Posts with tag: housing crisis

Average House Price is Eight Times the Typical Wage in the UK

Published On: October 11, 2016 at 9:22 am

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The average house price in the UK is eight times the typical wage, according to online estate agent eMoov.co.uk.

The agent has found the most unaffordable parts of the UK where house price to wage ratio is concerned. It has compiled data for all London boroughs, and each area across England, Scotland and Wales, calculating the most expensive and cheapest areas for buying property when compared to income.

Unsurprisingly, the majority of the most expensive areas are in London, where the average house price climbs to 14 times the typical wage.

Average House Price is Eight Times the Typical Wage in the UK

Average House Price is Eight Times the Typical Wage in the UK

The Royal Borough of Kensington and Chelsea tops the list, with an average house price of £1,212,375, despite suffering the greatest decline in property values in the capital over the past year, of 6%. The cost of buying a home in the borough is now 46 times the average wage, of £26,624, and the nation’s greatest gap in property prices to wages by far.

The City of Westminster is second on the list for the most expensive property price to income, where the typical property costs £1,028,617, up by 11% annually. With an average wage of £33,020, house prices in the borough are 31 times higher than earnings.

Richmond upon Thames, also in London, placed fourth on the list, with the average house price (£659,636) a huge 26 times the typical wage (£25,636).

Looking at England as a whole, the average house price is nine times the typical wage on offer. The most expensive city outside of London and third place overall is St Albans in Hertfordshire, where the average house price (£522,716) is 28 times higher than typical earnings (£18,928).

The second most expensive location outside the capital is South Bucks in Buckinghamshire, where the house price to wage ratio is 25. Workers on an average income of £23,192 are faced with the challenge of buying a property costing £587,645 in the area.

Chiltern, close behind South Bucks, has a wage to house price ratio of 24, with a typical property value of £512,910.

In Wales, the lower average property value means that the gap between prices and wages is just six times. Monmouthshire is home to the highest average house price to wage ratio in Wales (12), but is only ranked 153rd overall in the UK, with a typical property price of £221,345.

With house prices also lower in Scotland, the price to wage ratio is just five. The most expensive Scottish region is East Renfrewshire, despite placing 113th in the whole of the UK. The average wage in the area is 13 times lower than the typical house price.

The City of Edinburgh placed second in a three-way tie (along with East Dunbartonshire and East Lothian) for unaffordability in Scotland, but is ranked just 210th throughout the UK. It would take ten times the average wage in the Scottish capital to buy a home there.

In contrast, Copeland in western Cumbria is the most affordable part of the UK, with a property price to wage ratio of just three. Blaenau Gwent in Wales follows closely behind, at four times, with Burnley in Lancashire also at four.

The Founder and CEO of eMoov, Russell Quirk, comments on the findings: “Property values in England are significantly higher than the rest of the UK, which is reflected in the wages offered. However, the wages are not always consistent with property prices, and have failed to increase at the same pace.

“It highlights the unaffordability of the market in England when you consider the difference in Wales, where the highest annual average wage is under £21,000 in Cardiff, yet the city’s property value is merely third in the country, behind regions with lower averages in annual incomes. Additionally, the average wage in Kensington and Chelsea would take almost a lifetime working to be able to afford a home, which is unrealistic for most, let alone the average buyer.”

He adds: “It is important to consider the wage you can earn when buying property, to understand the longevity of the investment, as a lower property price doesn’t always mean a better quality of living, as the wage will also reflect the local market and economy.”

Official Statistics Prove that Housing Crisis is Spreading

Published On: October 10, 2016 at 10:53 am

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New official statistics from the Office for National Statistics (ONS) prove that the housing crisis is spreading to many cities across the UK, not just London.

The ONS has used its house price statistics to explore the housing market across the UK. The most recent complete data ranges to the end of 2015.

The median price paid for residential property in England and Wales was £207,500 in 2015, up by £12,500 (6.4%) on 2014. This was largely driven by a 7% annual increase in England, while growth in Wales averaged just 2%. The median price paid for property ranged from around £77,000 in Blaenau Gwent to almost £1.2m in Kensington and Chelsea.

Official Statistics Prove that Housing Crisis is Spreading

Official Statistics Prove that Housing Crisis is Spreading

The majority of local authorities in England and Wales recorded an increase in median price between 2014-15. The median price decreased in eight local authorities, five of which were in the North West, two in Wales and one in London. There was just one London borough where the median price decreased over this period – Kensington and Chelsea. The ONS believes that this is likely the result of higher Stamp Duty rates on the most expensive properties from the end of 2014.

The data shows that the gap between the median price paid for properties in regions with the highest and lowest prices has become wider over time.

This gap is largely the result of the steeper increase of house prices in London, reports the ONS. Between 2014 and 2015, London recorded an average house price rise of 9.6%, while an average increase of just 5.5% was seen in the North East.

In 2015, Barking and Dagenham had the lowest median house price in London, at £245,000. Although this was the cheapest price paid in the capital, it was higher than two-thirds of all local authorities in England and Wales, reflecting generally higher housing costs in London and its surrounding areas.

Since 2007, the median price paid for properties in the most expensive 10% of England and Wales has soared by 37.6%. Over the same timeframe, there has been a decline in median house prices for properties in the least expensive areas, of 3.9%. ONS believes that there are many factors that may cause changes in house prices, including average earnings and the rate of population change. When there is higher demand for owner-occupied housing in a certain area, house prices tend to rise at a faster rate than in areas where demand is lower, says the report.

The ONS claims that local authorities in which the population has increased the most in one year typically have a larger increase in house prices the following year.

While the population of England and Wales has risen steadily over time, this is not the only factor that pushes up demand for housing. One factor that affects housing demand is the characteristics and composition of residents in households. In 2015, people living alone occupied 28.6% of all homes in the UK. This can contribute to rising house prices, which in turn makes it more difficult for young people to purchase homes.

Commenting on the recent report, the Senior Research and Policy Analyst at the Resolution Foundation, Lindsay Judge, says: “Today’s ONS figures confirm that the housing crisis facing Britain is about much more than the inability of younger people to buy their own home. Housing is becoming less affordable. Homeowners and renters alike are seeing more of their earnings eaten up by accommodation costs, undermining living standards for millions. And while London remains the outlier in terms of costs, this housing crisis has now spread to cities across the country.

“While there has been a slight uptick in the number of new houses built this year, we are still falling well short of the levels needed to make housing genuinely affordable again. It’s encouraging that the Prime Minister has put housing at the heart of her Government’s plans. We now need to see the Government roll up its sleeves to meet its target of one-million homes built this Parliament.”

Industry Professionals Support RICS’s Call for More Rental Homes

Published On: October 5, 2016 at 8:32 am

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Following yesterday’s call from the Royal Institution of Chartered Surveyors (RICS) for the Government to address the shortage of rental homes, industry professionals have spoken out in support.

The RICS insisted that the Government should reconsider its 3% Stamp Duty surcharge for buy-to-let landlords, as the additional tax is hindering investment in the private rental sector.

Industry Professionals Support RICS's Call for More Rental Homes

Industry Professionals Support RICS’s Call for More Rental Homes

Finance specialist Paul Mahoney, of Nova Financial, agrees: “RICS has taken the words out of my mouth in recommending that the Government reverse the recent Stamp Duty changes for second properties and in fact incentivise build-to-rent supply in a vastly under supplied market. I will go one step further and call on the Government to incentivise buy-to-let investors to buy new build and off-plan properties and further boost supply.

“The Australian government has implemented depreciation tax benefits on new build properties, which has successfully boosted investment and supply driven by both local and overseas investors. Furthermore, the Australian government has restricted overseas investment in property to only new builds; why has this not been considered in the UK? We need to stop vilifying landlords and recognise them as a key part of the funding required for new housing supply.”

Additionally, London chartered accountant Blick Rothenberg LLP has detailed the changes it believes the Government should introduce in order to increase the supply of rental homes.

It believes that a temporary capital taxation relief should be implemented in order to incentivise landowners and developers to increase the supply of affordable housing.

A partner at Blick Rothenberg, Frank Nash, explains: “RICS is pushing to loosen tax rules on the buy-to-let market, and go even further by suggesting pension funds could be engaged to provide large scale housing schemes. This added pressure puts the Government in a difficult position, given their pledge to ensure younger generations become owner-occupiers rather than renters.

“We could use the tax system to boost the supply of affordable housing by temporarily reducing Capital Gains Tax, Corporation Tax and Stamp Duty Land Tax on development land, where affordable housing quota is met. Housebuilders and landowners are motivated to achieve competitive returns, and tax savings would incentivise them to work with local authorities and meet their affordable housing targets without degrading the competitive returns provided through private house sales.”

Just days after the Chancellor and Communities Secretary pledged to put housing ahead of the deficit, Nash added: “There are too many prospective homeowners chasing too few properties and competing with the private rental sector.

“Temporary tax exemptions on the disposal of land for housing should inject a new supply dimension into the housing market, but these reliefs should be conditional upon achieving a minimum percentage of affordable homes within a given timeframe, in line with each local authority’s own affordable housing targets.”

Chancellor Must Scrap Osborne’s Stamp Duty Reforms in Autumn Statement, Says SLC

Published On: October 4, 2016 at 8:33 am

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The new Chancellor, Philip Hammond, should scrap his predecessor’s Stamp Duty reforms for landlords in the Autumn Statement, according to the Society of Licensed Conveyancers (SLC).

The organisation believes that the Government should be addressing real housing issues, rather than consulting on changes to Stamp Duty.

Chancellor Must Scrap Osborne's Stamp Duty Reforms in Autumn Statement, Says SLC

Chancellor Must Scrap Osborne’s Stamp Duty Reforms in Autumn Statement, Says SLC

The SLC has called upon Chancellor Philip Hammond to reverse George Osborne’s damaging attacks on the private rental sector, in order to stimulate the housing market.

As of 1st April 2016, buy-to-let landlords and second homebuyers are charged an additional 3% in Stamp Duty on property purchases.

The SLC warns the Chancellor that these “attacks” on landlords have had a significant impact on property investment, which consequently affects the whole housing market.

The Chairman of the Society, Simon Law, says: “In spite of some trying to talk the market up, there is no doubt that transaction levels and new housing building are being adversely affected by a number of factors. While some people point at uncertainty created by Brexit, it is the Society’s belief that Osborne’s punitive and unnecessary reforms to the taxation regime associated with private sector property investors and landlords have been the main cause.

“The reforms have also caused enormous confusion for property purchasers and their conveyancers, particularly in respect of Stamp Duty, resulting in frequent delays and even transaction failure.”

He insists: “There is a real and significant opportunity for the new Government under Theresa May to unlock economic growth very quickly by simply reversing the Osborne reforms in the Autumn Statement. There is no doubt that a robust property sector can help allay any fears of an economic downturn if swift action is taken.”

Hammond’s first Autumn Statement will take place on 23rd November.

The SLC is calling on other property stakeholders to back its call on the Chancellor for the benefit of all property investors and landlords, and ultimately, their tenants. It reminds the Government that investment leads to construction, and a greater supply of housing keeps rent levels in check.

Yesterday, the Chancellor announced that he is focused on boosting housebuilding in order to tackle the housing crisis, rather than reducing the deficit.

Do you believe that abolishing the Stamp Duty reforms for landlords will help resolve the housing crisis?

30-Somethings Leaving London as Housing Becomes too Expensive

Published On: September 27, 2016 at 8:35 am

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High housing costs and unstable private tenancies are forcing 30-somethings and young families to leave London, according to a worrying report from tenant group Generation Rent.

The organisation has analysed Government data, which shows that net migration from the capital among 30-somethings and young children has soared by 41% since 2012.

In 2014-15, 65,890 adults aged between 30-39 moved out of London to another part of the UK, compared with the 35,480 30-somethings who moved into the capital, according to internal migration data from the Office for National Statistics (ONS). This net loss of 30,410 people compares to 20,590 in 2011-12, when 58,130 30-somethings moved out and 37,530 moved to London.

30-Somethings Leaving London as Housing Becomes too Expensive

30-Somethings Leaving London as Housing Becomes too Expensive

There has also been a similar rise in the amount of children being moved out of London, with 26,920 more under-10s leaving the capital for another part of the UK than arriving in 2014-15, up from 19,980 in 2011-12. Young families have long been the most common group to leave London, however, the faster growing rate of 30-39 year olds moving out of the capital suggests that many are making the decision before they start a family.

Generation Rent believes that London is becoming a turn-off to younger age groups, as the net migration of 25-29 year olds dropped from a high of 11,680 in 2013-14 to 9,990 in 2014-15.

This exodus occurred during a period when house prices in London surged by 37%, compared to 16% across the UK as a whole, and rents rose by 10%, compared with 4% outside the capital.

Of the people leaving London for another part of the UK, 64% moved to the South East and East of England commuter belt, while 12% moved to the Midlands, 11% to the north, 9% to the South West, and 5% to Scotland, Wales and Northern Ireland combined. These proportions have remained fairly consistent over recent years.

Generation Rent’s report comes as a warning to the Mayor of London, Sadiq Khan, who is being given the task of keeping housing costs down to avoid even more Londoners leaving the capital, which would impede its economy and weaken communities.

In the report, the group calls on Khan to ensure that his housing policies tackle the affordability crisis and allow people of all incomes to continue living in the capital.

Generation Rent’s recommendations include:

  • Homes let at the London Living Rent should be targeted at tenants for whom the median London rent is over 30% of their income.
  • Khan should commission a large-scale investigation into different forms of rent control for the wider private rental sector.
  • In his negotiations with the Government for additional powers on housing, Khan should demand powers over landlord licensing and indefinite tenancies in the private rental sector, to ensure that private renting is a genuine long-term option in London.
  • Khan should push for the largest possible grant allocation for a new generation of social housing and roll out his priority for Londoners pledge, to ensure that residents get first access to new homes, rather than absent investors and landlords.

The Director of Generation Rent, Betsy Dillner, comments: “Growing numbers of Londoners are giving up on the city and its extortionate housing market. London is an incredible city, and the decision to move away isn’t taken lightly. These people are leaving friends and family in order to find a home they can afford, and some are leaving their jobs. This should worry everyone in London, from employers facing a loss of skills, to communities losing valued neighbours, and particularly Sadiq Khan, whose housing policies will need to stop this exodus.”

Landlords, what did you think about this reported exodus and how would it affect you?

Developer Welcomes Housing Minister’s Commitment to Private Rental Sector

Published On: September 19, 2016 at 10:27 am

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Following last week’s news that the Housing Minister is backing investment in the private rental sector, a property developer and investment firm has spoken out in support of the pledge.

Developer Welcomes Housing Minister's Commitment to Private Rental Sector

Developer Welcomes Housing Minister’s Commitment to Private Rental Sector

The Chief Executive of Quintain believes that Gavin Barwell’s commitment to the private rental sector will ensure the right type of homes are built to meet demand.

Speaking at the RESI Conference last week, Barwell said that the necessary number of new homes will “never be achieved” without significant investment in the private rental sector.

Barwell commended the recent “impressive” growth in the bespoke rental market, but insisted that this “progress must be expanded” to ensure that there is a “thriving private rented sector”.

With the amount of people living in the private rental sector continuing to grow, Barwell also noted the increasingly important role that the build to rent sector will play in providing the many homes that are so desperately needed.

The Chief Executive of Quintain, Angus Dodd, responds to the pledge: “I welcome Gavin Barwell’s comments made earlier this week at the RESI Conference and agree that build to rent can play a critically important role in delivering the high quality and affordable homes which are needed across the country to meet Britain’s housing needs.

“The sector is still immature in the UK, but the focus the industry has on the technical and design aspects of build to rent developments and the appetite of investors and lenders to finance schemes means it is growing up fast.”

The developer insists that the planning process remains the greatest barrier to the delivery of significantly more new build homes for sale and to rent in the UK, and is now calling on the Government to streamline the planning process, particularly regarding tighter rules around the consultation procedure, enabling developers to speed up the delivery of new homes.

He explains: “We believe that build to rent schemes usually contribute directly to the supply of affordable housing and that should be taken into account when S106 affordable housing provisions are agreed.

“We’d also like to see local authorities use their existing powers to give developers greater flexibility to adapt the interiors of their properties for build to rent, such as variable unit sizes and taking account of common amenities.”