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Archive for the ‘Communities’ Category
Thursday, September 1st, 2011
The National Housing Federation has stated that it expects home ownership in England to fall to mid-80s levels, slumping to just 63.8% over the next decade (Minister vows to get UK building again as home ownership slumps, 31 August). But to address a critical shortage of homes the government has previously made the rather fanciful announcement that it aims to create 170,000 new affordable homes by 2015. In 2010-11 just 105,000 homes were built in England – the lowest level since the 1920s.
I’ve just had to abandon a major scheme that would have provided over 750 new homes, 25% of which would have been affordable, in an area of Essex that sorely needs them. This was because the amount of money the social landlords were initially able to pay for more than 180 homes was drastically cut as they in turn had their funding cut. This made the development untenable as I simply couldn’t afford to build 180-plus homes at a loss.
If the government is serious about increasing housing provision, it needs to recognise that cutting funding to social landlords is not going to help achieve that aim. Social landlords, in turn, need to start concentrating only on helping the poorest households, not mid-high income earners. Currently the rules are so arbitrary that for some affordable housing schemes you can earn as much as £60,000 and qualify for assistance. Others aren’t even means-tested, so you can earn £100,000 but still qualify for a handsome discount as long as you live or work locally.
Only by ending the inequity of a system that fails to address the needs of the poorest households, and freeing the housing sector from the myriad of red tape, taxes and levies that stifle development, will this country be able to get anywhere near delivering the number of new homes, both private and affordable, that it so urgently needs.
Bob Weston
Chairman and chief executive, Weston Homes
•?A well-aimed piece of PR spin from the National Housing Federation has managed to prompt a series of responses in your paper, mostly supporting the aim of the PR, that is to say support for a rapid increase in housebuilding. However, both the reported “facts” and the response need questioning.
1) The decline in home ownership was a projection based on the premise of higher price rises than is likely, given the need for “readjustment” in the housing market to historic links with earnings.
2) The current high rates of private ownership were only possible due to unsustainable reckless lending and borrowing.
3) One big attraction of home ownership is the free money many people have gained through rising prices. When prices are stagnant or falling, the high costs of home ownership may not be so attractive to young people who want to move around.
4) If enough houses were to be built to substantially reduce prices, many will be bought up by rich people and budding mass landlords, and many existing mortgage holders would experience high degrees of negative equity, exacerbated by the rise in interest rates that must happen sometime in the future.
5) As with other goods, it is not so much how many houses we have but how we share them out that is really important. It is the gross inequality in our society, more than anything, that is creating this problem.
Chris Savory
Bridport, Dorset
•?Allegra Stratton (Inside politics: Coalition fears it is unravelling right-to-buy revolution, 1 September) highlights the government’s unease at the burgeoning housing crisis and the low rate of housebuilding. In London, the affordable housing budget has been cut by two-thirds. Boris Johnson isn’t offering any new ideas to help private tenants suffering from record high rents. Nor has Boris offered anything new to reverse the rise in homelessness he had previously predicted. In 2008, Boris promised “a network of Community Land Trusts”, but not a single trust has been set up in London. The mayor needs to lobby for better protection for private tenants, and a realistic housing budget that can provide the low-cost social homes we need. In the meantime, he needs to put all his money and land into keeping rents as low as possible.
Jenny Jones AM
Green candidate for London mayor
•?The mayor of London, Boris Johnson, has long advocated community-led development and the benefits this can bring for building stronger communities.
Contrary to the suggestion in your article, the mayor has already determined that the community should hold the entire freehold of the St Clement’s site in Tower Hamlets in trust. He has also made clear that a community board should oversee management of the homes. This would make St Clement’s the country’s first urban CLT. The site is currently being procured on this basis, and the decision will be subject to the usual procurement rules. But it is clear that whoever is the successful bidder we intend St Clement’s to be held in trust, with the management overseen by the community.
Richard Blakeway
London mayor’s adviser for housing
•?Given the latest evidence that the UK welfare and housing system is failing to break the association between unemployment, poverty and homelessness (Homelessness could spread to middle class, study warns, 31 August), the time is now ripe for a Great Debate – one as “radical” and imaginative as the 1942 Beveridge report – on how to manage social and economic affairs in ways that meet the wellbeing of the many rather than the few. We could do with a quality broadsheet leading such a debate. Any suggestions?
Charlie Cooper
Lecturer in social policy, University of Hull
•?Not only is the current level of home owership even lower than the official figures indicate, but it is also declining at a much faster rate than forecast.
This is because up to three million homes included in the figure for home ownership are in fact leasehold, and leaseholders do not own their homes but merely have the right to live there until the lease expires. In order to stay in their homes leaseholders will have to pay large sums of money to the freeholder for an extension of the lease.
At the same time around half of all newly built homes are now flats, the majority of which are sold on a leasehold basis, reducing still further the proportion of households who will genuinely own their homes.
Nigel Wilkins
Chair, Campaign for the Abolition of Residential Leasehold
•?The key to the housing “problem” is the number of homes, not the proportion of owner-occupiers. There is inevitably a significant proportion of the population who at any given time would be better suited to renting than buying their homes. There is pressure to “get on to the housing ladder” for financial reasons; pressure that if you do not start early enough you will lose out financially. As a result the economy is driven by the housing market to an unfortunate extent. The key issue should be adequate housing to buy or rent. One simple – but probably politically unacceptable – measure would be to try to separate the concepts of a house as a “home” and as an “investment” by removing capital gains tax exemption from the principal private residence. The sky did not fall in when tax relief on mortgage interest was removed.
Paul Russell
Winchester
•?The National Housing Federation talks of the “chronic under-supply of housing” in the context of unprecedented developmental pressure on green spaces. However, markets are composed of supply and demand. England is the most densely populated country in Europe. Given that the UK is experiencing its highest rate of population growth for 50 years, with an estimated 10 million more citizens over the next 15 years, should we not also be talking about – and addressing – our chronic over-supply of people?
Simon Ross
Chief executive, Population Matters
Posted in Boris Johnson, Business, Communities, Construction industry, Homelessness, House News, House prices, Housing, Housing market, Letters, Liberal-Conservative coalition, London, London politics, Money, Politics, Property, Public sector cuts, Public services policy, Real estate, Society, The Guardian, UK news | Comments Closed
Thursday, September 1st, 2011
Homelessness up. Housing benefit claims up. Housing waiting lists up. What happened to the Tory dream of home-ownership transforming the nation?
It would be funny if it were not so terrible. Britain is 30 years into the grand Conservative project that was to transform the nation into a ”property-owning democracy”. To mark this great anniversary, a government-sponsored organisation, UK Asset Resolution, is about to embark on the highly patronising and paternalistic task of telephoning 30,000 mortgage-holders and telling them to spend less on nights out, Sky television, gym membership and mobile phones, and more on servicing their mortgages. It’s safe to say that this is not what Margaret Thatcher had in mind when she promised that her privatisation policies would remove the state from people’s personal lives. It hardly chimes with David Cameron’s rhetoric either.
UK Asset Resolution. What a name. It sounds like a highly dodgy private company that buys debt, then intimidates people into paying it off at extortionate rates. But it isn’t. UK Asset Resolution is the Treasury-owned holding company that was established last October to “support around 800,000 customers with £77bn of loans”, customers who initially took out their mortgages with Northern Rock and Bradford & Bingley. Both of those companies, of course, are now “taxpayer owned”, after receiving more than £48.7bn in government loans.
Essentially, all these 800,000 people live in houses that are owned by the government, and have to pay the government every month if they wish to carry on living in them. Some of them – the riskier propositions – will also have to put up with presumptive lectures from strangers about their frivolous failure to understand their financial priorities. And they are not the only vulnerable “home owners” by any means. It is Lloyds TSB and Royal Bank of Scotland, for example, not Northern Rock and B&B, that have the greatest exposure to customers whose mortgages are already larger than the value of their homes.
You’d imagine that the implosion of the “property-owning democracy” project was obvious to all. You’d have imagined that it had become obvious back in 1997, when highly visible homelessness was one of the factors that delivered a landslide election victory to Tony Blair. But no.
Just to underline this historic failure, the National Housing Federation this week predicted that the proportion of the population who own or live with the owner of their home will fall to 63.8% by 2021, about the level it stood at in the 1980s. Of more immediate concern are the observations from homelessness charity Crisis that rough sleeping is up 8% on last year, while the number of people accepted as homeless by local councils and placed in social housing is up by 10%. Since the coalition came to power, the number of families claiming housing benefit has risen by 150,000. There are now five million names on waiting lists for social housing. Many more don’t bother to make an application, because they understand that they have absolutely no chance of becoming a council or housing association tenant.
The most astounding thing about this mess is that there is still a widespread failure to understand that a flagship ideological experiment in self-regulation by the market is in tatters. The deregulation of banks and building societies, combined with draconian restrictions on the provision of new council housing, which could have replaced stock diminished by the right to buy, was supposed to transform “sink estates” into privately owned and lovingly cared-for communities. Instead, the social demographic of people living in council flats has narrowed massively. The people with the greatest problems are herded together, sometimes seeking a dark kind of identity in their blighted postcode, to the point at which the threat of eviction from council housing is seriously touted as a way of encouraging people to think twice before they take part in riots. God help us.
Yet even though the property-owning democracy idea has achieved neither its social nor its financial goals (the housing market has manifestly not developed in an orderly fashion that seamlessly matches supply and demand), there remains a truculent insistence from the right that somehow it is still interference from the state that is the problem, rather than the lack of it. That is at the heart of Cameron’s wish to delay the enactment of recommendations whereby banks separate their retail operations from their investment arms. Not for the first time in recent decades, we see a British prime minister who is very keen on “liberal democracy” when he is “exporting” it, but much more keen on oligarchy when he is dealing with matters at home.
Capitalism is pretty simple. Those with the capital get the profits because they are the ones who have money to invest. The very fact that 30 years of financial deregulation has resulted in greater division between rich and poor is prima facie evidence that capitalism has been working extremely dynamically, unhindered by the state’s supposedly crushing interference, until the bursting of the asset bubbles that it created. Chief among these, of course, was the property bubble, which in turn fuelled the febrile consumer boom that continues to worry the 2,400 employees of UK Asset Resolution so greatly.
Yet, still there remains in place an obstinate refusal to see that, without a determinedly redistributive infrastructure, liberal democracy simply cannot exist.
Britain has now been an oligarchy, not a democracy, for quite some time. It is utterly absurd that Cameron and his chancellor George Osborne are at odds with their coalition partners over this question of reorganising the banks, and instead are minded to give greater weight to the desires of the banks themselves, who are resisting the plan.
Basically, the reform calls for the ordinary money of ordinary people, who earn it, to be looked after with more caution and respect than the extraordinary money of people looking for speculative returns that will provide unearned income. After the hammering that ordinary people have been asked to take, in consequence of the financial crash, it is perverse and repulsive that this pair can even imagine that they have a mandate to shield the banks from a restructuring prompted by their own cavalier and foolhardy negligence. It’s an appalling affront to democracy, property-owning or not.
Posted in Comment, Comment is free, Communities, House News, Housing, Money, Property, Society, The Guardian | Comments Closed
Wednesday, August 31st, 2011
Homelessness charity points to direct link between economic downturn and welfare cuts, and rising numbers living on streets
The economic downturn and the government’s deep cuts to welfare will drive up homelessness over the next few years, raising the spectre of middle class people living on the streets, a major study warns.
The report by the homelessness charity Crisis, seen by the Guardian, says there is a direct link between the downturn and rising homelessness as cuts to services and draconian changes to benefits shred the traditional welfare safety net.
In the 120-page study, co-authored by academics at the University of York and Heriot-Watt University, Crisis highlights figures released over the summer that show councils have reported 44,160 people accepted as homeless and placed in social housing, an increase of 10% on the previous year and the first increase in almost a decade.
Last year another 189,000 people were also placed in temporary accommodation – such as small hotels and B&Bs – to prevent them from becoming homeless, an increase of 14% on the previous year.
Crisis says that with no sign of economic recovery in sight, there are already signs that homelessness is returning to British streets. In London, rough sleeping, the most visible form of homelessness, rose by 8% last year. Strikingly, more than half of the capital’s 3,600 rough sleepers are now not British citizens: most are migrants from eastern Europe who cannot find work and, unable to get benefits or return home, are left to fend for themselves on the streets.
The charity says the evidence is that the current recession has seen the poor suffer the most, but other parts of society may be in jeopardy if the government’s radical welfare agenda is acted on as the economy stutters.
“Any significant reduction of the welfare safety net in the UK as a result of coalition reforms may, of course, bring the scenario of middle-class homelessness that much closer,” the report states.
The charity says that the government needs to reverse cuts to housing benefit and invest urgently in new housing. It also calls on ministers to withdraw the most radical provisions in the localism bill, which would make “temporary accommodation” for needy families just that. Under the new legislation, councils would be forced to remove parents and children who have been in a hotel for a year. At present the assistance is open-ended.
There is also an alarming trend in what the charity calls the “hidden homeless” – families forced to squeeze into one room rather than a flat. It says 630,000 households are now “overcrowded”, with London and the south-east the worst hit. This trend could worsen: this summer a survey by the National Landlords Association found more than half of private landlords were planning to reduce the number of properties they let to tenants on housing benefits. Crisis says more families will be forced to share an ever decreasing number of homes.
In a separate report, Channel 4 News will broadcast further evidence that official figures underestimate the true picture of homelessness. In Crawley, West Sussex, the Open House hostel said it turned away people needing a bed almost 2,000 times last year, although official figures estimate there are just seven homeless people in the town. Two-thirds of homelessness organisations nationwide told Channel 4 there had been a rise in rough sleeping in their area.
Leslie Morphy, Crisis’s chief executive, said: “We are extremely worried. Homelessness in both its visible and hidden forms is already rising and as the economic downturn causes further increases in unemployment and pressure on households’ finances, homelessness is likely to continue to rise. This research is clear that it is the welfare and housing systems in the UK that traditionally have broken the link between unemployment and poverty and homelessness, yet these are now being radically dismantled by the coalition government. The government must listen and change course before this flow of homeless people becomes a flood.”
Crisis argues that instead of doubling its efforts to end the “scandal” of homelessness, the government is in effect making it impossible for those on low incomes to pay their rent. It says in the past British welfare policy, unlike that in the US, has linked housing benefit to actual rents. But the government’s changes break this link and mean that claimants will be priced out of swaths of the country – or end up on the streets in wealthy regions.
The report also says the government’s “affordable” house-building regime is likely to generate fewer than 50,000 homes by 2015, “well short of the 80,000 required to meet ministers’ targets”. Gone will be the lifetime tenancies offered by councils which had to give priority to those in need. Instead, under new powers, local authorities will be able to choose families with “local connections”.
With the coalition’s welfare reform bill heading to the Lords and MPs voting on the localism bill next week, Labour said Crisis’s warnings were a “timely reminder of a looming homeless catastrophe”. Karen Buck, Labour’s welfare spokesperson, said the government had played down the rising number of people who thanks to the economic downturn were forced to rely on housing benefit.
She said that since the government took power another 150,000 families had been forced on to housing benefit. “The numbers relying on housing benefit to help with housing costs have been soaring. These figures include not just the unemployed but hundreds of thousands of working families. Rising rents, benefit cuts and housing shortages risk a homeless catastrophe will with all the associated human and financial costs.”
The Department for Communities and Local Government said: “Ministers have always made clear their commitment to ensure the most vulnerable in society are protected, which is why the government is investing £400m in preventing homelessness, and has announced plans to extend the London project, No Second Night Out, across the country so no one spends more than one night sleeping rough.
“But the most important thing the government can do to help struggling households to stay in their homes is to keep interest rates low, and to do that we must cut the deficit. That is why we are introducing reforms that will cut the housing benefit bill. But to ensure a smooth transition to this new system, the government is giving councils a £190m fund to help those families most in need.
“Far from the claims made by Crisis, the government’s £4.5bn affordable homes programme is set to exceed expectations and deliver up to 170,000 affordable homes by 2015.”
Posted in Charities, Communities, Family finances, Homelessness, House News, Housing, News, Politics, Property, Public finance, Public sector cuts, Public services policy, Society, State benefits, The Guardian, UK news, Voluntary sector, Welfare | Comments Closed
Tuesday, August 30th, 2011
Our housing problem hits the economy hard, yet politicians seem to lack the will to take any action
One thing that’s struck me frequently during the last month’s social tumult has been the abject failure of our property-owning democracy to concern itself with those who don’t own property. A twisted consequence was the staggering lack of empathy shown by looters and destroyers towards small-business owners, regarded as “rich” in the face of all evidence. Another is the fact that we seem to be the only country in Europe to have decided that your degree of enfranchisement is dependent on owning your own home.
This week’s report from Oxford Economics, conducted by the National Housing Federation, predicts that home ownership will fall to just under two-thirds of households, from 2001′s high-point of nearly three-quarters, taking us back to levels last seen in the mid-80s, when the right-to-buy was in its early days and interest rates were in double figures.
We’ll still have a property-owning majority in 10 years, then, but the social and economic health of the nation in that time could be decided on governments’ treatment of the growing population of long-term renters. For that reason I dream of waking up one day soon to find an incumbent housing minister doing the job that the whole country is screaming out for them to do.
What does that involve? First, making sure enough suitable housing is available to meet demand, through a combination of sensitive yet decisive measures to build new homes and keep old ones in useful circulation. Second, detaching the task of housing people healthily and equitably from the task of making people feel as if they’re rich. Third, preventing this essential part of our infrastructure from being subject to endless poking by new ministerial brooms.
Housing shouldn’t just be a ministerial post; it ought to have full cabinet status: it’s a determining aspect of public health, a litmus paper for the underlying health or sickness of the economy, and therefore important enough to need a degree of protection from partisan faffing.
If the aim of a “property-owning democracy” is inherently a conservative one, it’s not one that you can automatically argue with from a social-democratic standpoint. Spain has 80% home ownership and, for now at least, a socialist-party government. Levels of home ownership in Germany, which has a centre-right government, range from around a third of households overall to under 20% in Berlin.
In some ways a renting culture encourages transience, but not in others: the very affordability of rented housing in Berlin goes some way towards explaining why it has the highest birth rate in Germany, in spite of the city’s relative dearth of decent jobs. Low rents mean low deposits and the absence of that British paranoia about “throwing money down the drain”.
British renters, on the other hand, suffer from a combination of insecurity – assured shorthold tenancies only run from between six months to three years – and inaffordability, which cements the relationship between the quality and availability of jobs and that of decent housing.
Similarly, it’s in the same areas that housing is cheapest to buy that higher numbers of homeowners are struggling with their mortgages. To buy a house for £60,000 requires a deposit of between £3,000 and £15,000 – a laughably distant figure for someone earning the minimum wage, who, for their part, is less likely to have property-owning (and therefore inheritance-leaving) parents and grandparents.
Indeed, the Oxford Economics report reveals that the average income of a first-time buyer now needs to be £44,464 in order both to raise a deposit and to raise a big-enough mortgage. In the report’s words, that’s “close to the top 10% of earners”. At which point a lightbulb goes off in my head: that’s the only segment of the population that the coalition is actually bothered about. The rest can scrabble for what’s left.
There’s no question in my mind that housing demand needs to be tackled at the level of central government: only it has the power to legislate for fairer tenancy agreements, the money to pump into stalled housebuilding schemes, and the political will at once to create jobs and fulfil demand by instigating a fully funded programme of multi-tenure building.
That would mean acknowledging that free markets need tethering if inequality and disenfranchisement aren’t to remain rigid features of British society. Only those without imaginations could possibly see this job as dull, yet its takers seem paralysed, if not by boredom, then by a conviction that there are some problems you can’t do anything about.
Posted in Business, Comment, Comment is free, Communities, House News, Housing, Housing market, Money, Property, Society, The Guardian, UK news | Comments Closed
Tuesday, August 30th, 2011
• National Housing Federation says home ownership falling
• Group predicts house prices to rise 21% by 2016
• Rents forecast to rise almost 20% by 2016
• Call for more housebuilding to tackle crisis
The housing market is in crisis as home ownership tumbles and house prices soar, a study has warned.
Home ownership in England will slump to just 63.8% over the next decade – the lowest level since the mid-1980s, the National Housing Federation’s forecast, published on Tuesday, said.
Huge deposits, combined with high house prices and strict lending criteria, have sent home ownership into decline, the federation said.
The housing minister, Grant Shapps, admitted that “we have not been building enough homes”, but insisted the government was “in the process of reversing that through massive planning reform” and a “massive programme” involving the release of thousands of acres of public land to build new homes.
The National Housing Federation, which represents England’s housing associations, warned that the housing market will be plunged into an unprecedented crisis as it also forecast steep rises in the private rental sector and a house price boom. It blamed the bleak outlook on an under-supply of homes in the UK.
The chief executive, David Orr, said: “With home ownership in decline, rents rising rapidly and social housing waiting lists at a record high, it’s time to face up to the fact that we have a totally dysfunctional housing market.
“Home ownership is increasingly becoming the preserve of the wealthy and, in parts of the country like London, the very wealthy.
“And for the millions locked out of the property market, the options are becoming increasingly limited as demand sends rents rising sharply and social homes waiting lists remain at record levels.”
Shapps said the reason house prices had become so unaffordable was a tripling of prices in the space of 10 years from 1997 to 2007, which put them out of reach for many people.
Asked about the study’s forecast for future levels of home ownership, the minister said forward predictions were “hellishly difficult” to make and were “nearly always wrong”.
He cited a Halifax survey showing that house price affordability has been “improving quite dramatically” and that prices were more affordable than any time over the last 12 years.
However, he admitted there were significant challenges for first-time buyers and said the government had a responsibility to help home ownership.
Asked about the measures being taken, he told BBC Radio 4′s Today programme: “We are releasing enough government land to build Leicester twice over across the country – it is a massive programme.
“The new homes bonus is a multi-billion pound incentive to communities to build programmes, and we are hugely reforming the planning system, which is massively complex.”
He said thousands of pages of planning guidance and law were being boiled down to about 60 pages in a reform “that even the National Housing Federation, who have produced this report this morning, approve of”.
He added that he would be very disappointed if it did not achieve the goal of building more homes.
The federation forecast that, in England, the proportion of people living in owner-occupied homes will fall from a peak of 72.5% in 2001 to 63.8% in 2021.
In London, the majority of people will rent by 2021, with the number of owner-occupiers falling from 51.6% in 2010 to 44% by 2021, it said.
The north-east will be the only English region to see any increase in owner-occupier numbers over the next decade, rising marginally from 66.2% to 67.4%, the federation predicted.
Meanwhile, the average house price in England will rise by 21.3% over the next five years from £214,647 in 2011 to £260,304 in 2016, according to Oxford Economics, which was commissioned to produce the forecasts.
Average rents in the private sector are forecast to increase by 19.8% over the next five years, fuelled by high demand and a shortage of properties.
About 4.5 million people are currently on social housing waiting lists, but only those in the most desperate of circumstances have a realistic chance of being allocated a home.
The federation said that, in 2010-11, 105,000 homes were built in England – the lowest level since the 1920s.
Posted in Business, Communities, Construction industry, First-time buyers, guardian.co.uk, House News, House prices, Housing, Housing market, Money, News, Politics, Property, Real estate, Society, UK news | Comments Closed
Saturday, August 27th, 2011
More than half the UK’s regions are now ‘blackspots’ for mortgage wannabes. Mark King looks at the knock-on effects for the entire market
Prospective homeowners continue to be forced out of the housing market, with “first-time buyer blackspots” covering seven out of 11 regions in the UK and half of all UK tenants expecting rents to rise in the next year.
According to property website Rightmove, only 23% of people who intend to purchase a property in the next 12 months are first-time buyers, when 40% is considered normal for a healthy housing market. This drops to 17.6% in the south-west and Wales and is below 20% in five other regions across England and Wales: Scotland, the south-east, East Anglia, East Midlands, Yorkshire and Humberside.
The website said the three top reasons were difficulties in raising a deposit (exacerbated by steep rental price increases); concerns over financial security (one in five first-time buyers said they were worried about meeting mortgage payments); and over-priced property values – a worrying seven out of 10 prospective first-time buyers told Rightmove they feel property is over-priced in their area.
The emergence of these blackspots, along with stalling wage growth, redundancies and stagnant mortgage approvals are pushing would-be buyers into the rental sector.
But in a report, to be published on Monday 29 August, Rightmove found more than half of people now renting expect their rent to be higher in 12 months’ time, with one in six of those believing it will rise by more than 10%. This comes on the back of a 4.2% rise in rents, according to LSL Property Services, over the year to the end of July, taking the monthly average to £705 (7.1% to £1,009 in London).
Despite rising rents, there is now more than twice as much rental demand for 12% fewer properties compared with April 2009, helping inflate the rental bubble.
Miles Shipside, director of Rightmove, said conditions for tenants continues to deteriorate, with inflation running at 4.4% and wage growth of 2.2%. He said: “Tenants’ pain is a landlord’s gain with a shortage of rental accommodation and continuing high demand further boosting landlords’ returns. The rental ceiling of what some tenants can afford appears to have some headroom left, despite disposable incomes being squeezed. While competition will help improve landlords’ rental returns, there are consequences to an over-inflated rental bubble.”
First-time buyers perform an essential function in the housing ladder by starting chains that help others to move. Shipside says this is now under threat: “The emergence of so many first-time buyer blackspots has serious implications not just for those who are unable to buy for the first time, but also housing markets in each of those regions. It is particularly bad news for first-time sellers, for example.”
Owner occupation rates peaked in 2003 at 70.9% after an 80-year period of growth, and have since declined to a level of to 67.4% in 2009-10 (the latest figures available). The growth in home ownership rates have now stalled, which is less an inevitable flattening out of a market that is close to its natural capacity and more a generational story that is not being told.
Matt Griffiths of first-time buyer website PricedOut said there is now a definite split in the age groups of those who own their own home. Between 1991 and 2009-10, owner occupation levels in the 16-24 age group fell 61% (36% to 14%), while owner occupation in the 25-34 group fell by 30% (67% to 47%). Home ownership in the 35-44 group also fell, by 14% (78% to 67%). But levels of owner occupation continued to rise in older groups. Between 1991 and 2009-10 the 65-74 group saw a 14% increase in home ownership (62% to 79%), while those aged over 75 saw home ownership rise by 38% (53% to 73%).
The percentage of young people getting a foothold on the housing ladder today is are clearly falling behind the number who managed it 20 years ago. Griffiths argues this decline is exacerbated by the growth of the private rented sector, with the rise of the buy-to-let market enabling those with existing housing wealth to “out-bid” potential first-time buyers for property.
The growth of the private rented sector is projected to continue to increase to 20% of households in 2020, according to the National Landlords Association, from 14% of households in 2008.
Griffiths says: “Unfortunately the unenviable position of generation rent is reinforced by the political dynamics of home ownership – older homeowners are a larger group, vote more and are much more vocal in defending their interests. Politicians therefore have been very reluctant to challenge the generational inequalities in the housing market and tiptoe round the problem.”
The statistics all indicate that government initiatives are desperately needed to help buyers get a foothold, but the FirstBuy scheme has been roundly criticised for assisting only a small number of first-time buyers.
“The government’s flagship first-time buyer scheme – FirstBuy – is a classic example of how to do close to nothing with maximum publicity,” Griffiths says. “It will only benefit 10,000 young people and will have no impact on the drivers creating generation rent. Nowhere is this more apparent than in the response to the credit crunch – where stopping house prices falling has been a major concern of government and the Bank of England. The pain of market readjustment is therefore now being felt primarily in the rental market – with younger people shouldering higher costs. Given this group was the major loser from the boom, this seems a bit unfair.
“Over the longer term, there appears to be a seriousness from some in the coalition to deal with lack of new homes via planning reform – and they will face stiff opposition from the grey vote even here. But the government seems to have implicitly accepted that, for the time being, there will be a lost generation of young homebuyers.”
Posted in Borrowing & debt, Business, Communities, House News, Housing, Housing market, Money, Mortgage lending figures, Mortgages, News, Property, Real estate, Renting property, Society, The Observer, UK news | Comments Closed
Friday, August 12th, 2011
UK taxpayers left £275m out of pocket after deal is reached by Olympic Delivery Authority
London’s Olympic Village has been sold to the Qatari ruling family’s property company in a deal that leaves UK taxpayers £275m out of pocket.
Qatari Diar, the oil-rich state’s investment arm, and UK property developer Delancey Estates teamed up to buy the athletes’ village next to the Olympic Park in east London for £557m.
After the 2012 Olympic Games, the village will be converted into a neighbourhood with 2,818 homes, including 1,000 family homeswith three or four bedrooms. The rest of the properties range from studio flats to five-bedroom apartments. The area will also include a schoolwith 1,800 places for children aged three to 19, shops, bars, clinics and parks.
The Olympic Delivery Authority, which sold the site, had already sold 1,379 of the residences in the 11 blocks of the athletes’ village to Triathlon Homes for £268m in 2009. They will become affordable housing such as shared ownership or socially rented apartments.
Qatari Diar and Delancey plan to turn the bulk of their share of the residences – 1,439 properties – into private rental accommodation, rather than selling them. They say this will create the first UK private sector residential fund of more than 1,000 homes to be owned and directly managed as an investment.
At the moment, the apartments in the village do not have kitchens as athletes will eat at dining halls. They will be fitted out for long-term residential use after the games when kitchens will be added and new floors put in. The first tenants are due to move in in late 2013.
The joint venture also acquired six adjacent development plots with the potential for a further 2,000 new homes. The deal includes a profit-share that should provide income to the public sector in future.
Jeremy Hunt, the culture secretary, hailed the sale as a “fantastic deal that will give taxpayers a great return and shows how we are securing a legacy from London’s Games”. The village cost £1.1bn to build, but the ODA insisted it never expected to recoup building costs. “It was an entirely empty site, it didn’t have any infrastructure, roads or parks. There was always going to be a public sector contribution to help put those in,” said a spokesman.
He added: “We weren’t just looking for the highest bidder, but for the best owner with long-term commitment.” He said the ODA supported the property investors’ plans to turn most of the residences into rental accommodation.
Jamie Ritblat, chief executive of Delancey, said: “This acquisition reflects the first truly great residential investment opportunity in the UK; offering the chance to break the mould and create a sustainable leasing model to provide first class accommodation for those who see the chance to rent long-term, as the way forward.”
The ODA had to dip into the Olympic contingency fund and use £324m of public funds after a private developer, Lend Lease, failed to put forward a funding package in 2009 due to the financial crisis. That money will now be repaid to the Olympic budget out of the village sale proceeds – this has been uncertain during the economic downturn.
Qatari Diar already owns the Chelsea Barracks site, which it bought from the Ministry of Defence in 2007, and it will redevelop the US embassy in Grosvenor Square, London, as well as the Shell Centre on the South Bank.
The Qatari property developer has been embroiled in a high-profile row over the £3bn Chelsea Barracks scheme, which recently received the green light two years after Prince Charles intervened over plans for the 13-acre site. In June 2009, the developer withdrew its planning application after the Prince of Wales wrote to its chairman, the prime minister of Qatar, saying his “heart sank” when he saw the modernist design by Lord Rogers.
Qatari Diar’s then-partner, the CPC Group owned by the Monaco-based property developer Christian Candy, launched a high court action to claim £81m in compensation after the scheme’s collapse. The architects behind the revised plans are Dixon Jones, Squire and Partners and Kim Wilkie.
Posted in Business, Communities, House News, Housing, Housing market, London, Money, News, Olympic Games 2012, Property, Real estate, Society, Sport, The Guardian, UK news | Comments Closed
Monday, August 8th, 2011
Seven out of 11 regions register first-time buyer levels below 20%
Seven out of the 11 UK regions are now “first-time buyer blackspots” as demand from new entrants trying to get on the property ladder slumps in the face of rising living costs and financial uncertainty, according to a new report.
The survey of 14,125 potential property buyers, undertaken by Rightmove, the online estate agent, found that of all respondents who intended to purchase property in the next 12 months, only 23% were doing so for the first time. This is down from 26.2% in the previous quarter and well under the pre credit-crunch norm of 40%, which is seen as an indicator of a “healthy” property market.
Rightmove’s commercial director, Miles Shipdale, said that the figures had “serious implications”, with the regional spread of the results causing even greater concern. Seven regions (Yorkshire and Humberside, the south-east, the east Midlands, East Anglia, Wales, the south-west and Scotland) all register first-time buyer levels of below 20%, taking them into “blackspot” territory.
Only the capital has retained its vitality, with 41.2% of those intending to buy in London doing so for the first time, illustrating how the London housing market continues to buck the national trend. The figure is such an exception to the rest of the market that without it the national average falls below 20% for the first time in the survey’s history.
Shipside said that such poor regional figures had wider effects “not just for those who are unable to buy for the first time, but also for local housing markets in each of those regions”.
He added: “First-time buyers perform an essential function at the start of the housing chain that help others in the area move as well… [The results] are particularly bad news for first-time sellers, for example.”he said
The survey identified difficulties over raising a deposit, concerns over financial security and property being “overpriced” as the three key issues.
Among first-time buyers, 42% said that raising a deposit was their single biggest property market challenge, making this the concern most frequently expressed. This is surprising as the number of mortgage products that specifically target those buying for the first time has increased 11-fold since July 2009. Over the same period, first-time buyer levels have dropped from 30.8% to 23.0%.
This, said Shipdale, showed that deposit requirements remained a “major hurdle” and suggested that further government action was necessary.
Deposit-assistance initiatives such as the government-backed FirstBuy scheme help make deposits more affordable for first-time buyers but, with the current scheme limited to only 10, 000 mortgages and restricted to new property, Rightmove said that more assistance was required.
Posted in Business, Communities, Economic growth (GDP), Economics, First-time buyers, House News, Housing, Housing market, London, Money, News, Property, Rightmove, Scotland, Society, The Guardian, UK news, Wales | Comments Closed
Monday, July 18th, 2011
A jobcentre worker hit the wrong button, bank charges sent me over my overdraft limit and more trouble from the landlord
Part three Diary of a tenant: enter the landlord
A red-letter day looms. Finally I am due to be paid some jobseeker’s allowance, and so I set off to buy some food (the cupboards are actually bare). First I check my balance. Some money was credited, but more was taken out. It’s bank charges.
I then realise that what has been credited is not jobseeker’s allowance but a portion of housing benefit – or local housing allowance, as it is now known, and the reason defies belief. Frantic phone calls ascertain that “Somebody forgot to press a key,” when I signed on, and so my payment did not go through. At the jobcentre, stoic staff do what they can. I mention the bank charges, and one adviser suggests moving my account and complaining. Inwardly, I consider offering staff lessons on pressing the right button, but hold my silence.
The surrealism continues. Another letter, this time from the housing benefit office arrives, stating that they have stopped my claim after one week without explaining why.
I visit the office, and queue. Nonchalantly, the desk attendant produces a handwritten letter, which arrived a while ago. It is from “Bill”, my landlord, who makes inflated claims about the rent he insists I owe. He says it’s 12 weeks. I say it’s seven.
At the end of my tether, I patiently point out that the dates in the letter are not covered by my claim, and that I was not even eligible to claim at that time because I was a student. They agree it’s not their concern. Nevertheless they are “investigating”, and have put my claim on hold.
Why has Bill assumed I was signing on for all that time? If a tenant is more than eight weeks in arrears with rent, then benefits are stopped. I am not in that position, but in this topsy-turvy world, if they don’t pay me, I soon will be.
Next I visit the bank, to inquire about the charges (I’ve been waiting to be paid for some work for ages, and couldn’t cancel a direct debit in time). They are rude, and when I ask politely for a refund, they restate that I was given notice of the charges. They have charged me for going overdrawn when the overdraft was caused by their own charges.
Eventually the counter clerk repeats: “That’s all I have to say. That’s us done now.” .
I have no money, no food and no phone credit. Fortunately, a friend calls later and learning of my plight buys me pizza.
One week later my missing jobseeker’s allowance is paid, but I don’t know what to do about Bill’s housing benefit letter. Another notice of inspection arrives: he’s due next week, and I decide, reluctantly, to tackle him in person.
Meanwhile, I calculate exactly what I can afford to buy in the way of food. I make excuses to avoid meeting people for coffee or drinks. Walking between the various offices, I realise that the heavy rain is now flooding into my last pair of weather-proof shoes.
Posted in Borrowing & debt, Communities, Editorial, Family finances, guardian.co.uk, House News, Housing, Housing benefit, Job hunting, Money, Property, Renting property, Society, Work & careers | Comments Closed
Thursday, July 14th, 2011
Average rents in London through £1,000 barrier, with properties snapped up within a day of being advertised
Rents in England and Wales rose by 0.7% in June to reach a new record high of £701 per month in June, pushing annual rent inflation to 4.1%. In London, rents broke through the £1,000 a month barrier for the first time, rising by 1% to reach a new high of £1,006 per month.
The latest LSL Property Services Buy-to-Let index shows that rental properties in London can be snapped up within a day of being advertised and there isn’t enough rental property to match the soaring demand.
During the past year London rents climbed faster – 6.9% – than any other region of England and Wales, while steep increases were also experienced in the North East and the West Midlands, where rents increased by 5.1% and 4.6% respectively. In the past year, the only region in which rents fell was the east of England – by a marginal 0.3%.
Month on month, rents increased fastest in the West Midlands and the east (2% and 1.6%) and fell in only three regions: the east Midlands (-0.5%), the south-east (-0.2%) and Yorkshire and the Humber (-0.1%).
David Newnes, estate agency managing director of LSL Property Services, which owns the Your Move and Reeds Rains chains, said: “Tenant demand continues to reach ever higher peaks – and there simply isn’t enough rental property coming on to the market to match it. In areas like London where competition for rental property is most intense, it’s not unheard of for rental properties to be let within a day of coming on to the market.
“We’ve had five successive months of rent rises, but there is no sign of a let-up anytime soon. Despite several new deals on the market, securing a big enough mortgage remains a tall order for the average buyer. The climbing cost of living and renting is impacting how much renters can save for their deposit, and demand will remain high in short-term.
“In the long term, there is an even smaller chance of a significant slowdown. Just 102,570 new homes were completed last year – at a time when the UK’s population increased by nearly half a million. This trend shows no signs of slowing. Excess demand will be driven into the private rental sector driving rents up further. Landlords thinking long-term will do well.”
The average rent is now £28 a month higher than June 2010, while the total annual return on a rental property was 1.3% in June, as the rental income received by landlords is offset against an annual decline in property prices. LSL said the total annual return is the equivalent of £2,203 – £7,486 in rent, with a capital loss of £5,283.
If property values continue on their current trend, a property investor could expect to make a total annual return of 2.3% over the next 12 months – equivalent to an average of £3,776 per property.
Tenant arrears decreased for the second consecutive month, with 9.3% of all UK rent unpaid or late by the end of June – down from the 11.5% of rent unpaid or late in May. Unpaid rent totalled £257m across the UK in June, down 18% from the £315m unpaid in the previous month.
But Newnes warned: “We’ve yet to see the full effects of public sector job losses, and as inflation remains high, many tenants’ finances will face mounting pressure over the medium-term.”
Posted in Buying to let, Communities, guardian.co.uk, House News, Housing, Money, News, Property, Renting property, Society | Comments Closed
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The notion of Britain as a property-owning democracy is in tatters | Deborah Orr
Thursday, September 1st, 2011Homelessness up. Housing benefit claims up. Housing waiting lists up. What happened to the Tory dream of home-ownership transforming the nation?
It would be funny if it were not so terrible. Britain is 30 years into the grand Conservative project that was to transform the nation into a ”property-owning democracy”. To mark this great anniversary, a government-sponsored organisation, UK Asset Resolution, is about to embark on the highly patronising and paternalistic task of telephoning 30,000 mortgage-holders and telling them to spend less on nights out, Sky television, gym membership and mobile phones, and more on servicing their mortgages. It’s safe to say that this is not what Margaret Thatcher had in mind when she promised that her privatisation policies would remove the state from people’s personal lives. It hardly chimes with David Cameron’s rhetoric either.
UK Asset Resolution. What a name. It sounds like a highly dodgy private company that buys debt, then intimidates people into paying it off at extortionate rates. But it isn’t. UK Asset Resolution is the Treasury-owned holding company that was established last October to “support around 800,000 customers with £77bn of loans”, customers who initially took out their mortgages with Northern Rock and Bradford & Bingley. Both of those companies, of course, are now “taxpayer owned”, after receiving more than £48.7bn in government loans.
Essentially, all these 800,000 people live in houses that are owned by the government, and have to pay the government every month if they wish to carry on living in them. Some of them – the riskier propositions – will also have to put up with presumptive lectures from strangers about their frivolous failure to understand their financial priorities. And they are not the only vulnerable “home owners” by any means. It is Lloyds TSB and Royal Bank of Scotland, for example, not Northern Rock and B&B, that have the greatest exposure to customers whose mortgages are already larger than the value of their homes.
You’d imagine that the implosion of the “property-owning democracy” project was obvious to all. You’d have imagined that it had become obvious back in 1997, when highly visible homelessness was one of the factors that delivered a landslide election victory to Tony Blair. But no.
Just to underline this historic failure, the National Housing Federation this week predicted that the proportion of the population who own or live with the owner of their home will fall to 63.8% by 2021, about the level it stood at in the 1980s. Of more immediate concern are the observations from homelessness charity Crisis that rough sleeping is up 8% on last year, while the number of people accepted as homeless by local councils and placed in social housing is up by 10%. Since the coalition came to power, the number of families claiming housing benefit has risen by 150,000. There are now five million names on waiting lists for social housing. Many more don’t bother to make an application, because they understand that they have absolutely no chance of becoming a council or housing association tenant.
The most astounding thing about this mess is that there is still a widespread failure to understand that a flagship ideological experiment in self-regulation by the market is in tatters. The deregulation of banks and building societies, combined with draconian restrictions on the provision of new council housing, which could have replaced stock diminished by the right to buy, was supposed to transform “sink estates” into privately owned and lovingly cared-for communities. Instead, the social demographic of people living in council flats has narrowed massively. The people with the greatest problems are herded together, sometimes seeking a dark kind of identity in their blighted postcode, to the point at which the threat of eviction from council housing is seriously touted as a way of encouraging people to think twice before they take part in riots. God help us.
Yet even though the property-owning democracy idea has achieved neither its social nor its financial goals (the housing market has manifestly not developed in an orderly fashion that seamlessly matches supply and demand), there remains a truculent insistence from the right that somehow it is still interference from the state that is the problem, rather than the lack of it. That is at the heart of Cameron’s wish to delay the enactment of recommendations whereby banks separate their retail operations from their investment arms. Not for the first time in recent decades, we see a British prime minister who is very keen on “liberal democracy” when he is “exporting” it, but much more keen on oligarchy when he is dealing with matters at home.
Capitalism is pretty simple. Those with the capital get the profits because they are the ones who have money to invest. The very fact that 30 years of financial deregulation has resulted in greater division between rich and poor is prima facie evidence that capitalism has been working extremely dynamically, unhindered by the state’s supposedly crushing interference, until the bursting of the asset bubbles that it created. Chief among these, of course, was the property bubble, which in turn fuelled the febrile consumer boom that continues to worry the 2,400 employees of UK Asset Resolution so greatly.
Yet, still there remains in place an obstinate refusal to see that, without a determinedly redistributive infrastructure, liberal democracy simply cannot exist.
Britain has now been an oligarchy, not a democracy, for quite some time. It is utterly absurd that Cameron and his chancellor George Osborne are at odds with their coalition partners over this question of reorganising the banks, and instead are minded to give greater weight to the desires of the banks themselves, who are resisting the plan.
Basically, the reform calls for the ordinary money of ordinary people, who earn it, to be looked after with more caution and respect than the extraordinary money of people looking for speculative returns that will provide unearned income. After the hammering that ordinary people have been asked to take, in consequence of the financial crash, it is perverse and repulsive that this pair can even imagine that they have a mandate to shield the banks from a restructuring prompted by their own cavalier and foolhardy negligence. It’s an appalling affront to democracy, property-owning or not.
Posted in Comment, Comment is free, Communities, House News, Housing, Money, Property, Society, The Guardian | Comments Closed