The Brief: Two thirds (35.6%) of London renters are motivated to move home within a year, according to Bloomberg Intelligence. This is higher compared to the national average of those currently renting but want to purchase a home in the next 12 months at 21.6%.
Why It Matters: The report mentions that the high cost of rent is a significant factor in the survey respondents’ decision to purchase a home.
Finanze® Foresights: London property prices had started to fall pre-mini-Budget in September, recording a 17% slump in the 12 months through June, according to the UK Land Registry. But the short-lived economic agenda of former PM Liz Truss set a faster pace of slowdown. London’s demand for financial district properties usually comes from professionals moving to work in the capital and socio-economic factors, but the modest increase in newly built homes still cannot keep pace with the rise in demand. In addition, financing home ownership can be a challenge, especially now that mortgage rates have breached the 6% threshold. But deciding on home ownership versus renting can be tricky. On whether is it cheaper to rent than to get a mortgage, Imogen Sporle, Finanze’s Head of Regulated & Term Finance, explains, “the majority of landlords have mortgages on the properties they are letting out, and although their mortgage payments are slightly lower as they pay them on an interest-only basis, due to the lenders debt service coverage ratio, they will still have to increase the rent they charge when the mortgage rates increase to ensure the rental income the property receives is enough to cover the mortgage at the lenders required DSC.”
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