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Archive for the ‘London’ Category
Monday, September 5th, 2011
Housebuilder on track to hit profit target two years early as central London property market remains strong
London-focused housebuilder Berkeley Group will hit an ambitious profit target two years early, it said on Monday, as it provided further evidence of the UK’s two-tier housing market.
While house prices drift across the UK generally, upmarket builder Berkeley said it would now double profits in three years, rather than five.
The success of Berkeley is testament to the strength of the central London housing market – 70% of Berkeley’s land is within zones one and two. Equally, the lack of mortgage finance that has led to weakness in the broader UK residential property market affects Berkeley less since many buyers are from overseas, and pay in cash. Berkeley said in its most recent annual report that 50% of its customers do not require a mortgage.
The average selling price for a Berkeley property is around £300,000, twice the national average.
“Overseas buyers see London as a safe haven, and Berkeley has a reputation for good quality properties,” said Gavin Jago of Shore Capital.
Berkeley’s moves will be closely watched by those seeking to read the runes of the domestic property market, with the group credited with having successfully predicted the downturn, pulling back from land purchases at the right moment before the credit crunch took hold.
Berkeley said on Monday that it had purchased a further seven sites, and had secured better planning arrangements on sites in Battersea and Kew in London, North Bersted in West Sussex and Gillingham in Kent. In the four months to the end of August forward sales grew further, topping £850m.
Berkeley plans to return cash to shareholders through a series of large dividends rather than using the cash to expand.
Analysts at Numis said the positive outlook was “testament to the strength of market conditions in London and the south-east, well-timed investment in land and work in progress and Berkeley’s ability to add value through planning and sales. In our view, providing market conditions remain stable, the group has the potential to continue growing profits.”
The company could however be hit by the recent falls in stock markets if London is hurt, Citigroup said: “Investors and overseas buyers are major customers for Berkeley and any undue [sterling] turbulence and difficulties with rental markets may affect them more than the industry,” the broker added.
Investors voted in favour of all the motions at Monday’s Berkeley AGM, with the largest vote against being registered at the reappointment of Victoria Mitchell, the company’s deputy chairman.
Shareholders representing 11% of the companies shares voted against her reappointment. Mitchell has been a non-executive for nine years, regarded by some as too long a period in order to maintain independence. The company takes the view that she nevertheless adds a great deal of value.
Shares in Berkeley finished up almost 5% at £12.36.
Posted in Berkeley, Business, House News, London, Money, News, Property, Real estate, The Guardian | Comments Closed
Thursday, September 1st, 2011
The National Housing Federation has stated that it expects home ownership in England to fall to mid-80s levels, slumping to just 63.8% over the next decade (Minister vows to get UK building again as home ownership slumps, 31 August). But to address a critical shortage of homes the government has previously made the rather fanciful announcement that it aims to create 170,000 new affordable homes by 2015. In 2010-11 just 105,000 homes were built in England – the lowest level since the 1920s.
I’ve just had to abandon a major scheme that would have provided over 750 new homes, 25% of which would have been affordable, in an area of Essex that sorely needs them. This was because the amount of money the social landlords were initially able to pay for more than 180 homes was drastically cut as they in turn had their funding cut. This made the development untenable as I simply couldn’t afford to build 180-plus homes at a loss.
If the government is serious about increasing housing provision, it needs to recognise that cutting funding to social landlords is not going to help achieve that aim. Social landlords, in turn, need to start concentrating only on helping the poorest households, not mid-high income earners. Currently the rules are so arbitrary that for some affordable housing schemes you can earn as much as £60,000 and qualify for assistance. Others aren’t even means-tested, so you can earn £100,000 but still qualify for a handsome discount as long as you live or work locally.
Only by ending the inequity of a system that fails to address the needs of the poorest households, and freeing the housing sector from the myriad of red tape, taxes and levies that stifle development, will this country be able to get anywhere near delivering the number of new homes, both private and affordable, that it so urgently needs.
Bob Weston
Chairman and chief executive, Weston Homes
•?A well-aimed piece of PR spin from the National Housing Federation has managed to prompt a series of responses in your paper, mostly supporting the aim of the PR, that is to say support for a rapid increase in housebuilding. However, both the reported “facts” and the response need questioning.
1) The decline in home ownership was a projection based on the premise of higher price rises than is likely, given the need for “readjustment” in the housing market to historic links with earnings.
2) The current high rates of private ownership were only possible due to unsustainable reckless lending and borrowing.
3) One big attraction of home ownership is the free money many people have gained through rising prices. When prices are stagnant or falling, the high costs of home ownership may not be so attractive to young people who want to move around.
4) If enough houses were to be built to substantially reduce prices, many will be bought up by rich people and budding mass landlords, and many existing mortgage holders would experience high degrees of negative equity, exacerbated by the rise in interest rates that must happen sometime in the future.
5) As with other goods, it is not so much how many houses we have but how we share them out that is really important. It is the gross inequality in our society, more than anything, that is creating this problem.
Chris Savory
Bridport, Dorset
•?Allegra Stratton (Inside politics: Coalition fears it is unravelling right-to-buy revolution, 1 September) highlights the government’s unease at the burgeoning housing crisis and the low rate of housebuilding. In London, the affordable housing budget has been cut by two-thirds. Boris Johnson isn’t offering any new ideas to help private tenants suffering from record high rents. Nor has Boris offered anything new to reverse the rise in homelessness he had previously predicted. In 2008, Boris promised “a network of Community Land Trusts”, but not a single trust has been set up in London. The mayor needs to lobby for better protection for private tenants, and a realistic housing budget that can provide the low-cost social homes we need. In the meantime, he needs to put all his money and land into keeping rents as low as possible.
Jenny Jones AM
Green candidate for London mayor
•?The mayor of London, Boris Johnson, has long advocated community-led development and the benefits this can bring for building stronger communities.
Contrary to the suggestion in your article, the mayor has already determined that the community should hold the entire freehold of the St Clement’s site in Tower Hamlets in trust. He has also made clear that a community board should oversee management of the homes. This would make St Clement’s the country’s first urban CLT. The site is currently being procured on this basis, and the decision will be subject to the usual procurement rules. But it is clear that whoever is the successful bidder we intend St Clement’s to be held in trust, with the management overseen by the community.
Richard Blakeway
London mayor’s adviser for housing
•?Given the latest evidence that the UK welfare and housing system is failing to break the association between unemployment, poverty and homelessness (Homelessness could spread to middle class, study warns, 31 August), the time is now ripe for a Great Debate – one as “radical” and imaginative as the 1942 Beveridge report – on how to manage social and economic affairs in ways that meet the wellbeing of the many rather than the few. We could do with a quality broadsheet leading such a debate. Any suggestions?
Charlie Cooper
Lecturer in social policy, University of Hull
•?Not only is the current level of home owership even lower than the official figures indicate, but it is also declining at a much faster rate than forecast.
This is because up to three million homes included in the figure for home ownership are in fact leasehold, and leaseholders do not own their homes but merely have the right to live there until the lease expires. In order to stay in their homes leaseholders will have to pay large sums of money to the freeholder for an extension of the lease.
At the same time around half of all newly built homes are now flats, the majority of which are sold on a leasehold basis, reducing still further the proportion of households who will genuinely own their homes.
Nigel Wilkins
Chair, Campaign for the Abolition of Residential Leasehold
•?The key to the housing “problem” is the number of homes, not the proportion of owner-occupiers. There is inevitably a significant proportion of the population who at any given time would be better suited to renting than buying their homes. There is pressure to “get on to the housing ladder” for financial reasons; pressure that if you do not start early enough you will lose out financially. As a result the economy is driven by the housing market to an unfortunate extent. The key issue should be adequate housing to buy or rent. One simple – but probably politically unacceptable – measure would be to try to separate the concepts of a house as a “home” and as an “investment” by removing capital gains tax exemption from the principal private residence. The sky did not fall in when tax relief on mortgage interest was removed.
Paul Russell
Winchester
•?The National Housing Federation talks of the “chronic under-supply of housing” in the context of unprecedented developmental pressure on green spaces. However, markets are composed of supply and demand. England is the most densely populated country in Europe. Given that the UK is experiencing its highest rate of population growth for 50 years, with an estimated 10 million more citizens over the next 15 years, should we not also be talking about – and addressing – our chronic over-supply of people?
Simon Ross
Chief executive, Population Matters
Posted in Boris Johnson, Business, Communities, Construction industry, Homelessness, House News, House prices, Housing, Housing market, Letters, Liberal-Conservative coalition, London, London politics, Money, Politics, Property, Public sector cuts, Public services policy, Real estate, Society, The Guardian, UK news | Comments Closed
Friday, August 12th, 2011
UK taxpayers left £275m out of pocket after deal is reached by Olympic Delivery Authority
London’s Olympic Village has been sold to the Qatari ruling family’s property company in a deal that leaves UK taxpayers £275m out of pocket.
Qatari Diar, the oil-rich state’s investment arm, and UK property developer Delancey Estates teamed up to buy the athletes’ village next to the Olympic Park in east London for £557m.
After the 2012 Olympic Games, the village will be converted into a neighbourhood with 2,818 homes, including 1,000 family homeswith three or four bedrooms. The rest of the properties range from studio flats to five-bedroom apartments. The area will also include a schoolwith 1,800 places for children aged three to 19, shops, bars, clinics and parks.
The Olympic Delivery Authority, which sold the site, had already sold 1,379 of the residences in the 11 blocks of the athletes’ village to Triathlon Homes for £268m in 2009. They will become affordable housing such as shared ownership or socially rented apartments.
Qatari Diar and Delancey plan to turn the bulk of their share of the residences – 1,439 properties – into private rental accommodation, rather than selling them. They say this will create the first UK private sector residential fund of more than 1,000 homes to be owned and directly managed as an investment.
At the moment, the apartments in the village do not have kitchens as athletes will eat at dining halls. They will be fitted out for long-term residential use after the games when kitchens will be added and new floors put in. The first tenants are due to move in in late 2013.
The joint venture also acquired six adjacent development plots with the potential for a further 2,000 new homes. The deal includes a profit-share that should provide income to the public sector in future.
Jeremy Hunt, the culture secretary, hailed the sale as a “fantastic deal that will give taxpayers a great return and shows how we are securing a legacy from London’s Games”. The village cost £1.1bn to build, but the ODA insisted it never expected to recoup building costs. “It was an entirely empty site, it didn’t have any infrastructure, roads or parks. There was always going to be a public sector contribution to help put those in,” said a spokesman.
He added: “We weren’t just looking for the highest bidder, but for the best owner with long-term commitment.” He said the ODA supported the property investors’ plans to turn most of the residences into rental accommodation.
Jamie Ritblat, chief executive of Delancey, said: “This acquisition reflects the first truly great residential investment opportunity in the UK; offering the chance to break the mould and create a sustainable leasing model to provide first class accommodation for those who see the chance to rent long-term, as the way forward.”
The ODA had to dip into the Olympic contingency fund and use £324m of public funds after a private developer, Lend Lease, failed to put forward a funding package in 2009 due to the financial crisis. That money will now be repaid to the Olympic budget out of the village sale proceeds – this has been uncertain during the economic downturn.
Qatari Diar already owns the Chelsea Barracks site, which it bought from the Ministry of Defence in 2007, and it will redevelop the US embassy in Grosvenor Square, London, as well as the Shell Centre on the South Bank.
The Qatari property developer has been embroiled in a high-profile row over the £3bn Chelsea Barracks scheme, which recently received the green light two years after Prince Charles intervened over plans for the 13-acre site. In June 2009, the developer withdrew its planning application after the Prince of Wales wrote to its chairman, the prime minister of Qatar, saying his “heart sank” when he saw the modernist design by Lord Rogers.
Qatari Diar’s then-partner, the CPC Group owned by the Monaco-based property developer Christian Candy, launched a high court action to claim £81m in compensation after the scheme’s collapse. The architects behind the revised plans are Dixon Jones, Squire and Partners and Kim Wilkie.
Posted in Business, Communities, House News, Housing, Housing market, London, Money, News, Olympic Games 2012, Property, Real estate, Society, Sport, The Guardian, UK news | Comments Closed
Friday, August 12th, 2011
• Qatar in joint deal with developer Delancey
• Deal worth £557m to take over 1,439 homes
The London 2012 Olympic Village has become Qatar’s latest acquisition in world sport. The property company of the Arab state’s royal family and the British developer Delancey have signed a £557m joint agreement to buy the athletes’ village and manage it as private housing after next year’s Olympics.
Qatari Diar and Delancey will take over 1,439 of the 2,818 homes on the site and acquire land to build as many as 2,000 more.
With the Olympics having cost £9.298m of public money, the culture secretary, Jeremy Hunt, said the deal “will give taxpayers a great return”.
Oil-rich Qatar last year won the right to host the football World Cup in 2022.
Posted in guardian.co.uk, House News, Housing market, London, News, Olympic Games 2012, Property, Sport | Comments Closed
Wednesday, August 10th, 2011
Damage caused by civil unrest should not impact on people making insurance claims, a Zurich spokesman says, but customers should check their policies
Insurers have said they will pay out to customers who have had possessions damaged and stolen in the riots in London and across the rest of the country.
Some policyholders had been concerned that they wouldn’t qualify for a payout because the losses were a result of civil unrest, but insurers said this wasn’t a problem.
Keith Lewis, a spokesman for insurer Zurich, said: “As a customer it doesn’t matter what is happening – the issue of whether it is classed as rioting or civil unrest rises when we as insurers are trying to reclaim costs. It is a back-office issue.”
Lewis said Zurich had sent a team of loss adjusters to Tottenham early yesterday morning, and had more specialists ready to visit the scenes of other clashes.
The Association of British Insurers (ABI), which is currently putting the cost to the industry at “tens of millions of pounds”, urged those affected to call their insurers as soon as possible.
The ABI’s director of general insurance, Nick Starling, said: “We have every sympathy for residents and business owners who have suffered damage to their properties.
“This is a time of enormous stress for them and their insurers will be on hand to answer any questions that they may have.”
Home and business policies
The ABI said standard home insurance policies should cover fire, looting or damage caused, and that many policies would also cover accommodation costs for those unable to stay in their homes.
Most commercial insurance policies would cover businesses for damage to their premises, it said, including interruption to their business.
Some policies also cover businesses which were not damaged, but whose trade is affected by the aftermath. Owners of businesses which were not damaged but are losing income due to denial of access should check their policies.
The ABI said business owners should act quickly, as many insurance policies required claims to be made within a set time period – often just seven days.
Motor and travel policies
Owners of cars damaged in the unrest will be able to claim if they have fully comprehensive cover, but may not qualify for a payout if they have anything less.
Graeme Trudgill of the British Insurance Brokers’ Association said for those with third party, fire and theft cover, the situation would depend on what had happened to their vehicle.
“If someone whacks it with a pole then it is not covered; if they set fire to it, it is,” he said.
One area where things are less cut and dried is travel insurance. A spokeswoman for the ABI said police officers who have to cancel a holiday because they have had their leave rescinded will be covered, but other people may not.
“If someone’s business has been affected, and there is a reason they cannot travel, then they would need to contact their insurer and it would be considered on a case-by-case basis – but even that would not be covered by a standard policy in my view,” she said.
Politicians who have had to cut short their holidays to return to London may also find they are not covered.
Uninsured home and business owners
Under the 1886 Riot (Damages) Act the police are obliged to compensate people who have had their property and/or buildings damaged or stolen during disturbances like those seen this week.
Home and business owners who do not have insurance or are underinsured should make a claim to their local police force.
To make things difficult, claims need to be made in writing and within 14 days of the event taking place. The ABI is calling for this to be extended to 42 days to give people chance to asses how much they have lost.
Anyone affected by the riots could also apply for a crisis loan to help them meet daily expenses while claims are settled. These are loans from the government designed to help people in emergencies.
Posted in Business, Car insurance, Crime, guardian.co.uk, Home insurance, House News, Insurance, Insurance industry, London, Money, Motoring, News, Property, Small business, Travel insurance, UK news, UK riots | Comments Closed
Monday, August 8th, 2011
Seven out of 11 regions register first-time buyer levels below 20%
Seven out of the 11 UK regions are now “first-time buyer blackspots” as demand from new entrants trying to get on the property ladder slumps in the face of rising living costs and financial uncertainty, according to a new report.
The survey of 14,125 potential property buyers, undertaken by Rightmove, the online estate agent, found that of all respondents who intended to purchase property in the next 12 months, only 23% were doing so for the first time. This is down from 26.2% in the previous quarter and well under the pre credit-crunch norm of 40%, which is seen as an indicator of a “healthy” property market.
Rightmove’s commercial director, Miles Shipdale, said that the figures had “serious implications”, with the regional spread of the results causing even greater concern. Seven regions (Yorkshire and Humberside, the south-east, the east Midlands, East Anglia, Wales, the south-west and Scotland) all register first-time buyer levels of below 20%, taking them into “blackspot” territory.
Only the capital has retained its vitality, with 41.2% of those intending to buy in London doing so for the first time, illustrating how the London housing market continues to buck the national trend. The figure is such an exception to the rest of the market that without it the national average falls below 20% for the first time in the survey’s history.
Shipside said that such poor regional figures had wider effects “not just for those who are unable to buy for the first time, but also for local housing markets in each of those regions”.
He added: “First-time buyers perform an essential function at the start of the housing chain that help others in the area move as well… [The results] are particularly bad news for first-time sellers, for example.”he said
The survey identified difficulties over raising a deposit, concerns over financial security and property being “overpriced” as the three key issues.
Among first-time buyers, 42% said that raising a deposit was their single biggest property market challenge, making this the concern most frequently expressed. This is surprising as the number of mortgage products that specifically target those buying for the first time has increased 11-fold since July 2009. Over the same period, first-time buyer levels have dropped from 30.8% to 23.0%.
This, said Shipdale, showed that deposit requirements remained a “major hurdle” and suggested that further government action was necessary.
Deposit-assistance initiatives such as the government-backed FirstBuy scheme help make deposits more affordable for first-time buyers but, with the current scheme limited to only 10, 000 mortgages and restricted to new property, Rightmove said that more assistance was required.
Posted in Business, Communities, Economic growth (GDP), Economics, First-time buyers, House News, Housing, Housing market, London, Money, News, Property, Rightmove, Scotland, Society, The Guardian, UK news, Wales | Comments Closed
Wednesday, July 27th, 2011
Property owners near to the Olympic stadium in east London are not benefiting much from staging of 2012 Games
Homeowners in London’s East End have not benefited significantly from the building of the Olympic sites in their vicinity, research has revealed.
House price data for the six years since London was awarded the Olympics shows that property values in the areas nearest the Olympic sites have gone up by an average of £60,000. Average house prices in the postal districts close to the Olympic site have risen from £208,148 to £266,730, a 28% increase according to research by Lloyds TSB.
However, the research includes 145 areas of London, and the top performing area affected by 2012 preparations – Homerton in Hackney – sits in just 44th place, with a property price increase of 56% or £120,000.
Seven areas affected by Olympic construction sit in the bottom 20 performing postal codes, with house price increases ranging from 28% to just 8%. People living in Stratford, the home of the Olympic Stadium, have seen rises of only 13%, less than half the average increase across east London, while East Ham and Plaistow have had the smallest growth with only an 8% increase since July 2005.
The biggest rise in London over the past six years – 153% – has come in the Victoria area of the City of Westminster.
A spokesman for Lloyds TSB, a main sponsor of the London 2012 Olympics, admitted it was difficult to see whether these areas had benefited from the construction work, but added: “The point was to try and regenerate these areas, and they say that after the Olympics arrive, that’s when we will see the investment pay off. Who’s to say that without that investment [the prices in these areas] wouldn’t have been further down the table? It’s a long term thing.”
In prime central London property prices have surged by 10.8% so far this year. Traditionally, there is more growth in prices in the first half of the year and 2011 is following this pattern, but London estate agents Douglas and Gordon said it was possible that demand at the top end of the market would be sustained, as insecurity in other parts of the world encourages overseas buyers to invest in London.
The lack of supply has also driven up rental prices in central Londonby 5.4% in the first quarter of the year and by 6.9% in south-west London.
Analysis of data from the five leading house price indices shows that the average UK house price has risen consistently in the past six months, from £195,425 in January to £198,908 in June or by 1.8%.
Property and financial services group Assetz, which conducted the analysis, said the figures point to increasing market stability, with the annualised growth rate now at 3.3%.
Posted in guardian.co.uk, House News, House prices, London, Money, News, Olympic Games 2012, Property, Sport, UK news | Comments Closed
Friday, July 8th, 2011
With millions of Olympics visitors searching for accommodation in 2012, we look at whether homeowners can make a packet by renting out their properties
For those lucky enough to live anywhere near the Olympic site there’s one big question: can I rent out my home for thousands of pounds and head off on an expensive holiday on the proceeds?
With the opening ceremony just over a year away, and lettings agents reporting the first expressions of serious interest from those looking to rent homes near to the action, Guardian Money has been asking whether there is serious cash to be made. Or are homeowners hoping for a bonanza heading for disappointment?
A whizz around the internet reveals plenty of households hoping to cash in. Owners of some – frankly, very ordinary – homes within walking distance of the Olympic Park in Stratford are asking as much as £5,000 a week. Even one-bedroom flats are being marketed at £1,500 a week.
The big question is whether they are going to get it. Joanna Doniger, who has let Wimbledon homes to tennis players for two decades and is an expert on the short-let market, predicts some homeowners will make some serious money, but others will be out of luck.
The owner of the Chelsea-based agency Accommodate London is offering the same service for 2012, and says it is already getting busy.
“We’ve been taking calls from media organisations and others who are going to be in London for the Games and are looking for homes to rent. There have also been lots of inquiries from people hoping to rent out their homes; however, we won’t be taking them all on.”
She says that to stand a chance of being suitable, a home will have to have certain features. A power shower, Wi-Fi, flatscreen TV and a high standard of decoration are a must – as is proximity to the Stratford site on foot or via public transport.
She predicts early house rentals will mostly go to people working in jobs connected to the Games – TV crews, journalists and the like. Individuals tend to book much later.
“Some groups will want to take a house for as much as four to six weeks. Potential renters will have to ask themselves whether they are prepared to be away for that long.”
She predicts a three-bedroom family house very close to the stadium will rent for around £3,000-£4,000 a week. “We’ve let out a four-bedroom refurbished property near Victoria Park for more than £5,000 a week,” she says.
If Wimbledon is anything to go by, she says, there will be a rush of bookings at the last minute from normal visitors leaving it late to find a bargain.
Those thinking of renting out their homes have two options: pay an agent specialising in short-term lets, or do it yourself. Agents will typically charge a commission of 10%-15% plus VAT. The advantage is that they provide a contract and, crucially, collect the money from the tenant.
Those looking to avoid paying commission tend to put their home on one of the many websites that have sprung up – such as Rentduringthegames.com, londonrentmyhouse.com and 2012homerentals.com. Fees to use the websites typically vary from £25 (to list a property) to £150. Usually you can upload pictures and full details. It is up to the householder, to agree a price, collect the rent and deal with the client.
Most homeowners trying to find customers were this week asking for a 50% deposit upfront and for the balance to be paid prior to the keys being handed over. This looks to be the major hurdle of going down the DIY route. After all, how many people would be prepared to send a £1,000-plus deposit to a stranger in the expectation that they will honour a rental a year later?
Rob Mearns, who set up rentduringthegames.com from his base in Vancouver for the 2010 Winter Olympics, says there are currently 310 properties on his site. The average house is listed at around £3,400, or £900 per bedroom. Flats are typically being offered at around £1,300 per week.
“We are starting to see a much higher demand – website traffic is up over 620% since January, and I suspect the demand will just get much, much higher the closer we get to the Olympic Games,” he claims.
Jo Selby of east London agents Alan Selby & Partners questioned whether those with long-established and happy tenants would want to go to the trouble of finding short-term Olympic lets, unless they just happen to have a vacancy at the time.
Others have questioned whether families have really considered what it entails. Cupboards and wardrobes will have to be emptied and personal possessions removed. The house will have to be spotlessly clean, and there is the cost/aggravation of finding somewhere else to stay.
Lastly, don’t forget the taxman will want his share of the income you generate. Homeowners who decide to let their homes will also need to check with their insurers, as most household policies do not cover commercial rents. And your mortgage provider may have something to say on the matter, and will have to be notified.
During the 2000 Games in Sydney, a late scramble for accommodation drove up rents, especially near the Olympic village, to as much as 10 times normal rates. However, even as the Games started, lots of homes were still available.
Posted in Features, House News, London, Money, Olympic Games 2012, Property, Renting property, Sport, The Guardian, Travel | Comments Closed
Monday, May 30th, 2011
Survey shows high prices and hefty deposits means two-thirds of would-be first-time buyers are unlikely to buy a home in the next five years
Two-thirds of potential first-time buyers have no realistic prospect of owning their own home in the next five years and lack the long-term saving mentality they need to get onto the housing ladder, according to a report on home ownership by one of the UK’s biggest mortgage lenders.
Owning a home has been a priority for most Britons since the 1950s when living standards began to rise, but the Halifax says that the high cost of property, strict lending rules and unwillingness of non-homeowners to save a deposit have fundamentally changed the attitudes of younger people towards home ownership.
In a survey of 8,000 people aged between 20 and 45, only 5% of those described by the Halifax as “Generation Rent” (those with no realistic prospect of getting on the housing ladder) are making spending sacrifices to save towards their first home. The remaining 95% have no spare cash, no interest in saving or are trying but failing to save.
Almost half the people questioned predicted that Britain would become a nation of renters within the next generation.
The report says that such a development would have far reaching consequences for the economy and living standards in Britain. As much of Britain’s wealth is tied up in housing, an increase in the rental sector could widen the wealth gap between homeowners and non-owners. It would also have an impact on retirement living standards, as less people would have the money in their homes to support their retirement and long-term care.
A rise in renters would also lead to a more transient population – although good in terms of labour mobility, the phenomenon would not encourage the building of strong communities.
However, the most immediate impact would inevitably be on the housing market. The report says: “In order for the market to remain sustainable, homeowners need to be able to move up the housing ladder. Without first-time buyers, there could be a standstill in the market as many people living in their first homes would not be able to move up the ladder without a first-time buyer purchasing their home.”
London is the most difficult area for aspiring homeowners to buy in, thanks to the combination of the highest property prices in Britain and increasing rental costs, reducing the amount that can be saved towards a deposit.
According to recent analysis by Findaproperty.com, first-time buyers who have no financial assistance from their parents will rent in the capital for an average of 31 years (from the age of 21, based on figures from the National Housing Federation) before buying their own home, spending £308,558 on rent. The average price of a home in London for first-time buyers is £257,249.
The average time spent renting in England is 16 years, taking the average age of the financially unassisted first-time buyer to 37. The National Housing Federation predicts this could soon rise to 43 as more people struggle to raise deposits.
Sarrah Laspa, a 29-year-old who has lived in London for seven years, regards rent as “wasted money” and would love to buy her own home, but has no disposable income left at the end of every month with which to save a deposit. She lives in Borough, a central area of south London, which is within walking distance of her legal publishing job and spends half her monthly income on rent.
“I could live further out, but then I would have to pay for public transport which would negate the benefits of cheaper housing,” she said. “And being single, it would be pointless living in the middle of nowhere.”
While the main barriers to home ownership are financial, the study found that many non-homeowners are deterred by fear of the mortgage application process, with 84% believing that banks do not want to lend to first-time buyers. Many worry that if their application for a mortgage is rejected by one bank, this would stay on their credit record and hinder further attempts to borrow.
Stephen Noakes, commercial director of mortgages at the Halifax, says the bank will publish more information about the criteria used to assess applications and explain that failed applications do not have a long-term negative impact. Home ownership rates have remained virtually static at 70% since the 1990′s, but the number of first-time buyers has slumped in the last few years as property prices increased and lenders began to demand much bigger deposits. According to figures produced by the Council of Mortgage Lenders, 36,200 first-time buyers bought a home in the first quarter of this year compared to 43,600 in the first three months of 2010. But both figures are dwarfed by the 167,400 people who became homeowners at the peak of the market in the third quarter of 2001.
The size of deposit required to buy a first home has soared. In 2000, a first-time buyer needed an average deposit of £9,865 or 14% of the property price, but this grew to an average of £28,770 or 21% of the property price by last year.
Posted in Banks and building societies, First-time buyers, House News, House prices, Housing, Housing market, London, Money, Mortgage lending figures, Mortgages, News, Property, Renting property, The Guardian, UK news | Comments Closed
Wednesday, April 20th, 2011
The Ukrainian billionaire has just bought the most expensive property ever sold in the UK
Age: 44.
Appearance: Evil Adrian Chiles.
I’d say he looks more like a posh Ralph Wiggum. Perhaps.
Or a crushed Louis Walsh. Shall we move on?
Sure. Let me guess: he’s a super-rich billionaire. That’s a tautology.
So’s evil Adrian Chiles. Touche. Yes. He’s a super-rich billionaire. Forbes magazine lists him as the 39th richest person in the world, with a £9bn empire run from headquarters in Donetsk, the eastern Ukrainian mining town where Akhmetov was born. Naturally, he now owns the football team. He made his first million trading coal and now runs steel, electricity and media businesses.
Ooh, I’ve got another one! Pointy Chris Huhne. Brilliant. They do indeed look vaguely similar. Can we talk about what he’s done now?
What has he done? He has bought a pair of new flats at One Hyde Park in Knightsbridge, London. For £136m.
And? And he’s spending another £60m knocking them through into a three-storey penthouse with a private cinema, a 21m swimming pool, saunas and a gym. Treated as one property, the resulting £136m apartment is the most expensive residential UK property ever sold.
Looks like Peter Beardsley’s less talented brother has done all right for himself. That’s enough with the look-alikes now. We don’t want to get in trouble with a billionaire.
Don’t we? That’s not what I signed up for. I’m a serious investigative journalist. No, you’re not. You’re me pressing Ctrl and B and pretending to be an idiot. Now ask me one more question and let’s wrap this up.
Fine. Anything else we ought to know about this Akhmetov guy? Ukrainian journalists have accused him of having links to organised crime. A claim we should definitely, definitely point out he has vigorously denied.
Surely that’s the part that will get us in trouble. Let’s hope not.
Do say: “He looks like a nice man with a forgiving sense of humour.”
Don’t say: “He also looks a bit like a sad owl.”
Posted in Europe, Features, House News, House prices, London, Money, Property, The Guardian, UK news, Ukraine, World news | Comments Closed
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