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Archive for October, 2014

Second Time Buyers Need an Extra £60,000

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Discussions of the difficulties of buying a home tend to focus mainly on first time buyers who are trying to get onto the property ladder, but a recent report from Lloyds Bank suggests that making a second move can also be very hard.

Rising house prices have made it more difficult for homeowners to afford to move into a new property, particularly as many of those who would like to move are looking for larger homes to house an expanding family. Although the values of the properties that the homeowner hopes to buy and sell may have been increasing at about the same rate, the gap between them has also been widening.

The difference between the value of potential second-time buyers’ current homes and the types of properties that they would like to move into has grown substantially over the last few years. It has risen by an average of about £18,000 since 2012. Homeowners who are planning to move into their second property will now need to find an extra £58,400 on average, above what they will make on selling their existing home. To put this number in perspective, it is about double the average deposit paid by a first-time buyer.

The growing financial burden of taking the second step up the property ladder has made it more difficult for homeowners to move on. According to Lloyds, more than half of those currently living in their first home said that they had wanted to trade up during the last year, but had been unable to do it. This isn’t just a problem for those struggling to find their second home, or for sellers who are marketing properties suited to second-time buyers. All of these people who are stuck living in their first home while wanting to move on are also reducing the number of properties available for first time buyers.

However, despite the difficulties, the report also showed that prospective second-time buyers were feeling more confident about their chances of moving on. The 35% who believed that economic uncertainty would make it difficult for them to buy in 2013 has now dropped to 25%, while the number who are worried about finding the deposit for a second home has dropped from 50% to 37%.


Communities Tell Councils: Cut Opening Hours, Not Services

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The recent public consultation over changes to recycling services in Hertfordshire revealed substantial opposition to the closure of two local recycling sites, and demand for services to be made available at evenings and weekends, even if overall opening hours had to be cut.

Hertfordshire is not alone in having cuts proposed to its rubbish removals and recycling services. Other councils around the UK have also been looking for ways to cut down on their spending in order to cope with their ongoing financial hardships. It seems that our waste services are an easy target for budget cuts, despite their importance for public health and the environment.

A similar situation arose last year in another part of the country, when drastic cuts were proposed to waste services. The East Sussex council announced that it was hoping to close down three of its recycling centres. A public consultation was held to discuss the idea, and the resulting outcry was so extreme that the council had to change its plans. At the beginning of October, they announced that rather than getting rid of these sites completely, they will simply have their opening hours cut. The cuts will still be severe, with the sites reduced to opening for just three days a week, but this will enable the sites to be saved, while the council can save £1.8 million over the next 18 years of their contract with the waste service provider.

Despite the pressure for councils to keep finding ways to cut costs, the consultation process underwent a similar pattern in Hertfordshire. The council considered the various surveys, letters, and petitions that were handed in as part of the public consultation, and decided that closures were not the right way to reduce spending. Instead, new schedules will be created to keep every disposal site in Hertfordshire open, with hours designed to make life as easy as possible for local people. The council has also recommended that the new waste service provider, AmeyCespa, should make every effort to increase recycling in the area by reaching out to the community and promoting reuse and recycling.


Are Home Buyers Better Off Now ?

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Home BuyersBuyers who are struggling to come up with the deposit to make their move might find it a little hard to believe, but a recent report from estate agency Hamptons International suggests that buying a home today might actually be easier than it was just a few years ago.

The authors of the report came to this optimistic conclusion after creating an affordability index that compared the costs of various items before and after the financial crisis. The ratio of property prices to earnings was a key component of the index, but the researchers considered many other types of costs that potential homeowners need to take into account when budgeting for their move. These included mortgage rates and the cost of living, including paying for food, utilities and other essentials.

The cost of these essential items has increased significantly, rising 28% since 2008, putting greater financial pressure on many families. Incomes have also risen, but by a much smaller amount, leaving many families with much less disposable income than they used to have. This rising cost of living, coupled with the recent increases that we have observed in property prices, might make it seem as though buying a home today must be more difficult than it was before the crisis began. However, the average property still costs about 5% less than it did at its pre-crisis peak, and lower interest rates have been keeping down the costs of purchasing a home. Buyers today are actually spending a lower proportion of their earnings on their mortgage repayments than they were in 2008, making homeownership more affordable, although buyers may now need to raise a larger deposit than they would have been required to in the past.

Despite this apparently good news, not everyone is looking forward to making a move into their own home. According to a survey conducted by the insurance company Aviva, many of those who are currently living in rented accommodation do not see themselves ever able to get on the property ladder. About 25% of tenants aged 35 to 44, and 50% of those aged 45 to 50, do not expect to be able to buy their own homes.


Recycling Targets: Are We Meeting Ours?

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Ahead of the release of the official statistics on recycling in November, councils around the country have been analysing the league table released by letsrecycle.com, which shows how well placed each area is according to provisional estimates of its recycling rate.

Some parts of the UK have done very well. Swansea, for example, has managed to reach its high target of recycling 56% of its waste. This success was attributed to a new fortnightly limit of three bags of rubbish that was introduced in April, and to the door-to-door visits offering residents advice on recycling and reducing waste. The target will be raised to 58% next year.

However, other parts of the UK have struggled, and some have missed their targets. Scotland has been striving for an overall rate of 50% since 2013, but it has not managed to reach it this year. The average for all 32 Scottish councils was 42%, meaning that there is still plenty of work to do in order to boost recycling. Nine of the councils had managed to meet the target, with some exceeding it by substantial amounts. Clackmannanshire actually achieved a 60% recycling rate. However, there were some very low rates in other parts of Scotland that drew the average down. Shetland only managed to recycle 12% of its waste, while Dumfries and Galloway recycled 24%.

Closer to home, South Oxfordshire managed to claim the top spot in the league table, with a recycling rate of 65.71%. A lot of work has gone in to achieving this high rate. Mixed recyclable waste is collected every fortnight, relieving residents of the need to sort their own recycling, and food waste is collected separately once a week, keeping it out of landfill. Rochford, which took second place this year after several years at the top, managed to recycle 65.49% of its waste, through a three-bin system collecting food waste weekly while taking other recyclables and waste every two weeks. New incentives are expected to be introduced next year that could boost Rochford back into the top spot, and the goal for 2016 is to be recycling 70% of waste. The overall goal for the UK is now to reach 50% by 2020.


Are House Prices on Their Way Down ?

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Property Prices DownThe market has been looking better for buyers for a while, thanks to the increasing number of properties for sale and the smaller numbers of people looking for a new home. However, what homeowners, including recent buyers, want to know, is what will happen in the longer term. A new report from the Centre for Economics and Business Research has predicted that next year could be a significant turning point for the property market in the UK.

Prices have tended to rise during 2014, and this is a trend that is set to continue throughout the rest of the year, according to the CEBR. The end result is likely to be an overall increase of about 7.8%. However, the trend is expected to reverse in 2015, when property values may start to decline. The predicted fall is not likely to be as large as the rise that we have seen this year, so that gains in value that have accumulated over 2014 will not be wiped out completely. The CEBR predicts that the dip in prices in 2015 could be just 0.8%.

Although this amount seems small, the turn from steady increase to small decline could be significant for anyone who is hoping to move into their own home for the first time. While existing homeowners who are expecting to move may find the reduction in prices offset by the decrease in their current home’s value, first time buyers could benefit from prices that could drop by an average of just over £2000, as well as the chance to get onto the property ladder without having to catch up to prices that keep climbing just out of reach.

If the CEBR’s predictions do come true next year, then 2015 will be the first year that property prices have declined since 2011. Several factors make such a decline likely, and their effects are already beginning to be seen on the market. The Mortgage Market Review began to slow down mortgage approvals in April, demand from buyers has declined particularly in the least affordable areas, and expectations that the Bank of England will raise interest rates have made many more cautious about the housing market.


Renters Face Increasing Competition to Find Homes

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Homebuyers are not the only ones who face competition when looking for a new place to live, but while the market is becoming more favourable for those who are planning to buy their new homes, the competition is becoming fiercer for those looking to rent. While potential buyers are seeing increasing numbers of homes on the market, at the same time as the number of competing buyers has declined, the number of properties that are available to rent seems to be declining.

The Association of Residential Letting Agents has reported that there is a significant shortage of rental properties, with many more people looking for new rentals than there are properties available. According to a survey conducted by the association, 68% of agents across the country had found that the number of people seeking to rent had grown larger than the number of properties available during the third quarter of the year. The shortfall of rental properties has been growing worse since the beginning of the year, largely because of a decline in the number of properties available to rent.

In the last three months, the number of rental properties being managed by members of the ARLA has dropped by about 6%. The average letting agency now manages about 135 properties, while three months ago the average was 143 homes. Many of the properties that have been taken off the rental market have been put up for sale by their owners, who are seeking to cash in on the better prices that are currently available. Almost one in three landlords are currently selling at least one of their properties. More rental properties are being sold than there are properties being bought to let, resulting in an overall decline in the rental market, despite the growing number of people who are looking for rental properties.

The growing number of landlords who are putting their properties up for sale is good news for anyone who is hoping to buy a new home, since it has contributed to the increasing number of properties on the market, reducing the competition between buyers. However, those who are planning a move into a new rental property may find it harder to get the home that they want.

 
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