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
    0

    Comment number 1611.

    1585.elmo747- " I say regulate the Estate Agents. Why can an unqualified estate agent walk into a property and say this is worth 'xxxxx' amount? Also people need to learn to STOP paying for the overvalued prices that Estate Agents demand..."

    Estate Agents cannot 'demand' anything

    If Agents had the power you suggest then house prices would be on a continual, never-ending upward trend

  • rate this
    +1

    Comment number 1610.

    Misguided people who claim estate agents set house prices should realise a simple fact they don't they only advise.
    The person who sets the house price is the home owner but the person who reinforces that price is the person who buys it.
    It really is that simple if over priced it will not sell, that's why we end up with lots wanting to sell but no buyers as they are all unable to and are renting

  • rate this
    +1

    Comment number 1609.

    nieu divil
    1515
    what you said you learned in peru
    1/ the really poor poor dont whine
    2/ there is always someone worse off than yourself
    so you made it your lifes work to belittle the poor and those worse off than your self - profound.

  • rate this
    +2

    Comment number 1608.

    @1593.Red_5 "fatcat private landlords"

    Why are private landlords fatcats? Someone works hard at their job and wants to invest for their retirement by buying a house and renting it out. What is so wrong with that?

    I own a BTL and the rent doesn't cover the expenses, so the renters are actually staying in a place for less than it would cost them if they owned it.

  • rate this
    +2

    Comment number 1607.

    I earned my PhD from Imperial College 3 years ago and currently head a small R&D team in Oxford.

    The UK economy now desperately needs people like me to boost our high-tech industry & pull us out of this economic slump. Unfortunately, even my very respectable salary is insufficient to save for a mortgage deposit in the Oxford area so I've decided to take a job offer in California.

  • rate this
    +1

    Comment number 1606.

    Jennie suggests: "The reason we're having a "housing crisis" is because the council allowed people to buy their council house at a discounted rate, which then meant that there was fewer houses to be used by the Council for the people who needed them."

    Unless the houses are empty though Jenny, the argument fails - if the house is full - it is full - council owned or otherwise. It can do no more.

  • rate this
    +1

    Comment number 1605.

    It is not just "too few houses" so much as far too many people on a tiny little island.

    We are one of the most overpopulated lands in the World - and still people are flocking here from overseas.

    It isn't going to get better is it?

  • rate this
    0

    Comment number 1604.

    1588.feedbackloop
    ... We are not truely resource contrained in UK

    Actually in parts of the SE we are, eg. water.

    Making housing affordable in the SE requires fixing the broken economy in the rest of the country, otherwise resources will prevent you building enough to accommodate those who want to live there.

  • rate this
    +1

    Comment number 1603.

    I say house prices are rising because of the collapse of people's pension expectations. My retirement is a few years off yet (sob) but when the time comes I'll rent a little flat in the sticks or even live in a caravan, because renting out my home will fetch 2-3 times the money I can expect from my pension. Hence people buy more homes than they can live in, and prices rise.

  • rate this
    +2

    Comment number 1602.

    Start prioritising social housing for those prepared to work, and who will appreciate it. Stop giving them to those with no intention of improving their lot, and who are content to remain on benefits for the rest of their days, the teenage mums and work-shy NEETS.Make the few remaining council houses a privilege to be earned, not a prize for getting pregnant at 15.

  • rate this
    0

    Comment number 1601.

    #1593 Red_5-"they move here,and they have to live somewhere in our country."
    Go to the top of the class.

  • rate this
    +1

    Comment number 1600.

    In countries like Germany and Switzerland it's fine to rent because they have honest money (= very low inflation). Here it's a vicious circle. Houses represent a relatively safe long term investment, so people pay far too much and then rely on inflation to make the original price affordable. As for financial tinkering, if 120 people are chasing 100 houses, 20 won't get one, period,

    Graucho

  • Comment number 1599.

    This comment was removed because the moderators found it broke the house rules. Explain.

  • rate this
    +3

    Comment number 1598.

    1577.sheila coleman There is a complaint comment from someone with 4 children, no one forces people to be irresponsible and he chose to overpopulate which is why there is so much polution. We need a smaller population not more building
    -
    It's only irresponsible if you can't afford to bring them up, and if you think your answer is correct what is the correct no of children 3, 2, or 1?

  • rate this
    +2

    Comment number 1597.

    The truth is our economy doesn't work if we don't shovel people into the country every year to bolster the magical pyramid economy.

    And if we don't give them a place to live our beloved hoose prices (aka God) will rise to the heavens !

    Rule Britannia !!

  • rate this
    +1

    Comment number 1596.

    jennie_glendenning The councils didn't decide to sell their housing stock at a discount. That was Mrs Thatcher's government. I think you're right though that this may have caused some of the problems

  • rate this
    0

    Comment number 1595.

    nieuw divil
    one eskimo guy reminded me of you, he would go outside every christmas and be heard making a noise, then he would go back in the igloo and say to the kids, theres a present outside, they would run out all excited and shout thanks dad another slide.
    talk about malingerers out all sun night bending over a fishing hole 50 below, big queue mon at the doctors, let me guess its a bad back.

  • rate this
    0

    Comment number 1594.

    To all those blaming normal people who have the audacity to reproduce:
    Selfish, two-wage, childless households are as much to blame for artificially forcing up house prices as anything else. The reason the older generation seemed to have more is that a family 30 years ago could survive on one full-time wage. Selfishness and material greed allowed Thatcher's legacy to put a stop to that.

  • rate this
    -2

    Comment number 1593.

    For starters they should limited how many properties someone can buy to rent out, fatcat private landlords are also partly to blame for the shortage in housing.

    Another thing, our politicians have sold us British citizens out by allowing unlimited EU Eastern European migrants into the UK, they move here, and they have to live somewhere in our country.

  • rate this
    0

    Comment number 1592.

    Feedbackloop
    "For all those that hate the BTL brigade the logical conclusion is that you want the rental sector supplied solely by either the state or by large private coorporations"
    Nope, I want the properties to be on sale for the people who need them without BTL profiteers getting a cut.
    "We've been there already remember and it was complete pants."
    We're here now and it's worse.

 

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