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Em Morley

Tenants Cannot Find Affordable Homes in London

Published On: July 28, 2015 at 12:01 pm

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London could soon lose its labour workforce, as low-paid workers cannot find an affordable home to rent in the capital.

Flat and house share website SpareRoom has found that there is not one postcode classed as affordable for tenants on the London Living Wage. Affordable is described as the rent costing no more than 35% of take-home pay.

Even the cheapest areas for renting, including Thamesmead in SE28, are no longer reasonable for those on the London Living Wage of £9.15 an hour.

Tenant Cannot Find Affordable Homes in London

Tenants Cannot Find Affordable Homes in London

Often, tenants earning this salary must budget over half of their take-home pay for rent.

The average weekly income for a worker on the London Living Wage is £292.69 after tax. The average weekly room rent has increased by 6% in the last year, to £164.31, meaning that tenants must spend 56% of their net income on housing.

Tenants living in postcodes starting with W spend around £810 per month on a shared property.

In East London, the average monthly room rent is £676. In the N and NW postcode areas, average monthly rents are £635 and £721 respectively.

Apprentices could soon be priced out of the market altogether.

A room in London’s cheapest postcode district is £480 a month. This is £38 more than an apprentice earns.

Director of SpareRoom, Matt Hutchinson, says: “”We’ve reached a point where the housing crisis is driving the lowest paid workers out of the capital.

“Even the cheapest way to rent, flat sharing, is officially unaffordable to them across the whole of London.

“The sad irony is that those on the Living Wage are what keeps London ticking, and they need to be able to afford to live in the city that depends on them. Rising rents are forcing many to live hand-to-mouth or, increasingly, forcing them out.

“Apprentices are in an even worse position.

“London is quite rightly celebrated for its vibrancy, diversity and creativity. To protect that, we must make it affordable to live in; otherwise it’ll turn into nothing more than a theme park for the rich.”

Hutchinson urges: “The Government needs to take action to make sure the capital doesn’t face a labour shortage that could paralyse the heart of the British economy.”1 

1 http://www.propertyindustryeye.com/growing-crisis-for-tenants-faced-with-nowhere-in-london-they-can-afford/

 

 

Renters in the capital being priced out

Published On: July 28, 2015 at 11:40 am

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Concerning data taken from a recent report suggests that London could be heading towards a labour crisis, with renters earning the living wage being priced out of the capital’s rental market.

Worrying

The report by flatshare website SpareRoom.co.uk suggests that those earning the London Living Wage of £9.15 per hour would need to spend more than half of their pay on rent. Typically, affordable rent is classed as lower than 35% of an individual’s net earnings. In the capital however, the average weekly income on the living wage amounts to £292.69 post tax and with room rents rising by 6% in the past year, renters are spending up to 56% of their net income on rental costs.[1]

As part of its research, SpareRoom looked at each postcode district in London and alarming found that none were classified as affordable under those on the London Living Wage. The cheapest postcode region in the capital, Thamesmead, where rents average rents total £480 per month and the second lowest region Edmonton (£505) were both still out of reach.[1]

Even more alarming was the news that renters living in a ‘W’ postcode area face rental costs of £810 per month, 14% than the average London rent of £712. For those on the Living Wage, a rental property here would see them spending 64% of their wages on rent.[1]

For those in the SW or SE postcode areas, rents typically cost £764 and £617 respectively, which would mean putting aside 60% and 49% for their accommodation. In N and NW postcode districts, rents command 50% and 57% of wages.[1]

The table below shows the difficulty for those earning the Living Wage in London and also highlights the plight of apprentices working in the capital:

Renters in the capital being priced out

Renters in the capital being priced out

Area/Postcode Average monthly room rent* Room rent as % of monthly net Living Wage (£1,268) Room rent as % of monthly net apprentice wage (£444)
London £712 56.1% 160.4%
SE £617 48.7% 139.0%
SW £764 60.3% 172.0%
W £810 63.9% 182.4%
E £676 53.2% 151.8%
N £635 50.1% 143.0%
NW £721 56.9% 162.4%

Crisis point

Matt Hutchinson, director of SpareRoom.co.uk feels, ‘we’ve reached a point where the housing crisis is driving the lowest paid workers out of the capital. Even the cheapest way to rent, flatsharing, is officially unaffordable to them across the whole of London.’ He went on to say that, ‘the sad irony is those on the Living Wage are what keeps London ticking and they need to be able to afford to live in the city that depends on them. Rising rents are forcing many to live hand to mouth or increasingly, forcing them out. Apprentices are in an even worse position.’[1]

‘London is quite rightly celebrated for its vibrancy, diversity and creativity. To protect that we must make it affordable to live in, otherwise it’ll turn into nothing more than a theme park for the rich. The Government needs to take action to make sure the capital doesn’t face a labour shortage that could paralyse the heart of the British economy. An overwhelming 97%6 of renters in shared accommodation told us the Government isn’t doing enough to make housing affordable – it looks like they were right,’ Hutchinson concluded.[1]

[1] http://www.propertyreporter.co.uk/landlords/london-renters-on-living-wage-priced-out.html

 

 

First Time Buyer House Prices Rise by £138 Per Day

Published On: July 28, 2015 at 10:58 am

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The average first time buyer house price rose by £4,150 in June, according to haart estate agent.

First Time Buyer House Prices Rise by £138 Per Day

First Time Buyer House Prices Rise by £138 Per Day

This is equivalent to a huge £138 per day, or £12,000 annually.

haart also revealed that the amount of first time buyer registrations dropped by 13.6% in the year to June 2015, with a decrease in London of 17.3%.

haart’s research also found that housing supply was down 13.9% in June compared to June 2014, with property prices up 6.1%, to an average of £216,951.

The agent has analysed data from its 200 branches nationwide, discovering that the number of exchanges in June was 15.8% lower than in the same month last year.

CEO of haart, Paul Smith, says: “First time buyer house prices climbed £138 every day in June.

“A potential first time buyer on an average salary of £27,000 must be prepared to spend 42% of their take-home salary on mortgage repayments, showing that the traditional rule of spending no more than 30% of income on housing is no longer reality for many.

“As a result, we’ve seen a knock-on effect on first time buyer registrations. The only solution to this is to unlock the market and free up supply.

“Efficient use of space is a must and we need to dispel fears that downsizing indicates older homeowners have lost their zest for life.

“Movement in the upper echelons of the market will free up stock at all levels and put the brakes slightly on property price growth.”1 

1 http://www.propertyindustryeye.com/first-time-buyer-property-prices-shoot-up-by-138-per-day/

Sales of High Price Homes Halt

Published On: July 28, 2015 at 9:56 am

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The amount of sales of homes worth over £1.5m is expected to drop for the first time in two years due to Stamp Duty reform.

Jackson-Stops & Staff estate agent says that sales have been affected, halting and potentially reversing the 36% annual growth witnessed between 2012-14.

Sales of High Price Homes Halt

Sales of High Price Homes Halt

Nick Leeming, Chairman of Jackson Stops & Staff, which has 44 offices nationwide, says: “The wider UK residential property markets are reasonably buoyant now.

“However, the revision to Stamp Duty rates late last year has contributed to the widespread stagnation of the higher valued markets in 2015, both in London and the country, where many properties are finding it difficult to attract buyers.

“Sale volumes have plateaued across the country in response to high transaction costs, reflecting the fact that the UK has one of the highest taxed property sectors in the world.”

The reform means that buyers of properties worth between £925,001-£1.5m must pay an extra 10% in Stamp Duty, and those buying homes worth over £1.5m now have a further 12% to pay.

Leeming continues: “We have an ageing house-owner population with too few younger entrants onto the property ladder.

“Mortgage funding is difficult to raise for people in their 40s, even if they have been previous house-owners, irrespective of their credit history.

“We need to encourage trading down so that larger houses are released to families needing more space.”1

Director of Jackson-Stops & Staff in Sevenoaks, Kent, Alastair Hancock, adds: “Over a third of our available stock is priced in excess of £1.5m and this is no wonder given what little incentive there is for buyers at the mid to high end of the market currently.

“Since the Stamp Duty hike last December, we have seen a significant decline in volume of sales at this level.”1

1 http://www.propertyindustryeye.com/sales-of-higher-value-homes-at-stagnation-point/

First time buyer house prices increase in June

Published On: July 28, 2015 at 9:51 am

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New research has indicated that the average price of a first-time buyer home rose by over £4,150 in the last month.

A report from Haart shows that homes grew in value by £138 every day in the past month and by £12,000 over the last year.[1]

Rises

Data compiled by Haart shows that the average UK property price is now £216,951. This represents a 6.1% rise over the year and 2.6% on the month and is a new high, continuing the upward spiral of prices since November.[1]

For first-time buyers, the average price of a home saw a larger increase of 7.5%. Starter homes also grew in value by 2.6% in June to stand at £166,393. The total number of first-time buyers however was down 13.6% annually.[1]

Additionally, first-time buyers made up 42.7% of all mortgages taken out in June, down from the 44.4% a year earlier. This data suggests buyers are still finding it difficult to get a substantial foothold in the market. What’s more, the average first-time buyer mortgage was up 3% in June and 8.7% in the year.[1]

New buyers registering increased slightly by 0.5% but supply was found to be lacking, down by 0.7% monthly and by a substantial 13.9% annually.[1]

First time buyer house prices increase in June

First time buyer house prices increase in June

Changing reality

Paul Smith, CEO of Haart acknowledged, ‘first-time buyer house prices climbed £4,150 in a single month or £138 every day in June. A potential first-time buyer on an average salary of £27,000 must be prepared to spend 42% of their take home salary on mortgage repayments, showing the traditional rule of spending no more than 30% of income on housing is no longer reality for many.’[1]

Smith said that, ‘as a result, we’ve seen a knock-on effect on first-time buyer registrations which are down 13.6% annually. The only solution to this is to unlock the market and free up supply.’ He went on to suggest that, ‘efficient use of space is a must and we need to dispel fears that downsizing indicates older homes have lost their zest for life. Movement in the upper echelons of the market will free up stock at all levels and put the brakes slightly on property price growth.’[1]

‘There are currently 11 buyers chasing every new property to come onto the market in the UK, and in London the figure is nearly double at 20:1. However, the Government’s recent announcement in the emergency Budget that the inheritance tax threshold is to be raised to £1million and that an ‘inheritance tax credit’ will be implemented, should encourage those with larger, more expensive homes to downsize. This should have a trickle-down effect and boost the supply of starter homes at the lower end of the market, helping first-time buyers,’ Smith concluded. [1]

[1] http://www.propertyreporter.co.uk/property/ftb-house-prices-increase-by-4150-in-june.html

 

 

Money Laundering is Distorting the Housing Market

Published On: July 28, 2015 at 8:49 am

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Foreign criminals are laundering billions of pounds through buying expensive properties and are pushing up house prices, says the National Crime Agency.

Money Laundering is Distorting the Housing Market

Money Laundering is Distorting the Housing Market

The Agency says that this is distorting the housing market in the UK.

Donald Toon, Economic Crime Command Director of the National Crime Agency, says that criminals have artificially driven prices higher by sequestering their assets in this country.

Toon urges estate agents to report any suspicious activity.

He says that he is “alarmed” by the amount of homes with registered ownerships to complex offshore holdings.

In the first financial quarter of this year, the Treasury earned £142m from Annual Tax on Enveloped Dwellings (ATED).

ATED is payable on properties bought by “non-natural persons”, including companies, trusts and investment firms, rather than individuals.

When ATED was launched in 2014, it was only payable on properties worth £2m or more. It is now charged on properties worth £1m or over and next year it will be payable on properties worth £500,000 or more.

Toon says: “Prices of high end property are being artificially driven up by the desire of overseas criminals to sequester their assets here in the UK. What they are doing is distorting the market.

“If [estate agents] have a suspicion that there may be money laundering involved, then they absolutely should be submitting a suspicious activity report.”

He warns agents: “You are at risk of committing a criminal offence if you do not do that.”1

Director of Valuations at Savills, Simon Aldous, states: “People have put a property into company vehicles for a number of reasons other than money laundering.

“But there must be something there – to say there isn’t any money laundering would be naïve, but to understand the extend of it is impossible.”1 

1 http://www.propertyindustryeye.com/money-laundering-distorting-housing-market-says-national-crime-agency/