Call for action on housing 'crisis'

 

Ruth Patrick lives with her partner and says she is struggling to get onto the property ladder

The housing market will be plunged into "crisis"' without government action to address the "chronic under-supply of homes", a body representing housing associations in England has warned.

The National Housing Federation (NHF) said it risked locking an entire generation out of the housing market.

It predicted further falls in home ownership rates and even higher rents.

The government says it has made more land available for building and is investing £4.5bn in lower-cost homes.

Housing Minister Grant Shapps said his plans would "get Britain building again".

"That's why I've announced plans to release thousands of acres of public land for housebuilding.

"And despite the need to tackle the deficit we inherited, this government is putting £4.5bn towards an affordable homes programme which is set to exceed our original expectations and deliver up to 170,000 new homes over the next four years."

But the NHF said this represented a cut of 63% on the previous programme of government spending on homes to rent or buy.

"What we need to do is to build new homes," NHF campaigns director Ruth Davison told BBC Radio 4's Today Programme.

"Governments of all colour have not properly understood that we in the grip of a housing crisis, and unless they do something about it an entire generation will be locked out of decent housing."

'Expensive and unregulated'

Viewpoint

Matt Griffith is renting because he cannot afford to buy his first home. He is a spokesperson for the pricedout.org group.

"It is important to remember that the decline in home ownership rates is happening overwhelmingly amongst the young.

"This is a tale of two generations. Home ownership has been growing strongly for older age groups despite the credit crunch - and is projected to reach record levels, with over 80% of pensioners set to become home owners by 2026.

"For younger groups it is the exact opposite - home ownership has slumped and current trends are making it even more of a distant dream.

"Unfortunately housing pressures have been increasingly playing themselves out in the private rented sector. Market adjustment appears to be happening through higher rents, not lower house prices. This is being reinforced by banking lending behaviour which is favouring the equity rich over potential young buyers."

The level of house prices, the need for larger deposits and stricter lending criteria set by banks, had combined to cut first-time buyers out of the market, the National Housing Federation said.

"People need much bigger deposits now, and typically people can only get mortgages of about 75% of the price of the home," she told the BBC.

Research it commissioned from Oxford Economics suggests that the proportion of home ownership in England, which has been falling steadily for the last 10 years, could decline further from its current rate of 67% to 63.8% over the next decade.

The forecasts are based on assumptions that affordability will worsen, as employment prospects and wages fail to keep up with a predicted 21% rise in house prices over the next five years.

But with rents forecast to keep rising, and more than 1.5 million people on waiting lists for social housing in England, it is also the lack of affordable alternatives to home ownership that is worrying to the NHF and others.

"Millions of people across the country remain desperate for an affordable place to live, with more and more forced into expensive and unregulated private rented accommodation," said Campbell Robb, chief executive of housing charity Shelter.

'Through the roof'

Analysis

The difficulties of raising deposits and obtaining mortgages are one side of the problem. The other is housing supply. It is, though, a bit of a catch-22.

Developers say they are willing and ready to build more homes. But they worry that they won't be able to sell them, because potential buyers will not be able to raise the finance.

The dilemma for policy makers is how to escape this damaging cycle, of restricted supply leading to high prices, which leads to curtailed demand, resulting in unwillingness to build.

The number of new homes built last year was the lowest in peace time since 1923, recent figures suggest.

"With major developers holding planning permission for at least 188,000 new homes, the government must urgently look at ways to get construction going. This will not only create jobs and drive growth but will deliver the homes people desperately need," said Shelter's Mr Robb said.

David Ritchie, chief executive of homebuilder Bovis, told the BBC that he was "frustrated by the lack of support for first-time buyers", saying the firm had itself lent the cost of deposits to help the buyers of its homes.

The NHF said the problem of unsold new homes was particularly acute among smaller one- and two-bedroom homes in city centres built in recent years.

Bovis, which has just revealed a doubling of first half profits, confirmed that it had shifted the mix of new homes it was building to larger, more expensive properties.

'Generation rent'

Oxford Economics predicts that average rents will jump by almost 20% over the next five years.

Matt Griffith of campaign group priceout.org said young people in particular now faced the "toughest housing environment in decades".

Graphic showing young household's declining home ownership

"This is producing a lose-lose for 'generation rent'," he told the BBC News website.

"Squeezed incomes from rent rises, inflation and stagnant wages are making saving for a deposit difficult.

"We have a slump in house building levels whilst government efforts to stop declines in the wider housing market benefits existing owners over those priced out of the market," he said.

Mr Shapps said that he was determined to "pull out all the stops" to help first-time buyers.

Housing Minister Grant Shapps says the coalition government's planning reforms will help the situation

"That's why I've held summits with lenders to encourage them to do more to help people take their first step onto the housing ladder, and I've launched the FirstBuy scheme as a valuable alternative to the 'Bank of Mum and Dad' for those struggling to get together that much-needed deposit."

Announced in the Budget, the £250m scheme aims to help up to 10,000 people buy their first home by helping them out with a deposit.

Those buying properties from some developers could receive a loan worth up to 20% of the value of the home from the government and the housebuilder.

Pricedout.org said only a small number of those wanting to buy would be helped.

But it praised government proposals to change the planning system to try to encourage more commercial residential housing.

The National Housing Federation also said last month's draft National Planning Policy Framework, which aims to simplify the planning system, was "a step forward".

 

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  • rate this
    +1

    Comment number 1311.

    1257. Braumeister1
    And from where I'm sitting, I can see fields that are about to be paved over to make Lebensraum for yet more immigrants."

    The biggest "need" for housing comes from all the people living singly rather than as part of a couple/family. Not from immigrants.

    Used to be that single people were the exception rather than the norm, and lived in bedsits or shared houses.

  • rate this
    +3

    Comment number 1310.

    Why hasn't anyone brought up the 'Ghost Estates' of unwanted new build housing in Eire? Thousands of empty, brand new properties...

    Oh, go on. You know you want to....

  • rate this
    +5

    Comment number 1309.

    1229.laughingman "If you want to debate immigration then fine, but don't try to twist every discussion to your own pet prejudices."

    Some growing up needed. Raising immigration in this discussion does not make you racist. There are impacts from immigration: housing & employment, eg a supply of good Eastern tradesmen meant apprenticeships weren't available for local youths (black or white).

  • rate this
    +4

    Comment number 1308.

    Immigration out of control , children having children , not popular with governments but its not rocket science , why the hell can they not DO something, if you notice they don`t even talk about it ?? no wonder most folk just shrug and give up with this country . added together were are they all going to live , ??

  • rate this
    +2

    Comment number 1307.

    1243.Harg

    Who sold all the gold reserves that should have been retained for such a crisis as we are now in? LABOUR!

  • rate this
    0

    Comment number 1306.

    1227. LNR_Rigby
    We can eat-up more of our countryside or kill two birds with one stone by banning holiday homes."

    Well, holiday homes are a very small percentage of houses in the UK.

    Banning them will certainly reduce the housing problem in some places - in two ways - there'll be more houses, and no point living there because there are no jobs, because no one holidays there any more.

  • rate this
    +12

    Comment number 1305.

    Where I live there are hundreds of empty houses, because people no longer want to live in old terraces without gardens.

    Rather than build new houses we need projects to redevelop current housing into places people want to buy and live in.

    I rent, due to housing benefit cuts am having to make do with the terraces no one wants. No sound proofing, you can hear everything the neighbours do.

  • rate this
    0

    Comment number 1304.

    Mayna

    The mad rush of BTL landlords before the credit crunch helped a lot towards limiting the number of houses available for purchase by people that would use them as homes. The number of houses were limited so the values go up - so people have to rent from BTL landlords.
    Can you remind me what tax the BTL landlords have to pay (apart from income tax on the massive rents?)

  • rate this
    0

    Comment number 1303.

    "1233.Shaunie Babes

    If couples waited till they could afford to have a baby very few people would"

    We waited till we could afford a baby, but when we found out how much extra help those who didn't wait get from the government we didn't know why we bothered!

  • rate this
    0

    Comment number 1302.

    Why on earth anyone would suggest that the Government can help here I do not know, they are the same people who allowed this madness to occur in the first place, they rode the gravy train, stamp duty coming in lovely, and more they spent ever penny they got. All sane people knew it was a bubble, it burst, live with it.

  • rate this
    +4

    Comment number 1301.

    "How can a homes 'crisis' be avoided?"
    ---

    Stop people buying and selling houses as a commodity and getting rich off the backs of people who have to rent.

    Houses are for living in. Not for buying and selling for massive profits.

  • rate this
    +1

    Comment number 1300.

    "Mayna
    That may be true, but the precedent set does nothing to convince the investing pensioner to be that it will not happen again... and again... and again."

    The lesson for everyone is not put all your eggs in one basket (mix of property, equities, cash, gilts...) rather than behaving like 7 yr olds playing football and rushing to whatever the current investment fad is.

  • rate this
    +2

    Comment number 1299.

    The government announces house building plans to address this crisis. When will this stop? The relentless pursuit of economic growth requires an ever increasing stock of labour - and these people all need homes. I worry that we are sleep walking into a situation where the country's rural character is destroyed by over-development. We need less people not more homes.

  • rate this
    +2

    Comment number 1298.

    1256 - completely agree, I bought my first flat [1 bed] in 1988 just before the big crash for £49,500 a huge sum with a mortgage rate of 15%. My husband and I had an old banger to drive, no holidays and every penny counted. I now have a nice house with a bigger mortgage. Do I feel guilty having a house? No, because we started at the very bottom with nothing - which is what you do.

  • rate this
    0

    Comment number 1297.

    A few on here who were to the right of Atilla the Hun and Genghis Khan when the "Human Rights Act" HYS was ongoing a few days ago, appear to be well to the left on this one when it comes to proposals to tax BTLers and 2nd home ownership. I merely point this out to ND and others who profer the soubriquet "left winger" around rather simplistically.

  • rate this
    0

    Comment number 1296.

    1171.Colin

    The trouble was that councils sold houses cheaply but Maggie Thatcher DID NOT ALLOW them to use money to build new houses, they had to use it to keep council tax down, short term thinking so people would vote Tory at the next election.

    ---------

    And spending £4.5 billion on "affordable housing" is a nice waste of money that will buy VOTES now... good to see politics haven't changed!

  • rate this
    +3

    Comment number 1295.

    #1218.theopeneye
    Not all landlords are vicious, I'm not, I let my property at less than market value. You have to shop around

    At the end of the day you are deriving surplus wealth from providing anothers basic requirements. Feudal lords did it in the middle ages.. it was not right then either. Just paying the mortgage are you? You aren't...someone else is paying the mortgage for you.

  • rate this
    0

    Comment number 1294.

    If Blair and his cronies had conttrolled immigration, we would not be in this place where we are giving up yet more green belt land.

    Green and pleasant land? Not anymore.

  • rate this
    +1

    Comment number 1293.

    1253.Mayna "Though I may agree with you not liking the idea of holiday homes, why should someone be taxed because of how they choose to spend the money they have worked for/earned? "

    Holiday homes CAN destroy commnunities and village life - the become ghost towns in winter, shops for locals become uneconomic and close. It is fair to impose tax if it is to prevent harm to communities.

  • rate this
    0

    Comment number 1292.

    21st CENTURY

    STILL HERE WE ARE AT THE LEVEL OF CAVE MAN

    STRUGGLING WITH JOBS , HOUSING , FAMILY

    NOTHING CHANGED ! ( for the mugs )

    UTTER DISGRACE ! ! !

 

Page 17 of 82

 

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