Someone in Government has listened to us and finally recognized that buying and owning a house is expensive and getting more so. The Consumer Prices Index that has been favoured by the Government to assess the rate of inflation has ignored mortgage payments, council tax, buildings insurance and estate agents costs. It replaced the Retail Prices Index devised in the First World War, which includes all these costs.
This sleight of hand has meant that the official inflation rate is currently 1% while the traditional RPI which is 2% is ignored by the authorities unless consumers are paying. It is used for rail fares, student loans and mobile phone contracts.
Cost of owning a home to be included in inflation index
From March the CPIH index will add changes to the cost of owning a home to the prices tracked by the CPI, such as rental costs, stockbroker and unit trust fees.
It is a step in the right direction. But only a baby step as the Treasury has no plans to use the new inflation rate when uprating benefits, tax credits, public sector pensions or tax thresholds. A hollow victory.
But at lease we will see the difference whereas the much higher RPI rate is hidden away each month when the inflation stats are revealed.
Home buying is getting more expensive
Just for starters a Lloyds Bank survey showed that home movers paid an average for £5,404 for estate agency fees – more than double that in London – £1,58 for conveyancing, surveyors fees £665 and £1,109 for removal costs. Added to that were mortgage arrangement fees that can reach £2,000 on a cheap fixed rate loan.
that ignores Its official way of counting inflation A new official way of counting inflation has been announced. Home ownership costs are going to be counted by the Government from next March the Treasury announced today.