The Inside Edge
More and more it seems people are renting accommodation instead of buying. For first time buyers the reason is simple, the initial outlay. The average property in the UK is valued at around £240,000, so with a 95% mortgage you’re looking at a £12K deposit. Add to this the costs involved, such as arrangement fees and stamp duties, and you could well be looking at paying over £15K upfront. The next problem that immediately arises is repayment fees. The greater percentage of the property that is mortgaged, the higher the interest payments. In other words, if you take out a 95% mortgage you are deemed to be a greater risk than someone who has taken out a 70% mortgage and as such, you will pay more interest.
Rising house prices
Part of the problem is caused by house prices rising at a far greater speed than inflation. The average house in the UK is around twice the cost than in 1980 (allowing for inflation). This has led to more and more of those who earn less not being able to get on the property ladder, with properties going to those with more money, who in turn rent out the properties, thus leading to a nation of renters.
According to the Guardian owner occupation has been steadily declining for several years, with private renting increasing at the same time. Some of the reasons for this are obvious. Many people are having their incomes frozen or have pay rises that aren’t keeping up with inflation. As a result, mortgages aren’t as easy to obtain as they once were and more and more are being forced into renting.
With the lack of social housing, more people are having to opt for private renting, which is also becoming more expensive due to the basic economics of supply and demand. The more people that want to rent, the more landlords can charge. There is also the issue of a housing shortage. The population is on the increase and houses are becoming harder to find. With this, house prices are still rising and as such, more and more people will struggle to get on the housing ladder. Unless this issue is addressed at some point in the future, there doesn’t really look like an end in sight and the reality is that the nation will see more people renting and less buying.
Camberwell estate agents are one of a large UK network and can help you to find a home, whether it’s renting or buying, or even buy-to-let.