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Workers Struggle To Afford To Live In London

London workers pay up to 60% more on housing in order to live in the city they work than those living 1 hours travel away.

Research by Lloyds Bank has found that for Londoners, living in the most central areas of the city adds 60% or a total of £447,015 to average property prices. This is compared to the average property prices in established commuter areas, where good transport links allow access to central London through 1 hours travel.

Wellingborough, Southend, Sittingbourne and Rugby, all around 1 hours travel away from the heart of London have an average house price of £294,903, compared to the £741,919 necessary to buy the average property in central London.

Cost Of Commuting Far Cheaper Than Buying In London

The cost of commuting an hour each way is a sizeable £4,989 annually but when compared to the £447,015 difference in house prices, it would take a massive 89 years to even out.

For those living 40 minutes of travel away from central London, namely Hatfield, Billericay, Orpington and Reading, average house prices are £389,000. It would take almost 100 years of £3,534 annual train fares to make up the £353,000 difference.

Other Reasons People Commute

Director of mortgage products at Lloyds Bank, Andrew Mason says that people also consider other issues when deciding where to live. In their findings, “quality of life is also a major factor: family circumstances, better schools, physical environment and homes that offer better value for money also come into the equation.”

Mr Mason states that “commuters are often prepared to pay a premium to commute when they could be better off in purely financial terms living closer to their place of work.” This is the case in cities such as Birmingham and Manchester.

For Independent Mortgage advice please contact us at Hoskin Mortgages for more information.

Clare Allen.

Hoskin Financial Planning Ltd is authorised and regulated by the Financial Conduct Authority number 613005. The guidance and/or advice contained in this website is subject to UK regulatory regime and is therefore restricted to consumers based in the UK. Think carefully before securing other debts against your home. Your home may be repossessed if you do not keep up repayments on a mortgage or any other debt secured on it.

Shared ownership

Shared ownership

10 tips to help you on your way

1) Manage your expectations, because housing associations are not charities. If you default on rent or a mortgage, your home may be repossessed. The association will not bail you out if your home falls into negative equity or if you struggle to find a buyer down the line.

2) You may be banned from subletting. This could mean no lodgers or live-in partners, and no earning a quick buck on Airbnb. Check before you buy.

3) You may need to pay stamp duty. Most buyers opt to pay just on the portion of the home they will own and, if this is less than £125,000, you will be exempt. If it is above, you will be hit with a bill, and if you buy an increased share of the property, you might have to pay extra stamp duty too- and you will need a solicitor to do your conveyancing.

4) Rents usually increase annually, based on the Retail Price Index, plus one per cent. Over a year, this will add about £100 to £150 to the running costs of a £250,000 property (full price).

5) Don’t get seduced by the idea of fabulous extras, such as swimming pools. Shared owners are usually, and rather unfairly, excluded from using them. They also often have to use a different front door to people who have bought on the open market. “Poor doors” segregate lower-income residents, and are widely considered a scandal.

6) Shared owners often also get shunted to the worst part of a development – overlooking railway lines, a busy road, or on lower floors with no views. Ask to see a model, and certainly detailed plans, of the entire development.

7) As with any new home, you must find out how long the development around you is going to take to complete. Shared-ownership sections often get built early, which could mean years of building noise. And what if you want – or need – to sell up within a year or two.

8) Take a cool-headed look at potential price growth. If new transport links are planned, it will be a good bet. If it is in a run-down location with no sniff of regeneration, then you will be the first to be hit when any downturn happens.

9) When you want to sell, you might not be able to take full advantage of the market. The housing association will first offer the property to buyers on its waiting list for a set price (based on an independent estimate) and will not get into any bidding wars. On the plus side, there’s no gazumping or gazundering. If it does not sell, you will be able to pitch it on the open market.

10) You aren’t likely to become a property millionaire. If you buy a 50 per cent share of £500,000 flat and its price rises by 20 per cent, when you sell, you will make £50,000. However, you have to pay a fee to the housing association if it markets the property. If you sell through an estate agent, you will pay a fee of up to 3.5 per cent of the entire selling price. This could knock as much as £21,000 off your profit, so shop around for agents with lower rates.

For more help and advice please do not hesitate to contact us @HoskinMortgages