London households deep in arrears

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The Independent Online
ONE IN 10 Londoners are behind with mortgage or rent payments and 9 per cent of homeowners in the capital think their properties are worth less than the mortgages, according to a survey out last week.

The London Research Centre (LRC), an independent research organisation, interviewed 6,500 London householders. It found that the number in arrears with their mortgages or rent payments had doubled since its last survey five years ago. The number of owner-occupiers in arrears had more than quadrupled.

'One in five of all households said they were finding it difficult or very difficult to meet their housing costs, with a slightly higher proportion of council tenants, one in four, having difficulties.

'The households most likely to be in housing debt are one-parent families, while those least likely are pensioners living alone.'

The LRC notes that more than half those with mortgage arrears and more than a third of council tenants in rent arrears said it was unlikely they would be able to repay their debts in the next six months.

According to its estimates, 96,000 households had negative equity last year. The number will have risen since then, the LRC estimates, because house prices have continued to fall. A further 9 per cent of householders with mortgages said their loans equated to the value of their homes. 'Thus in all, about 194,000 home owners in London think they have negative or nil equity,' says the LRC.

One in four of those with negative equity had owned their home for more than five years, and 6 per cent had been there for more than 10 years.

'Owner-occupiers living in north-east London are most seriously affected by negative equity, where one in 10 say their mortgage exceeds the value of their home. This covers the seven boroughs from Hackney eastwards.'

Despite these problems, three out of four households still want to be owners. But the LRC estimates that 50,000 homeowners would now prefer to rent.

Chancellor Norman Lamont might want to reflect on the views of homeowners about mortgage interest tax relief as he puts the finishing touches to the Budget. A quarter of London owners would be happy to see it abolished or restricted.