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Average residential tenancy deposit in England and Wales up 11% year on year
The value of deposits for the average home tenancy in England and Wales has increased by 11% over the last year, according to the latest published data. They average amount protected by mydeposits now stands at £1,210 up £121 from this time last year and up 1% from the second quarter of 2014, the firm’s latest tenancy deposit digest shows. The figures also show a difference of £1,266 between the average cost of deposits in the most expensive and cheapest regions in England and Wales. London stays at the top of the most expensive average deposit paid by tenants around the UK in the third quarter of the year with £1,859 on average being spent in the capital, a 9.8% increase from this time last year. The research also shows a 5.6% quarterly increase in London while the cheapest region for average deposit is the same as the second quarter with Yorkshire and The Humber on average spending £593. The South East saw the greatest monetary increase in deposit values quarter on quarter with a rise of 20.3%, however the North East has witnessed a growth in average deposit of 37.7% which is the biggest proportional growth across England and Wales. The East Midlands and the North West are the only two regions not to have seen a quarterly rise while the East Midlands saw the biggest fall of 9.3% which is subsequently more than double the amount in the North West where deposits fell by 3.7%. Deposits in the South West have risen similar to that of London year on year at 19.3% which is the biggest proportional growth across all the regions over the 12 months. The East of England saw the only drop in deposit value and growth with a fall of 0.3%. Despite deposits in the East Midlands growing at a similar rate to London over the last 12 months, the average value of deposits is three times more in the capital reflecting the higher overall cost of living in London. ‘Since the start of Tenancy Deposit Protection in 2007 the cost of the average deposit has risen by around 40%, and much like the cost of rents, deposits continue to rise year on year,’ said Eddie Hooker, chief executive officer of mydeposits. ‘The deposit value is usually tagged to the rental cost of the property, typically between four to six weeks’ worth of rent, so the only real way to relieve some of the pressures on the rental market is to tackle the huge issue of undersupply of housing in the UK at present,’ he explained. ‘It will be one of the biggest challenges for the next elected government, so it’s concerning to see that not all political parties have ironed out the details of their housing manifesto pledges in build-up to next May’s general election,’ he added. Continue reading
Rural homes more expensive to buy than urban homes in UK
Countryside properties continue to command a substantial price premium over urban homes and are 26% higher in price, new research shows. On average, homes in rural areas in Great Britain are £46,575 higher in price and this is true of all regions although it differs significantly across the country, according to a new report from the Halifax. The rural premium is greatest in the West Midlands at £88,781 or 57% compared to £17,570 in the North East or 13% and the research also shows that prices in urban areas have been rising faster over the past five years. Between 2009 and 2014, the average price of a home in the countryside rose by 12% compared with an average increase of 18% in urban areas. Between 2013 and 2014, the average price of a home in the countryside has risen by 8% compared with an average 10% increase in urban areas, excluding Greater London. There are also fewer firs time buyers in rural areas. They account for 42% of all mortgage financed purchases in rural areas, compared to 54% in urban areas. The report says that recent outperformance of house prices in urban areas partly reflects the relative strengthening of the first-time buyer market in the last few years. Since 2010 there has been a significant increase in the number of first-time buyers, and this group typically represents a larger proportion of the market in urban areas. ‘It typically costs significantly more to buy in rural areas with a substantial premium existing in all the regions of Great Britain. This reflects the aspiration of many to own a property in the countryside, said Martin Ellis, housing economist at the Halifax. ‘The relatively high prices, however, put rural homes out of the reach for many, particularly the young. This is reflected in first time buyers accounting for a smaller proportion of home buyers in the countryside than in urban areas,’ he added. The research also shows that affordability is a bigger issue in many rural areas. The average house price in the countryside is equivalent to 6.8 times gross annual average earnings. This significantly exceeds the comparable ratio for urban areas of 5.6. Social housing provision is typically lower in rural areas of England and Wales, with 12% of the housing stock accounted for by social housing compared with 19% in urban areas. There are only three rural areas where the ratio of prices to earnings is below the historical long term average of four; Copeland in Cumbria and East Ayrshire both at 3.8 and North Lincolnshire at 3.9 which are the most affordable rural areas in the country. Chiltern is the most expensive rural area in Britain with an average house price of £477,526, making it the least affordable rural area in Britain as measured by the house price to earnings ratio, with an average house price that is 9.5 times local gross annual average earnings. Six of the 10 least affordable rural areas in the country are in the South East with… Continue reading
Research reveals how UK home owners are switching mortgage deals
Some 18% of borrowers in the UK have changed their mortgage details or come to a new arrangement with their lender in the last three years, new research has found. Meanwhile, one in 12 have moved to an interest only mortgage and the same number have extended their mortgage term, meaning they could end up paying more, according to the research by Ocean Finance. It says that despite enjoying more than five years of record low interest rates, the squeeze on real incomes over the same period has left many home owners struggling to keep on top of their monthly repayments. An interest only mortgage sees the borrower paying off the interest on the loan every month, but not repaying any of the capital, which makes the monthly repayments cheaper. However, this means that at the end of the term they do not own the property and will need to find a lump sum to repay the debt, perhaps by selling their home. Extending the term of a mortgage might mean extending the period of time they have to repay the loan from an initial 25 years to as much as 40 years. While this means they should pay less each month, it is likely to see them paying more overall due to the interest they will continue to be charged over the extended period of the mortgage. The firm points out that a longer mortgage term may also mean people have to rethink their future plans, such as working later in life to continue repaying their mortgage, rather than retiring. The research also found that 3.8% of home owners revealed they had agreed with their lender to make temporary lower payments. Meanwhile, 2.3% of home owners surveyed said they were taking a temporary holiday from making payments. ‘While repossession figures have been low, this has masked the real struggle that many borrowers have had to keep paying their mortgage. As incomes have been squeezed over the past few years, one in six borrowers has had to find a way to reduce their monthly payment,’ said Ian Williams, spokesman for Ocean Finance. ‘Switching to an interest only mortgage or extending the term are both being used as a way to lower repayments. While both of these can help provide short term relief and may serve to keep the roof over people’s heads, it may be that this is simply storing up problems for the future,’ he pointed out. ‘In addition, with the Bank of England currently predicting that it expects to start to raise the base rate of interest in the middle of next year, more home owners may find that they start to struggle, especially if they are still on a standard variable rate or tracker mortgage,’ he explained. ‘It might therefore be worth their while speaking to their existing lender or a mortgage broker about whether they could benefit from switching to a new mortgage now,’ he added. Continue reading
