In England, owners are becoming increasingly rare

The rise in house prices in recent years in England has mechanically reduced the share of property owners in the United Kingdom.

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Just because a country is populated by households that dream of buying their own home does not mean that it contains a large proportion of homeowners. This can be seen in France where, if the desire to become a homeowner remains inalienable – even among young people – in the end “only” 57.7% of households have bought the housing they occupy, says Insee. This makes France one of the European countries with the lowest rate of home ownership.

This is also true for England, where a study by the Resolution Foundation think tank shows that the proportion of the English population owning their homes has fallen to 63.8%, the lowest since 1986, while the highest national level was reached in 2003 with 70.8% ownership. However, the English are very attached to real estate ownership. Only less than 10% of private sector tenants in the UK say they do not want to own a property. And more generally, two thirds of the English who have resigned themselves to the idea of buying their home are resigned because they feel they will never have the means to do so.

A question of purchasing power

The purchase of real estate is therefore above all a question of purchasing power. However, in England, as in France, property prices have risen sharply in relation to household incomes over the past thirty years. In the 1980s, the first real estate purchase was made at an average price for England of less than 30,000 pounds (35,400 euros), while in 2015, an average of 150,000 pounds was required in the country and 330,000 pounds in London, recalls the Resolution Foundation study. As a result, more and more English people have become tenants.

Not surprisingly, the most extreme case is the capital, London, where the percentage of owners is now only 40% of the population. It must be said that London is the most expensive city in Europe: a Deloitte study mapping the areas that can be acquired in 19 countries for 200,000 euros shows that the English capital is the most expensive city in the ranking with… 11 m² ! And the amplification of the real estate bubble in recent years in London has only reinforced the phenomenon of exclusion of an entire segment of the population from home ownership.

A similar phenomenon was observed in Paris. After a sharp and disconnected increase in incomes between 1998 and 2011, real estate prices have become at least twice as high as in other major French cities. Thus, only a third of Parisian households are now homeowners and the rental stock represents a little more than 60% of housing.

Renting does not mean paying less in the short term

Paradoxically, in the short term, renting is not financially more advantageous. In England, for example, private sector tenants spend on average 30% of their income on rent, while landlords’ loans represent only 23% of their income. Renting in the private sector is therefore less a financial choice than an inability of households to buy because of high prices. For-Sale‘s study shows that the United Kingdom is the least affordable country because its inhabitants have to save for nearly 11 years to buy a 70 square metre apartment.

Moreover, the drop in the share of homeowners in England is not only true in London: cities like Manchester (-14 percentage points compared to 2003 to 58%) or counties like South Yorkshire or the West Midlands (respectively -10 points to 58.5% and -11 points to 59% compared to 2005) have also lost owners in recent years. “With prices and contributions constantly rising while incomes have stagnated in recent years, it is not difficult to see why an increasing number of people can no longer access home ownership,” the study confirms.

How effective are public policies?

The situation is all the more surprising given that the British real estate market benefits from historically low mortgage rates and that the government has set up a purchase assistance program that allows buyers to have only 5% of the purchase value of the property available for contribution. But apparently, such a public policy has not given a section of the population excluded from home ownership the opportunity to buy, quite the contrary, so this observation questions the effectiveness of public policies to stimulate real estate, sometimes inflationary.

They can even have perverse effects. Not only “because of the frustration it causes for those who cannot buy, but because of the impact on their standard of living,” the report notes. And even in the long term, this is also a problem, because a low rate of home ownership also means that “the younger generations will have a more uncertain retirement“.

Value of a property

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How to determine the value of your home?

The real estate market is a constantly evolving market. In question? Increasingly stringent energy standards, ever-changing housing trends, fluctuating interest rates and soaring or declining neighbourhood ratings. If you want to sell a property, it is therefore crucial to know its exact value at the time of sale. To obtain a realistic estimate of the selling price of your home, the best solution is to have its value estimated by an expert. How does this process work and what do you need to be aware of?

Why should you have the value of your home appraised?

Having the exact value of your home estimated can be important in several cases:

  • When selling your property: if you offer a price that is too low, you risk financial losses, and if you set a price that is too high, your property may never find a buyer.
  • Your banker asks you for an official estimate of the value of your home before granting you the requested credit.
  • You inherit a property, in which case it is preferable to have its value estimated. Indeed, when you declare your succession, you must communicate the value of this property to the authorities.
  • You are divorcing and your ex-partner wants to buy his or her share of the house. It is therefore important to agree on a fair price despite difficult circumstances.
  • You wish to integrate your home or any other real estate into your company‘s assets.

Factors influencing the value of your property

Investing in real estate is generally an excellent decision. However, some factors can change over time and cause the value of your property to change. This evolution can work in your favour, but also against you. In order to obtain a realistic estimate of the selling price of your home, it is therefore crucial to take all relevant factors into consideration. Sometimes, all it takes is one unfavourable element to drastically increase or decrease the value of a property.

1. geographical location

The geographical location of your home has a significant influence on its value. Two similar properties, one located in the city centre, the other in the countryside, will have a completely different value. Similarly, real estate prices in listed neighbourhoods will be much higher than in working-class neighbourhoods.

Even more important factors: the proximity of a station and/or major roads, the presence of schools, shops and leisure areas not far from your home.

On the other hand, the proximity of a company with noisy activities or heavy traffic around your property will greatly reduce its value.

2. the type of housing

There are many types of real estate: studios, apartments, two-sided houses, three-sided houses, four-sided houses, villas… Of course, the more exceptional the property is, the higher the price.

3. the stamp of your home

The architectural style of a house is also an important criterion for estimating its value. However, the latter remains highly subjective. Some people will appreciate a contemporary style, others a rather retro one.

4. the age and general condition of the dwelling

An older home will generally be cheaper than a new home, but a tasteful renovation can significantly increase the price of an older property. You should also know that a home in which major work will have to be done will be more difficult to sell.

5. surface area and number of rooms in the house

Living area, number of bedrooms, number of bathrooms, presence of a cellar, etc. These characteristics have a significant influence on the value of your property.

6. living comfort

Leisure facilities (sauna, swimming pool, games room, etc.) can significantly increase the value of a property.

7. the quality of the interior finishes

The presence of noble materials such as marble in the kitchen and/or bathroom will be a plus over standard finishes.

Estimate the value of your property yourself

An easy way to determine the value of your home is to calculate the price per square metre by comparing it with the price of properties for sale in your area. To do this, simply divide the sale price by the total surface area of the properties consulted and multiply the result by the number of square metres of your own home.

Another way to estimate the value of your property in figures is to base yourself on the value of a comparable home and then identify all the points that work in your favour or against you (location, surface area, number of rooms, comfort, etc.).

Your cadastral income can also help you determine the value of your home. This income is actually an estimate made by the tax authorities and represents the fictitious rental value of your home. The cadastral income is therefore equal to the net amount you would receive per year if you rented your property.

Attention: cadastral income is only a reliable indicator for new constructions or in case of revision after a major renovation.

Have the value of your property estimated online

On the Internet, you will find many sites/tools that can help you estimate the value of your home. Some are free, others are not free.

Have the value of your property appraised by an expert

To determine the value of your home, you may decide to use an expert such as a surveyor, architect, real estate agent or notary. The advantage? You receive a detailed report that justifies the final estimate point by point.

Since the services of an expert are rarely free of charge, we advise you to ask for a quote in advance. For the estimation of a real estate agent, count between 250 to 350 € excluding VAT. However, you should be aware that this amount will often be refunded if you sell your home through the services of the agent who made the estimate. The same is generally true for notaries, who will not count the estimate if you then use them to sign the deed of sale. Among real estate experts, it is surveyors and architects who charge the largest amounts. The rates applied are often hourly rates, which is why an estimate can cost more than 500 €.

Finally, note that if you inherit a property, it is always worthwhile to use a certified expert to estimate its value. This will prevent you from paying too much inheritance tax or having to pay a fine if the tax authorities believe that the value of your property has been undervalued.

Attention!

An estimate remains and will always remain a “simple” estimate. It is therefore likely that two experts will put forward figures that differ from each other. In addition, the final selling price of your home will also depend on your persuasiveness as a seller.