The recent increase in VAT, from 17.5 % to 20%, is yet another hindrance for people thinking of moving home.
VAT is payable on just about everything and that includes estate agents and solicitors fees, so instead of paying £17.50 on each £100.00 of fees, you will now pay £20.00. House sellers in Scotland also have to obtain a compulsory survey and energy assessment, costing £500. The fee for this used to be payable after the sale was completed, but a change in the regulations means the charge is now payable up front.
Owner-occupation in the UK has already dropped to 68%, the lowest level seen for twenty years and now that mortgage lending companies have imposed stricter lending criteria, some experts predict that the downward trend is set to continue.
The housing market is definitely experiencing hard times at present due in part to falling house prices and a lack of contractor mortgage availability. During 2010, the number of homes for sale increased by 44% to 975,000, but the number sold fell by 11%.
Potential first-time buyers are forced to rent instead of buy due to high deposit requirements and yet in some areas rents have increased by nearly 20% over the last year. According to www.zoopla.co.uk, the property search website, it now costs more to rent a two-bedroom flat than it does to buy in the largest UK towns and cities.
Grant Shapps, the housing minister, said recently that people should not look at property as a long-term investment or alternative means of funding their retirement. Currently the only people with that option appear to be buy to let landlords who are profiting from the rental bonanza.
This past weekend saw more yet bad news for people hoping to buy a brand new property. The number of planning applications lodged in the final quarter of 2010 was the second lowest for nearly five years.
We have still to see how 2011 is going to pan out as far as house prices and mortgage availability goes, but it could be that our love affair with home ownership has come to an end. In future years, the UK could end up more like Germany where home ownership stands at just 47%.
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