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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
Land Registry fraud line helps thousand protect their homes
The UK’s Land Registry’s fraud line has helped thousands to protect their home ownership against property fraudsters in its first three years. Nearly 3,000 calls and emails have been received as people become more aware of the risk of someone stealing their identity in order to sell or take out a mortgage on their home before disappearing with the money. ‘Since we launched our property fraud line property owners have become more aware of the risk. We urge home owners to follow our advice to reduce their risk of falling victim to property fraud,’ said Alasdair Lewis, director of Legal Services at the Land Registry. ‘Whilst no system can eradicate fraud completely, since September 2009 we have stopped 199 fraudulent applications on properties worth around £82 million,’ added Lewis. The properties most vulnerable to property fraud are usually empty, tenanted or mortgage-free. Individuals at a higher risk of fraud include owners who do not live in the property because they live abroad, buy to let landlords, people in long term hospital or residential care or where a relationship has broken down. Lewis gave an example of a recent case. Penny Hastings called Land Registry’s property fraud line after becoming suspicious that someone had fraudulently sold a property which she owned and rented out. It turned out the tenant was part of a fraud ring. Once he’d rented Penny’s house using a false identity, he and an accomplice put the house on the market. The accomplice was a lady who had changed her name to Penelope Hastings by deed poll and then secured a passport in that name. ‘The Land Registry did not register the sale as we suspected a fraud. This meant that Penny Hastings still maintains the legal ownership of the property. Unfortunately, an unwitting buyer paid £1.35 million for the property. The police are currently investigating the fraud,’ said Lewis. The property fraud line was launched in February 2013 for owners to quickly alert Land Registry if they are concerned their property might be subject to a fraudulent sale or mortgage. It forms part of Land Registry’s ongoing fraud prevention and detection techniques to safeguard people’s registered properties. Callers can speak to specially trained staff for practical guidance about what to do next. The telephone number is 0300 006 7030 and the line is open from 8.30am to 5pm Monday to Home owners can protect their property by signing up for the Land Registry’s free Property Alert service to receive an email alert when there is certain activity on the monitored property such as an application to register a new mortgage. People can then judge whether the activity is suspicious and seek further advice if necessary. Lewis pointed out that those who become an innocent victim of fraud and suffer a financial loss as a consequence may be compensated. If your property isn’t registered then no compensation is payable. There can be up to three addresses on the register including an… Continue reading
Call for relaxation of mortgage affordability rules in UK
A relaxation of mortgage affordability rules in the UK could help more lifetime mortgage customers take up the option to make interest repayments initially before switching to a roll-up arrangement, it is claimed. Such a move for residential rather than lifetime lending could benefit consumers and encourage innovation, according to the Equity Release Council which has asked the Financial Conduct Authority to look into it. Amendments to the Mortgage Conduct of Business (MCOB) rules following the Mortgage Market Review (MMR) mean that lifetime mortgage contracts which permit, but do not require, consumers to pay interest for a period are subject to the requirement of providers to assess their affordability. This is despite the fact that payments of interest are always optional and that customers will never be at risk of losing their home as a result of being unable to continue with interest payments. As a result, says the ERC, some customers who would have taken out a lifetime mortgage giving them the option to repay interest for as long as they wished might not now pass affordability assessments, may be reluctant to subject themselves to the assessment process or be recommended alternative products. The Council has asked the FCA to consider whether a relaxation of rules originally designed for residential rather than lifetime mortgages would help more consumers unlock their housing wealth while protecting a larger amount of equity in their property. A relaxation might also support existing providers' ability to expand their product range and encourage new entrants. The request from the Council formed part of its evidence submission to the FCA's Call for Inputs on competition in the mortgage market. The FCA is set to outline next steps in the form of a summary statement in the first quarter of 2016. The Council's submission included a separate request for the FCA and Government to consider the long-term impacts of decisions relating to tax and regulation which may affect equity release lending. It also recommended that the FCA engages with the Prudential Regulatory Authority (PRA) to consider how equity release is currently funded, the extent to which current prudential requirements create barriers for firms and whether a broader approach could be taken which would enable alternative sources of funding to be accessed. ‘We welcome the proactive decision by the FCA to review whether there are any barriers to competition in the mortgage sector. Retirement lending is a crucial part of this and there needs to be careful consideration of the factors which differentiate residential and lifetime borrowing,’ said Nigel Waterson, chairman of the Equity Release Council. ‘As part of our wide-ranging input we highlighted that revisiting affordability rules may help more consumers to make use of options already offered by equity release providers in later life, as well as encouraging more new entrants to the market,’ he explained. ‘There is a growing recognition that equity release has an important part to play in the planning of funding for later life, and we look forward… Continue reading
