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Cost of living leaves many Britons without the money for a mortgage (8 September 2014)

Date: 08/09/2014
Duncan Lewis, Housing Solicitors, Cost of living leaves many Britons without the money for a mortgage

Research by website Shareamortgage.com has found that most Britons are unable to afford a mortgage on an average salary of £26,500, because the cost of living has risen to £13,281 before taking into account how much people have to pay for accommodation.

Traditionally, accommodation costs – whether these involve a mortgage or rent – were estimated to be one-third of a salary.

However, the International Business Times (IBT) reports that figures from Shareamortgage.com show that on an average salary, this has rocketed to half the salary.

In the case of low-wage earners, it is unlikely they could afford even the estimated cost of living – in some areas of the UK, £13,000 is an average salary.

On an average salary of £26,500, just £7,962 would be left to pay for accommodation after the current cost of living is deducted, says Shareamortgage.com.

House prices are also continuing to rise, with the average house price outside London rising to around £250,000 and inside London, almost £500,000.

More new homes are being built since the UK’s economic outlook improved – however, in London many new redevelopment projects such as Battersea Power Station are being marketed to “the global community”, rather then providing affordable homes. In the Battersea Power Station development on the south bank of the Thames, there is no social housing being included in the project.

The co-founder of Shareamortgage.com, Andrew Boast, said that the rising cost of living for those earning an average wage could mean they are “trapped by their budgets”, with many workers unable to meet the borrowing criteria set by lenders.

“Wage growth has been less than one per cent in recent months – and with property prices rising far quicker than average earnings, people haven't had the time to catch up with the rising cost of living, leaving many trapped by their own budgets,” Mr Boast said.

Across the UK, the average house prices to June this year stood at £276,000 in England, £167,000 in Wales, £137,000 in Northern Ireland and £193,000 in Scotland, IBT reports.

The Bank of England has been accused of sending out contradictory signals about when interest rates will begin to rise, but it is now thought these could begin to increase by January 2015.

This means thousands of first-time buyers who may have over-extended themselves financially to get on the property ladder will be facing higher monthly mortgage repayments once the base rate increases.

From October 2015 – after next year’s General Election – the Bank of England has also said it will also restrict lending to borrowers requiring four-and-a-half times their salary.

Usually mortgages are based on two-and-a half times a salary or three times an individual’s salary.

Under the government’s Help to Buy scheme, homes up to a value of £600,000 can be bought for small deposits of just 5% – meaning some first-time buyers may have stretched themselves financially to buy a larger property or a property in a more desirable location while mortgage interest rates have been low.

Duncan Lewis Housing Solicitors

Duncan Lewis housing solicitors can advise homeowners on housing matters such as debt management and mortgage repossession.

Duncan Lewis is also a leading provider of Legal Aid services and can advise rental tenants and social housing tenants on a wide range of housing matters, including:

• Disrepair of rental property
• Housing Benefit
• Housing possession
• Landlord & Tenant disputes
• Local Authority housing
• Unlawful eviction.

For expert legal advice on housing law, contact Duncan Lewis housing solicitors on 020 7923 4020.


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