Posts with tag: housing crisis

Is There a Solution to the Housing Crisis?

Published On: August 6, 2016 at 8:36 am

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It’s well known that homeownership is in decline. In fact, it’s at the lowest level for three decades. But is there a solution to the housing crisis?

Claire Carponen, of the HomeOwners Alliance, has taken a look at the main problems and possible solutions to the UK’s housing crisis.

The average wage in the UK is £26,500, while the average house price is over £200,000. It doesn’t take a mathematician to work out that the odds of buying a house for a first time buyer are pretty slim.

Is There a Solution to the Housing Crisis?

Is There a Solution to the Housing Crisis?

Carponen claims that the gap between wages and house prices is one of the main barriers to homeownership.

According to a report from the Resolution Foundation, homeownership has dropped to its lowest level for three decades. After hitting a peak of 71% in 2003, the number of households that own their home has now dropped to just 64%.

But don’t be fooled into thinking this is a new trend. Four years ago, the HomeOwners Alliance published a report named The Death of Dream: The Crisis in Homeownership in the UK, which found that homeownership has been in decline for years.

Although the recession did accelerate the rate of decline, it is not a short-term blip caused by financial difficulty, but rather a long-term trend.

Carponen reports that affordability remains an issue in the south of England, but is now spreading to other parts of the country. The Resolution Foundation’s report warned that while the news focuses on the housing crisis in London, those living in Manchester are actually facing greater difficulty in getting onto the property ladder.

While the south has typically had higher house prices, the north is catching up, with both Manchester and Yorkshire experiencing steep drops in homeownership.

The CEO of the HomeOwners Alliance, Paula Higgins, recently said in an article in The Telegraph: “The decline of homeownership and the lack of affordable housing is having – and will increasingly have – profound, long-lasting and adverse economic and social consequences.”

Although housing has become so unaffordable, Carponen has found that most people still aspire to own their own homes.

Being a homeowner is much more than just owning a pile of bricks and mortar, she insists. Those that own their own home are more likely to have a better quality property, a sense of stability and permanence, and a financial safety net for old age.

And while the Government is trying to help with its first time buyer initiatives, its schemes aren’t reaching enough people, believes Carponen. Although it proudly announced in March that its Help to Buy scheme has helped 180,000 first time buyers get on the property ladder, this was over a three-year period.

The fact that not enough homes are being built has been well documented. But Carponen warns that more homes may not necessarily solve the housing crisis. In central London, thousands of new homes are currently under construction or in the pipeline, yet most will be unaffordable for the majority of people who are living and working in the capital.

Higgins insisted: “We must make sure that the homes being built are of the right quality and meet the needs of the ultimate owners – last time buyers as well as first time buyers – and not the housebuilder.”

While many young people are struggling to get a foot on the property ladder, landlords must remember to provide safe, suitable and secure homes for those forced to live in the private rental sector.

Housing Crisis Not Confined to London, Warns New Report

Published On: August 2, 2016 at 8:41 am

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Plummeting homeownership levels across the north of England show that the housing crisis is not confined to London, warns a new report from the Resolution Foundation.

The study found that homeownership in England has dropped to levels last seen in 1986, with Greater Manchester, South and West Yorkshire and the West Midlands metropolitan area all experiencing double-digit falls since the early 2000s peak.

The analysis shows that after reaching a high of 71% in 2003, the proportion of people owning their own home in England has declined steadily over the past decade, by eight percentage points. The Resolution Foundation believes that the increase in homeownership recorded in 2014 was likely a blip to correct the sharp fall seen the year before, rather than a welcome reversal of a long-standing trend.

The new report also warns that while many reports on the housing crisis focus on London, Greater Manchester has actually recorded the greatest decrease in homeownership of any major city in the past decade.

Housing Crisis Not Confined to London, Warns New Report

Housing Crisis Not Confined to London, Warns New Report

In 2003, 72% of households in Greater Manchester owned their own home – slightly higher than the average in England as a whole. However, homeownership in the area has since plummeted by 14 percentage points – almost twice as fast as England as a whole – meaning that last year, just 58% of those living in Manchester were homeowners.

The Resolution Foundation notes that people living in Greater Manchester are no more likely to own a home than those living in outer London, and that homeownership levels have dropped below all other large northern city areas, except Tyne & Wear.

However, the report also warns that plunging homeownership is not confined to Greater Manchester either. It reports that outer London, South and West Yorkshire and the West Midlands have also seen double-digit declines in homeownership since the early 2000s.

This drop in homeownership has corresponded with a near doubling in the number of private tenants in England, which has risen from 11% of all households in 2003 to 19% in 2015.

The proportion of households renting privately in Greater Manchester has more than trebled over the same period – from 6% to 20% – while outer London and West Yorkshire have also reported double-digit growth.

The report insists that the shift from homeownership to private renting, which is occurring throughout England, particularly among young people, is concerning for many reasons.

It highlights that private tenants spend a far higher proportion of their income on housing than those who own a home with a mortgage – 30% compared to 23% – which explains why the share of income that households spend on housing in the UK has risen by around a quarter since 2003, and by around a third in the North West.

Private tenants are also more likely to face the greater insecurity associated with short-term contracts, while the struggle to purchase a home makes it harder for people to accumulate the wealth that they may rely on in later life.

In fact, almost half of over-45s consider their property wealth as key to their retirement income plans.

The Resolution Foundation analysis follows the English Housing Survey, released last week, which found that two-thirds of private and social tenants named affordability as a barrier to homeownership. It found that less than one in ten private renters did not expect to buy a home because they liked it where they were, while just 1% preferred the flexibility of renting.

The Policy Analyst at the Resolution Foundation, Stephen Clarke, comments on the report: “London has a well-known and fully blown housing crisis, but the struggle to buy a home is just as big a problem in cities across the north of England.

“The chances of owning a home have fallen fastest in Greater Manchester over the last decade, though the Leeds and Sheffield city areas have also experienced sharp drops.

“These drops are more than a simple source of frustration for the millions of people who aspire to own their home. The shift to renting privately can reduce current living standards and future wealth, with implications for individuals and the state.”

He insists: “We cannot allow other cities to edge towards the kind of housing crisis that London has been saddled with. It’s encouraging that the new Prime Minister has talked about tackling the housing deficit. She may find that making good on this promise could secure as important a legacy as negotiating a successful exit from the European Union.”

Landlords, remember that many households across the country are forced to live in the private rental sector. Wherever you own rental properties, remember to stick to the law and ensure that they are safe, suitable and secure for your tenants.

New Home Approvals in London Recovered Pre-Brexit

Published On: August 1, 2016 at 9:00 am

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Ahead of June’s Brexit vote, new home approvals in London recovered from a former drop, reaching 6,310 in the second quarter (Q2) of the year. However, the latest London New Homes Monitor from Stirling Ackroyd claims that this progress could be short-lived.

Out of a possible 8,280 news homes that could have been approved in Q2, 6,310 – or 76% – were granted permission. This marks a 46% quarter-on-quarter improvement on Q1, which saw 4,300 new home approvals in the capital.

Westminster proved the most proactive London borough for new home approvals, with 1,720 given permission. Overall, the inner borough authorised 99% of all new home applications it received.

The Managing Director of Stirling Ackroyd, Andrew Bridges, says: “London has had a tough time lately, as Brexit injected a dose of uncertainty into the property market. In spite of this, the number of new home approvals improved in the run-up to the result. There may still be an impact to come, but for now, this pick-up is a sign that London’s property market is resilient. It’s a new game of unknowns – and London could emerge a winner.

“Westminster is soaring ahead in terms of approvals and applications, but these are unlikely to be affordable for the typical Londoner. Many in the capital are left feeling let down as affordability drives them further away from a home of their own.

“A new Housing Minister means new rules though, and London could be set for a shake up. The revival of a Minister for London could bring some reassurance to developers and buyers, who are hoping for a pro-building Government under Theresa May. Realistically, however, it’s more likely to be business as usual.”

New Home Approvals in London Recovered Pre-Brexit

New Home Approvals in London Recovered Pre-Brexit

Despite a pick up in approvals in Q2, the quarterly improvement trails behind the levels recorded in Q2 last year.

Q2 2015 saw 8,063 new home approvals, out of a possible 10,662. Annually, the rate has dropped by 22%.

Bridges continues: “We keep on hearing negativity when it comes to housing in London; not enough space, not enough money, too much Nimbyism. In fact, there’s plenty of room and sufficient progress isn’t being made on a yearly basis. Our research suggests space for up to 570,000 across the next ten years. Sadiq Khan may be keen to protect greenbelt sites, but good development is possible there too, and we need to think the politically unthinkable to solve the housing crisis.

“There’s a clear and difficult road ahead to solve London’s housing deficit. A big challenge is how to ensure the Government’s promise of one million new homes and Sadiq Khan’s promises of over 50,000 in London are delivered now Brexit is a reality. A more efficient planning system is the place to start. Crucially, planning reforms are still on the Government agenda for now – and they need to stay there.

“Overall, more resources and time need to be committed to achieve the number of new homes London needs. Having a new home can transform lives and London has always been an aspirational city.”

The London Borough of Newham rejected a huge 92% of possible new homes in Q2, recording the lowest Greater London approval rate, and meaning that just nine new homes were approved over a three-month period.

Comparatively, the London approval average was 76% in Q2, with just 13 out of 33 boroughs surpassing this level. However, this is an improvement on Q1, when the average approval rate stood at 61%.

Behind Newham, Bromley approved just 23% of all new home applications, while Islington approved a surprisingly low 36% of potential new homes.

However, Merton’s planning department approved 88% of new home applications, and the east of London saw a boost to its new build developments, with Tower Hamlets approving 87% of new home applications, alongside Havering.

Bridges concludes: “The east of London appears the most reliable area when it comes to tackling London’s housing crisis. Planning is more lenient, there’s less resistance to new developments, and the area keeps growing in vibrancy and significance to the London economy. East London’s impressive tech sector is just a starting point, and success will continue to ripple around the surrounding locales. More and more, people are wanting to live in Shoreditch, Dalston and Hackney Wick, and this enthusiasm is driving developers to the area.

“It’s great to see overall progress, but certain boroughs are slowing things down – Newham has seen a rigid approach to planning in Q2, which will need to be reversed if a consistent approach is to be enacted across London.

“Again, the ugly inner/outer divide has reared its head, with outer London remaining defiant against new homes and new developments. Unfortunately for London, consistency is key to solving the planning equation. If planning departments are to embrace a new strategy, some tough love from central Government might be needed. And Gavin Barwell may be the man to do it – only time will tell.”

Landlords, with new developments cropping up consistently, east London may just be the right spot for you to invest in. Here’s why you should buy further east: /why-landlords-should-buy-in-east-london/

Mortgage Approvals Drop to 15-Month Low in Brexit Month

Published On: July 27, 2016 at 10:59 am

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Mortgage approvals dropped to a 15-month low in June amid concerns over the Brexit vote, according to figures from the British Bankers’ Association (BBA).

Mortgage Approvals Drop to 15-Month Low in Brexit Month

Mortgage Approvals Drop to 15-Month Low in Brexit Month

Data from the trade body shows that mortgage approvals for house purchase fell from 41,842 in May to 40,103 in June, while net lending dropped from £1.6 billion to £1.3 billion over the same period.

On an annual basis, the number of approvals is 11% lower. However, in the first half of the year, approvals were 5.5% higher than in the same period of 2015.

Although the number of mortgage approvals was down, the total value of loans was up, with gross mortgage borrowing of £12.2 billion in June, up by 4% on the same month last year. Borrowing for the first six months of 2016 totalled £79.9 billion, which is up on the £63.6 billion recorded in the same period of 2015.

The Chief Economist at the BBA, Dr. Rebecca Harding, comments: “This month’s high street banking data reflects the uncertainty that was felt ahead of the EU referendum. Business borrowing in June dropped for the first time in 2016, signalling that investment decisions were being delayed until after the vote.

“Mortgage lending and approvals also fell back in June, but remain above the low levels seen in April following the introduction of the Stamp Duty surcharge.”

Andrew McPhillips, the Chief Economist at Yorkshire Building Society, also responds to the data: “These figures show that homebuyers chose not to postpone getting on the housing ladder, despite uncertainty around the EU referendum. That said, it’s important to note that increases in lending are not solely influenced by movements in demand, but also by house prices.

“Current levels of house price inflation are putting upwards pressure on the size of the loans people are taking out, which is, in turn, driving up mortgage lending. There was a 4.9% monthly increase in property transactions in June, according to HMRC, and the fact that lending is increasing on a much steeper scale shows how house price increases are affecting the mortgage market.”

He continues: “Looking at the long-term trends, property transactions are actually down by 10.2% on last year, compared with a 4% increase in lending over the same period. The consequence of increasing house prices is that many people are being pushed out of the market due to the amount of money required to get on the property ladder.

“There is a clear need for more homes to be built, which should act to reduce house price inflation and help to make homes more affordable.”

Positively, however, the latest figures from housebuilder Taylor Wimpey show that customer interest in new homes remains strong, despite uncertainty surrounding the Brexit vote. If the firm continues to build homes at the current rate, housing supply should increase significantly, relieving the pressure on the property market.

Customer Interest High Despite Referendum, Reports Housebuilder

Published On: July 27, 2016 at 9:39 am

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In its latest half-year report, housebuilder Taylor Wimpey claims that customer interest continues to be high, despite last month’s EU referendum.

In the first six months of 2016, the builder completed a total of 6,019 homes, up by 3% on the same period last year.

Its average selling price was also up, by 5.8%, to £238,000.

Looking ahead, Taylor Wimpey reports that it has a strong order book for the future, representing 8,683 new homes.

Customer Interest High Despite Referendum, Reports Housebuilder

Customer Interest High Despite Referendum, Reports Housebuilder

The report found that although it is too early to assess the long-term effects of the EU referendum result, there has been no meaningful change to the housebuilder’s business to date, with trading in the past month at a normal seasonal range.

Since 24th June (the date the referendum result was announced), the early confidence indicators amongst homebuyers, alongside continued competitive lending by mortgage providers, are encouraging the resilience of the UK housing market.

Taylor Wimpey has also found that the Help to Buy scheme continues to be a differentiator for new build housing, and remains popular with its customers.

Positively, the housebuilder reports that commentary over the last month from the Government, Bank of England and mortgage lenders demonstrates a commitment to housing supply and recognition that there remains a fundamental imbalance between demand and supply.

Additionally, customer interest from Taylor Wimpey remains high, with website visits solid, and customers continuing to register interest in forthcoming developments and make appointments to progress their home purchases. Although the builder experienced a small increase in the average cancellation rate immediately after the referendum, this remained low compared to historic norms and is now back in line with recent low levels.

However, it’s not good news for the prime central London market, where demand has continued to slow. Despite this, the wider London market remains robust.

Taylor Wimpey insists that through focusing on creating long-term value and mitigating future risk, it delivers on providing homes in the right location, which is a “key determinant of a home purchase”. It is currently operating from 286 locations across the country, in villages, towns and cities “where people want to live”.

As a result, the housebuilder believes that it will continue to perform well throughout all market conditions.

The Chief Executive of Taylor Wimpey, Pete Redfern, comments: “We have delivered a strong operational and financial performance, with continued growth in profitability, building over 6,000 new homes across the country during the first half of 2016.

“One month on from the EU referendum, current trading remains in line with normal seasonal patterns. Customer interest continues to be high, with a good level of visitors both to our developments and to our website. We are monitoring customer confidence closely across a number of metrics, including appointment bookings, and these continue to be solid. Whilst it is still too early to assess what the longer-term impact from the referendum result on the housing market may be, we are encouraged by the first month’s trading and by continued competitive lending from the mortgage providers, as well as the positive commentary from Government and policymakers.”

If confidence in the housing market continues, will the demand and supply imbalance be corrected?

Housing Minister Remains Committed to Building 1m New Homes

Published On: July 21, 2016 at 11:09 am

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The Government’s new Housing Minister, Gavin Barwell, has confirmed that he remains committed to building one million new homes.

Barwell, who was appointed last week, has also made it clear that unless there are very special circumstances, these homes will not be built on the greenbelt.

He said: “The Government is committed to the strong protection and enhancement of greenbelt land. Within the greenbelt, most new building is inappropriate and should be refused planning permission, except in very special circumstances.”

Housing Minister Remains Committed to Building 1m New Homes

Housing Minister Remains Committed to Building 1m New Homes

Answering a question in Parliament, Barwell also highlighted the importance of homeownership.

He insisted that the Government is committed to a “mixed programme” of different housing tenures, but that 86% of people aspire to own their own home.

The new Secretary of State for Communities and Local Government, Sajid Javid, also emphasised his commitment to protecting the greenbelt, describing it as “absolutely sacrosanct”.

Meanwhile, the Managing Directors of the Association of Residential Letting Agents (ARLA) and the National Association of Estate Agents (NAEA), David Cox and Mark Hayward, welcomed Barwell to his new role.

In a joint statement, they said: “We would like to congratulate Gavin on his new appointment and welcome him to his new role.

“This is a crucial time for housing, with demand greatly outstripping supply and an urgent need to reshape Britain’s housing mix.

“We worked closely with the previous administration to increase transparency in the UK property sector, and remain very supportive of the need for a beneficial ownership register.

“Property transparency is particularly a problem in London, where housing stock has increasingly become a vehicle for money laundering operations, so we applaud the decision to provide the minister with a dual oversight for London.”

However, they added: “Despite this, Gavin will have a lot in his in-tray and a number of key concerns still exist in the sector.

“The Government’s decision to sell the Land Registry risks reversing its good work on transparency, and we call on the new minister to work with the new Business, Energy and Industrial Strategy Department to think again on this proposal.

“Secondly, it is also essential that Gavin honours the commitment of his predecessor to bring forward a review of the need for mandatory Client Money Protection (CMP) for letting agents, following the discretionary powers that were brought in as part of the Housing and Planning Act.

“Only this can provide the adequate level of protection for landlords and tenants alike.”

The statement concluded: “These challenges are not insurmountable, and we greatly look forward to working with the new minister to find a solution to these issues in the months and years ahead.”