Four-year high in cost of running a home

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THE cost of running a home has soared to a four-year high, amid rising energy bills.

Homeowners spent an average £9,393 on household costs to January, 2.7 per cent up on the year, according to research by Halifax.

In Yorkshire and northern Lincolnshire costs rose three per cent, but are still more than £1,000 less than the UK average at £8,320.

A £218 hike in gas and electricity bills was main reason for annual bills rising to their highest level since 2008.

Energy bills now take up the second biggest share of housing costs, having outstripped council tax, which takes up 15 per cent of outgoings.

Over the last decade electricity and gas prices have risen by 145 per cent and at £1,653 a year take up almost a fifth of household costs.

Household budgets have also been subjected to intense pressure from high inflation which has driven up living costs, although there are signs of this easing as the rate of inflation hit a 15-month low in February.

Since the peak of the housing market, mortgage payments have fallen as a share of housing costs over the last four years from nearly half (48 per cent) to just over a third (37 per cent) by January this year, saving the average householder just over £1,000, although they still take up the biggest chunk of expenses.

Martin Ellis, a housing economist at Halifax, the UK’s biggest mortgage lender, said: “The typical cost of owning and running a home has increased over the past year, returning the overall level to that of four years ago.

“This has happened despite the substantial fall in mortgage payments over recent years, as all the other costs associated with home ownership have risen.

“The prospect of declining consumer prices inflation through much of 2012 may help the costs associated with running a home to ease as well, providing some welcome relief to homeowners.”

After fuel and council tax, the average householder spends another £717 on maintenance and repair work, £478 on water supply and other services, £219 on household appliances and £216 on tools and equipment for the garden.

Goods and services for routine household maintenance cost £384, and the telephone bill £342.

Council tax cost on average £1,379, a whopping 57 per cent increase on 10 years ago.

Typical annual mortgage payments have dropped by 23 per cent or more than £1,000 over the past four years, to £3,485 in January this year, owing to falls in mortgage rates as well as flat house prices, the report said.

Low interest rates allowed lenders to offer some of their cheapest ever mortgage deals, but they have recently tightened up on borrowing amid the weak economy and the availability of mortgages is expected to drop in the coming months.

Several lenders have also cut the amount people can borrow on an interest-only mortgage, while many have recently announced mortgage rate rises which will affect more than a million borrowers in total, blaming the increased cost of funding a mortgage.

A survey released by uSwitch.com last week found that 14 per cent of households are in debt to their energy supplier, with the average amount owed standing at four per cent higher than last year, at £131.

Apart from mortgage payments, household insurance is the only other category to have become cheaper over the past year, falling by 2.6 per cent or £10 on average to reach £358 annually.

Housing costs have increased in all 12 UK regions since January 2011, but just two, Northern Ireland and Wales, saw them rise higher than CPI inflation, recording rises of 4.6 per cent and 3.9 per cent respectively.

Households in London spend nearly £12,000 a year running a home, the highest average cost in the study, while families in Northern Ireland have the lowest costs, at less than £8,000.