The rising costs of running a property

Despite long-term subdued interest rates, the costs of owning or renting a property has been rising at a worrying rate. Published in November 2018, MORE TH>N’s CORAH (Cost of Running a Home) report has revealed that homeowners are paying on average £21,403 a year to run their homes versus £20,342 for renters.

Compared to 2017, this is a £3,206 increase for homeowners (an extra £267 per month). For renters the cost rose by £2,685 (an extra £224 per month).

 

For the third year running, London’s Westminster remains the most expensive place to rent the average home (running costs of £7,044.10 per month) and to own the average home (£12,578.53 per month).

The cheapest place to own a three-bedroom home is Antrim in Northern Ireland, where running costs come in at £1,066 per month.

 

 

Squeezed household budgets means that many people have few savings to cover unexpected expenditure. Indeed, the homeless charity Shelter reported that one in three would not be able to meet their financial commitments for more than a month if they lost their jobs.

This report mirrors the government’s own findings and those of the Skipton Building Society, which discovered that 25 per cent of adults have no savings whatsoever.  One reason for this was that 54 per cent of the average adult’s income goes on essential living costs.

The Building Society also noted, "But our results found people are more prone to splurging money on things they don’t need, rather than saving it and it’s this that has the greatest impact.”

 

The report, now in its third year, seems very comprehensive. According to MORE TH>N, it includes either mortgage or rent payments plus the following bills: utility bills, water bills, council tax, TV/phone/broadband, contents and buildings insurance, garden maintenance (including plants and tools), household furnishings (including textiles and appliances) plus general house maintenance. However, it does not include flat service charges, which are a growing menace, especially with new-build properties.

For many households, it’s possible to reduce many of these costs, and that should be a priority as the cost of living rises. Plus, of course, at some point interest rates will rise—now is the time to batten down the hatches; there may be storm clouds ahead.

 

 

Over the next few months we will look at all of the costs in MORE TH>N’s report and investigate how they can be reduced. We will also look at service charges and whether there’s a way to reduce these too.

In the meantime, before you buy anything, think about Skipton Building Society’s words and ask yourself, “Do I really need this?”