With Sunak taking over the UK government, building 300,000 homes was mandatory, but the UK Prime Minister made it advisory, and according to the Guardian newspaper the decision will cost tenants an additional £200 a year by 2030.
In February 2023, according to official government data, rental prices increased by 4.5% in 12 months, worsening the cost of living crisis for tenants. Sunak ignored an answer to Starmer’s question about how long it would take the average saver to rack up £9,000 for a mortgage deposit New figures released this week showed the average rent in the UK was £1,190 and in London by £2,500 Data from March 2023 showed the biggest drop In housing construction, the opposition UK Labor Party is working on a new Tenants’ Charter which will provide homes to rent and buy. The Federation of Homebuilders earlier warned that scrapping the annual housebuilding target would cost the UK economy more than £17billion.
The cost of mortgages has risen following a series of unprecedented interest rate increases approved by the Bank of England, leading to fewer approvals for them in the UK, to the lowest level in two and a half years, after high borrowing costs clouded the housing market.
In an exclusive interview with “Sky News Arabia Economy”, British-resident parliamentary historian and journalist, Adel Darwish, who is among those affected by the mortgage crisis, says there are 3 groups affected by high mortgage costs in Britain, which destroyed the recent crisis as well as government policy, most of them:
One: ordinary people who buy real estate Second: the big real estate investor with the developer Third (worst of all): people who don’t have a pension
Darwish added that there are different types of inflation, namely:
Inflation resulting from rising prices for real estate, raw materials, construction, decorations and workers Inflation resulting from government policy and the fiscal policy it imposes
Mortgage payments are set to rise by £26billion a year by the end of 2024 as fixed interest rates expire for families, forcing them into more expensive deals.
According to analysis by the Resolution Foundation, more than 5 million households will see their annual mortgage payments increase by an average of £5,100 until the end of 2024.
Darwish explains his speech by saying: individuals are the most affected by inflation in the real estate market; Because it led to their inability to withdraw their deposits due to a lack of capital, in addition to the relationship between salary and the ability to bear the bank charges of the mortgage, which caused a decrease in the number of applications approved, and he expected “the continuation of this decline, due to the low savings capacity of families.
The UK-based parliamentary correspondent explains: “The UK government is trying to help with mortgage guarantees, where people can get a 95% mortgage with a government guarantee (borrowing around 95% of the purchase price of the property they want to buy, while 5 percent is the rest of the down payment), but the hurdle is that any new development is not like buildings built 200 years ago, which can withstand over 500 years to come, so they have no real value like older houses.
And he continues:
Interest rates are not the crisis. The crisis is that if you borrow from the bank, the interest is on the loan balance relative to the income. For example, your annual income is around £200,000 and the interest on the loan is around £90,000. It is deducted from the annual income under the Conservative government in 2015. Then Finance Minister George Ospen , allied with the Democrats, has phased out interest on mortgages, which has created two types of investors with the recent crisis: the first type which has increased the rent exaggeratedly to cover its costs, the second type has created a new housing crisis by selling at a loss to buyers outside Britain, and those leaving to preserve its long-term value UK government treatment to protect affected families from mortgage charges, is not enough, except for the measure that is being taken to help first-time buyers through this type of 95% mortgage guarantee scheme The Bank of England is trying to do two things at the same time: an attempt to actually control inflation resulting from external factors, and increasing interest rates which lead to a slowdown in the economy and affect all British families.
on the other side; Britain’s annual inflation rate unexpectedly accelerated in February 2023, despite efforts by the Bank of England to tame the growing cost of living crisis, official data shows, and the index Consumer price inflation rose on an annual basis to 10.4%, from 10.1 percent in January 2023.
Britain property expert Jonathan Rowland comments that general inflation has contributed to Britons being unable to afford the cost of living meaning they can afford lower costs on the rent or mortgage, so general inflation is hurting the real estate sector severely, while real estate itself is inflated in terms of rents and prices are rising at an unprecedented rate; However, selling prices were slowing down.
In January 2023, mortgage approvals in the kingdom were at their lowest since January 2009, and mortgage lenders are expected to reduce the supply of home loans in the second quarter of 2023.
Roland adds, in statements exclusive to “Sky News Arabia Economy”:
The government’s decision to cancel the construction of 300,000 homes per year has created a shock in the housing market. Homeownership rates are still low. The approval rate for mortgage applications is also low, and the curve is expected to take a downward trend until the end of this year.
Prospective UK home buyers are currently facing mortgage affordability issues and rising house prices
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