House prices: the 10 most recession-proof counties in the UK

A debt advice charity is being overwhelmed by demands for help in some of the most affluent parts of the country. Transact, which represents more than a thousand organisations and individuals involved with people suffering financial hardship, said last night that the number of middle-class people wanting advice was rising dramatically.

Its alert came as a survey for The Times found that people attempting to escape the property crash by renting rather than buying face increases of as much as 17 per cent this year. At the same time a survey by the Royal Institution of Chartered Surveyors predicted that house prices will fall by about 5 per cent and the number of housing sales could fall by 40 per cent.

Transact said that the credit crunch was leaving many professionals and homeowners unable to cope with their mounting debts, and some advice centres were having to turn people away. In affluent areas such as Haywards Heath, West Sussex, and Congleton, Cheshire, there had been a 100 per cent rise in the number of inquiries in the past year.

At the Mid-Sussex Debt Advice Centre, which serves the Haywards Heath area, the average debt of clients — excluding mortgages — is £20,000, rising to £110,000 in the most extreme cases. Emma Russell, a debt adviser, said: “I’ve had at least two clients tell me that they would have killed themselves if they hadn’t found out that we were here.”

Jamie Elliott, the co-ordinator of Transact, told the BBC: “In the past it was almost uniquely people on benefits, people in social housing, who went to debt advice agencies. Since the credit crunch started they are seeing a big increase in professional people and homeowners coming to seek help, who have just been pushed over the edge and now can’t cope with their outgoings.”

The survey for The Times by Hometrack, the property data company, found that the cost of renting a home rose on average by 6.15 per cent in the year to April. In hotspots such as Oxford, Birmingham and London, rents rose by 17, 16 and 14 per cent respectively, while in Cambridge and Sheffield, tenants are paying an average 10 per cent more than they were in March last year.

Richard Donnell, the director of research for Hometrack, said: “The rental sector is a waiting room for the housing market and more people are being pushed into that waiting room just as rents are being forced up.”

Many of the people seeking help from debt advice agencies had used credit in their homes to pay for home improvements but, as fixed-rate mortgage terms came to an end and the cost of living increased, many people were finding it hard to meet repayments, even if they earned a relatively good salary.

Transact said that it expects the problem to become worse, and has called for more funding to provide debt advice.

The Hometrack data tracks rents on two-bedroom flats or houses, but the cost of tenancy is reported to be rising even more quickly for larger family homes. A survey by Paragon, a buy-to-let lender, suggested that rents for detached homes have risen by 30 per cent, compared with an average of 12 per cent across all housing types.

The survey suggests that rent rises are highest in the South West, up by an average of 42.2 per cent, and in East Anglia, where they are 31.9 per cent higher.

The Money Centre said that one third of its landlords had reported plans to increase rents within the past three months, by an average of 6.8 per cent.

The mismatch between supply and demand in homes for rent is helping to create the above-inflation increase in housing costs.

The rent for two-bedroom properties is falling, however, in some areas, including Milton Keynes, Leicester and Reading, because mortgage repayments are similar to the cost of renting. In Milton Keynes, where the rent on an average £140,700 two-bedroom home is about £177 a week, it would cost £178 to buy with a 15 per cent deposit and an interest rate of 6 per cent.

House prices: the 10 most recession-proof counties in the UK