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| MONDAY 15TH AUGUST 2005 |
 UK
COUNCIL TAX INCREASES HOME OWNERSHIP COST
New research by Halifax, based on the latest ONS data, shows
that the cost of owning and running a house rose by 5% in 2003/04, more
than four times the rate of CPI inflation, the government's preferred inflation
measure.
Rising council tax bills accounted for more than 30% of the total increase
in housing costs in 2003/04, the single biggest increase during the year.
Annual housing costs, at £5,948, make up 23% of total household
spending by owner occupiers and are one-third more than household spending
on the essential items of food & drink, clothing, education and healthcare.
There is a wide disparity in the cost of owning and running a home across
the country. At £7,691 per year, London housing costs are the highest,
77% above annual housing costs in the North East, the cheapest region
at £4,358 per year. Relative to household income, the South West
has the highest housing costs, 19% of gross disposable income; costs
are lowest in the East Midlands at 16% of gross disposable income.
Halifax estimates the cost of owning and running a home rose by 6% in
2004/05 to £6,303, driven by higher mortgage servicing costs and
rising council tax bills. Halifax forecasts a further 2% rise in annual
housing costs to £6,406 in 2005/06 with a likely fall in mortgage
servicing costs partially offsetting rising utility and council tax bills.
The key findings are:
* Council tax contributed the most to the increase in the cost of owning
and running a house in 2003/04 - expenditure on council tax increased
by 11% to an average of £921. Council tax made up 16% of the cost
of owning and operating a household in 2003/04. London home-owners paid
the most council tax, £1,050 per year.
* At £1,795, mortgage interest costs account for around 30% of the annual
costs of owning and running a household, the largest single expense.
* Additionally, households spend an average of £978 on capital repayment
of a mortgage, which would increase the cost of owning and running a house
by 16% if included. In London mortgage interest payments account for 35% of
total housing costs, the highest proportion of any region. Housing maintenance
and repair expenditure increased by 9% in 2003/04
* and accounted for nearly 1 percentage point out of the 5 percentage point
increase in total housing costs for the year. Strong demand for tradesman and
DIY equipment has pushed costs in this area higher. Ten regions of the UK have
annual housing expenses for homeowners above £5,000.
* Housing costs are highest in London at £7,691. Only the North East
(£4,358) and Northern Ireland (£4,859) have annual housing costs
below the £5,000 mark. Housing related expenditure relative to income
is highest in the South West,
* accounting for 19% of gross household income and Wales, 18%. For the average
UK homeowner, housing expenses take up 17% of their income. Costs are lowest
in relation to income in the East Midlands at 16.4% of gross disposable income.
Council tax seems likely to be one of the fastest increasing housing cost categories
again in 2004/05 and 2005/06.
In England the ODPM has indicated that the average council tax bill for all
households (owner-occupiers and other residents) rose 6.5% in 2004/05 to £967
and will rise by a further 4.3% in 2005/06 to £1,009.
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