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 1631.

    most immigrants gets a house to rent paid for by the taxpayer
    each child will need schooling for upto to 12 years all will need medical care, most have children at a faster rate than the british, none have paid a penny contribution before arriving, no i'm not a national front nut nor racist, it's just plain facts. immigration has gone up under cameron, they lied again.

  • rate this
    0

    Comment number 1630.

    With all the arguments on here right or wrong, please spare a thought for all the homeless in this country due to the economic downturn and the government's deep cuts to welfare.

  • rate this
    -1

    Comment number 1629.

    Rt Hon. Grant Shapps is merely 'spandexing' about how he intends to bridge the gap between affordability and house prices!

    By not building enough low-cost houses, he is destined to be the MP that failed to achieve. The approach he has take fails to take the require initiative at the required time.

    The fact that he refuses to take advice from the electorate, whom are suffering here, says it all.

  • rate this
    +1

    Comment number 1628.

    How will interfering like this help anybody except a very few who are lucky enough to get the equivalent of a big cash handout? You either create a two-tier housing market, or anything that is done will amount to little more than giving selected young people tens of thousands of pounds of money from the taxpayer.

    Great way to fuel resentment.

  • rate this
    0

    Comment number 1627.

    The simple issue for me as a saver is I'm cross subsiding home owners to help the economy going again. He needs mone owners to spend lots of cash. They can only do this if interest rates are low. So they have a tracker at +0.5% from 07 paying £200/mon on a £200k home. I meanwhile have the choice of renting the same home for £800/mon or save £40k, buy and pay £600/mon in interest

  • rate this
    -2

    Comment number 1626.

    Its quite clear that immigration is causing a significant impact on housing demand. Those that are wedded to liberal totalitarianism will hold a different view. Its not just the immigrant but the offspring of immigrants. Leave out the politics just do the maths. The BBC is in the grip of liberal totalitarianism as is most of the Government.

  • rate this
    0

    Comment number 1625.

    And government needs to make money available to housing associations (not councils) to build more homes. This might help to kick start our economy and make people happier. Those who privately own homes will suffer price declines - but if they have any care for their children (who can't afford homes of their own) they will see their own loss of value as a needed correction to the market.

  • rate this
    0

    Comment number 1624.

    Demand for housing is high because we're living longer, in smaller housing units and have net immigration of 250k p.a. On the supply side we're only building 100K homes p.a. Homes will only get cheaper if we build many more of them for many years. Whether they are rented, privately or publicly owned doesn't really matter we need more homes. Planning controls need to be eased to allow this.

  • rate this
    +1

    Comment number 1623.

    #1579 the private rental market was heavily regulated for 50 years and was a complete disaster as it drove private landlords to sell up as soon as property vacant. Sub standard social housing of the late 1960s and 70s was the direct result

  • rate this
    +1

    Comment number 1622.

    I currently rent a flat that costs me half my wages a month.I get nothing back out of that & it all goes to my landlord and agent.If I had the money for a deposit & found a place I could buy I'd be playing out LESS money a month on a mortgage & I would see some of that money back.Sure the Government has this FirstBuy Scheme but that will help around 10k of people in England. NOT the UK as a whole.

  • rate this
    0

    Comment number 1621.

    New Homes Bonus money won't build a single home, it's un-ringfenced and so my council has already spent the money on the interest on the debt it owes.... back to central government!

    Building new is NOT the answer! Councils use new builds to meet their Affordable Housing targets, which get sold to Housing Associations, so the developer increases prices on the rest!

    Refurbish empty homes! Simple!

  • rate this
    +1

    Comment number 1620.

    I bought a house 2 years ago I saved up for the deposit for 10 years since starting my first job. I've never had the best fashions, latest gadgets or holidays abroad. Me and my partner always rented a room in a shared house and we've made the decision not to have children

    People need to prioritise what they want most in life - be it children / social life or owning a house.You cant have it all!

  • rate this
    0

    Comment number 1619.

    Our earned money pays for Housing Benefit which slips straight through the hands of people on low wages and the unemployed into the wallets of BTL landlords, money which was never intended to prop up Donald Trump wannabes. Unless this form of theft from society is addressed with new legislation, we continue to provide landlords the buying power to push genuine house buyers out of the marketplace.

  • rate this
    0

    Comment number 1618.

    1528.perdot
    Its all good saying train so we don't need to bring in skills from outside but that ignores the fact most businesses love the idea of cheap labour (more profits and bigger wages for fat cat directors and shareholders) and no longer pay living wages hence why so many people need to hold down 2 full time jobs or get benefits despite being in full time work.

  • rate this
    +1

    Comment number 1617.

    Kids - go abroad and let the boomers rot

  • rate this
    -1

    Comment number 1616.

    1536.Total Mass Retain
    Because only stupid people take out loans at 17.5% when the base rate is 0.5%.

    what a simplistic and incorrect answer a far better one would be.
    If the risk is high and the borrower looks shaky you are a fool not to lend at high rates of interest because of the risk and the banks should have been charged base rate plus 6-15% like they love to charge weaker borrowers.

  • rate this
    0

    Comment number 1615.

    1608. Bob Dylan

    @1593.Red_5 "fatcat private landlords"

    Why are private landlords fatcats?

    ----

    Just ignore them. To some people, anyone who earns more than them or took a risk and invested their money is evil. Funny how they don't turn away the tax money they pay, isn't it.

  • rate this
    -1

    Comment number 1614.

    jame1607
    bye how will we manage without you.
    if i recall it was just such oxford cambridge types who ruined the ecconomy. they are running the country now, absolutely cluless.

  • rate this
    +1

    Comment number 1613.

    1558.nieuw divil
    Its simple its gone south because of the tories and it only took them a little over a year to bring it all down.
    There's no fairness there is rampant greed and as you show a selfishness that can only harm the whole of society
    Tories ignore the fact that the rich dont get rich by some miracle its society that makes them rich and if they ignore that society they risk losing it all

  • rate this
    +1

    Comment number 1612.

    This will go round in circles. I have both rented and purchased my own house. When I was 21 I saved the deposit as you could only get 80% as a mortgage. Worked hard and saved, what for, to sit in four walls that I could not do anything with because of the mortgage around my neck. Renting gave us freedom to move and fine better houses. I have my own house again now, big mistake. Falling values.

 

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