?

All property purchases should be considered as a long-term investment. Due to the financial implications of buying a property, it is unlikely that anyone will be able to or even want to move on a regular basis, with the exception of unforeseen circumstances.

With this in mind, homeowners should consider things like if their family is going to grow up over the period that they will be living in the property. This will mean that their children will be going to local schools, which will need to be considered before buying a home, along with other factors in the neighbourhood. It is pointless finding a perfect home for today if it will not be right in the near future.

Questions to consider when buying property

Does it require too-much work?

As a general rule, the more work that a property requires, the better the value for money. Properties requiring lots of work can generally go for less, but that does not always add up to a bargain.

Buyers who are considering a property that requires work must ask themselves a number of questions before agreeing a deal. Do they have the necessary skills to carry out a project? Is there enough money left over from their budget? Do they have the time to complete a task to a high standard?

Is there a chance to add value?

Carry out improvements on a property will always add value but buyers should consider other factors that will add value in the long-term. Features such as loft conversions or adding an extension to a property will certainly increase market appeal, especially if other houses in the area have benefited from the same improvements. Furthermore, energy efficiency measures such as loft and cavity wall insulation could also be considered.

Location, location, location

Interested buyers will need to weigh up a number of considerations when looking for a property, but location is high up on the list. As mentioned, factors such as schools and a friendly environment must be looked at for people with children. However, further considerations, such as the commute to work and proximity to public transport routes could all be big factors for some people choosing a home.

Potential suiters should also visit the area at a number of different times. If the area becomes a car park during rush hour or changes after dark, then buyers will need to know before paying a deposit.

Consider carefully

Surveying success

All buyers should arrange for or ask to see results from a full survey of the property. A number of factors can arise from a survey, such as asbestos in the tiles or recent movement in the property. Buyers should carefully look at a survey of the property with their solicitor before agreeing to a sale.

Search thoroughly

There are a number of potential searches that can be carried out, but would-be buyers should first consider a Local Authority search. This will show-up issues that are not apparent, such as if planning permission has been granted for new roads or local developments. All issues should be highlighted with a solicitor, so the severity of all issues do not come as a nasty surprise.

Enquire about enquiries

At an early stage within the buying process, sellers should produce a document outlining important features about their experience of living in the property. These could include disputes with neighbours, boundary rules or any upcoming planning work.

This document should be studied carefully to ensure that buyers are aware of what that may have to encounter when moving into the property.

Look twice, or more

Normally, first viewings are when buyers get a feel for the property and ask themselves if they could see themselves living there in the future. A second viewing is normally different, with potential buyers examining features of the property more closely. This could involve looking for signs of damp, assessing the boiler and the plumbing.

Buyers should not be afraid of asking whoever is conducting the property lots of questions about any issues that they have. Additionally, if purchasers would like another look at a property, they shouldn’t be afraid to ask. They should remember that they are making a substantial life choice and are spending considerable money, therefore everything needs to be just right before a signature is given.