Upfront costs 'unaffordable' says new study

A new report by the Royal Institution of Chartered Surveyors (Rics) has said that the upfront costs of buying a home are now beyond the means of lower income couples.

The body said the average cost of paying for arrangement fees, deposits and stamp duty is now £27,738, more than the joint net income (£27,516) for a couple whose earnings match the average of this demographic.

Rics stated that this contrasts with the situation in 1996, when the and other costs would amount to 21 per cent of the annual income of such a couple.

Rics senior economist David Stubbs warned: "The picture does not look like improving in the latter part of 2008 and first-time buyers will find their path to home ownership increasingly blocked."

Many of the problems stem from the rise in rates and fees imposed by lenders since the liquidity crisis began.

In contrast with the housing market at large, the market for lending to those seeking to self build has been almost untouched by the credit crunch, Citywire reported this week, with the confidence lenders have in home builders being greater than that elsewhere in the market.

The report noted that self build is one of the few sectors where 95 per cent loan-to-value mortgages are currently available.