UK mortgages are cheap but rents are most expensive in Europe

The cost of renting somewhere to live is higher here in the UK than anywhere else in Europe, says the National Housing Federation.

British housing tenants pay, on average, 39.1 per cent of their income on rents compared to 29 per cent in the rest of Europe. Private rents in Germany and Holland, for example, are approximately 50 per cent cheaper than here in the UK.

The National Housing Federation, (NHF), also said that British tenancies are among the least secure in Europe because shorter contracts are more frequently offered to tenants by landlords. Tenancies in the rest of Europe are much more likely to be long term.

Homeowners, by contrast, are benefiting from low cost mortgages, particularly as many lenders lower their rates in order to compete with one another. The British Bankers’ Association (BBA), said that there are currently many ‘great deals’ available because of the ‘fierce competition’ between mortgage lenders, with many actively seeking to switch customers to fixed rate mortgage deals.

While property prices are increasing, the cost of borrowing, at least, is falling due to the drop in the number of properties on the market. Consequently, lenders are having to compete for the reduced number of homebuyers.

The disparity between the fortunes of tenants and homebuyers is a cause for concern for would be first time buyers, who are trying to save enough money for a deposit on their first home.

Chief executive of NHF, David Orr, said that high rents are just a symptom and that we have had years of under investment in the housing market. We are simply not building enough places for people to rent or to buy. Short term tenancies lead to insecurity, with tenants often being forced to move home frequently.

Debt management firms still mislead vulnerable customers, says watchdog

The Financial Conduct Authority, the City watchdog, has warned that a number of debt management firms increase some of their clients’ financial problems rather than helping them, by selling them unsuitable services and products.

The report by the FCA, cited the case of one woman who was sold a product that would have taken her 125 years to repay.

The watchdog said that some of the debt management companies that charge their customers a fee were particularly at fault, often giving debtors poor advice. They are legally obliged to inform their customers that independent free financial advice is available to them, but the report by the FCA gave the example of one vulnerable client, who was told that free advisors were in fact ‘owned by banks’ and so not impartial.

Debt management firms that do not charge their customers were better said the regulator but still left room for improvement.

Acting director of retail supervision at the FCA, Linda Woodall, said that people turn to debt management firms when they are in serious financial difficulty. They need to be given suitable advice that will enable them to make an informed decision. Too many debt management firms are failing to meet the standards expected by the FCA.

Debt management companies are supposed to identify vulnerable clients but, according to the report by the FCA, many are failing to do so, even when their clients have disclosed significant medical problems or difficulty with understanding legal or financial issues.

Chief executive of the Money Advice Trust, Joanna Elson, said that the FCA report confirms what many who offer free debt advice have known for a long time – that some debt management firms are failing to give appropriate advice and, in doing so, are exacerbating their clients’ debt problems.