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Home ownership still out of reach for many in UK due to buying costs
Home ownership in UK is still out of reach for many would be buyers as new research shows that the average first time buyers will have paid over £52,000 in rent. Indeed, a first time buyer purchasing their first house this year will have spent £52,900 on rent by the time they get on the first rung of the ladder, and future first time buyer can expect to spend 22%. The data compiled by the Centre for Economics and Business Research (Cebr) for the Association of Residential Letting Agents (ARLA) also shows that the average first time buyer in England in 2016 will have spent 16.4% of their total lifetime earnings on rent for all the years they were a tenant. Those buying a property for the first time this year in the North East will have spent £31,300 on rent, the lowest amount in England. Whereas in London, the average amount spent is more than double that, at £68,300. The South East is the only region other than London where the total lifetime rent spent is above the English average with the total rent expenditure equating to £55,900. Last year alone on average people in the UK spent 22% of their wages on rent, increasing to 30% in London. Those living in the East enjoyed the most affordable rents due to relatively high earnings in the region, yet rent still accounted for 18.9% of their disposable income. People that move out of their family home at the age of 18, will typically rent for 13 years before buying their first property. The report found those leaving home and starting to rent this year, will spend an average of £64,400 before they are able to buy their first property, some 22% more than current first time buyers getting on the housing ladder this year will be spending. Those leaving home and starting to live independently in London will continue to be worse off, as they will spend an average of £91,500 on rent before they can buy their first home, some £23,100 more than those buying in the capital this year. ‘The rising cost of rent in this country is a huge issue, and is preventing tenants from being able to save to buy a home. Our Cost of Renting report reveals that tenants are already spending a significant proportion of their income on rent, and therefore struggling to save any money,’ said David Cox, ARLA managing director. ‘However, as house price affordability worsens and interest rates start rising, more pressure will be put on renting with weekly rent likely to rise, so home ownership will remain out of reach for many,’ he pointed out. ‘Rents are becoming alarmingly unaffordable due to the lack of available housing; the North-South divide we’re currently seeing in the UK is a clear illustration of this. The London rental market is… Continue reading
Home prices set to rise 5.4% in the United States in 2016
Home prices across the United States, including distressed sales, increased year on year by 6.3% in December 2015 and increased month on month by 0.8%, the latest index shows. And forecast data from the CoreLogic House Price Index also indicates that home prices are set to rise by 5.4% this year. ‘Nationally, home prices have been rising at a 5% to 6% annual rate for more than a year,’ said Frank Nothaft, chief economist for CoreLogic. However, he added that local market growth can vary substantially from that. For example, some metropolitan areas have had double digit appreciation, such as Denver and Naples, Florida, while others have had price declines, like New Orleans and Rochester, New York. ‘Higher property valuations appear to be driving up single-family construction as we head into the spring. Additional housing stock, especially in urban centres on the coasts such as San Francisco, could help to temper home price growth in the longer term,’ said Anand Nallathambi, president and chief executive officer of CoreLogic. ‘In the short and medium term, local markets with strong employment growth are likely to experience a continued rise in home sales and price growth well above the US average,’ he added. Meanwhile, research from real estate firm Zillow shows that buyers in Boston, New York, and Washington, D.C. have to stay in a home for at least three years to break even on a home purchase, and buyers in the Bay Area would have to stay nearly that long to make buying financially advantageous. In general, Americans can break even on a home purchase in less than two years in 70% of US metros and the firm says that this is thanks to low interest rates, healthy home value forecasts, and the relatively fast pace of rents in recent years. The Breakeven Horizon index shows that on average you don't need to plan on living in a home for even two years to make purchasing the home more financially advantageous than renting it over the same time period. Among large housing markets, the Breakeven Horizon is longest in Washington, D.C. at 4.5 years and shortest in Dallas at 1.3 years. Around the country over the last year, the Breakeven Horizon quickened in most of the Midwest and Southeast as well as in the Northeast corridor from New York to Boston. The Horizon stretched longer in Florida, Northern California, and in the Northeast from Virginia Beach to Philadelphia, but it remained clear that financially, it's still a better deal to buy a home than rent it, assuming you're planning to stay in the home for at least a couple years. ‘Even with record high rents in places like San Jose, Boston and Washington, D.C., putting off a home purchase might be the best financial decision for a young person who has saved enough for a down payment, depending on how long they intend to stay in their jobs and homes,’ said Zillow chief economist Svenja… Continue reading
Amendments to tenancies bill in Scotland could hit provision of rural homes
New amendments to the Private Housing (Tenancies) Bill in Scotland have the potential to create significant problems for the provision of rural homes, it is claimed. The Bill has reached its stage two process within the Scottish Parliament with the Infrastructure and Capital Investment Committee meeting to discuss amendments that have been lodged. In total, 198 amendments had been submitted to the original draft Bill, demonstrating the depth of feeling regarding the future of the private rented sector and perhaps indicating there has been a lack of thorough consideration due to rushed timescales. However, Scottish Land and Estates said that it was particularly concerned that an amendment by Alex Johnstone MSP to allow a landlord to ask a tenant to leave in order to accommodate a new or retiring employee had been rejected. ‘The Scottish Government has stated repeatedly that the aim is for a simpler tenancy which strikes a fair balance by offering tenants more security and giving landlords robust and comprehensive grounds so they have the confidence to let without fear of not being able to recover possession under reasonable circumstances,’ said Katy Dickson, policy officer for business and property at Scottish Land and Estates. ‘The drafted legislation went some way towards this balance point but disappointingly a number of amendments which were approved will leave landlords dismayed that the new tenancy will bring the uncertainty and imbalance that they feared at the outset of the Bill,’ she explained. One of the main concerns for rural landlords is the rejection of Alex Johnstone’s amendment to allow a landlord to repossess a property in order to house a new employee or retired employee. ‘This ground would come with a full notice period and prior notification at the outset of the lease so that security was not lessened on all let property. Without this ground the ability for rural businesses to grow is restricted and landlords may well choose to move property out of the long term letting market into a holiday home or decide to leave it empty,’ Dickson explained. She said that frustration is growing at the Scottish Government’s continued lack of appreciation of the importance of this ground. ‘The Housing Minister repeatedly stated that a family should not be moved out to allow an employee to move in but has failed to recognise that an employee often comes with a family. The fact that there is similar uncontested ground for religious workers adds further confusion as why can tenants’ security be lessened for religious workers but not farm workers?’ added Dickson. She accused the Scottish Government of making a surprising U-turn by proposing an amendment to remove the initial period when they had previously stated that this provided landlords and tenants with security. ‘This was a disproportionate reaction to some campaign groups raising fears that it may be problematic for a limited number of people… Continue reading
