Posts with tag: housing crisis

Can the UK Build 180,000 Homes a Year?

Published On: April 28, 2015 at 9:30 am

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Categories: Property News

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Recent research by Knight Frank has revealed that building over 180,000 new houses a year is unachievable in the current market.

More than two thirds of house builders in the UK believe this is impossible. 67% of respondents said the maximum sustainable annual delivery of new builds is 180,000 or less. Only 9% think it is possible to build over 200,000 residential properties per year.1

Over half of all developers and builders think an increase in new builds over the next year is unlikely. However, about 60% predict a continuous rise in the amount of house building starts and completions in the next 12 months.1 

Can the UK Build 180,000 Homes a Year?

Can the UK Build 180,000 Homes a Year?

The report also revealed that almost four in five respondents (78%) expect new build house prices to increase in the next year, with 43% predicting rises of up to 5%. 91% also think there will be an increase in construction costs due to the pressure on builders. Most of these respondents (59%) expect a rise of 5-10% this year.1

Furthermore, two-thirds (68%) believe Greenfield land prices will increase.1

Over half of respondents (56%) said that the Community Infrastructure Levy (CIL) is suppressing development volumes.1

The study also asked house builders what measures policymakers could make to increase long-term house building in the UK. The most important step was increasing resources in local planning departments (82%), followed by improvements to skills and training in the construction industry (58%), and opening up public land (57%) completing the top three.1 

Head of Residential Research at Knight Frank, Grainne Gilmore, says: “In the run-up to the election, all political parties agree that the delivery of more new homes is a priority. Yet more than two-thirds of house builders believe that under current market conditions, the maximum number of units that can be sustainably delivered each and every year is 180,000 or less.

“Policymakers, especially those in power after the election, may want to heed the calls from house builders to beef up planning departments in local authorities, plough more investment into skills and training in the construction sector and provide better access to public sector land, moves which the house building industry is signalling could move the country closer to building enough homes for all.”1 

Joint Head of Residential Development at Knight Frank, Justin Gaze, adds: “The capacity to deliver the sheer number of new homes required is the fundamental issue faced by the UK’s house builders.

“The inability to create the necessary number of new homes is being driven primarily by a skills shortage in the development sector which shrunk dramatically following the financial crisis, limited development funding and the lengthy mortgage approval process, which is delaying purchasers.”1 

1 http://www.propertyreporter.co.uk/property/is-180000-new-homes-a-year-achievable.html

 

Milliband gives his answer to housing problem

Published On: April 27, 2015 at 5:25 pm

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Categories: Landlord News

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Ed Milliband has outlined his proposals for changes in the rental market, should he be successful in the General Election, just ten days away.

House Key

Milliband’s proposals include ensuring rent increases are frozen at the rate of inflation, giving tenants obligatory three-year contracts and allowing them the right to ascertain knowledge on how much their predecessor had been charged.

The key to number 10 could be in solving the housing crisis, with all of the major parties vocal in their pledges to provide hundreds of thousands of fresh homes. Alongside promising to change common tenancy agreements from one year to three years (with a six-month probationary period) Labour also plan to ban estate agents from charging fees before tenants move into a property.

 

Rip off

This said, Mr Miliband has pledged to do even more to help Britain’s renters from being ripped-off. By capping rents over three year tenancies, wherein rents will not increase by more than inflation, there will be less room for flexibility and thus leave tenants facing less uncertainty. Additionally, by giving tenants a legal right to find out what the previous inhabitant of their property paid, Labour believe that this will give them more power to negotiate fairer rent prices.

 

Landlords would be permitted to serve at least two months’ notice on tenants to leave a property. However, the rent freeze would not apply to those where shorter contracts were necessary, such as in student accommodation.

 

Rogue Landlords

Mr Milliband also outlined plans for landlords to be punished for poor maintenance of a property. Under the proposals, rogue landlords will be refused tax assistance if they are found to have neglected a home. Tax relief currently allows landlords to offset 10% of their gross annual rental yield against fluctuation in values of furniture and necessary appliances.

Milliband feels that this would go some way to helping those priced out of the market and also those in temporary rental agreements.

 

Milliband gives his answer to housing problem

Milliband gives his answer to housing problem

Opposition

Unsurprisingly, Labour’s proposals have been met with disdain by the Tories. Boris Johnson was particularly scathing, responding directly to Milliband by saying, ‘first of all you’d discourage people from getting into the rental market, you’d discourage the creation of new housing, and all that would happen – fewer houses… [and] at the end of the three years those that remained renting out their properties would jack up the rents even higher.’[1]

 

Maligned Liberal Democrat leader Nick Clegg also stated that on the surface, Labour’s plans seemed, ‘superficially attractive,’ but would lead to, ‘huge hikes,’ in rents every three years.[2]

 

Roger Harding of housing charity group Shelter said that limiting rents would be welcome, but Alex Hilton of Generation Rent warned that Labour’s policy would not see rent reduced as rates would, ‘catch up’ in three year spells.[3]

 

Housing is certainly one of the central election battles. The Conservatives have outlined their plans to extend both the Help and Right-to-Buy schemes, while the Lib Dems promised young people living at home a loan to pay for deposits on rented accommodation.

 

Similar to Labour, the Green Party has also pledged to cap rent rates. Leader Natalie Bennett said that, ‘keeping rent rises in line with inflation will reduce poverty and allow tenants a better standard of living.’[4]

 

With the pre-election polls still predicting a photo-finish, it could well be the party who keeps their house in order the best that gets the key to the big property on May 7th.

 

[1-4] http://www.bbc.co.uk/news/election-2015-32468997

What do Young, Single and Homeless People Really Face?

Published On: April 23, 2015 at 11:34 am

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Categories: Finance News

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Mateasa Grant is a 25-year-old who found herself homeless at the end of 2013.

After her relationship broke down, Mateasa moved in with some friends and got herself a new job. When her boss disappeared after two months without paying her, Mateasa had nowhere to live.

Mateasa could not turn to her family for support, and realising that she would have to sleep rough “was frightening” and “out of my control.”

However, Mateasa found that her situation is not unusual, as over half of those seeking help for homeless are under 25-years-old.

Mateasa was “confident” that her local authority could help her, but what followed has formed part of a shocking and disappointing journey. Mateasa documented her struggles in the film Young, Single and Homeless.

The facts that Mateasa unearths will surprise many, as it appears the housing crisis is causing difficulty for councils, charities and those finding themselves without somewhere to live.

Watch the film below:

 

 

 

 

The Young Rely on Inheritance to Buy Property

Published On: April 21, 2015 at 4:28 pm

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Categories: Property News

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Half of parents do not think their children will be able to buy their own home without inheritance money, a study has found.

The lack of young people entering the property market has been caused by spiralling house prices and a shortage of affordable homes.

Homeownership among the young has dropped substantially in the last few years, as young professionals have to rent for longer.

Research has revealed that 49% of parents whose children have not yet bought a property believe that their offspring will depend on inheriting family money.1

The survey also found that one in six of those aged 25-34 who do own a house used inheritance from a relative for the deposit. This is significantly higher than the one in 20 over-55s who used inheritance to purchase their first property.1

The Young Rely on Inheritance to Buy Property

The Young Rely on Inheritance to Buy Property

One in ten of those who relied on inheritance said that it made them feel inadequate and dependent on others.1

Homeownership among 25-34-year-olds has decreased from 59% in 2003 to 36% in 2013, according to the English Housing Survey.1

Housing charity Shelter ordered the survey. Its Chief Executive Campbell Robb says: “No parent wants to think the only way for their children to ever own a home of their own is through losing someone they love.

“It’s a tragic consequence of our housing shortage that, even when they are working hard and saving what they can, a generation of young adults have no choice but to rely on the prospect of inheritance to have any hope of buying their first home.

“The failure of successive governments to build anywhere near enough affordable homes is leaving millions of young adults facing a lifetime of uncertainty either in expensive and unstable private renting, or stuck in their childhood bedrooms well into adulthood.”

Shelter has called on the next government to “make a real and lasting commitment to building the affordable homes we desperately need.”1

One 28-year-old who is struggling in this housing crisis is Richard Hill of Colchester, Essex, who works at the University of Roehampton. He joins thousands of young people living with their parents because they cannot afford to rent in London.

Richard explains: “It takes me nearly two hours to get to work and costs hundreds of pounds each month in travel.

“While I don’t want to still be living at home by the time I turn 30, it looks like it might be my only option. Even though I save every penny I have and cut costs wherever I can, it never seems to be enough with today’s house prices.

“I hate the thought that losing the people I love most in the world could be the one chance I’ll have to buy my own home.

“It’s ridiculous that so many people in my generation simply can’t buy without inheritance or a huge deposit from the bank of mum and dad. There’s got to be a better offer on the table for hard-working young people.”1

These shocking facts arrive at a time when asking prices are higher than ever. We revealed yesterday that a lack of sellers in the market is forcing house prices up. Read more: /average-property-prices-at-record-high-of-over-286000-in-april/

1 http://www.dailymail.co.uk/news/article-3047950/Youngsters-need-inherit-buy-house-Half-parents-fear-children-never-able-property.html

Average Property Prices at Record High of Over £286,000 in April

Published On: April 20, 2015 at 9:08 am

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Record high house prices around the UK, particularly in London, were driven by a lack of sellers and an increase in buyers, according to Rightmove.

In April, the average asking price of properties coming onto the market reached an all-time high of more than £286,000. This increase was fuelled by a rise in buyers and a shortage of sellers, found the UK’s biggest property website.

Rightmove’s report emphasises the housing crisis in Britain and arrives as political parties address the market in their election manifestos.

The property portal recorded its busiest ever month in March, the highest volume of visitors since its 2000 launch. The amount of people searching for homes grew 20% year-on-year. During the same period, the number of people listing their property on the website dropped 4% in the first three months of the year, compared to 2014.1

Director of Rightmove, Miles Shipside, says: “Record high housing demand and an undersupply of homes have delivered a new all-time high in the price of property coming to market in the month before the election.

Average Property Prices at Record High of Over £286,000 in April

Average Property Prices at Record High of Over £286,000 in April

“The high cost of housing is a big concern for many home-hunters, so the contents of the respective party manifestos and well thought-out sustainable solutions to the lack of affordable housing supply will be high on many voters’ agendas too.”

Last week, we reported David Cameron’s plan to expand the right to buy scheme to 1.3m families living in housing association properties. Read more about the proposal: /how-would-the-conservatives-right-to-buy-work/.

Critics of the Conservatives’ announcement believe that the scheme could worsen the housing crisis, causing prices to inflate.

Commenting on the average house price in April, which rose 4.7% over the year, Shipside says that they have been forced up by hopeful sellers hesitating to put their homes on the market and more landlords investing in properties. He thinks that the long-term rise in prices has been fuelled by a shortage of house building.

He says: “Failure to meet house building targets since the 80s, 90s and 00s to match forecast housing demand has been a major factor in upwards price pressure both in the property sales and private rented sectors.”1

Around the country, asking prices increased month-on-month in every region in April compared with March. They only fell annually in Wales. Monthly growth in Greater London and the North East were the highest in England, where the average asking prices were £594,585 and £146,361 correspondingly.1

Since the last general election in May 2010, the average asking price in London has risen by around 50% (£195,000). The north of England has experienced a 3.7% increase (£6,374).1

Separate research from property company Hamptons International revealed that hopeful homeowners’ ability to purchase a home has declined in the past year, but it had improved in the five years since the last election.

Hamptons’ report, which focused on income, property prices and the cost of living, created an ability to buy index, which indicated the main reason some people have more money to put towards a home than they did five years ago as record low mortgage rates.

However, this has not been enough to help some. For a family with two children and one parent working full-time and the other part-time, their ability to buy has decreased by 6% in the last year, meaning they are 5% worse off than at the previous election.1

Director at Hamptons, Fionnuala Earley, explains: “For working families with children, the growing costs of childcare eats into the amount of money left at the end of the month to service a mortgage.”1

1 http://www.theguardian.com/society/2015/apr/20/april-house-price-average-at-all-time-high-of-over-286000

Britain facing another housing crisis

Published On: April 17, 2015 at 11:35 am

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Experts are warning that Britain faces another significant threat of a housing crisis, with home shortages pushing up property prices across the whole of the U.K.

Slowing

A shortage of property for sale has led to a slowdown in market activity and has coincided with the London property market showing it’s slowest growth in many months.

The Royal Institution of Chartered Surveyors (RICS) has recently released their latest property forecasts for the next five years. RICS suggest that house prices will rise by 2.5% during 2015, and then by 4.5% each year for the next five years.[1]

Their latest report on property price growth has shown an increase in value of homes across most regions of the UK in the three months to March 2015. However, prices actually fell in London and in the North of England.

Slipping back

Simon Robinson, member of RICS, said that, ‘the boost that was given to the housing market by the Help to Buy scheme has begun to dissipate and activity levels have slipped back.’ Robinson also believes that, ‘even more worrying are the tentative signs that price momentum could be set to pick up once again, as the supply of stock to the market continues to fall.’[2]

Mr Robinson also points out that, ‘election uncertainty may be having some impact on the market,’ but is gravely concerned that, ‘underlying the trends visible in the latest survey is a very real housing crisis which will urgently need to be addressed by the next government.’[3]

Election tension

These latest figures from RICS come when the future of the housing market is subject to scrutiny in the election debate. The Tories have pledged to extend the Right-to-Buy scheme to Housing association tenants, alongside local authority housing. Furthermore, the Conservatives will allow homes up to the value of £1m to not become subject to inheritance tax.

All main political parties seem to have given their support to increasing homebuilding. With this said, figures suggest that very few local authority houses being built has contributed largely to Britain’s home shortage problem.

Small solution

The Conservative Party’s proposals regarding the Right-to-Buy scheme will not solve the housing shortage problem, according to RICS member Jeremy Blackburn. He feels that the proposal to extend the scheme to local authority housing will only help, ‘relatively small numbers of tenants to move into home ownership’ and will not help at all to, ‘solve the shortage in overall housing supply.’[4]

Blackburn went on to suggest that, ‘aspirational home ownership is at the core of our economy,’ but feels that Britain, ‘must ensure that we have a future stock across all tenures and particularly for those on lower incomes.’[5]

Rental concern

In the letting market in particular, demand for housing continues to exceed supply. The RICS report states that, ‘expectations for rental growth remain almost unchanged versus the previous month with respondents anticipating growth of 2.7% over the next year to come.’ Additionally, RICS predict that growth will increase thereafter to, ‘an average of 4.7% per annum over the coming five years.’[6]

Britain facing another housing crisis

Britain facing another housing crisis

 

Deposits put down by first-time buyers have also been perceived to be lower in the first three months of the year. Surveyors have noted that these deposits are lower in comparison to the final quarter of 2014.

Loan approval

The Bank of England’s latest Credit Conditions Survey has indicated that both banks and building societies are now more open to lend to persons with deposits lower than 10%. Lenders have indicated that they expect to see an increase in home loan application approvals during the coming months.

 

[1-6] http://www.thisismoney.co.uk/money/mortgageshome/article-3040143/Housing-shortage-triggering-worrying-upsurge-property-prices-expectations-2-5-rise-2015.html