Posts with tag: homeownership

Notable Rise in Middle-Aged Renters Recorded

Published On: May 20, 2019 at 8:00 am

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A notable rise in middle-aged renters has been recorded by property developers and letting agents alike. 

Rising UK house prices have left many middle-aged renters unable to afford to buy, or stuck in rental housing after a relationship breakdown. This means that significantly more middle-aged households are now renting from private landlords than they were a few years ago.

Given that there is such a focus on supporting young first time buyers into homeownership, many middle-aged renters now risk being ignored, which may partly explain why professional landlord Grainger has seen a notable rise in the number of people in their 30s and 40s embracing renting.

Helen Gordon, the Head of Grainger, says that her firm has noticed an increase in the amount of middle-aged renters aged between 35-44, especially in London.

“That is partly because our flats are seen as an attractive alternative to people priced off the housing ladder,” she believes. “But there has also been a mindset change in society: not everyone feels the need to own anymore.”

In addition, research commissioned by Intus Lettings earlier this year found that there had been a 15% rise in the number of people aged 35-54 renting their homes in the past three years, as middle-aged renters struggle to get a mortgage.

The study also revealed that less than a fifth of tenants aged 55+ believe that they will ever be able to afford to buy their own homes.

Reasons included general affordability and problems getting a mortgage, due to age.

Hope McKendrick, the Lettings Manager at Intus Lettings, commented: “With the cost of rent rising faster than wages, it’s no surprise that an increasing number of people find themselves unable to save up for a deposit to buy a home well into their 40s, 50s and beyond.

“The survey results revealing that a large proportion of older renters don’t believe they’ll ever be able to buy a home is a particularly worrying trend, as only around one-in-five middle-aged tenants feel renting actually suits their lifestyle.”

She added: “Given that nearly half of renters aged between 35-54 live with their children, the pressures can mean added stress for parents and families.”

A Third of Scottish Tenants have No Plans of Buying a Home

Published On: May 8, 2019 at 8:58 am

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Almost one in three Scottish tenants have no plans to ever buy their own homes, mainly because they are happy living in private rental housing, a new study has found.

The Tenant Research Survey, conducted by SafeDeposits Scotland, found that around 30% of Scottish tenants do not plan to ever own a property.

The research asked tenants about their experiences in the private rental sector and their expectations for the future.

Responses showed that, as well as many not aiming to buy their own homes, 71% said that they see themselves renting for the foreseeable future.

Victoria Smith, the Chief Operating Officer of SafeDeposits Scotland, says: “What this survey makes clear is that tenants cannot be characterised as a single group of people of a certain age, background or other profile.

“People of all ages and from all walks of life rent for a number of reasons. The responses the survey received revealed that some tenants rent because it works for their educational and professional needs, and is flexible – not just because they can’t afford to buy, as is a common generalisation.”

She continues: “Of course, for some people that is the case, but by no means for all.

“Whether tenancy is an active choice, a long-term or short-term necessity on the way to owning a property, it’s important that tenants understand their rights and responsibilities. The private rented sector in Scotland is diverse and growing. We want to help all parties in the sector to raise standards and ensure that it works for everyone.”

Smith adds: “These survey responses and the interest shown in our Tenant Conference indicate that tenants are becoming increasingly engaged in the private rented sector.”

Are you a Scottish tenant? If so, let us know what you like about living in the private rental sector and whether you think the new rules work for both parties. 

Those who Live Alone are More Likely to Rent

Published On: April 8, 2019 at 8:00 am

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People who live alone are more likely to rent their homes than those living with a partner, ideal flatmate has found.

According to Office for National Statistics (ONS) data, the cost of living alone has hit a huge 92% of the average income, making it far harder for single people to get onto the property ladder.

The figures also show that the number of those who live alone is continuing to rise, up by 16% to 7.7m of all households over the 20 years from 1997-2017. This is projected to hit 10.7m by 2039.

The greatest expenditure for those who live alone is housing costs, including rent and bills.

Households in the 25-64-year-old age range who live alone are less likely to own their own homes than couples, at just 50% of households, compared to 75% respectively.

This means that people who live alone have fewer opportunities to accumulate wealth through purchasing property and paying off a mortgage, with some homeowners having benefitted from significant house price growth.

Tom Gatzen, the Co-Founder of ideal flatmate, says: “While we are currently seeing an upward trend in single occupant living, as a result of a growing population and social factors, such as an increase in divorce rates, we are also seeing a similar increase across other living habits, such as co-living.

“While living alone is more prevalent across older age groups, we’re seeing a growing preference amongst younger generations to live in share households. This is not only helping them to address the financial issues head on, but can also help with other disadvantages associated with living alone, such as a lower level of wellbeing.”

He believes: “If properly considered and developed, this lifestyle trend could go some way in addressing the predicted uplift in those living alone over the next two decades and the negative impact that this could have on this segment of the population.”

Tenants to have Rent Payment History Matched with Mortgage Criteria in UK First

Published On: March 25, 2019 at 10:08 am

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Private tenants can now have their rent payment history matched with mortgage criteria from the country’s biggest building society in a UK first.

Thanks to a collaboration between CreditLadder and Nationwide, tenants who pay their rent on time can now have their rent payment history matched with the building society’s mortgage criteria, in line with the Government’s Rent Recognition Challenge, which was launched in the 2017 Autumn Budget.

The scheme was a £2m competition for firms to develop applications to help tenants boost their credit scores and get onto the property ladder quicker and more easily.

Now, for the first time, data accessed via Open Banking will be used to help tenants find out if they are eligible for a mortgage with Nationwide.

CreditLadder can analyse the income and expenditure data of its users, and overlay it against the building society’s qualifying mortgage criteria.

Tenants who meet the criteria, and continue to pay their rent on time, will be prompted to discuss their options with Nationwide’s mortgage consultants and apply for a loan, if they wish.

While there is no guarantee that users will be accepted for a mortgage, those who do not qualify will still receive periodical checks to see if their circumstances have changed.

Sheraz Dar, the CEO of CreditLadder, says: “Tenants already using the CreditLadder service do so to improve their credit rating, as well as looking to increase their chances of being approved for a mortgage.

“With the service now live, the relationship is the first of its kind between a rent reporting service and a mortgage provider in the UK.”

They add: “Working with Nationwide is a key plank in our plans to help those who dream of owning their own home to realise their aspirations.”

CreditLadder claims to be the first and biggest rent recognition platform in the UK, which enables tenants to add their rent payment history to their credit score.

The company was a final stage winner of the Rent Recognition Challenge and became one of 20 businesses chosen from almost 100 to join the Treasury-supported Tech Nation fintech programme.

Tech Nation’s Greg Michel comments: “It’s great to see CreditLadder grow as a business and find another way to help people reach their life goals by improving their credit score. We are proud to have them as alumni.”

Gap Between the Cost of Buying and Renting at 9-Year Low

Published On: March 5, 2019 at 10:00 am

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The gap between the cost of buying and renting a home has hit a nine-year low, according to research by Halifax.

The mortgage lender calculated the monthly costs of a three-bedroom property either to buy or rent. It found that buyers were saving an average of £900 per year compared to tenants in 2017, but this saving was down to £366 in 2018 – a 59% decline.

This is the smallest savings gap for nine years.

The research compares the typical costs for a first time buyer, such as average mortgage payments, income lost by funding a deposit, rather than saving, spending on household maintenance and repairs, and insurance costs, with rental data from BM Solutions.

There are some limits to the figures, as they don’t include upfront costs, such as Stamp Duty, valuations and legal fees, or anything that a tenant may pay, such as a deposit or tenant fees.

Homeowners are still better off by buying their own properties than renting across the UK.

In December 2018, housing costs, including a mortgage on a three-bedroom home in the UK, averaged £729 a month, compared to the typical rent of £759 for the same property type.

The greatest saving is in London, where homeowners are spending £4,475 less than tenants over a year, followed by Scotland, at £1,574.

In contrast, the cost of buying a property in Yorkshire is just 5% lower than renting, saving £361.

Russell Galley, the Managing Director at Halifax, says: “The gap between buying and renting is narrowing, primarily driven by reduced first time buyer prices, deposits in some regions and continuing house price growth, meaning buyers are paying more on their mortgages.

“With more products available for borrowers, these factors combined have pushed up the price of buying quicker than the price of renting. Meanwhile, the cost of rent, household maintenance and average deposits have remained broadly flat.”

Homeowner Possessions at Lowest Level since 1980

Published On: February 15, 2019 at 10:59 am

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Homeowner possessions in 2018 dropped to the lowest level seen since 1980, according to the latest Mortgage Arrears and Possessions data from UK Finance.

In 2018, 4,580 homeowner possessions were recorded, which is the lowest number since 1980, when there were 3,480 possessions. Over the same period, the number of outstanding homeowner mortgages increased, from 6.2m to nine million.

In the fourth quarter (Q4) of 2018, 77,610 homeowner mortgages were in arrears of 2.5% or more of the outstanding balance, which is down by 5% on the same quarter of the previous year.

4,690 buy-to-let mortgages were in arrears of 2.5% or more in Q4 2018, which is unchanged on Q4 2017.

During Q4, 1,130 homeowner possessions were recorded, which is 3% fewer than in the same quarter of the previous year. 

Buy-to-let possessions are also down over the same period, by 14%, with 540 recorded in Q4. 

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Jackie Bennett, the Director of Mortgages at UK Finance, comments on the data: “Homeowner possessions reached their lowest level in almost 40 years in 2018, aided by a historically low interest rate environment and lenders showing continued flexibility when working with borrowers in financial difficulty. 

“Mortgage arrears also remain at historically low levels, with the majority of borrowers continuing to repay their mortgages in full and on time each month. 

“We would always encourage anyone with concerns about making their mortgage repayments to contact their lender to discuss the options and support available to them. Repossession is always a last resort.”

Shaun Church, the Director of mortgage broker Private Finance, also responds to the figures: “We may live in turbulent times, but homeownership is remarkably secure, with homeowner possessions at their lowest level in almost 40 years. A sustained period of low interest rates has made repaying a mortgage not only more affordable, but also more predictable. Lenders are also now duty bound to work with any borrowers struggling to repay their loan to put a realistic repayment plan in place. 

“Doomsayers will argue that trouble is brewing for when rates do start to rise again. But lenders have stringent tests in place that ensure borrowers can afford their loan if rates rise by a far higher percentage than is likely. This means that, assuming there are no dramatic changes in their circumstances, borrowers should be able to comfortably accommodate slightly higher repayments when rates to begin to creep up. 

“The incredibly low level of arrears and possessions makes the case for wider availability of high loan-to-value (LTV) products. Affordability tests are clearly working and, with a secure system in place, there is no reason why loans of 95% or above should present any danger. Saving for a deposit is one of the biggest financial hurdles many will face, and for some is unsurmountable. Better availability of high LTV mortgages would help to remove this barrier and put buyers’ homeownership prospects on a more equal footing.”