Property news roundup: Drop in cost of renting compared to buying
Plus, thirtysomething homeownership, renting and cleaning, and mortgage hunters are getting younger
Alex Johnson has been part of The Independent's online team since 2007. He has been writing about microarchitecture on his internationally-acclaimed Shedworking blog since 2006 and is the author of Shedworking: The Alternative Workplace Revolution. His latest book is Bookshelf, published by Thames & Hudson.
Tuesday 13 May 2014
Rising house prices mean that the cost of renting relative to buying has fallen, according to Countrywide Residential Lettings.
Its figures suggest that in 2014, the average tenant pays 93p in rent for every £1 spent on mortgage repayments by a homeowner able to put down a 10% deposit. This is a decrease of 3p from 96p a year ago.
The report shows that house prices rose more quickly than rents over the past 12 months across 87 per cent of England, Scotland and Wales.
The 13 per cent of areas where the cost of renting rose relative to buying were almost all in South Wales and the North East of England.
Iin London the average tenant spends 86p on rent, down from 93p a year ago, for every £1 a homeowner spent on a mortgage. It is now cheaper to rent than buy in 30 out of the 33 London boroughs, up from 25 in 2013.
Nick Dunning, Group Commercial Director, Countrywide plc, said: "Home ownership has long been part of the British psyche. However, for many households, particularly in the short to medium term, home ownership doesn’t always make sense financially or otherwise.
"As house prices rise, renting increasingly allows people to live in areas they would otherwise be unable to afford to buy. In more expensive cities, such as London, the cost of renting in more central areas can be just half the cost of buying. The result is that in the most central areas of London, and many other global cities, over half the population now rent.
"While homeowners can benefit from increases to the value of their home over the long term, homeownership itself doesn’t automatically equate to large financial returns. The money saved by renting can be invested in other ways. The reality is that tenants, far from being priced out of the market in the long term, have benefitted from the flexibility this growing and increasingly professional sector offers."
Drop in average age of mortgage hunters
The average age of buyers seeking a mortgage during April dipped below 37 (to 36.9) for the first time since September 2010.
The figures from the Mortgage Advice Bureau come a fortnight after the introduction of the Mortgage Market Review (MMR).
Remortgage application numbers dropped by 12 per cent in April, while purchase applications fell by seven per cent. However, the numbers of both were still 29 per cent higher than in April 2013.
Cleaning is the main cause of disputes between tenants and landlords and the problem is getting worse, according to the Association of Independent Inventory Clerks.
The annual review by the Tenancy Deposit Scheme shows that the most common cause of complaint is about cleaning, increasing from 49 per cent in 2009 to 56 per cent in 2013, the highest level since 2007.
"The main problems are dirty ovens and fridges, stains and marks on carpeting and flooring, bathrooms which have not been cleaned for months, and pet hair and excrement on floors, furniture and soft furnishings," said Pat Barber, Chair of the Association of the AIIC.
Homes and the under-35s
Analysis by Lucian Cook at Savills shows that those aged under 35 are having a tough time finding a home.
His figures indicated that in three quarters of local authorities, first time buyers have to earn above the average full time income for the area to afford to buy, while in a quarter of areas they need to earn at least 50 per cent above that figure.
In addition to London, he points to affordability issues in the more expensive towns of the Midlands and the North, including Stratford upon Avon and York, and Maidstone and Exeter in the South.
Overall, his analysis suggests that first time buyers now need an income of more than£50,000 to buy in Cambridge, Chichester, Guildford, Horsham, Oxford, Winchester and Woking, and more than £40,000 to buy in Basingstoke, Canterbury, Lewes, Reading and Slough.
"Younger households will undoubtedly rent for longer and enter the housing market later in life, possibly when they can pool two incomes or for the lucky ones, take advantage of the housing equity built up by parents and grandparents," he said. "As a result, government policy needs to become less fixated on home ownership and look to substantially increase the supply of good quality rental accommodation."
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