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Under 35s pay thousands more for housing than pensioners in England and Wales
A soaring divide in housing means older people pay just a fraction of the money towards housing that younger people in England and Wales, new research shows. On average the under 35s pay over £6,600 more per household than the over 65s and around £4,400 per household more than the 50 to 64 year olds, says new research from Savills published at RESI, the annual housing conference run by Property Week. The research also shows that households where the main householder is the under the age of 35 spend some £37 billion per year on housing equivalent to £8,600 per household of which 56% is paid in rent to private landlords. In contrast for the over 65s it is just 12 billion or £1,939 per household, reflecting both the extent to which those holds have been able to initially access home ownership and pay off their mortgage. ‘These figures reflect the generational divide in the housing market that needs to be reflected in housing policy. The youngest households have reduced access to homeownership, are paying more rent and have less opportunity to accumulate housing wealth. In London alone they pay around £8.3 billion in private rent,’ said Lucian Cook, director of UK residential research at Savills. He pointed out that significant investment is needed in the private rental sector to meet their needs, with a concerted effort to bring in institutional investment through build to let. But at the other end of the scale, more needs to be done to encourage downsizing, particularly in terms of the new housing we build. Not only would that mean more efficient use of our housing stock, but it would also help housing wealth to be passed down the generations and recycled in the housing market to limit the decline in homeownership. For those in the 35 to 44 age group, whose housing bill of £53 billion or just under £7,700 per household, the key short term focus is on interest rates. Some 63% of their housing costs are taken up by mortgage payments and that a 2% interest rate rise would add 18% to their total housing bill. ‘While the under 35s are protected from an increase in interest rates over the short term, given more of them are renting, this may impact their future access to home ownership because if they do get a mortgage the cost of servicing it will be a greater constraint, particularly given stress testing of affordability following the mortgage market review,’ said Cook. Continue reading
A mansion tax in the UK would mostly affect owners in London and South East
The announcement by the UK’s Shadow Chancellor that the Labour Party will impose a mansion tax on homes over £2 million will put a heavy burden on home owners in London and the South East. Ed Balls has announced that if Labour wins the general election next year the tax will be introduced and the revenue used to increase spending on services such as the NHS. ‘We will do it in a fair, sensible and proportionate way, raising the limit each year in line with average rises in house prices,’ he said. He claimed it was not right that a ‘billionaire overseas buyer of a £140 million penthouse in Westminster will pay just £26 a week in property tax’. Labour would not say how much the mansion tax would raise but the Liberal Democrats who have also raised the idea of a mansion tax calculated it raise £1.7 billion a year, but Labour’s higher bands for homes worth tens of millions could raise more. But with property prices having shot up in the past decade, families who moved into relatively affordable homes could suddenly face huge tax bills because their home has increased in value even if their income has not. Indeed, according to figures from the Halifax House Price Index, a property in Greater London bought for £500,000 in 1994, would now be worth £2,056,381 and according to the Centre for Policy Studies think tank, almost one third of properties worth more than £2 million have been owned by the same people for more than a decade, and around a sixth for more than 20 years. Almost 96% of the mansion tax burden would absorbed by London and the South East with more than 108,000 households nationwide affected by the proposed tax, according to leading property website Zoopla. After conducting analysis of all properties in the UK currently valued at more than £2 million, Zoopla found that in excess of 108,000 households would be liable for the annual levy, at an average of £15,000 each. Properties in London and the South East would account for the vast majority, 95.9%, of the additional £1.63 billion cost with the rest of the country contributing just 4.1%, or £66 million, of the total contribution. ‘The introduction of a mansion tax would disproportionately penalise home owners in London and the South East who are already responsible for the vast majority of property tax take in the UK,’ said Lawrence Hall of Zoopla. ‘With more than 100,000 homes to be affected by this new levy, it is somewhat misleading to call it a mansion tax when many three bed family homes in London and the South East would find themselves caught by it,’ he added. A mansion tax would distort the realities of who own homes in the £2 million plus bracket, according to Nick Leeming, chairman of national estate agents Jackson-Stops & Staff. ‘This will affect people all over the country, not just in… Continue reading
UK continues to see average property prices grow, but biggest rise still in London
Average UK property price growth remains strong across the country, up 8.9% annually to £206,578, according to the latest monthly index. House price growth in London continues to storm ahead, up 23.6% on August 2013 and 2.4% on last month, the data from independent estate agent haart also shows. The number of new buyer registrations has fallen by 5.5% annually across the UK but there are 9.5 buyers on average chasing every property. Overall the report says that the UK market remains buoyant with sales transactions also up 8.9% on last year although in London the supply of homes is up by much more, with the city seeing growth of 26.6% annually and 15.7 buyers registering for every new property for sale. ‘The property market is currently recalibrating. Our data shows an easing of demand as new buyer registrations across the UK decrease 5.5% annually, in contrast to the uplift in homeowners looking to sell which is up 4.1%,’ said Paul Smith, chief executive officer of haart which has a network of over 200 branches. ‘Despite this influx of stock the market remains competitive with an average 9.5 buyers registering interest in every new home that comes to market, which is the driver behind property price growth. This gradual return to normality should now dispel fears about property bubbles which we have always dismissed as hype,’ he explained. ‘People now see the reality that interest rates will rise early next year but are keen to take advantage of current market conditions. Our message to people thinking about selling is that autumn is crunch time,’ he pointed out. ‘Good mortgage deals are still plentiful but won’t last forever. Buyers do have increased choice right now but the strong competition that remains in the market will ensure that those selling now have the best chance at the best price,’ he added. The index also shows that the average first time buyer property price dipped marginally by 1.1% on the month to £153,967 but increased 6.7% annually. First time-buyers now make up 45.9% of all mortgages written which is up from 42.2% in August last year. The average mortgage extended to a first time buyer is now £120,933 which represents an increase of 9.5% on last year and the average loan to value is now 80.2%, which is up from 78.6% last year. The average property price in London is now £494,026, an increase of 23.6% annually and 2.4% on the month. The firm says that the reason behind this growth is the high ratio of demand to the supply of homes with an average 15.7 prospective buyers registering for every available property. The west London postcode is the most expensive area in which to buy with the average price now at £551,711, an increase of 13.3% annually. The east of the city remains the cheapest postcode with the average property price currently at £421,166. The number of properties for sale in London is… Continue reading
