Posts with tag: housing crisis

Rent for Life: Which Direction is the UK Heading?

Published On: November 15, 2018 at 10:59 am

To rent or not to rent? That is the question. In years gone by, many young people only wanted to rent until they could buy their first home, and few thought of renting long-term. In other countries, such as Germany and France, there are a comparatively high number of rented accommodations, and long-term renters are not the exception – in Germany, in particular, people favour renting – over 40% of the country does!

In recent years, there has been a considerable increase in the number of rented accommodations in England, and people are now staying in the rental market for many years…

The changing English property market

57% of house owners in England are aged 65+ and only 22% are aged 16-34 years. Most property buyers fall into the 35-50 age group (48%), with a further 31% aged 50-65 years. For a variety of reasons, there has been a huge growth in the private rental sector in recent years – particularly in the younger age group. One of the key reasons for this is that young people find it incredibly difficult to save enough money for a deposit to get on the first rung of the property ladder.

Private renters are getting younger

There has been a large growth in the number of younger people wanting to rent privately. In 2011, this figure was 1.8m people aged 34 or under, which, in reality, meant an increase of 728,000 in rental households within a decade, and analysts are tracking a continued upward swing as we head towards 2019. Whilst the difficulty of affording to buy a property is one of the main reasons, many younger people choose to rent, as it gives them greater flexibility especially for job mobility and they can choose exactly where they live for convenience.

Rent for Life: Which Direction is the UK Heading?

In 2008, 37% of people in their 20s bought their first property, but, in 2017, this number had fallen to 27%. There are 5.6m people in this age group, and the fall in house purchase was sharpest in the middle-income group, where wages failed to match the required deposit and mortgage repayments.

The increase in private renters is nationwide

Although London has recorded the sharpest increase in the demand for private rentals, this increase has also been mirrored in towns where there is a good commuter network to the capital. Such towns as Slough, which has recorded a growth of 13%, Enfield, where the property market grew by 11.9% in 2017, Watford, 9.9%, and Milton Keynes, by just over 9%. Interestingly, in Tonbridge, Kent, rental prices are high and property is often rented as soon as it goes on the market. The main reason is that the railway station is within walking distance of much of the town, and the train to London Bridge takes just 44 minutes – and some, just 31 minutes.

There has been a 23% growth in the private rental sector across England, with the 2017 figures for the South East being second only to London, with Yorkshire and the Humber third, and the West Country in fourth place. Interestingly, in Wales, there was a growth of only 0.4% and Scotland, 0.1%.

Who is renting privately?

The types of households in the private rental sector have shifted in recent years. A decade ago, only 15% of families with dependent children were private renters, but this figure has risen to 27%. Couples with children account for another 21%, and the largest proportion are single occupant households, at 27%. Interestingly, ten years ago, only 16% of people in the 35-45 age group rented, but, today, that figure stands at 24%.

The bottom line is that, in the past ten years, the number of people in rented accommodation in England has risen from 10% of the population in 1996/7 to 20% last year. For the first time, families are looking to stay in rented accommodation long-term, as they find property prices are out of their reach and job uncertainties make rented accommodation more appealing.

Private renters are now coming from all socio-economic groups, too. 50% of foreign people migrating to England rent in the private sector for at least the first five years. Many private renters are favouring city centre locations, as they want to dispel with commuting costs, and current trends favour eco-friendly properties and ones that are unfurnished.

What about the horror stories about rented accommodation?

Many private renters make the positive choice to rent rather than try to buy, and a key reason for this is that the standard of rental properties has significantly improved and, also, most landlords maintain their properties well and care about their tenants. The Decent Homes Standard has done a good job of improving the quality of rental accommodation. In 2006, 47% of rented accommodation was deemed below standard, but, two years ago, in 2016, this figure had dropped to 26%.

Buy-to-rent possibilities

Property buying experts housebuyers4u.co.uk say that the buy-to-rent sector should have been flourishing, with a number of exciting new projects under development in the key cities, but many small landlords are selling up, as recent tax changes on second properties have meant that buy-to-let is not as lucrative as it once was. In reality, this means that, although England is becoming a nation of renters, demand is greater than supply, and market experts are predicting that rent prices are set to climb by 17% in the next five years.

The bottom line

If the trend of younger people opting to rent continues (whether that is because they choose too or not), then it’s clear the UK is heading towards a more rental-based property market.

Is this good or bad for the country? A case could be made for both, but as the old saying goes, only time will tell.

Councils Already 6 Years Behind Housebuilding Targets

Published On: November 7, 2018 at 11:02 am

Author: Em Morley

Categories: Property News

Tags: housebuilding,housing crisis

Councils across the country have fallen more than six years behind their own housebuilding targets, spelling disaster for Britain’s bid to end the housing crisis, according to new research by Project Etopia.

The modular smart homes provider found that development across the country is moving at such a glacial pace that local authorities are, on average, 6.2 years behind the rate of housebuilding needed to hit targets identified as part of the Government’s ten-year plan, ending in 2026.

Councils Already 6 Years Behind Housebuilding Targets

The Ministry for Housing, Communities and Local Government set out annual housebuilding targets with local authorities up to 2026, published in September 2017.

However, building in 316 local authority areas is set to fall short of housing need by 889,803 homes over the next decade.

Some of these locations (75) are keeping pace with housing requirements, but, just one year in, 241 areas are already in deficit, leaving them 9.2 years behind housebuilding targets on average.

If those councils not building fast enough do not speed up, they will miss their targets to the tune of 1,013,312 homes by 2026, Project Etopia reports.

Of the ten councils that have fallen the furthest behind, it would take until between 2042-60 for all the homes required by 2026 to be built.

Figures show that Southend-on-Sea is by far the worst town or city outside of London for meeting its housebuilding targets, and is set to be 8,405 homes short of what it needs by the end of 2026. If it does not speed up, it will take 34 more years to build that amount of housing stock.

York and Luton are the only other towns and cities that are more than 20 years behind, and all ten councils with the greatest deficits are two decades off the pace on average.

The Project Etopia study found that, even councils with fewer homes to build, such as Gosport, Hampshire, which only needs 238 per year, have been struggling to meet their own housebuilding targets. Gosport is 17 years behind.

For years, councils have been prevented from building new homes themselves, leaving them at the mercy of developers, whose building can be hampered by economic and planning constraints.

However, the Prime Minister announced at the Conservative Party Conference last month that the borrowing cap would be lifted, to encourage local authorities to commission new developments.

Preston, Lancashire was ahead of housing need by the biggest margin, with Scarborough, North Yorkshire and Burnley, Lancashire close behind.

In London, the situation is even worse, reveals Project Etopia. Redbridge is in the worst shape in the whole country – 82.5 years behind its housebuilding targets.

London boroughs are, on average, 19.2 years behind, and those that are in deficit lag their housebuilding targets by 21.4 years. Come 2026, London boroughs are on target to have a shortfall of 429,973 homes.

Joseph Daniels, the CEO of Project Etopia, says: “It is alarming to see so many areas so far behind already. If the pace is not rapidly picked up, we will be in an even deeper black hole in ten years’ time than we are in now.

“Housing need is plain for all to see, but not enough is being done about it. There is an air of complacency — everyone knows we need to build more houses and fast, but not enough decisive action is being taken to ease the crisis.”

Budget was a Missed Opportunity that will Affect Tenants, Experts Warn

Published On: October 30, 2018 at 10:30 am

Author: Em Morley

Categories: Law News

Tags: Budget,housing crisis

Yesterday’s Autumn Budget announcement from Chancellor Philip Hammond was a missed opportunity that will ultimately affect tenants, according to experts from across the property industry.

The Policy Director of the Residential Landlords Association (RLA), David Smith, went as far as to say that the statement “fails the country’s private tenants”.

He explains: “Whilst the Chancellor again outlined the Government’s desire to boost homeownership, he failed to address the needs of the millions of people who cannot or do not want to rent.

“With the demand for private rented housing rising whilst supply is shrinking, we needed pro-growth taxation measures to ensure that tenants have an adequate supply of housing to choose from. Despite being given innovative suggestions to protect tenants in their homes, encourage sale to tenants, and improve energy efficiency, we got a damp squib with little more than promises of further consultations. Eventually, the Government will need to stop consulting on the housing crisis and take action.”

Neil Cobbold, the Chief Operating Officer of proptech firm PayProp UK, was also disappointed with the lack of information on Government plans: “The ban on upfront fees charged to tenants was first proposed by Chancellor Philip Hammond almost two years ago, along with a cap on security and holding deposits. Given the length of time that has passed, it’s crucial that letting agents, landlords and tenants get more information about when and how it will be implemented.

“Next year is set to be a crucial year for letting agents – now that they have more clarity, they can plan accordingly. The Bill will pose a challenge for letting agents, but they must try to take the positives out of the situation. The fees ban will force agents to look for alternative revenue streams and streamline processes using technology.”

He points out another missed opportunity, this time on tax breaks for landlords offering long-term tenancies: “This would have been a welcome move by the Government, as it would have allowed landlords and tenants who want to pursue longer tenancy agreements to do so without making it a mandatory requirement for the entire private rental sector.

“Industry research has shown that mandatory longer tenancies may cause some landlords to exit the sector, and that not all tenants are looking for long-term agreements. However, for many landlords, a Capital Gains Tax (CGT) break would be a timely incentive to continue to provide much-needed rental housing stock.

Budget was a Missed Opportunity that will Affect Tenants, Experts Warn

“Such a policy could have provided vital feedback to the Government’s previously announced plans to introduce mandatory three-year tenancies, indicating whether long-term tenancies are needed or if they should remain an optional decision rewarded with a tax break.”

John Phillips, of Just Mortgages and Spicerhaart, is concerned that the crisis isn’t enough of a concern for the Government: “Once again, it appears that housing is less of a priority for the Chancellor than we might have been led to believe. Funding for further infrastructure is one thing and, hopefully, it will mean more houses do get built, but that is only one element in fixing the broken housing market.

“The housing crisis appears to be less critical to the Treasury than all the people we know are looking to buy or sell a property. Instead of listening to the industry, the Government appears to believe that the health of the housing market will come solely from first time buyers. This blinkered view will do nothing to get the whole market moving, which is vital in the long-term.”

Neil Knight, also from Spicerhaart, agrees that the announcement doesn’t go far enough: “We welcome the Chancellor’s announcement of a further £500m for the Housing Infrastructure Fund, to unlock 650,000 homes, and news that he will empower up to 500 neighbourhoods to buy land for housing for sale to local people in perpetuity.

“However, these were the only major announcements in terms of housing, and we would have liked to have seen more measures announced, considering what a hot political topic housing is.

“We had hoped that the Chancellor might have announced plans to speed up the build out permission process, following the publication of Sir Oliver Letwin’s report earlier today, which would go a long way to help Government reach its targets, but there was no such announcement today.

“Let’s just hope that when the Chancellor addresses the findings of the report in the New Year that there is more support for developers and local authorities, so that we can start building the homes that this country so desperately needs.”

The CEO of Quintessentially Estates, Penny Mosgrove, shares this sentiment: “Overall a disappointing Budget for the sector. Hammond duped us with the glorifying statistics of how well the UK economy was doing, how the deficit was down, employment was up and it was the end of austerity! Yet, housing, which is the biggest issue of our generation, has been ignored.

“Yes, first time buyers are being helped, and now first time shared ownership buyers are now being included in that support, but what about the rest of the market? The empty nesters looking to downsize, who are asset rich but cash poor, the hard-working family who is struggling to put together bill for Stamp Duty, despite being in need of a larger home. Supporting just the first time buyers means that the bottle neck gets worse and transactions will not increase – which means they collect less tax.”

Alan Waxman, the Founder and Chief Executive of Landmass, takes a swipe at the Chancellor: “Philip Hammond has failed to penetrate the property market. No one can argue against helping first time buyers, but stimulating just this part of the market has a detrimental impact on the property market as a whole. In fact, it increases prices, hitting first time buyers the hardest, as demand increases, and then so do prices, so the net effect is that it actually costs the buyers more in total – fools logic!

“It is a shame that he didn’t have the political will to reduce the punitive Stamp Duty for hard working families, investors and young entrepreneurs, as this will have increased activity and Stamp Duty revenue, helping people lower down the chain to move up the ladder, rather than stay still and build more basements or extensions!”

Were you, too, disappointed in the Chancellor’s Budget announcement yesterday? And do you agree with these experts, that the lack of attention on housing will ultimately affect tenants?

Rewarding Landlords who Sell to Tenants is Not the Solution to the Housing Crisis, Argues Shared Ownership Supporter

Published On: October 12, 2018 at 9:53 am

Author: Em Morley

Categories: Landlord News

Tags: housing crisis,tenants

The Director of a portal for shared ownership properties and mortgages has insisted that the Government should not reward landlords who sell to their tenants, in a bid to solve the housing crisis.

Stephen Dwelley, of Share to Buy, has spoken out in response to a report from think-tank Onward.

He explains his stance: “Following this week’s research from the Institute of Fiscal Studies, which shows that house prices have increased by 173% over the past two decades, think-tank Onward has suggested that the Government should reward landlords for selling properties to long-term tenants, to help young people onto the housing ladder.

“However, with recent rents continuing to rise to unprecedented levels, particularly in the capital, such a move is likely to further reduce stock of quality rental properties, putting additional upward pressure on rents. This would ultimately make saving for a deposit even more of a challenge for Britain’s under-35s.”

Dwelley believes: “The only genuine, long-term solution to the UK’s housing crisis is to dramatically increase housing output, with a specific focus on homes built for affordable homeownership – such as shared ownership and London Living Rent, backed by the Mayor of London.

“The median household income of London-based shared ownership registrants on Share to Buy is £42,000 – almost 40% less than the average first time buyer in the capital. Minimum deposits for shared ownership homes in London average at just £6,335.97 for a one-bed, or £8,390.60 for a three-bedroom home – making this perhaps the only affordable route onto the housing ladder.”

Nevertheless, his idea faces difficulties: “However, in the current market, the UK’s affordable homeownership providers face dwindling funding to deliver truly affordable homes in sought after areas across the country and, as a result, demand for shared ownership homes undoubtedly outstrips supply.

“In the up-coming Autumn Budget, we would implore the Government to prioritise alternative homeownership schemes, helping to safe-guard the future of would-be first time buyers in the UK.”

We have already received the National Landlords Association’s and Residential Landlords Association’s expectations from the Chancellor for this month’s Autumn Budget.

BBC Publishes Study into Unaffordable Rent for Young People

Published On: October 4, 2018 at 8:05 am

Author: Em Morley

Categories: Tenant News

Tags: housing crisis,rent prices,tenants

The BBC has published an important study into the unaffordable rent that many young people across Britain are paying out for their homes.

People in their 20s who want to rent a home face having to pay out an unaffordable amount in rent in two-thirds of the country, the BBC research found.

Private tenants face financial strain, as the average rent on a one-bedroom property eats up more than 30% of their typical salary in 65% of British postcode areas.

The general consensus in the property industry is that spending more than a third of your income on housing constitutes unaffordable rent.

A salary of £51,200 per year is required to afford to rent a one-bed home in London.

Flat-sharing – the choice of many young working people – does not entirely resolve the issue, as 12% of postcodes in Britain remain unaffordable for two people in their 20s sharing a two-bed home.

Analysis by the BBC’s data team shows that a gross annual income of £24,800 would be needed for the average one-bed rental flat in England to become affordable using the 30% measure. In Scotland, £20,700 is required, while just £17,600 is needed in Wales.

Many people can pay more than 30% of their income on rent, but housing organisations insist that this puts considerable strain on the rest of their finances.

Living with parents

BBC Publishes Study into Unaffordable Rent for Young People

Friends Molly, 22, Danielle, 25, and Amelia, 24, all work in Cheltenham, but find it prohibitively expensive to rent in the town.

“It is expensive on a starting salary and any kind of saving is not an option,” Danielle explained.

Amelia, who previously rented, but was now back living in her family home, said that moving into a rental home in Cheltenham would mean giving up a car and cutting back on other spending.

However, staying with her parents also brought restrictions on where to look for jobs.

Shop manager Morgan said that she and her partner moved in with his parents in order to save, as rent would have taken up most of their salaries.

The 25-year-old said that the living arrangements were “not what I had envisioned”.

“My friends definitely struggle,” she added. “A lot of their money is used up in just their rent alone.”

The Director of tenant lobby group Generation Rent, Dan Wilson Craw, responded to the findings: “This research is more evidence of how difficult it is to lead the life you expect. If you get a job and work hard, you should expect to have some choice about living arrangements.

“People in areas with a strong jobs market have to find somewhere to share with others in order to afford to live there.”

The data reveals the importance of location in determining how significant a chunk of their monthly wages is likely to be spent on rent.

Kate Faulkner, a housing market analyst, highlighted that renting can be affordable in many areas outside of London, but the particular squeeze in the capital dominates the debate, meaning that policymakers overlook many other pressing concerns for tenants.

In London, tenants in their 20s with a typical income would spend 55% of their monthly earnings on a mid-range, one-bed flat. Housing charity Shelter considers any more than 50% as “extremely unaffordable” rent.

This rises to a whopping 156% – one-and-a-half times the average salary – in one part of Westminster (the most expensive part of the capital), where an average one-bed home costs a staggering £3,500 a month to rent.

In contrast, a young tenant looking for a typical property in the Scottish district of Argyll and Bute would only have to spend 15% of their income on rent.

Least affordable areas outside London

The BBC has highlighted the other areas, outside of London, where rent is extremely unaffordable:

Epping Forrest – Tenants here can expect to spend between 62-71% of their earnings on rent.
Cambridge – Things are not much better here, at 62%.
Elmbridge – Rents here also eat up 62% of the average salary.

The Research Highlights the Most and Least Affordable Areas

Most affordable areas

The following locations are much kinder to tenants’ pockets:

Argyll and Bute – Rent here accounts for just 15% of a tenant’s salary.
Scottish Borders – Tenants can expect to spend between 19-20% of their earnings on rent.
Northumberland – Rent will eat up just 20% of wages here.
East Ayrshire – The average rent here accounts for 20% of a tenant’s monthly income.

Finding one or more flatmates is a popular way of cutting the cost of renting for many young tenants. The research found that two people in their 20s sharing a two-bed flat in Manchester could pay just over 20% of their income on rent.

A separate study by Shelter, however, suggests that tenants may already find that they are cramped for space, compared to those who own their own homes.

The charity estimates that private tenants in England spend £140 more in housing costs than those with a mortgage. In the last ten years, when families have been increasingly likely to rent, homeowners have seen the average floor space of their homes increase by 7%, compared with a 2% rise for tenants.

That leaves homeowners with an average of 30 square metres’ extra floor space than tenants, which Shelter suggests is the equivalent of a master bedroom and a kitchen.

This all comes at a time when young adults might look back in anger at previous generations. The BBC research shows that a private tenant in the UK typically spends more than 30% of their income on rent.

In 1980, the average tenant spent an average of 10% of their earnings on rent, or 14% in London. However, there were many more people renting from councils or in social housing at that time.

Landlords point out that they face costs, including mortgages, insurance, maintenance and licensing, which need to be covered by their rents.

Chris Norris, the Director of Policy at the National Landlords Association, commented: “These costs are increasing, as the Government introduces new measures to discourage investment in property, such as the removal of mortgage interest relief and the changes to Stamp Duty.

“This is compounded by the number of landlords divesting, as their businesses become less financially viable, resulting in fewer properties available to rent, while demand for properties across the UK remains high.”

David Smith, the Policy Director of the Residential Landlords Association (RLA), has also reacted to the study: “With a majority of under 35s living in rented housing, it is young people now facing the consequences of the supply crisis facing the private rental market.

“The Government’s own data shows that, across England, there was a loss of 46,000 private rented homes in England in 2016/17, a result of tax increases on the sector.”

He continued: “The demand for homes to rent is not expected to slow, whilst figures from the RLA’s research arm, PEARL, warn of a net loss of 133,000 homes for rent over the next year.

“Given the scale of the housing crisis, ministers need to support the development of new homes to rent, alongside all other tenures.”

The Housing Crisis: Could the Elderly be the key to Unlocking it?

Published On: August 17, 2018 at 10:00 am

Author: Em Morley

Categories: Property News

Tags: housing crisis,property market

Property Values Falling Faster than Bitcoin

According to the third annual Retirement Confidence Index, (RCI) from McCarthy & Stone, the UK’s leading retirement housebuilder, with the prospect of owning a home experiencing a decline for those under the age of 30, it is suggested that the older generation have the answers, when it comes to the question of how the housing crisis can be resolved. In addition, they have the power to increase the chances of younger people getting on the property ladder.

Produced in conjunction with YouGov, the RCI found that 60% of people belonging to the younger generation believed that the UK required more ‘later homes’ for older people, not just ‘starter homes’ for first time buyers.

Moreover, the results revealed that 70% of pensioners equally felt that there should be more focus on improving the provision of suitable housing options for the older generation.

However, it’s not only the younger generation who have a desire to move…

While it is apparent that people belonging to the younger generation have an urgency to get their foot on the steps of the property ladder, older people share an equal desperation for downsizing.

McCarthy & Stone discovered that 35% of adults aged 65 and over would consider moving, representing 4.1 million pensioners.

But, too many of these people are part of “generation stuck”, those pensioners who want to downsize but find they are blocked by limited options. In addition, 22% of older people would also consider a specialist retirement property, equivalent to 2.6 million people.

Are ‘later homes’ assisting older people to downsize and free up housing?

From the results provided by McCarthy & Stone, it was discovered that those who were contemplating downsizing, to do so, would equate to more than 2 million two-bedroom homes being released into the market. This would also help release over £364 billion of housing equity, boosting the finances of those aged 65 and over.

The declining prospect of owning a home, however, means that younger people feel they need to rely on their parents for financial assistance or perhaps, their grandparents. To get on the property ladder, 51% claimed they would require financial support from family.

Chief Executive of McCarthy & Stone, Clive Fenton, commented:
“Both older and younger people see the benefits in providing better housing options for our ageing population. Millions of older people are looking for properties better suited to their needs, and young people are desperately trying to join the housing ladder.

By providing more suitable housing, such as bungalows, retirement housing or other well-designed accommodation for later life, we can address a big part of the housing crisis. We absolutely understand the Government’s focus on helping young people join the housing ladder, but if they are really serious about solving the housing crisis they have to recognise that helping older people to downsize to free up under-occupied property has to be a significant part of the solution.”