Posts with tag: housing crisis

Last Time Buyers Could Help Solve the Housing Crisis, But Properties Aren’t Available

Published On: July 20, 2016 at 11:28 am

Tags: first time buyers,homeowners,housing crisis,last time buyers,property market

Last time buyers could help solve the nation’s housing crisis by moving to smaller homes, but properties are simply not available, according to new research.

Over the past two years, more than 500,000 homeowners aged 55 or over have had to scrap their plans of moving house due to a lack of suitable properties, says a report from the HomeOwners Alliance.

Almost one in five (19%) homeowners aged 55+ have considered moving since 2014 but have not done so, found the study by YouGov on behalf of the HomeOwners Alliance and BLP Insurance.

Of these, almost one in four (23%) said that a lack of suitable housing was the main reason why they had not moved house. This equates to over 500,000 people across the UK.

Last Time Buyers Could Help Solve the Housing Crisis, But Properties Aren’t Available

The report believes that these so-called last time buyers could help ease the housing crisis in the UK. If older homeowners living in homes that are under-occupied moved to smaller properties, more housing stock would be released to first time buyers and second steppers. There are approximately 11.4m homeowners aged 55 or over in the UK.

According to the latest homeowner survey, 6% of homeowners aged 55+ say they have moved in the past two years, and a further 19% have considered moving but have not done so – the equivalent of more than two million homeowners.

A lack of suitable homes is the main reason for older homeowners deciding to stay put, with 23% of those aged 55+ who considered a move saying that this is the primary reason for not moving.

The study also found that emotional ties, rather than financial concerns, are a significant barrier to moving in later life. The stress and upheaval of moving is more likely to be among the reasons not to move for those aged 55 or over who considered a move (30% versus 21% of homeowners overall). Additionally, older homeowners are more likely to not want to move away from friends, neighbours and their community (23% vs. 17%), whereas property prices are less likely to be a barrier (22% vs. 31%).

When thinking about a future move, top priorities are similar for all homeowners, regardless of age. Spaciousness of rooms (72%), good build quality (71%) and parking (69%) top the list across all age ranges.

However, compared with UK homeowners generally, a greater proportion of those aged 55+ identify availability of parking (77% vs. 69%), low running costs (70% vs. 59%), proximity of shops (66% vs. 55%), good transport links (56% vs. 47%) and living on one level (36% vs. 24%) as important criteria for their next home.

When considering a new build home as an option, older homeowners consider new builds to be particularly low on running costs, but less likely to deliver on spaciousness of rooms, the amount of available green space and providing living on one level. They believe that being close to amenities and good transport links are also less typical of new build homes.

The CEO of the HomeOwners Alliance, Paula Higgins, comments on the findings: “The recent Brexit decision means we are now in the midst of uncertain times, and new housing is likely to be a victim. Government needs to focus efforts on negotiating a European exit, but they must not drop the ball in delivering new housing that meets the needs of last time buyers. Housebuilders can’t be allowed to sit on their hands and land bank. The Government needs to keep them building and building homes that meet the needs of last time buyers as well as first time buyers.”

The CEO of BLP Insurance, Kim Vernau, adds: “The issues highlighted by this survey that face last time buyers are as acute as those issues encountered by first time buyers. If we wish to provide the required quality of housing that addresses these concerns, we desperately need an appropriate mix of well-designed homes alongside adequate local infrastructure to help address the current housing shortage.”

Generation Rent has Spent £44,000 More on Rent than Baby Boomers

Published On: July 19, 2016 at 11:08 am

Author: Em Morley

Categories: Finance News

Tags: Generation Rent,homeownership,housing crisis,private rental sector

The combination of declining homeownership and rising costs in the private rental sector mean that today’s generation rent will have spent £44,000 more on renting by the time they reach 30 than baby boomers, according to new research by the Resolution Foundation.

The analysis, published ahead of yesterday’s launch of the Resolution Foundation’s Intergenerational Commission, highlights a worrying drop in homeownership over recent decades, which has reduced living standards for the millennial generation and led to a further concentration of wealth among the older generation.

The study found that baby boomers – those born between 1946-1965 – were the main beneficiaries of the growth of homeownership during the 20^th century, with almost two-thirds (63%) owning their own home by the age of 30. However, decades of falling housebuilding and rising house prices have reduced homeownership levels for subsequent generations.

About 60% of generation X owned their own home by the age of 30, falling to 42% for today’s millennial generation.

This shift away from homeownership has left many more millennials renting privately, which has subsequently caused a sharp rise in the cost of renting. The Resolution Foundation found that millennials have spent almost twice as much on rent as generation X did at the same age, who in turn spent twice as much as the baby boomers.

Generation Rent has Spent £44,000 More on Rent than Baby Boomers

Combining the downward shift in homeownership with the rising cost of renting, the report shows that millennials have spent £44,000 more on rent than baby boomers by the time they reach 30, and £25,000 more than generation X.

The Resolution Foundation says that the extra spending on rent has reduced living standards for today’s young people and made it harder to save for a deposit for their own home. It adds that the extra spending on rent is more than the average first time buyer deposit, of £33,000.

With half of all residential rental income landing in the pockets of baby boomers, the organisation says that the growth of generation rent is a key reason why questions of intergeneration fairness are rising nationally.

The Resolution Foundation welcomes Theresa May’s acknowledgement of Britain’s housing deficit in a speech last week, where she said that unless action is taken, “young people will find it even harder to afford their own home”.

The group says that a major housebuilding scheme is likely to be supported by all generations, contrary to popular belief, pointing to findings in the British Social Attitudes Survey, which found that baby boomers’ support for homes being built in their local area has almost doubled in recent years, from 29% in 2010 to 56% in 2014.

The Resolution Foundation report was published ahead of the launch of its Intergeneration Commission, an 18-month investigation that hopes to repair the fractured social contract between generations. It will consider the extent to which the living standards of generation rent have been permanently scarred, and recommend policies to raise the living standards of current and future generations.

The Senior Policy Analyst at the Resolution Foundation, Laura Gardiner, explains: “The nation’s housing crisis is perhaps the most visible example of growing inequality between generations.

“Young people today are paying a heavy price for decades of falling homeownership. The struggle to get on the housing ladder has left many of today’s millennials renting, at a time when it has become more expensive to do so. Millennials have had to spend £44,000 more on rent by the time they reach 30 compared to the baby boomers.”

She continues: “Britain’s continuing failure to build enough homes means that unless we change course, the struggle of young people to own their home is only going to get worse.

“The good news is that older generations are just as concerned about young people’s struggle to own their home, and support for housebuilding is growing across all age groups. A sustained programme of housebuilding to cut Britain’s housing deficit would send out a clear message from the incoming Prime Minister that she is committed to repairing the social contract between generations.”

Do you support plans to help generation rent get onto the housing ladder?

Study into Decline of Homeownership Expected for Release in Autumn

Published On: July 7, 2016 at 10:46 am

Author: Em Morley

Categories: Property News

Tags: Brexit,homeownership,housing crisis,housing market,Redfern Review

The Redfern Review, an independent study into the decline of homeownership, is expected for release in autumn 2016.

The report, commissioned by the former Shadow Secretary of State for Housing and Planning, John Healey MP, is undergoing an extended consultation period to take into account the consequences of the recent UK vote to leave the EU.

Study into Decline of Homeownership Expected for Release in Autumn

The Redfern Review’s main objective is to analyse the recent decline in homeownership and ways in which opportunities to boost homeownership can be improved. It is an independent review that aims to widen public debate and policy thinking.

Despite his recent resignation from the shadow cabinet, John Healey continues to work on housing and is determined to continue to encourage the delivery of the review. Alongside Peter Redfern, he remains passionate about the long-term health, sustainability and fairness of the property market. Redfern is committed to completing the work of the review, and expects it to be published in autumn.

The recent uncertainty caused by the EU referendum has put the housing market into sharp focus as a key factor in national social and economic stability, and in the security and life choices of individuals.

The panel and team have already focused on the long-term issues surrounding the market, how short-term initiatives impact in the long-term, and the balance of opportunity for all in accessing homeownership and other forms of housing tenure.

In the early autumn, the panel expects to set out a comprehensive analysis of the decline in homeownership and an overall framework within which high quality and long-term housing related decisions can be made.

However, the referendum vote of 23^rd June has caused a series of potential challenges and opportunities, and the team intends to update its report to take this change into account.

The initial submission and consultation process is now complete, but the Redfern Review will now extend its consultation deadline to 31^st July, to consider the impact of Britain’s exit from the EU. Submissions can be sent to: info@redfernreview.org.

Peter Redfern comments: “The long-term decline in homeownership in the UK towards 60% disadvantages both individuals and the health and stability of our economic and social structures. Our initial findings indicate that only long-term measures will work in addressing this critical issue in a sustainable way.

“The review will report in the autumn taking into account views on the impact that Brexit will have on homeownership. We need to continue to strive to give current and future generations a realistic opportunity to own their own home.”

John Healey MP adds: “Following the recent referendum vote, fresh thinking and new ideas in areas like housing are more needed than ever. I’ll be carrying on my work on housing, and look forward to the important contribution the Redfern Review will make to our national debate.”

Half of Working Britons Have Seen No Rise in Living Standards Since Early 2000s

Published On: June 28, 2016 at 8:45 am

Author: Em Morley

Categories: Finance News

Tags: Brexit,house prices,housing,housing crisis,living standards

Around half of working Britons have seen no rise in living standards since the early 2000s, as a squeeze on earnings and rising housing costs hit household budgets.

A major new report from the Resolution Foundation shows how weak income growth and increasing housing costs have effectively wiped out any gains for low and middle income working age families since the early 2000s.

By considering the impact of rising housing costs on living standards, the report found that family budgets have been more squeezed than standard measures of incomes suggest. The organisation warns that this squeeze started well before the financial crisis and has continued despite post-crisis record low interest rates putting downward pressure on housing costs. The report adds that since the early 2000s, rising housing costs have had severe effects on low to middle income households.

Looking at the impact of housing costs on living standards amongst different groups, the report found that from the start of the income slowdown in 2002:

Half of Working Britons Have Seen No Rise in Living Standards Since Early 2000s

Over half of households in the working age population have experienced falling or flat living standards – equivalent to almost 11m families.
Two-thirds of the growth in average working age income has been wiped out by rising housing costs.
More than all of the growth in private tenant income has been wiped out by rising housing costs.
The same is true for households headed by someone aged between 25-44.

Although the report shows that London is a standout case in terms of how housing costs have dragged down living standards – the proportion of income spent on housing has risen by almost a third in the capital since the early 2000s – it is not just a southern problem.

The Resolution Foundation says that the north is catching up with the south, with Scotland, the North West and the East Midlands all experiencing sharper increases in housing costs as a proportion of income than the South East and South West.

The report claims that regional differences in the strength of leave votes in Thursday’s EU referendum were rooted in long-term, geographical economic inequality, rather than shorter term trends, and that explanations for last week’s outcome go far beyond economic concerns. However, it adds that the widespread squeeze on living standards for working Britons since the early 2000s has affected all parts of the UK, which has increased dissatisfaction with the status quo.

As politicians from all parties consider how to respond to last week’s vote, the Resolution Foundation insists that they will need to understand these trends and respond to them, with a renewed focus on housebuilding.

It adds that while many aspects of incomes are difficult for the Government to directly influence, the failure on housing is home grown, and tackling it is well within the power of the Government.

With the short-term e conomic uncertainty caused by the Brexit vote likely to increase inflation, the report believes that now is not the time to press ahead with large cuts to working age benefits, which would further dampen living standards for lower income families.

The Director of the Resolution Foundation, Torsten Bell, says: “There were many factors – both cultural and economic – behind Britain’s decision to back Brexit last week.

“But stagnating living standards have been an important background to rising dissatisfaction with the economic and political status quo, particularly among poorer households. The fact that the British people have seen successive governments fail to seriously address problems that are well within their control, such as housing, has only reinforced that feeling.”

The Senior Policy Analyst at the organisation, Lindsay Judge, also comments: “Britain’s stagnation in living standards has a range of roots – from low pay growth to high inflation during the financial crisis. But rising housing costs have played a much bigger part than is normally appreciated.

“And while it’s not possible for Government to solve all the living standard challenges we face, the failure to address our housing crisis is a long and sustained home grown public policy failure. Finally getting to grips with our housing crisis would help to boost living standards for millions of people and have the added benefit of helping young people, many of whom have been hit hardest in recent years.”

London Tenants Spending 70% of Their Income on Rent and Bills

Published On: June 8, 2016 at 11:36 am

Author: Em Morley

Categories: Property News

Tags: housing crisis,London,London tenants,rent prices,tenants

London tenants are now spending 70% of their average income on rent and essential bills, according to research by London estate agent Portico.

New data analysis by the firm shows that for three-and-a-half out of five working days, Londoners work solidly to pay their rent and other essential expenditure, such as taxes, housing costs and household bills.

The following table details how the typical London tenant’s working week is divided to pay for essential costs:

London Tenants Spending 70% of Their Income on Rent and Bills

Portico claims that it is not until 1pm on a Thursday that the average Londoner has earned enough to cover all of their essential expenses for the week. They are then left with around £201 of disposable income to be spent or saved as they like – although the firm notes that bills do not include food.

From 10am on a Tuesday until 4pm on Wednesday, Londoners are working to pay their rent, whereas all day on Monday, they work to pay their Income Tax and National Insurance.

Portico has also analysed the data on a borough-by-borough basis, adjusting the cost of rent, Council Tax and travel to zone 1 accordingly, but using the average London salary of £34,320 a year.

The agent found huge variations between boroughs; London tenants living in Bexley will have the greatest amount of disposable income left over after rent and essential bills, at £287 a week, while City of London workers have the least amount of disposable income, at £32. If tenants are looking to live in zone 1, Lambeth offers the highest amount of weekly disposable income, at £209.

The Managing Director of Portico, Robert Nichols, comments: “Londoners have to work increasingly later into the week before they start to spend some of their hard-earned money. Working for five hours alone to pay Income Tax, plus almost two days on rent, clearly shows how private rents in the capital have skyrocketed.

“But while rents are increasing, public transport is also improving significantly, so we’re seeing a huge number of tenants move further out to boroughs like Bexley, Barking and Dagenham, and Ealing to benefit from affordable rents, a quick commute – which will become even better with the arrival of Crossrail – and a good sum of disposable income in their pockets at the end of each week.”

Huge Jump in London Rents Prompts Calls for Rent Controls

Published On: June 8, 2016 at 11:16 am

Author: Em Morley

Categories: Property News

Tags: housing crisis,London,London rents,rent controls,rent prices

A huge jump in London rents has prompted calls for rent controls and security of tenure by leading trade union GMB.

After recording a rent price rise of over 50% in one London borough, GMB called for New York-style rent controls and security of tenure for private tenants in the capital.

The GMB Congress in Bournemouth was told how families with children should face greater security in their rental properties, through rent caps and a crash programme for new social housing.

Huge Jump in London Rents Prompts Calls for Rent Controls

The study highlights the change in rents in the capital for one, two and three-bedroom properties between 2011-16. It found that the average cost of a one-bed home in Hounslow surged by 51.3% in the last five years – the highest increase in London.

In 2011, the average rent price in Hounslow for a one-bed property was £825 per month. It is now £1,248 – a rise of £423 a month.

The research found that in 11 London boroughs, rents have increased by 30% or more during the past five years.

For the capital as a whole, average rents for one-bed properties grew from £950 per month in 2011 to £1,250 in 2016 – up by £300 or 31.6%.

This huge leap in London rents compares to a Retail Price Index increase of 12.3% over the same period. It also compares to the average rent for a one-bed home in England in 2011 of £495 per month, which rose by £55 to £550 in 2016 – an increase of 11.1%.

Over the same period, the average rent for a two-bed property in London grew from £1,192 to £1,500 per month – up by £308 or 25.9%.

The average rent on a three-bed in the capital rose from £1,350 to £1,800 a month – up by £450 or 33.3%.

The Senior Officer at GMB, Warren Kenny, comments: “These figures show that the housing crisis in London is getting worse, as rents soar under a Tory Government. Rents in one borough for basic accommodation soared by over 50% at a time when wages are frozen or being cut.

“These soaring rents coincide with the explosion in the size of the private rented sector and the growth in the billions of taxpayers’ money paid in housing benefits to private landlords. Nationally, the figure has ballooned from £21.4 billion when Osborne came to power, to £24.3 billion four years later.”

He insists: “London boroughs and the Mayor have to set up a register of landlords to ensure that standards of accommodation are safe and fit for habitation. There is also a need for new legislation on security of tenure especially for families with children at school.

“Rent controls will have to be introduced as well as a crash programme for new social housing if we want to maintain essential services in the capital.”

He concludes: “There is a free-for-all in the London housing market at a time when wages for essential public sector workers are frozen. Some workers in the capital, like cab drivers, even face pay cuts. This position is not sustainable and new thinking is needed to deal with it.”