Housing affordability in the UK reflects the ability to rent or purchase property. Home ownership in the UK has the following main types: Occupied owners; Private Sector Rental (PRS); and the Social Rent Sector (SRS). The affordability of housing in the UK varies widely regionally - house prices and rental rates will differ as a result of market factors such as the state of the local economy, transport relations and housing supply. For the key determinants of property occupied by the owner of affordability are: house prices; income; interest rate; and purchase cost. For leased properties, PRS rentals will largely be a reflection of house prices, whereas SRS leases are set by Local Authorities, Housing Associations or similar on the basis of what low-income groups can afford.
Video Affordability of housing in the United Kingdom
House price
Land Registration figures for England and Wales show that house prices rose from Ã, Â £ 70,000 to Ã, Â £ 224,000 in 20 years between 1998 and 2018. Growth was almost continuous during the period, except for a two year period of decline around 2008 as the result of the banking crisis.
Average house price compared to average salary
The gap between average incomes and average house prices has changed between 1985 and 2015 from twice the average salary to six times the average income, in the least expensive regions of England and Wales. Average house prices in London average homes now cost up to 12 times the average London salary. In 1995, 19,000 and average house prices were Ã,  £ 83,000, 4.4 times median incomes. In 2012-13, the average income in London has risen to  £ 24,600 and the average London home price has risen to  £ 300,000, 12.2 times the average income
In 1995, the Basic Interest Rate of the Bank was 6%, in March 2009 reaching 0.5% until August 2016 when it decreased to 0.25%.
The impact of planning restrictions on house prices
Some economists and pressure groups such as Shelter argue that planning restrictions are a factor behind price increases because up to 70% of the cost of building new homes is the purchase of land (up from 25% in the late 1950s).
Analysis by the LSE and the Dutch Bureau for Economic Policy Analysis found that house prices in the UK would be 35% cheaper without regulatory constraints. A report by Adam Smith Institute found that by using 4% of London's green belt, one million homes can be built within 10 minutes on foot from the train station.
The Economist criticizes the green belt policy, saying that unless more homes are built through law reform planning and releasing green belt fields, then the housing space needs to be rationed. He noted that if general inflation rises as fast as house prices since 1971, chickens would cost $ 51; and that the UK "build fewer houses today than ever since the 1920s". According to the Institute of Economic Independent Affairs, there is "remarkable empirical evidence that planning restrictions have a large impact on the cost of housing" and are the main reason why housing is two and a half times more expensive in 2011 than in 1975.
The UK Campaign for Protecting the UK argues that "Green Soil Land is important to our wider environment, giving us undeveloped trees and land that reduce the effects of heat generated by big cities." Instead of reducing this green space, we should use it for the best effect We know from our research that three quarters (79%) of the population want to see more trees planted and more food growing in the area around towns and cities. "
Assessment of land and its impact on house prices
The property company stated that the value of the land follows the price of the house and that the developer assesses the price of the new building's house can be reached at a certain location with reference to the price and the level of sales in the second-hand market and on comparable new building sites. At the ground level (assuming no affordable housing, S106 or CIL), they then multiply the price of the new house by the number of houses to be built on the ground and to achieve the gross development value (GDV) of the site. The underlying value of land is GDV minus development costs and less allowance for earnings.
Maps Affordability of housing in the United Kingdom
Property cost
The main taxes imposed by the central government are Stamp Duty and Value Added Tax (VAT). Other costs associated with buying and selling property are real estate agents, freight and survey fees, mortgage arrangement fees (if any), and removal fees.
Land Customs Tax
Stamp Duty Land tax payable by the buyer of the property as a percentage of the purchase price.
From December 2014, the Battery is converted into a pass system that removes the jump in stamp duty at the threshold value. For example, a property of £ 600,000 under the old system would pay 4% of the total asking price of £ 24,000. Under the new system, no taxes are payable on the first £ 125,000, the next Ã, £ 125-250,000 is charged at 2% ie Ã,  £ 2500 plus part (Ã,  £ 350,000) in tax band  £ 250,000 ,  £ 925,000 at 5% ie Ã,  £ 17,500. This gives a total tax of £ 20,000. This change is said to be beneficial to 98% of property purchases but leads to falling sales at the top end of the market.
Property Agent Fees
In 2011, Which one? magazine found the national average agency cost agency to be 1.8%.
Survey
There are four main types of surveys: assessment survey, condition report, home buyer report and complete structural survey.
Legal charges
The transfer fee varies according to the value of the property and services provided.
Mortgage adjustment fee
In April 2013, The Daily Telegraph reported that research by Moneyfacts showed the average mortgage arrangement cost of Ã, Â £ 1522.
Possible solutions
Changing board tax
The Joseph Rowntree Foundation has suggested replacing the Board's current tax system based on house price bands with a system which means taxes are more closely tied to property prices. This will increase the tax on the property with the highest price and lower it to the lowest. They claim it will also have the effect of reducing the volatility of house prices.
Land value tax is the proposed replacement for board tax, supported principally by the London mayor Sadiq Khan, which will be based entirely on the value of the land (ie the location) and not on the value of the building built on a piece of land or repair made. Therefore it will not penalize building repairs, including the addition of more living space, and will reduce house prices and volatility in house prices. Also, because it will increase a large amount of income, it could be used to fund the construction of new social housing.
Other commentators state that the Land Value Tax will cost ordinary people out of their homes, at a cost as high as Ã, Â £ 10,000 per year for properties outside of London and more for those inside.
Reducing international investment demand
In 2015, Bow Group, a conservative think-tank, produced a report showing a reduction in demand for international property investment. The report proposes limiting foreigners to buy new properties, with penalties if sold within five years. In 2016, the London mayor, Sadiq Khan, launched an investigation into housing costs in the city, which also highlighted the impact of foreign investment.
Second home ownership
The government is preparing £ 60m to help the board handle high-level homeownership. In 2016, a referendum in St Ives, Cornwall found 83.2% of voters supported a new housing project provided for full-time residents, as many tourists who frequent the area and Cornwall are very popular for both home ownership and vacation.
Buy-to-let tax change
Beginning in April 2016, a stamp duty surcharge of three percent of the purchase price is required for a purchase that is allowed. Beginning in April 2017, buy-to-let mortgage interest payments will have a higher rate of income tax relief terminated by the government. Although, the company will not be affected by the new rules.
Rent a house
English Housing Survey Bulletin 13 states that by 2013/14 there are 4.4 million households in the private rental sector and 3.9 million households in the social rent sector, of which 2.3 million households (10%) hire from the association housing and 1.6 million households. (7%) rent from local authorities. Private tenants have the highest weekly housing costs, paying an average of Ã, £ 176 per week in rent. Mortgagors pay an average of Ã, £ 153 per week in mortgage payments while the average weekly rent in the social housing sector is Ã, Â £ 98 for tenants of housing associations and Ã, Â £ 89 for tenants of local authorities. When considering gross weekly income, including allowances, of all household members, the proportion of income spent on housing costs is 18% for mortgagor, 29% for social tenants, and 34% for private tenants.
London
The demand for more affordable housing is often higher in London than across the UK. Research from the Trust for London found that 24% of new housing settlements in three years until 2015/16 are affordable, representing 21,500 homes. 6,700 affordable homes completed by 2015/16, which is only 39% of the targets set in the London 2015 Plan.
See also
- Homeless in the United Kingdom
- Awesome
- Green belt (English)
- Housing in the United Kingdom
- Great Recession
- Help for Purchasing
- List of entities involved in the financial crisis 2007-2008
- The real estate economy
- Subprime mortgage crisis
References
Source of the article : Wikipedia
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