High cost of running UK homes

Haul of of frugs and cash at Halifax Police Station.
Haul of of frugs and cash at Halifax Police Station.

Families in the UK are among the worst off in Europe when it comes to the cost of running a home, a charity warned today.

Around one in six people in the UK (16.5 per cent) is spending more than 40 per cent of their income on housing costs such as rent, mortgage payments and other household bills, which charity Shelter said was evidence of the “deeply dysfunctional” housing market.

It highlighted European Union research, which found that the UK has three times the share of people weighed down by high housing costs than its neighbour France, where 5.2 per cent of people were spending more than 40 per cent of their income on such costs.

Only Denmark and Greece were found to have a bigger share of people paying high housing costs than the UK out of 29 countries analysed.

Countries such as Spain, Italy and Portugal fared better than the UK in the study. In Portugal, 4.2 per cent of people were found to be spending more than 40 per cent of their income on housing. Meanwhile, 11.2 per cent of people in Spain and 7.5 per cent of Italians faced the same strain.

Shelter said that a lack of affordable homes caused by a succession of governments and years of easy access to mortgages had helped to drive up house prices.

Campbell Robb, chief executive of Shelter, said: “These figures are the evidence that the UK housing market is deeply dysfunctional.

“With so many families spending huge amounts of their income on their rent or mortgage, people will be making daily trade-offs between food bills, filling the car tank with petrol, and paying their housing costs.”

Households have come under intense pressure from high living costs at a time when they are seeing little return on their savings, although there are signs of the situation improving as inflation eases off.

However, a study published by SpareRoom.co.uk earlier this week found that four in ten people living in rental accommodation cannot afford to save anything for a deposit to buy their own home, as high living costs and loan repayments are already swallowing up their cash.

Just over one in seven people included in that survey said they are having to spend more than two thirds of their take-home pay just on their rent.

Rents have soared over the past year as people unable to get on the property ladder, because they cannot raise a deposit or meet tightening borrowing criteria, have stayed in the rental sector.

A recent study from LSL Property Services, which owns chains Your Move and Reeds Rains, found that strong competition among tenants has helped the average rent to rise to £712 a month on average.

Average mortgage payments for new borrowers stood at 27 per cent of disposable earnings in the fourth quarter of 2011, the lowest share since spring

1997 when a 26 per cent proportion was recorded, and well below the 37 per cent average over the past 27 years.

But mortgage lenders have been steadily increasing their rates for both new and existing borrowers in recent months, blaming the weak economy and the increased cost of funding a mortgage.

Borrowing is expected to become more expensive and tougher in the coming months, particularly for those with a small deposit.