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Tuesday 25 August 2015

The gap between buying and renting narrows

The cost of buying a home for first-time buyers is £670 a year lower than renting, according to new research by Halifax.

The average monthly costs associated with buying a three-bedroom house in the UK for a first-time buyer was £666 in June 2015, 8% (£56) lower than the typical monthly rent paid on the same property type (£722 a month).

This is in contrast to June 2009, during the financial crisis, when the average cost of buying was 16% (or £1,154 per year) more than the average rent paid.
Even though the average price paid by first-time buyers for a three-bedroom house is 25% higher than six years ago, the monthly costs of owning has come down as the average mortgage rate has fallen to 2.91% from 4.92%. Average rents have grown by 23% in the same period.

In the past year, with the price of a typical first-time buyer home rising by 8%, the difference between the cost of owning versus the cost of renting has narrowed from £85 in 2014 to £56 in 2015 – a fall of 34%. This is partly as a result of average monthly mortgage costs rising by £40 while average monthly rents have only increased by £8.
First-time buyers in London will have, in cash terms, experienced the largest benefit from buying rather than renting a home in the last year. The average monthly cost of £1,338 for those who have bought in London in 2015 compares to an average monthly rental price of £1,419; a saving of £81 a month (£973 over the year) or 6%.

The second largest difference is found in the South West where first-time buyers were paying 9% less a month (£67 a month or £808 annually) than the typical private tenant in the region.

Craig McKinlay, mortgage director, Halifax said: "Looking at monthly costs, the combination of lower mortgage rates and declining rental value over the past six years has made it cheaper to buy than to rent. While numbers of first-time buyers getting on to the housing ladder in the first six months of both 2014 and 2015 has been over 135,000 – almost double the lows seen in 2009 – the issue of building more new homes in the right places needs to be addressed if we are to see sustainable growth.” 

Monday 24 August 2015

Five-figure fine for Warwickshire HMO fire failings

A Warwickshire landlord has been fined £10,744 for failing to properly manage a two-storey property he owns in Leamington.

Manjit Chima owned a two-storey house split into seven bedsits. A fire at the property led to an investigation by the Fire Service and Warwick District Council’s Private Sector Housing Team.

Fire Fighters discovered that the fire had started in the communal kitchen. Both of the doors leading from the kitchen had previously been removed by the landlord, leaving any fire in the kitchen open to the hall, stairs and ground floor rear bedrooms.
A garage and outbuilding had also been converted into bedsits without being fitted with fire escape type windows.

Fortunately, all of the tenants managed to escape before the fire took hold, suffering only from smoke inhalation.

Chima failed to provide records of the servicing of the fire alarm system – which failed to operate properly. He also failed to provide any gas or electrical inspection reports.
Magistrates at Nuneaton Justice Centre told Chima the offences were “very serious” and placed his tenants’ lives in danger.

Cllr Peter Phillips, Warwick District Council’s housing and property services portfolio holder, said: “The vast majority of landlords work well with the council and provide good quality accommodation. The situation at 82 Westlea Road could easily have had a tragic outcome. Council officers will not hesitate to prosecute where tenants’ health and safety is put at risk by landlords blatantly disregarding the law.” 

Public remain buoyant about property market

Households in all UK regions perceived that house prices increased this month, according to Knight Frank’s latest House Price Sentiment Index. This is the first time in the Index’s six-year history that sentiment has risen in August.

The survey found that households in the south east currently perceive the highest rate of house price growth. It also confirmed that households in all UK regions expect prices to rise over the next 12 months, although the rate of expected increases has eased in many regions.

Some 6.6% of households surveyed said they expect to buy a home over the next 12 months, up from 5.3% in July and the joint highest percentage recorded since July 2014.

“The strength of the UK economy, rising wages and an undersupply of housing stock on the market are combining to underpin UK house prices. This has resulted in the first rise in the House Price Sentiment Index in August, usually a quieter summer period, seen since 2009,” says Grainne Gilmore, head of UK residential research at Knight Frank.

“However the expectation of future interest rate rises, something about which the Bank of England rate-setters are issuing more frequent warnings, is having an impact on the expectations for future house price increases. While households still expect the value of their home to rise over the next 12 months, the pace of the expected rise has eased in recent months,” she adds.