Posts with tag: homeowners

House prices increase almost three times faster than homeowner wages

Published On: October 4, 2019 at 9:38 am

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Categories: Property News

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The average UK home has increased in value almost three times faster than its owner’s wages over the past decade, according to a new analysis from Private Finance.

This information comes from the ONS Price Data (December 2008 and December 2018) and ONS gross mean weekly earnings data (2008 and 2018) for local authorities across the UK.

The average UK home experienced a 43% rise in value between 2008 and 2018, from £160,954 to £229,861. 

In comparison, the average annual UK salary has increased by just 15% from £24,606 to £28,860 over the same period. Private Finance highlights that had wages experienced the same increase as house prices, the average employee would now be on £35,187 per year.

London boroughs and home counties home to highest earning properties

Average house prices in Kensington and Chelsea have seen an 85% growth over the ten-year period, while wages have increased by only 3%.

Private Finance also points out that Kensington and Chelsea homeowners would now be on an average salary of £112,124 if their wages had increased at the same rate as house prices.

Top 10 hardest working regions for house prices

Local AuthorityGrowth in wages 2008-2018 (%)Growth in house prices 2008-2018 (%)2018 annual wagesAverage earnings if wage growth matched house price growth
Kensington and Chelsea3%85%£62,088£112,124
City of Westminster-1%78%£55,515£99,289
Camden9%89%£44,886 £77,424
Hammersmith and Fulham11%69%£46,306£70,057
Islington12%83%£43,820£70,191
Richmond upon Thames15%84%£48,235£75,703
Hackney18%89%£33,800£52,720
Haringey12%96%£33,597£58,044
South Bucks7%65%£42,812£65,623
Elmbridge-11%66%£43,030£79,381

Property values rise as mortgage costs fall

Falling mortgage rates have also meant that the monthly cost of owning a home has become considerably more affordable. This and rising property values indicates that making a return on investment is now even more lucrative.

From 2008 to 2018, the average two-year fixed rate mortgage at 75% loan-to-value (LTV) has fallen from 4.77% to 1.73%.

Bank of England average 2 year (75% LTV) fixedrate mortgage rate

Simon Checkley, Managing Director at Private Finance comments: “Property first and foremost provides a roof over your head and a place to call home; however, over the long term it can act as a lucrative investment. 

“With falling mortgage rates making the cost of owning a home even more affordable, homeowners’ potential return on investment could be set to become even greater.

“Many homeowners will undoubtedly take comfort in the fact that over the past 10 years, as they’ve worked hard to earn an income, their home has essentially been doing the same – and arguably even more successfully. 

“Though house price growth has slowed in recent years, it remains buoyant in many areas of the country, and has historically remained strong over the long-term.

“This money needn’t remain locked away in our homes. For homeowners looking to stay put, or move to a more manageable house, downsizing and remortgaging are both options that can enable individuals to release some of the money earnt by their home to help them with their wider financial goals.”

Over half of UK private tenants happy to remain renting

Published On: October 1, 2019 at 8:28 am

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Categories: Tenant News

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New research shows that only 42% of private tenants in the UK are interested in buying a home in the near future.

This information comes from a study from Landbay, the buy-to-let focussed marketplace lender. Involving 2,000 private renters in the UK, it provides insight to landlords on the wants and needs of their tenants.

The study also looked at age ranges, when it comes to the prospect of purchasing a home. Unsurprisingly, older renters are the least interested. Only 13% of over 55s are considering buying a home in the near future.

46% of those aged 35 to 44 said they are considering homeownership. However, as expected, the majority of interest goes to the 25 to 34-year-olds, with 64% stating that they are keen to buy in the future.

The area containing the most renters hoping to move to homeownership is London at 48%. Northern Ireland is a close second at 47%.

The least likely area is the South West and Wales, with both receiving results of 37%.

When those happy to remain renting were asked why, 25% replied that the flexibility of renting proves too tempting to resist. 6% attribute their plan to move to a new country, and 5% plan to move to a new city or a new job.

John Goodall, CEO of Landbay comments: “This research suggests the UK’s enthusiasm for homeownership may be waning. Conversations around the private rental sector often assume the bulk of renters are simply biding their time until they can buy a house.

“However, the changing face of employment and a thirst for flexible living mean renting is more attractive than ever, and landlords should reflect this in their interactions with tenants.

“It’s crucial that investment in the private rental sector becomes a priority. What use is Labour’s ‘right to buy’ policy if renters have no interest in doing so? Instead, the government must focus on encouraging purpose-built rental properties and cease its penalisation of landlords.”

Rent for Life: Which Direction is the UK Heading?

Published On: November 15, 2018 at 10:59 am

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Categories: Lettings News

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To rent or not to rent? That is the question. In years gone by, many young people only wanted to rent until they could buy their first home, and few thought of renting long-term. In other countries, such as Germany and France, there are a comparatively high number of rented accommodations, and long-term renters are not the exception – in Germany, in particular, people favour renting – over 40% of the country does!

In recent years, there has been a considerable increase in the number of rented accommodations in England, and people are now staying in the rental market for many years…

The changing English property market

57% of house owners in England are aged 65+ and only 22% are aged 16-34 years. Most property buyers fall into the 35-50 age group (48%), with a further 31% aged 50-65 years. For a variety of reasons, there has been a huge growth in the private rental sector in recent years – particularly in the younger age group. One of the key reasons for this is that young people find it incredibly difficult to save enough money for a deposit to get on the first rung of the property ladder.

Private renters are getting younger

There has been a large growth in the number of younger people wanting to rent privately. In 2011, this figure was 1.8m people aged 34 or under, which, in reality, meant an increase of 728,000 in rental households within a decade, and analysts are tracking a continued upward swing as we head towards 2019. Whilst the difficulty of affording to buy a property is one of the main reasons, many younger people choose to rent, as it gives them greater flexibility especially for job mobility and they can choose exactly where they live for convenience.

Rent for Life: Which Direction is the UK Heading?

Rent for Life: Which Direction is the UK Heading?

In 2008, 37% of people in their 20s bought their first property, but, in 2017, this number had fallen to 27%. There are 5.6m people in this age group, and the fall in house purchase was sharpest in the middle-income group, where wages failed to match the required deposit and mortgage repayments.

The increase in private renters is nationwide

Although London has recorded the sharpest increase in the demand for private rentals, this increase has also been mirrored in towns where there is a good commuter network to the capital. Such towns as Slough, which has recorded a growth of 13%, Enfield, where the property market grew by 11.9% in 2017, Watford, 9.9%, and Milton Keynes, by just over 9%. Interestingly, in Tonbridge, Kent, rental prices are high and property is often rented as soon as it goes on the market. The main reason is that the railway station is within walking distance of much of the town, and the train to London Bridge takes just 44 minutes – and some, just 31 minutes.

There has been a 23% growth in the private rental sector across England, with the 2017 figures for the South East being second only to London, with Yorkshire and the Humber third, and the West Country in fourth place. Interestingly, in Wales, there was a growth of only 0.4% and Scotland, 0.1%.

Who is renting privately?

The types of households in the private rental sector have shifted in recent years. A decade ago, only 15% of families with dependent children were private renters, but this figure has risen to 27%. Couples with children account for another 21%, and the largest proportion are single occupant households, at 27%. Interestingly, ten years ago, only 16% of people in the 35-45 age group rented, but, today, that figure stands at 24%.

The bottom line is that, in the past ten years, the number of people in rented accommodation in England has risen from 10% of the population in 1996/7 to 20% last year. For the first time, families are looking to stay in rented accommodation long-term, as they find property prices are out of their reach and job uncertainties make rented accommodation more appealing.

Private renters are now coming from all socio-economic groups, too. 50% of foreign people migrating to England rent in the private sector for at least the first five years. Many private renters are favouring city centre locations, as they want to dispel with commuting costs, and current trends favour eco-friendly properties and ones that are unfurnished.

What about the horror stories about rented accommodation?

Many private renters make the positive choice to rent rather than try to buy, and a key reason for this is that the standard of rental properties has significantly improved and, also, most landlords maintain their properties well and care about their tenants. The Decent Homes Standard has done a good job of improving the quality of rental accommodation. In 2006, 47% of rented accommodation was deemed below standard, but, two years ago, in 2016, this figure had dropped to 26%.

Buy-to-rent possibilities

Property buying experts housebuyers4u.co.uk say that the buy-to-rent sector should have been flourishing, with a number of exciting new projects under development in the key cities, but many small landlords are selling up, as recent tax changes on second properties have meant that buy-to-let is not as lucrative as it once was. In reality, this means that, although England is becoming a nation of renters, demand is greater than supply, and market experts are predicting that rent prices are set to climb by 17% in the next five years.

The bottom line

If the trend of younger people opting to rent continues (whether that is because they choose too or not), then it’s clear the UK is heading towards a more rental-based property market.

Is this good or bad for the country? A case could be made for both, but as the old saying goes, only time will tell.

Young Homeowner Proportion has Dropped by 10% in a Decade

Published On: October 8, 2018 at 8:56 am

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Categories: Property News

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The percentage of young people owning a home has witnessed a decline in the financial crisis and to make matters worse, there is little sign of improvement. Office for National Statistics (ONS) data reveals more…

Analysis carried out by the ONS found those aged 22 to 29 years old have become less likely to own a home, with the proportion of homeowners having fallen by 10 percentage points between 2008 and 2017 – from 37% to 27%.

There is also little sign of them becoming financially stable, with 53% of this cohort having no money in a savings account or ISA, compared with 41% between 2008 and 2010.

However, those who did had an average of £1,600 put away, up from £900.

Commenting on the figures, Ross Boyd, Founder of online Mortgage Adviser, commented: “For home ownership levels among those in their twenties to have fallen by 10% in less than a decade is a brutal reminder of the struggle young people face getting onto the property ladder.

“With house prices in so many areas of the country out of people’s reach, the transition from generation own to generation rent is accelerating by the day.

“To rub salt in the wound of many young people today, monthly rental payments are often considerably more expensive than the equivalent mortgage payments would be.

“This partly explains the increase in the number of people with nothing in a savings account. With inflation above target for so long, and rents so high, many young people have nothing left to put aside.

“Unless you’re fortunate enough to be able to cash a cheque from the Bank of Mum and Dad, finding the deposit required to buy a new home can be an insurmountable challenge, all the more so if you are paying off debt from university.

“In just a decade, the dynamic of home ownership in the UK has changed irreversibly. If this is to end, then something fundamental has to change, and mortgage lending itself has to evolve.”

Retired Homeowners Looking to Downsize Should Consider Renting with Assured Tenancies

Published On: October 8, 2018 at 7:59 am

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A recent nationwide survey from equity release adviser, suggests estate agents have seen a surge in inquiries about downsizing from retired homeowners, with 1.4 million over-65s saying they will consider downsizing in the next five years.

The survey discovered that over two out of five estate agents have witnessed an increase in inquiries from over-65s homeowners looking to downsize in the past year, with the need to save money (80%) the biggest reason for selling, followed by the desire for a more manageable home (78%).

Besides this, other reasons included moving to a more suitable retirement area. and boosting retirement income. However, the survey also revealed that three-quarters of estate agents believe there is a shortage of homes for retired people to move to, while 80% say there is a lack of homes suitable for those who are less mobile.

There is a solution – and that is to rent. According to Gillian Girling, Chief Executive of Girlings Retirement Rentals, more retirees are choosing to downsize and rent in a purpose-built retirement development because of the many benefits it can offer.

Gillian Girling says “Over the past decade, we have seen growing interest in renting in retirement as it allows people to free up capital in their home, move to a smaller more manageable property and not have to pay stamp duty when purchasing a home.
“In our experience the main barrier to renting has always been short term tenancies that don’t provide long term security for people. This isn’t the case with our properties as most are available with assured or ‘lifetime’ tenancies, so people have security of tenure.

“Our homes are designed for independent living but with the added benefit of being part of a community and being able to get involved in social activities with people of a similar age, plus most of our developments have lifts or people can request a ground floor apartment, ideal for people with mobility issues,” Gillian Girling adds.

One lady who decided to downsize and rent in retirement, moved into a one bedroom apartment on an assured tenancy, in a purpose-built retirement development in Wimborne, Dorset in May.

She claimed that there were many benefits of renting in retirement. She doesn’t have to worry about any property upkeep or maintenance, as this managed by the landlord. The apartment is safe and secure, plus there is a house manager on site to check in on the residents, beautiful communal gardens and a communal laundry room.

Janet commented: “I’m very happy renting. I have an assured tenancy which means I can remain here for life if I choose and I don’t have that awful fear of the landlord turning me out. I also find it reassuring that there’s a very capable and caring manager at the development should I need any assistance.”

Gillian Girling added: “Renting in a purpose-built retirement development particularly appeals to single people in later life. Many of our residents are widowed or on their own. They like the fact there is a ready-made community of people of a similar age and they can take part in social activities if they wish.

“Many find it reassuring that all our apartments come with a 24-hour emergency call line in case of emergency, and renting also frees people from the worries of property and garden maintenance. We believe more retired people will be choosing to rent in the future as it can suit their lifestyle as they get older.”

Girlings have a one-bedroom apartment available at Kingsmead Court, Wimbourne where Janet lives for £850 pcm. They also have one-bedroom apartments available at Homewaye House from £725 pcm and Restharrow for £695 pcm in nearby Bournemouth.

Mortgage Lending Strengthened in August, Reports UK Finance

Published On: October 16, 2017 at 9:27 am

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The latest UK Finance data shows that lending for house purchase was higher in August 2017 than in both the preceding month and a year earlier.

Mortgage Lending Strengthened in August, Reports UK Finance

Mortgage Lending Strengthened in August, Reports UK Finance

During August, first time buyers borrowed £5.7 billion – 16% more than in July and 12% up on August 2016. They took out 34,400 mortgages – 14% higher than the previous month and 9% higher on an annual basis.

Home movers borrowed £8.4 billion in August – 18% more than in July and 20% higher than in August last year. This equated to 38,500 loans – up by 17% month-on-month and 13% on August 2016.

Remortgaging by homeowners totalled £6.4 billion in August – 4% less than in July, but 8% higher than the previous year. The number of people remortgaging totalled 36,700 – down by 1% on July, but 5% up on August last year.

Buy-to-let lending totalled £3.1 billion in August – down by 3% on July this year and the same level as in August last year. This equated to 20,400 mortgages – the same as in July, but 4% higher than in August 2016.

The Head of Mortgages Policy at UK Finance, June Deasy, comments: “Activity picked up in August, and recent resilience ensured that borrowing by home movers was at its highest since March 2016, when transactions were boosted by an imminent increase in Stamp Duty.

“Over the last 12 months, the number of people remortgaging has been higher than in any period since late 2009. With mortgage rates close to historic lows and the likelihood of a rise in official rates moving closer, the popularity of remortgaging looks set to continue.”

On a seasonally adjusted basis, borrowing by first time buyers and movers increased by both value and volume. There was a decline in both the number of people remortgaging and the value of lending. The value of buy-to-let lending was unchanged, but there was a small decrease in the number of buy-to-let borrowers remortgaging.

The proportion of household income taken up by mortgage payments edged up for first time buyers in August (to an average of 17.5%), but was unchanged for movers (17.6%). Overall, it remains low by historical standards.

The average amount borrowed by a first time buyer rose from £138,999 in July to £140,035 in August. There was a smaller proportionate increase in the average first time buyer household income, up to an average income multiple of 3.63. The average amount borrowed by movers increased from £180,000 to £182,750, while their average income multiple rose to 3.40.

Remortgaging accounted for more than two-thirds (68%) of buy-to-let lending in August, however, it was 5% lower than in July. Borrowing for buy-to-let house purchase rose by 11%. Nevertheless, borrowing for house purchase by buy-to-let landlords remains at a lower level than before the introduction of the higher Stamp Duty rate last year.