RUGBY is one of the least affordable towns to buy a house in Warwickshire, according to a new report.
The National Housing Federation has warned this week that Warwickshire’s housing market is “broken”, with unaffordable homes and rising rents.
But a Rugby estate agent has disputed the claims, saying house prices in the town are affordable - but finding a mortgage and deposit are not easy.
Hadyn Yemm, managing director of Complete Estate Agents, said: “It’s not the house prices, it’s the banks. Buying a house is a big commitment, particularly when banks are asking for a deposit of between ten and 15 per cent. If people haven’t got that sort of money then it’s unaffordable.”
The Federation’s report says that the average home in Warwickshire costs £220,579 – 10.1 times the average individual income of £21,900. Rugby came third in a league table which identified the least affordable areas in Warwickshire by combining these two factors. Here the average home costs £186,461 - 8.2 times the average income of £22.662.
Mr Yemm said that despite the figures, his company has recently sold a one-bedroom flat in Rugby for £63,000, a two bedroom house in Craven Road for £75,000 and a three bedroom house in Rowland Street for £88,000.
He added: “There are lots of houses in the town under £100,000 and the cheapest property we have on the market is a one-bedroom flat in Bilton for £50,000. We also have shared ownership homes so there is no reason why people shouldn’t be on the housing ladder.
“The market is affordable but we need some common sense from the banks.”
Cllr Craig Humphrey, leader of Rugby Borough Council, said that houses are selling in Rugby and there is demand, adding: “The business sector is very buoyant about Rugby and what it has to offer. It’s great a place to be.”
Mark Pawsey, MP for Rugby, said the Government knows there are difficulties and is looking at ways to help.
Mr Pawsey’s full reaction to the story is outlined below.
“It is generally recognised that there are currently difficulties in the housing market. The population is growing, but the number of new houses being built is not meeting that need. The problem is that, in Rugby as across the country, increasing numbers of people are unable to make a start on the housing ladder and crucially, usually not because of salary levels, rather the size of deposits lenders require. We are now seeing buyers having to find deposits of 20-25% in order to secure their first home with the average of a first time buyer now 37 unless they are able to rely on the bank of Mum and Dad. That is precisely why the Government has stepped in with an announcement made just last month. Grant Shapps, the Housing Minister said, ‘What we want to do is to make it easier for first-time buyers who say the biggest problem is the amount of deposit we have to get together. This is the biggest blockage.’
“One measure is the Government’s new build indemnity scheme is designed to aid those who otherwise would not be able to afford a property. This scheme applies to new homes and is led by the Home Builders Federation and the Council of Mortgage Lenders to provide up to 95 per cent loan to value mortgages for new build properties in England. Housebuilders will deposit 3.5 per cent of the sale price in the indemnity fund for each home sold through the scheme, and the Government will provide additional security for the loan in the form of a guarantee. It will enable home buyers to secure mortgages with at least a 5 per cent deposit, and support lenders to offer mortgages for new build, with the first loans available in spring 2012. The New Build Indemnity Scheme is part of a joined up strategy designed to break the vicious cycle, where lenders will not lend, builders cannot build and buyers cannot buy. It will allow homebuyers to secure loans on newly built homes - the bedrock of the first time buyer market - with only a five per cent deposit. Government’s support will drive forward an increase in the scale of the scheme and will ensure that the scheme can cover all new build homes. The Scheme will give a helping hand for up to 100,000 prospective buyers in England and should deliver both a significant increase in housing supply and access to affordable mortgages.
“However the new build indemnity scheme is not the only measure the government is introducing. The government is also helping first time buyers through FirstBuy – a scheme that will enable an eligible buyer to purchase a brand new property, funded by an affordable mortgage and with assistance from a Homebuy Agency and any of the house builders who are participating in the scheme. The FirstBuy scheme provides the chance to buy a new home with the assistance of an equity loan.
“And finally, the Government has established a “Get Britain Building Fund” will see developers compete for funding to take forward projects that have commitments to affordable homes. It is hoped that this £400m fund will build around 450,000 homes by 2015 increasing the supply of new homes the country needs.”