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Interest rate rise tips the balance on renting vs buying

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Renting has become cheaper than buying a property after last week’s Bank of England interest rate rise, new research has claimed.

The monthly cost of owning an average home with a 10 per cent deposit mortgage is now slightly higher than renting it, despite rental inflation hitting double digits for the first time in at least a decade, according to estate agents Hamptons.

It said that working on the basis that last week’s 0.25 percentage point rise in the Bank rate was passed on fully to borrowers then the picture has shifted from it being £40 more expensive to rent to £1 cheaper.

Hamptons estate agents said average rents in Britain stand at £1,152 a month, which is a rise of 11.5 per cent in a year - or the equivalent of £119 a month higher than a year ago

Hamptons estate agents said average rents in Britain stand at £1,152 a month, which is a rise of 11.5 per cent in a year – or the equivalent of £119 a month higher than a year ago

Hamptons has shown the monthly difference between renting and buying a property

Hamptons has shown the monthly difference between renting and buying a property

Hamptons models its calculations on the monthly cost of rent vs mortgage payements for someone owning a home with a 90 per cent loan-to-value loan. It does not factor in the requirement to save a deposit to do this. 

Average rents in Britain stand at £1,152 a month, which is a rise of 11.5 per cent in a year – or the equivalent of £119 a month higher than a year ago, said the estate agent.

It is the first time that rental growth has reached double digits since Hamptons began started its records in 2012.

The latest figures show rental growth has surpassed the previous record rate set in April of 9.8 per cent.

With rents rising quickly and mortgage rates near historic lows, it had been cheaper to buy a home in Britain than rent for the past 11 months, but successive Bank of England rate rises since December have pushed up home loan rates, narrowing and then eradicating the gap.

It was £160 cheaper to buy than rent in November of last year, before Bank Rate started to rise from 0.1 per cent.

In May, by which point Bank Rate had reached 1 per cent, it was £40 a month cheaper to service a mortgage with a 10 per cent deposit than it was to rent the same home, according to Hamptons.

Now for a homeowner on an average 90 per cent loan-to-value mortgage, the rate rise would add a further £41 monthly costs, taking them from £1,112 to £1,153 – £1 above the £1,152 average rent.

The average mortgage rate for those with a 10 per cent deposit, used by Hamptons  for its modeling was 2.86 per cent, with last week’s 0.25 percentage point rise taking it up to 3.11 per cent. 

Hamptons has revealed that renting is cheaper than buying a property despite soaring rental growth

Hamptons has revealed that renting is cheaper than buying a property despite soaring rental growth

The Bank of England has repeatedly raised interest rates in recent months, pushing up the cost of borrowing among homebuyers

The Bank of England has repeatedly raised interest rates in recent months, pushing up the cost of borrowing among homebuyers

In reality, the cost of new fixed rate mortgages is not directly affected by the Bank of England’s rate in this way – and they will not move up directly in line with it, as Hamptons has modelled.

On top of this first-time buyers also need to save for a deposit. For many this is the main barrier getting onto the property ladder, with house price inflation pushing the amount needing to be saved up.

Chris Hutchinson, of rental firm Canopy, said: ‘The housing market is showing a few signs of cooling but it cannot be ignored that house prices are still far too high, making homeownership a pipe dream for many, particularly first time buyers. 

‘Add to this the backdrop of the cost of living crisis and it’s no wonder many can’t even begin to think about buying.’ 

Each 0.25 per cent rise in the Bank Rate will push the cost of buying further above the cost of renting by £41 a month for a typical first-time buyer with a 10 per cent deposit

Each 0.25 per cent rise in the Bank Rate will push the cost of buying further above the cost of renting by £41 a month for a typical first-time buyer with a 10 per cent deposit

Although it is now marginally cheaper to rent, the current situation is in sharp contrast to two years ago at the height of the pandemic when lenders raised mortgage rates for buyers with small deposits – making it considerably cheaper to be a tenant.

Although at that point, the Bank of England had cut Bank Rate to an all-time low of 0.1 per cent, lenders raised mortgage rates to reflect the higher risk of lending.

These higher mortgage costs meant that for the first time since 2014, renting was cheaper by £65 a month than buying with a 10 per cent deposit.

Mortgage rates subsequently fell substantially to reverse this scenario and make owning the average home with a 10 per cent deposit cheaper, despite property inflaiton pushing up the size of home loans needed.

For buyers with a 5 per cent deposit, it has nearly always been cheaper to rent than buy since the monthly mortgage costs are higher.

Last week’s Bank Rate rise means it will be £105 per month more to buy than rent, up from £59 in May 2022.

There are also regional variations to factor in. For someone with a 10 per cent deposit, it is typically cheaper to rent rather than buy in the south of the UK, while in northern areas it is generally cheaper to buy than rent.

Harriet Scanlan, of estate agents Antony Roberts, said: ‘The ongoing scramble for rental property, which is already of concern for tenants, is only likely to get worse in the foreseeable future if more people have to rent for longer as buying becomes increasingly out of reach.

‘The lack of rental stock has been a major issue for some time. With many landlords selling up in order to take advantage of a strong sales market, particularly for large family homes, rents have been rising accordingly.’

The average rents on newly let properties in different areas has been revealed by Hamptons

The average rents on newly let properties in different areas has been revealed by Hamptons

London rents are on the up

For the first time since November 2019, rents in London grew faster than any other region in the country, the research also showed.

Average rents grew 15.7 per cent in the past 12 months, faster than the 13.4 per cent recorded in the South West over the same period.

The last time London rents were growing quicker than anywhere else was during late 2019 when rents in the capital were up 6.4 per cent during the year compared to 3.9 per cent across Britain.

Inner London saw rents jump by more than a third – up 33.6 per cent – during the course of the last year, the fastest growth recorded in any region since the Hamptons Lettings Index began.

However, almost all this growth was generated by the recovery from the falls recorded during the pandemic, with Inner London rents up just 3.1 per cent between January 2020 and May 2022.

Aneisha Beveridge, of Hamptons, said: ‘Rising interest rates are set to swing the scales for would-be first-time buyers.

‘For the last 11 months it’s been cheaper to buy with a 10 per cent deposit than rent due to rental growth running hot and mortgage rates near record lows.

‘But the Bank of England base rate hike will change this once again, pushing the cost of buying back above renting – a reversal of pre-pandemic times when the average buyer saved nearly £800 a year by owning rather than renting.

‘For many buyers though, it isn’t just the challenge of servicing higher monthly mortgage repayments, it’s saving up for a deposit which remains the big barrier.

‘Over the next year or so we expect several further small interest rate rises, with mortgage rates set to peak around the middle of 2023 which will add to the cost of buying in cash terms.

‘We also expect rental growth to slow later in the year as rising living costs squeeze affordability. By this point it will mean that for new buyers with smaller deposits, the monthly cost of purchasing a home will be significantly higher than renting one.’

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Bluewater grows its entertainment offer (GB)

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Landsec has announced the opening of a third ‘UK first’ attraction at Bluewater, Kent as the destination expands its partnership with Hangloose Adventures. Skydive, a free-fall experience not found anywhere else in Europe, and the UK’s only outdoor skydive machine has opened at the centre. It follows on from Europe’s biggest purpose-built giant swing, standing at 46-metre tall, which opened at Bluewater earlier this month.  

 

The announcement builds on a successful first year for Hangloose’s initial attraction Skywire, the longest zip wire in England, which has welcomed 30,000 guests since launching at Bluewater last June. Landsec will continue to work with Hangloose to expand its offering, with up to five more experiences set to open at the centre by 2024: a bungee tower, giant slide, clip and climb, waterdrop boulding wall, and Via Ferrata, a route-marked climb using metal rails and rungs embedded in Bluewater’s cliff walls.

 

Mark Warne, Brand Account Director F&B and Leisure at Landsec commented: “Delivering new experiences which are unique to Bluewater is central to our overall offer for guests. Hangloose’s innovative concept raises the bar when it comes to leisure attractions and draws guests from across the UK to Kent. By partnering with Hangloose to grow their business and create shared value, we’ll be able to give guests even more exciting experiences every time they visit.”

 

Brian Phelps, MD of Hangloose Adventure, said: “Since the beginning, we’ve worked closely with Landsec to grow our leisure concept and drive performance, putting us in a unique position where we’re able to expand our offer after only a year. We’ve enjoyed great success at Bluewater so far and are already thinking about how we can provide even bigger and better experiences in the future.”

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Author with immaculate house offers ten tips for a clean home

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Is this the secret to NEVER having to clean? Houseproud author claims she saves hours by sticking to a ten-step mantra – including banning chairs in bedrooms, wiping as you cook and only ironing shirts and dresses

  • UK writer Natali Juste Simmonds says she’s cracked keeping a home clean, by sticking to a few simple ground rules – and making sure family members comply
  • She shared top ten tips for keeping a home spotless with her 20,000 followers
  • Among them are ditching a toilet brush in the bathroom, not having a chair in the bedroom and cleaning  the kitchen while you cook

A houseproud author has revealed her ten essential tips for keeping a house spotless – saying simple ground rules for family members and cleaning as you go means never wasting time on dull chores. 

Writer Natali Juste Simmonds, who was born in the UK but now lives in the Netherlands, penned her top ways to keep on top of cleaning on Twitter, saying she has time to focus on her writing because she follows her own advice about dodging ‘thankless’ cleaning tasks. 

The author of a series of paranormal romance novels told her 20,000 followers on Twitter: ‘I know so many people who spend hours cleaning up after their family every day, but I refuse to. 

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UK writer Natali Juste Simmonds says she's cracked keeping a home clean, by sticking to a few simple ground rules - and making sure family members comply

UK writer Natali Juste Simmonds says she’s cracked keeping a home clean, by sticking to a few simple ground rules – and making sure family members comply

‘It’s boring and thankless. I prefer to write. Yet my house is spotless. Here are 10 ways to keep on top of s*** so you don’t have to clean for hours.’ 

Sharing her ‘tough love’ mantra, she said that the key to keeping a home clean is making sure every family member is engaged, saying learning how to tidy is a lifeskill that everyone needs – and no-one should get away with not doing it. 

Natali wrote: ‘Train everyone in the house to do the following (cats are the exception). After a while these habits will become routine, but you MUST stick to them and make sure no one is let off the hook.’ 

Among the tips are filling a bag with things that are in the wrong place at the end of every day and placing them back where they belong. 

Tidy home, tidy mind: The Netherlands-based writer shared her top ten tips for keeping a home spotless with her 20,000 followers on Twitter - saying that making sure everyone in the house pulls their weight is key (Pictured: An office area in Simmonds' home)

Tidy home, tidy mind: The Netherlands-based writer shared her top ten tips for keeping a home spotless with her 20,000 followers on Twitter – saying that making sure everyone in the house pulls their weight is key (Pictured: An office area in Simmonds’ home)

The writer also claims having a toilet brush doesn’t help keep a loo clean and dousing it with bleach instead is a more reliable way to ensure it’s sparkling. 

And getting used to wiping down mirrors after using a sink also helps, she claims, writing: ‘Keep a dry cloth next to the bathroom sink. Every time someone uses the taps or brushes their teeth, wipe down the counter and mirror. Takes literally 2 seconds. No cleaning toothpaste stains off counters.’

Teaching kids to pull their weight around the house is key to success, and equality reigns supreme in the Simmonds house. 

Among her top tips are ditching a toilet brush in the bathroom - using just bleach instead; not having a chair in the bedroom - to prevent people leaving clothes on them - and cleaning the kitchen while you cook (Pictured: Simmonds' very tidy office)

Among her top tips are ditching a toilet brush in the bathroom – using just bleach instead; not having a chair in the bedroom – to prevent people leaving clothes on them – and cleaning the kitchen while you cook (Pictured: Simmonds’ very tidy office)

‘If one kid lays the table, the other clears. If one hangs out the washing, the other collects. I don’t say “I need help with dinner” I say “who will chop the veg and who will wash up?” Its called a presumed close. I have no option, why should others in my house?’

The author, who has written books including the Indigo Chronicles trilogy and the Blood Web series, admits that having a cleaner is still useful…because they can help keep on top of areas where grime quickly builds, including fridges and ovens – but she suggests ditching a takeaway a week to cover the cost. 

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DIA Group closes 25 Minipreco stores in Portugal

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DIA Group has closed 25 Minipreco stores in Portugal, resulting in the loss of approximately 159 jobs. The retailer said the closures are the result of ‘the effort to adapt, modernise and balance the operations of DIA Portugal, with the aim of better preparing the company for current and future challenges arising from the current economic situation in the country,’ according to media reports. In the last two years, the multinational company operating in Spain, Portugal, Brazil, and Argentina, accumulated losses of over €620m.

 

In Portugal, net sales reached €283.1m in the first half, 4.5% below the €296.3m generated in the same period last year, due to the reduction of stores and mobility restrictions. DIA Group confirmed its intention to continue to invest in Portugal. The company hopes to adjust its operation to the current reality in order to ensure the future success of the company.

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