Buy To Let News – Renting More Expensive Than Buying?

24

It appears renting a home is more expensive than buying one in 80 per cent of British towns, new figures have showed. Rents are typically 10 per cent more expensive – although in some towns, they exceed mortgage payments by almost 40 per cent, according to the research by property website Zoopla.co.uk. It blamed a lack of affordable mortgages, which has forced potential buyers to remain in the rental market, helping push up demand for rental properties. At the same time, house price falls and low interest rates have reduced the cost of owning a home. Nicholas Leeming, a director at Zoopla, said: “Buying has always been cheaper than renting, but now we’re seeing a real divide in the market. For those who are able to buy a home, costs are low, but for those who can’t, costs are much higher – and the doorway to entry into the housing market is narrower than ever.”

In more good news for the buy to let market, tenant arrears dropped significantly and rents rose for the ninth consecutive month in October, according to LSL Property Services. UK rents rose by 0.4% to £691 per month – surpassing September’s record high of £689. The annual inflation in the average UK rent has grown to 4.5%. If rent inflation continues at the same pace, the average rent will hit £722 per calendar month this time next year. The average yield remained stable at 4.9% in October, as steady rent rises were matched by modest growth in the prices of rental properties. David Brown, commercial director of LSL, said that price rises would steady in the run up to Christmas but that strong underlying growth would remain.

House Prices

Official figures indicated that house prices fell by 0.8 per cent in September, but mortgage experts warned that further declines might be on the way. Statistics from the Department for Communities and Local Government found that the average house price fell month-on-month to £211,815 in September. That has slowed the generally rising cost of houses on an annualised basis to 6.1 per cent, against a rate of more than 10 per cent recorded in the spring. The official month-on-month slowdown is at a gentler rate than that reported by the Halifax, whose September statistics cited a drop of 3.6 per cent. Martin Ellis, chief economist for the Halifax, said: “We count mortgage approvals, whereas the Department counts mortgage completions, so their figures lag behind. Our latest quarterly figure [the three months to October] showed a fall of 1.2 per cent and we are expecting declines of a little over 1 per cent in the coming months.”

Retail Sales

Retail sales in the UK rose for the first time in three months in October, although figures are down year-on-year. Economic data from the Office for National Statistics show that retail sales increased by a higher than expected margin of 0.5% last month compared with September. Sales by volume over the last three months are up by 0.1% on the previous quarter period, but volumes are still down by 0.1% on the same month in 2009. “The increase in October comes after two monthly falls, and the figures may be artificially inflated by people bringing forward purchases ahead of the VAT increase in January,” said David Kern, chief economist at the British Chambers of Commerce.

The Base Rate Minutes

The stalemate on the Bank of England’s Monetary Policy Committee (MPC) has continued for a second month, the minutes of its November meeting reveal. As in October, seven of its nine members voted for no change to interest rates and no return to quantitative easing, while the votes of the other two members cancelled each other out. The minutes, published yesterday, show that the two dissenting members were Adam Posen and Andrew Sentance, who, as in October, took diametrically opposed views about what the MPC should do now. Mr Posen urged the Bank to relaunch its quantitative-easing programme of stimulus to the economy, on the grounds there is a risk that Britain will otherwise fall back into a damaging recession. Mr Sentance, on the other hand, voted for a small increase in interest rates, amid the continuing failure of the MPC to bring inflation back down towards its 2 per cent target.

Source by Rubel Zaman

· · ·


Related Articles & Comments

Menu Title