How much does it cost to run your home?

Much is made of the cost of living these days, but do you really know how much it costs to run your home? Help is at hand. For the second year in a row, we’ve put together our Cost of Running a Home report[i] (CORAH) which has revealed that running the average-sized UK home[ii] takes up 83% of total monthly income for homeowners (81% for renters ), earning the national average wage of £27,271[iii].

This leaves many families in the UK in deficit each month after their mortgage or rent and household bills are paid for, but before any other living expenses (such as food, petrol and commuting costs) are taken into account. In fact, 89% of all homes, whatever the size, generate bills that are over half of the mortgage or rent payment. Running costs for an average three bedroom home remain unaffordable for national average wage earners as they exceed 100% of total earnings for 29% of homeowners and 25% of renters.

 

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The CORAH has shown that there are stark regional differences, too. It costs above the national average wage to run a three bedroom home in Greater London, the South East and most of the South West and Scotland:

Examples of monthly costs above national average:

  • Greater London - Croydon: £1,855.36 (own); Croydon £2,141.20 (rent)
  • South East – Eastbourne £1,836.13 (own); Basingstoke £1,714.32 (rent)
  • South West – Bristol £1,604.50 (own); Exeter £1,764.24 (rent)
  • Scotland – Aberdeen £1,744.25 (own);  Edinburgh £2,507.37 (rent)

 

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Owning vs renting

The 2017 report also shows that for 71% of people in the UK, it’s cheaper to run a home if you own the property, rather than rent it. The East Midlands is the only region in the UK where it is always cheaper to own than to rent any sized property, whereas in Greater London it’s only cheaper to own for 23% of homeowners.

There are 29 towns across the UK where, no matter the property size, owners spend less on their total bills than renters: Aberdeen, Antrim, Belfast, Birmingham, Boston, Bradford, Burnley, Carlisle, Exeter, Glasgow, Glossop, Leeds, Leicester, Liverpool, Manchester, Neath Port Talbot, Newcastle, Northampton, Nottingham, Paisley, Perth, Peterborough, Plymouth, Richmond, Scarborough, Sheffield, Stoke-on-Trent, Taunton and Welton.

Planning to make the jump from renting to owning? Read our top tips for buying a new property and find out more about insuring your first home.

 

How to protect your home and manage unexpected costs

With little to no wiggle room for unexpected costs in most household budgets, anything from a burst pipe to an accidental spillage could put your finances under pressure. It is easy to see why having the right insurance in place is so important.

Graham Nicholls, head of home insurance here at MORE TH>N says: “The report looks at average homes and average costs.  Just as last year, it’s clear that most people are financially stretched putting a roof over their heads and paying their bills – spending most of their income before buying other regular necessities such as food, commuting, petrol or insurance. 

 “With so little slack in the budget, it’s easy to imagine how one unplanned expense could prove to be unaffordable and we would encourage homeowners and renters to protect their home and possessions to guard against unexpected bills.  Having the right insurance in place offers peace of mind and prevents bigger bills down the road.”

With these figures coming to light, it is perhaps surprising that the Association of British Insurers reports that one third of UK households do not have buildings insurance and one quarter do not have contents insurance – putting millions of households at risk for a large unexpected bill.

 

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Graham adds: “The insurance industry pays out over £8m a day for household claims but the cost of protection in terms of buildings and contents insurance is affordable – we offer a combined five star product from an annual cost of £83*."

*Moneyfacts 5 star rating. Excludes optional extras. Based on 10% of  318  new customers who purchased upgraded buildings & contents cover . MORE TH>N data Oct 16 - Mar 17.

 

Whether you rent or own your home, it is important to have an appropriate insurance policy in place to protect both you and your property should the unforeseen happen. You can find out more about the home insurance products we offer, here.

 


[i] The MORE TH>N CORAH report looks at the cost of running average homes across the UK based on national averages for either mortgage or rent payments plus the following bills: utility bills, water bills, council tax, TV/phone/broadband, contents and buildings insurance, garden maintenance (including plants and tools), household furnishings (including textiles and appliances plus general house maintenance. Flat service charges were not included in this report due to their wide variation with no national averages available for comparison.

The MORE TH>N CORAH report looked at the average cost of running five different sized properties from a one bedroom flat to a four bedroom detached house for both homeowners and renters in 72 towns across 12 regions.  This housing stock represents typical homes for single, couple, retired, and families.

[ii] ONS: The average UK home has 2.8 bedrooms

[iii] After assessing the earnings of 21,563,000 people, the ONS revealed that the average UK salary is £27,271 – take home this is £21823.90 per annum

BUILD: MASTER