Posts with tag: housing crisis

How to Escape Generation Rent

Published On: July 23, 2015 at 3:57 pm

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Homeownership is something that young people will inevitably begin thinking about at some point. However, new research suggests that most will still be renting in ten years’ time.

A study by economists at PwC indicates that generation rent will not break into the housing market for at least another decade.

The firm predicts that by 2025, more people will be living in private rental sector accommodation than owning their own home.

This includes over half of Britons born between 1986-2005 that will still be renting from a private landlord.

Director of campaign group Generation Rent, Betsy Dillner, comments: “While the Government has made first time buyers a priority, the chronic housing shortage indicates another decade of rising numbers of people who can’t afford to buy.

How to Escape Generation Rent

How to Escape Generation Rent

“By handing half their pay cheque to their landlord, instead of paying off a home they own, renters struggle to save for the future, swelling the ranks of the have-nots. As more low earners and retirees rent privately with no way to pay the rent, the taxpayer will pick up the tab.”1

The PwC’s research also found that more and more members of the older generation have paid off their mortgages and own their homes outright.

Chief Executive of homelessness charity Shelter, Campbell Robb, says: “No matter how hard they work or save, an entire generation is being forced to watch their dreams of a stable future slip through their fingers, stuck in properties where rents eat up their salaries and short-term contracts leave them with no stability at all.

“It’s time for the Government to make good on their promises – not with piecemeal schemes that will only ever paper over the cracks, but with a real plan to build the affordable homes we so desperately need.”1

A senior economist at PwC, Richard Snook, says that first time buyers are hit with high house prices and large deposits: “The long rise in the UK owner-occupation rate in the post-war years seems to have gone into reverse.”1

How to escape generation rent

The private rental sector is growing at such a rate it is difficult to challenge. But there are ways that renters can help themselves in the fight for homeownership.

  • Deposits – The average first time buyer deposit is £25,134. Despite this being a huge sum, the sooner a renter starts to save, the better.
  • Government schemes – The Government’s new Help to Buy ISA, due this autumn, can help when saving for a deposit. Also, the Help to Buy scheme can help secure a mortgage.
  • Shared ownership – Buyers can purchase a share in a home from a housing association and buy more over time. This can be an easier way to get onto the ladder
  • Family – Not everyone can borrow money from their family, but if parents own their own house, they could act as a guarantor for their children, which will allow them to take out a mortgage with no deposit.
  • Partners – It is always easier to be granted a mortgage if someone buys with someone else. Often, this is a partner, but could also be a family member or friend.
  • Rental property – Whilst housing stock is low, it is still important that renters thoroughly inspect a property before moving in. Also, check any letting agent fees so that you avoid unexpected costs.
  • Co-ops – If paying a landlord isn’t appealing to you, you could sign up to a co-op instead. This way, you will still pay rent but the co-op owns the building. As a member, you can participate in discussions about how it is managed.
  • Campaigning – It is always worth campaigning for the things that you believe in, especially when it is affecting your lifestyle. Shelter can help you get started: http://england.shelter.org.uk/campaigns/fixing_private_renting/evict_rogue_landlords

1 http://www.mirror.co.uk/money/home-ownership-dead-10-years-6113018

Housing Supply Crisis is Worsening, says Rightmove

Published On: July 20, 2015 at 2:12 pm

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The shortage of supply on the housing market is worsening, says Rightmove.

The property portal has found that the number of new vendors has dropped 10.6% in the past year.

However, Rightmove reveals that demand is still high, with traffic and enquiries to agents both up 22% in June compared to June 2014.

The site also says that asking prices for properties new onto the market have reached another record high, rising 0.1% month-on-month to an average of £294,542.

Housing Supply Crisis is Worsening, says Rightmove

Housing Supply Crisis is Worsening, says Rightmove

Demand is strongest for small properties with up to two bedrooms.

The amount of inquiries for small homes is 24% higher than for larger houses with three or more bedrooms.

However, the greatest decrease in supply is in the standard first time buyer sector.

Miles Shipside, Director of Rightmove, explains: “The greatest mismatch between demand and supply is at the lower end of the property ladder, as no doubt many buyers in this category would like to afford to buy a larger home, but have had to accept that it is out of their reach and downsize their aspirations to increase their chances of a successful purchase.

“The forthcoming extra tax burdens on buy-to-let investors may help to tip the balance in favour of first time buyers, but the consequent drop in rental property supply could push up rents.

“More supply of affordable starter homes for the growing demand from both renters and buyers is required, which means more new builds for both sectors to meet the country’s current and future housing needs.

“The challenge for Government, planners and developers is how best to ensure the right properties are built in the right locations and at more affordable prices.”1

Two agents have reacted to Rightmove’s revelations, noting high property investor activity in the lower price range.

Trevor Binch, Managing Director of Merrick Binch in Coventry, comments: “We’re finding that any properties on the market with us at under £150,000 – so your typical two-beds or some three-bed terraced – are selling immediately.

“There are a lot of investors snapping up these types of properties and this, coupled with the fact that a lot of sellers aren’t coming to market, is making the supply shortage worse.

“While there are some new developments being built in Coventry, there just isn’t enough to satisfy the demand, especially at the lower end of the market.”1

Donald Collins, Director at Go View London in Ealing, adds: “The natural consequence of a growing London population, young professionals trying to get on the ladder and investors looking for long-term investments, is a big shortage of two-bed properties coming to market.

“For properties we have on between £400,000 to £700,000, half of the interest comes from residential buyers and half from investors.

“The fact that investors have a long-term focus of building their portfolio and in many cases handing it down to their kids, means that these kinds of properties in the right locations won’t come back round on the market for about 15-20 years.”1

1 http://www.propertyindustryeye.com/supply-crisis-worsening-says-rightmove-as-new-instructions-dive/

Generation Rent Urges Vendors to Sell for Less

Published On: July 20, 2015 at 12:17 pm

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Generation Rent Urges Vendors to Sell for Less

Generation Rent Urges Vendors to Sell for Less

Tenant group Generation Rent is urging vendors to sell their homes for less than they are worth, in a bid to solve the housing crisis.

Additionally, the organisation believes that landlords letting a flat should charge less than the market rate.

In a post on its website, Generation Rent says that ordinary people have a personal responsibility for the housing crisis.

Zeph Auerbach, who wrote the post, says that homeowners with a mortgage will make a huge profit from their asset, meaning that they are not as affected as the tenants who pay “extortionate rents.”

Auerbach writes: “Let’s put it plain: some of us are winners, some of us are losers.

“And if you are winning by selling or letting at a ludicrously high price, yes, you are continuing to the dire situation for your friends and strangers alike.”

The blog says that when it comes to housing, most people behave like “little caricature capitalists.”

It concludes: “If you are profiting obscenely from the rising housing market, you are contributing to it.”1

1 http://www.generationrent.org/the_uk_housing_crisis_are_you_profiting_from_it

Lenders Revise Their Housing Market Predictions

Published On: July 17, 2015 at 3:45 pm

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Mortgage lenders have revised their housing market predictions for this year, expecting more housing transactions but fewer purchases using mortgages than they initially forecast.

Lenders Revise Their Housing Market Predictions

Lenders Revise Their Housing Market Predictions

The Council of Mortgage Lenders (CML) recently reported that mortgage lending in June was at a seven-year high. It now expects 1.2m housing transactions, up from the 1.18m it predicted in December 2014.

However, it also thinks gross lending will be £209 billion this year, not the £222 billion originally forecast.

If the CML is correct, transactions will be almost equal to last year.

Although significantly improved since the sub-million transaction levels seen between 2008-12, transactions are still well below pre-recession activity. In 2006, there were almost 1.7m property sales.

The CML also expects 16,000 repossessions this year, down from the 22,000 it forecast last December.

In June, the CML found that gross lending increased by 29% compared to May and 15% annually. This is the highest figure since July 2008.

The CML says that its predictions could cause confidence in the market in the next few months.

Mohammad Jamei, CML Economist, says: “Activity is picking up after a slow start to the year. Our lending figure for June may be flattered by the end of political uncertainties related to May’s general election and the underlying picture is likely to be one of only modest recovery.

“This should be supported by favourable conditions in the economy, though it will be limited by rising house prices and affordability pressures.”1 

1 http://www.propertyindustryeye.com/mortgage-lending-shoots-up-to-a-seven-year-high/

Charities Say Housing Benefit for Under-21s is Vital

Published On: July 17, 2015 at 11:46 am

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In her first House of Commons speech, the youngest MP, Mhairi Black, stated that she is the only 20-year-old in the country that the Chancellor is willing to help with housing.

Criticising the Government’s plans to cut housing benefit for 18-21-year-olds, Black shared the concerns of many charities that work with young homeless people to the Commons.

In the July Budget, Chancellor George Osborne claimed that the best way out of poverty is work. However, for those struggling with housing, the solution is not so simple.

Charities Say Housing Benefit for Under-21s is Vital

Charities Say Housing Benefit for Under-21s is Vital

Jacqui McCluskey, Director of Policy and Communications at Homeless Link, voices her thoughts: “Here at Homeless Link, we have real concerns that some current and proposed welfare policies are counter-intuitive, and could create unnecessary hurdles for the people most in need of help to escape poverty.

“The Government’s plans to remove housing benefit from 18-21-year-olds are being sold as an incentive for young people to either earn or learn. Yet without the safety net that housing benefit provides, young people can find themselves pushed even further from the workforce.” 

Research has found that the most common cause of homelessness in under-25s is a relationship breakdown. Additionally, many are leaving violence or mental and physical abuse. These young people cannot stay at home and therefore housing benefit provides vital support as they “move towards independent living.”

“Without a stable home, many young people face additional barriers to work that cannot be addressed simply by removing access to benefits,” says McCluskey.

Six in ten young homeless people also have a range of complex needs, including mental health problems, and half do not have the basic skills to live independently.

“Restricting access to benefits does little to help these people into jobs,” explains McCluskey. “Homeless people have a far harder time trying to find work than those with a home.”

A study into benefit sanctions, usually occurring when jobseekers fail to turn up to Jobcentre appointments, revealed that only 3% of people who receive Jobseeker’s Allowance (JSA) are sanctioned. Among homeless people, this increases to 33%.

McCluskey urges: “Existing help to support people into work is already proven to be failing those who are most vulnerable. We need a greater focus on homeless people and their needs in the assessment process, the design and delivery of employment programmes, and the conditions placed upon individuals seeking support.”

Many homeless charities have reported that their clients are driven further into destitution due to losing their benefits. Although the Government has made the rules more flexible regarding those who are especially vulnerable, this should only reinforce the need for keeping essential benefits.

McCluskey concludes: “Work is a route out of poverty only if there is a welfare safety net that recognises the value of a sale and stable home, and employment support that understands housing needs.”1

1 http://www.theguardian.com/housing-network/2015/jul/16/housing-benefit-under-21s-vital-safety-net-vulnerable

Shortage of Homes on Market Drives Prices Up 1.7% in June

Published On: July 14, 2015 at 12:01 pm

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The amount of homes on the market dropped to a 37-year low in June, driving prices up by 1.7% over the month.

These figures have caused concerns that prices will surge to increasingly unaffordable levels.

Surveyors have said that the number of properties for sale with each of its members is at the lowest level since records began in 1978. Britain’s biggest mortgage lender, Halifax, also reported that the average UK house price has surpassed £200,000 for the first time on its measure, due to an unexpected 1.7% rise in June.

The Royal Institution of Chartered Surveyors (RICS) states that the average number of homes for sale with each member has fallen to 49.5 from 61 last June and is down from a record high of 148 in 1996.

Shortage of Homes on Market Drives Prices Up 1.7% in June

Shortage of Homes on Market Drives Prices Up 1.7% in June

It says the causes of this vary around the country. In expensive parts, high Stamp Duty costs and other fees make it more appealing to renovate or extend homeowners’ current properties than move. It also says that lack of housing stock is a vicious cycle, as people do not want to sell because there aren’t homes to move into.

Demand for homes rose in every region except the South East, and RICS says that its members are more positive about sales growth than at any point since April 2014.

The difference between supply and demand is keeping prices steady and RICS says that the number of members reporting price rises has reached an 11-month high. In total, 41% more surveyors said they expect house prices to increase in the next three months; the highest proportion in over a year.

Chief Economist at RICS, Simon Rubinsohn, comments: “There had been some hope that the removal of political uncertainty following the general election would encourage more properties onto the market but the initial indications are that this is not proving to be the case.

“Additionally, the recent flat pattern of appraisals by respondents to the survey suggests this is not about to change anytime soon. As a result, it is hardly surprising that prices across much of the country are continuing to be squeezed higher, with property set to become ever more unaffordable.”1 

Halifax’s monthly data, based on mortgages it has approved during the month, indicates that prices have risen for the fourth consecutive month, and are now higher than the previous pre-crisis peak.

During the quarter, prices were up by 3.3%, the largest three-month increase since November 2009. The lender says that the average UK house price is now £200,280, which is the first time it has passed £200,000 since it began recording in 1983.

Housing Economist at the Halifax, Martin Ellis, says lack of supply of homes for sale is driving up prices: “This shortage has been a key factor maintaining house price growth at a robust pace so far in 2015.

“Economic growth, higher employment, increasing real earnings growth and very low mortgage rates are all supporting housing demand, with signs of a recent modest pick-up in demand.”1 

This sudden increase in June has caused a significant rise in the annual rate of inflation to 9.6%, compared with 8.6% in the previous month. Annual house price growth is back to levels seen in September 2014 and has caused economists to re-evaluate their predictions.

Chief Economist at IHS Global Insight, Howard Archer, described Halifax’s latest report as “a bit of a stunner.”

He continues: “Our current forecast is for house prices to rise by 6% over 2015, but the Halifax data at least suggests that this may be too conservative a projection.”1 

However, Archer warns that data from Halifax may be more unpredictable than other house price measures and that no one should place too much trust on one particular house price survey or measure.

Property Economist at Capital Economics, Matthew Pointon, says that future house price gains are anticipated over the rest of the year.

However, he adds: “We doubt prices will be able to continue to rise at this breakneck pace.”

He says that mortgage lending is unlikely to relax substantially and the Bank of England’s recent concerns over buy-to-let “should prevent a surge in active housing demand and keep house price gains to around 6% this year.”1

1 http://www.theguardian.com/business/2015/jul/09/shortage-homes-uk-market-prices-up-june