Tag Archives: finance
Families in rented homes struggle to save a deposit, new research shows
Families who rent their homes are less likely to have a cushion of savings or protection products to protect them against financial shocks, according to a new financial report. Some 25% of private renting families, or 650,000 people would struggle to cope compared to 11% of those who have a home with a mortgage and 5% who own their home outright, says the research from insurance firm Aviva. Renting families are also less likely to have insurance in place to provide financial cover should they become ill or die. Just 20% families who rent privately have life insurance, compared to 25% who own their home outright and 48% who own their home with a mortgage. Similarly, 4% of renting families have critical illness cover and only 3% have income protection. The findings follow a significant rise in the proportion of families with dependent children living in rented accommodation, according to Aviva’s analysis of data from the Office for National Statistics (ONS) In 2013 some 17.7% of couples with dependent children were private renters. This rose by 3.6 percentage points to 21.3% in 2014. The same trend is true for single parents with 31.9% in rented accommodation in 2014, compared to 30.2% in the previous year, a rise of 1.7%. As a result, there were 1.5 million families with dependent children in rented accommodation in 2014, a 19% rise since 2013 when it was 1.3 million. ‘Renters might not have a mortgage to pay, but they still have financial obligations like bills and monthly rent. Not having a savings cushion in place means unexpected costs could make day to day living a struggle, while a lack of income protection could be disastrous should they become ill and unable to work,’ said Louise Colley, managing director, protection at Aviva. ‘With growing numbers of parents in rented accommodation, it’s vital all families think about the future and put financial plans in place, regardless of whether they are a home owner or not,’ she added. Aviva’s Family Finances report also reveals renting families are less happy with their homes. While 32% of home owning families with a mortgage feel emotionally attached to their home, this falls to just 18% of families who are private renters. The take-up of home contents insurance is also lower amongst renting families, with 42% owning this product compared to 81% of families with a mortgage. Unsurprisingly, the majority of renters have ambitions to move on. Only 4% of privately renting families want to stay in their current home for the rest of their lives versus 20% who own their home with a mortgage and 76% would like to become home owners in the future. However, the need to save for a deposit is the main barrier to the property market for today’s renters and 30% of families who rent privately say they cannot afford the deposit and fees associated with purchasing a house, equating to 775,800 households. On top of this some 574,500… Continue reading
Over half of UK home borrowers will struggle if interest rates rise, says new poll
Some 52% of borrowers in the UK believe they will struggle or fall behind with mortgage repayments when interest rates rise, according to new research published by the Building Societies Association. The survey has revealed that one tenth would experience real financial problems. A further 14% said they would be able keep up with repayments, but it would be a constant struggle, while almost a quarter, 23%, said that they would experience difficulty from time to time. When questioned about the impact on their lifestyle, 18% of borrowers said they will have to cut back on essentials such as food or clothing in order to make their monthly repayments. A further 15% said they will have to work more hours in order to keep on top of their mortgage commitments. ‘Concern from borrowers is natural when it comes to interest rate rises. There are at least 1.85 million home owners that have never experienced a rate rise, we have a record low Bank Base Rate for so long, it is unsurprising that some people are concerned that a rise in rates will affect their lifestyles and ability to make mortgage repayments,’ said Paul Broadhead, head of mortgage policy at the BSA. ‘Clearly some of the actions borrowers say they would take may not be within their control, for example working additional hours. Our advice to those concerned about interest rate rises is to start thinking about how they will manage the increased costs. This could include creating a household budget, to taking a look at mortgage calculators and rescheduling unsecured loans such as credit cards. Free money advice is available for those that are concerned,’ he explained. ‘The good news is that the results of our survey show nearly a quarter of borrowers will not have to make any changes to their lifestyle when interest rates rise. With the economy more stable than it has been for years, this is a positive result,’ he pointed out. ‘That said, with inflation near zero and the Monetary Policy Committee voting by a majority of eight to one to maintain the Bank Rate at 0.5%, it is looking unlikely that things will change before well into 2016,’ he added. Joanna Elson, chief executive of the Money Advice Trust, the charity that runs National Debtline, said that after years of low rates, borrowers’ minds are beginning to focus on the prospect of higher interest rates, and what this will mean for their finances. ‘Nevertheless, many mortgage payers are still in for a big financial shock when rates do start to climb and we remain concerned that many will fall into problem debt as a result. We must not forget that renters, too, are likely to be affected as extra mortgage costs are passed on by landlords,’ she explained. ‘Households now have a window of opportunity to re-assess their budgets, look again at their borrowing and think about how they will cope with higher interest rates. It is crucial… Continue reading
Scottish property market still seen as a good investment despite tax changes
The Scottish property market is still adjusting to political and taxation changes but overall remains an attractive place to invest in real estate, according to a new analysis report. Scotland remains comparatively good value for money, and this is the key driver in the majority of buying decisions but the introduction of Land and Buildings Transaction Tax (LBTT ) in April has had an impact. It has contributed to the growth of Scotland’s mainstream residential market, but delayed the recovery of the prime sector in the medium term, says the report from real estate firm Savills. However, Edinburgh is the exception to the rule, where the prime market is attracting buyers from London and overseas who remain cautious about investing outside the capital and the report says that one year on from the Referendum on Scottish Independence, there has been a notable transfer in balance within the residential property market north of the border, with a shift to bottom up growth. The report explains that during the summer of 2014, the Scottish property market was recovering from the economic downturn. The prime residential market was leading the way in the resurgence, with a growing demand for properties above £400,000, particularly in key property hotspots. Consumer confidence was beginning to ripple out, both to other locations and to lower price bands. However, the Referendum raised a number of difficult questions, and the resulting uncertainty stalled the property market. ‘This was felt acutely at the top end, the bracket that had long been boosted by the prevalence of London buyers. A year on, this key target group remains anxious about LBTT and the forthcoming Scottish Rate of Income Tax,’ said Faisal Choudhry, director of Scottish residential research at Savills. ‘In addition, both UK and Scottish Governments have introduced initiatives to support the lower value sector of the market in an attempt to revive both the house building industry and buyers on the early steps of the property ladder,’ he said. ‘Buyers of homes below £400,000 are now receiving further assistance in the form of favourable rates of LBTT. Meanwhile, buyers of more expensive homes are taking on the burden of the new progressive taxation in Scotland,’ he added. The report says that Scotland’s million pound market has felt the biggest brunt of the new taxation changes. The vast majority of sales in this bracket completed prior to 01 April, before LBTT was introduced. While there has been a slight uplift in activity in recent weeks, sales have mostly been focussed on the core locations of Edinburgh, East Lothian, East Renfrewshire and East Dunbartonshire and also in Aberdeen, which saw the most expensive sale since April this year at £2.78 million. ‘As the economy improves, and buyers from both sides of the border adjust to the new taxation structure, we expect this upward trend to continue. While the million pound market is beginning to recover in Scotland’s capital, buyer activity in more provincial locations remains subdued,’… Continue reading
