Posts with tag: housing crisis

Government Set to be 80,000 Short of its 1m Housebuilding Target by 2020

Published On: May 2, 2018 at 9:18 am

The Government looks set to fall short of its one million housebuilding target by 2020, by around 80,000 new homes.

Data from the Ministry for Housing, Communities and Local Government (MHCLG) shows that the number of new homes started between when the pledge was first made in 2015 and the end of 2017 was 386,160, while the amount of new builds in the process of being built rose by 7,235 over the past two years.

If this average rate of growth were maintained, it would create another 529,950 homes by 2020, providing a total of 916,110 – a shortfall of 83,890.

More recently, the Chancellor, Philip Hammond, pledged to build 300,000 homes per year by the mid-2020s, which seems an even more unrealistic ambition, given the shortfall for the current target.

Sam Mitchell, the Chief Executive of online estate agent HouseSimple.com, comments: “It could be a case of better-late-than-never if the rate of building growth is to be believed, but it’s going to be a tall order to keep this going for the next seven years.

“The Government’s main concern should be the anticipated failure to deliver on its most basic pledge to build one million homes by the end of 2020. If they fail, critics will simply paint the more lofty aspirations to build 300,000 homes a year as a piece of political theatre.”

He continues: “This issue deserves to be more than a distraction for voters, and it would help if the revolving door of housing ministers were to stop.

“The housing crisis is real and affordability problems play havoc with other parts of the economy, as first time buyers in particular are forced to part with significant chunks of their disposable income in order to get on the housing ladder.”

Are you surprised by the Government’s shortfall in delivering its housebuilding targets?

Can Build-to-Rent Schemes Alleviate the Social Housing Shortage?

Published On: October 24, 2017 at 8:44 am

Author: Em Morley

Categories: Property News

Tags: build to rent,housing crisis,social housing

With social housing in limited supply, Paul Staley, Director at SDL Group, explains how build-to-rent schemes (B2R) could deliver much-needed affordable homes.

Paul Staley, Director of SDL Group

As with most issues and problems, there is often no single solution, and the housing crisis is no different. Even though some local authorities have stepped up efforts to deliver more social housing, there’s no question that demand is still outstripping supply. Local authorities should therefore be looking much wider than the traditional registered providers when it comes to the provision of affordable homes.

I suppose the big question is, what you define as affordable housing. Is it traditional social rentals and private lets, or the new breed of shared ownership, Help to Buy and increasingly B2R?

Yes, the private rental sector has a long history in the provision of low cost housing – although the sector has been blighted with problems and issues of absentee and rogue landlords, which have tainted the local authorities’ view of this sector. B2R aims to readdress this reputation through the provision of quality low cost housing professionally managed and maintained – held for the long-term by institutional investors.

SDL Property Management (previously SDL PRS and Estate Management) is working with a number of institutional investors on the provision of low to mid-density rental accommodation on the edge of major conurbations and towns. The majority of these schemes are located on brownfield sites and are designed to cater for the local market, providing a real alternative for those who would like to buy but can’t, or feel renting is the best solution for their own personal situation.

We believe the solution for local authorities is to consider and include B2R in their plans to deliver affordable accommodation across their boroughs.

Councils too must play their part by releasing land for housing and streamlining the planning application process, to make renting more affordable for those who are not in a position to buy.

It should be remembered B2R could also reduce the financial burden on local authorities, since housing associations receive Government grants, rent and, increasingly, funds from private investors.

As the Government pushes ahead with plans to extend the Right to Buy scheme, the UK’s social housing stock will only diminish further. Local authorities are unlikely to be able to plug this gap, which means we’ll need housing associations to deliver B2R schemes more than ever before.

For more details on SDL Group, visit sdlgroup.co.uk.

May Pledges Additional £2bn for Affordable Housing

Published On: October 5, 2017 at 9:04 am

Author: Em Morley

Categories: Property News

Tags: Affordable housing,council homes,government,housing crisis

Theresa May has pledged an additional £2 billion to build affordable housing, in a bid to “get Government back in the business of building houses”.

Speaking at the Conservative Party Conference yesterday, the Prime Minister said that councils and housing associations will be able to bid for the funds, and some homes will be built for social rent below market levels.

She said that the budget for affordable housing is now almost £9 billion, which will help to build a new generation of council houses.

May vowed to take “personal charge” of the issue, and called for housebuilders to do their bit by building on land made available, adding: “It won’t be quick or easy, but I will make it my mission to solve this problem and will take personal charge of the response by reigniting homeownership in Britain once again.”

Commenting on the announcement, the Parliamentary Affairs Manager at the Royal Institution of Chartered Surveyors (RICS), Lewis Johnston, says: “It is over 65 years since a Conservative conference committed the party to delivering 300,000 homes a year. With today’s housing challenge no less urgent, the Prime Minister’s plan to unleash the first major Government housebuilding programme in decades indicates the kind of ambition we need to tackle the housing crisis.

May Pledges Additional £2bn for Affordable Housing

“In 1968, councils accounted for 40% of all housebuilding and today’s plan is an acknowledgement that councils are an important part of the solution to the supply crisis, although it will be interesting to see how this announcement works with the recent expansion of Right to Buy.”

He adds: “The success of the plan depends on the Government’s willingness to tackle the other obstacles to building. Alongside the already announced measures, we need bold reforms of the planning system and a deep-seated resolve to unlock the potential of modern methods of construction.”

The CEO of the National Landlords Association (NLA), Richard Lambert, also comments: “The majority of landlords would agree that more social housing should be built, and it’s about time that the Prime Minister set aside a significant pot of money to do so.

“Government, society and indeed taxpayers will get better long-term value from investing in building than in subsidising rents.”

He continues: “Today’s announcement should not only provide more available housing for those most in need at rents they can afford, it should also relieve the pressure on the private sector, and choke off the breeding-ground for the minority of rogues and criminals who get away with providing substandard housing and neglecting their tenants”.

Meanwhile, Dan Wilson Craw, the Director of tenant lobby group Generation Rent, has also responded: “Under Theresa May, the Conservatives have made a welcome shift towards more state support for affordable housing and private renters, including today’s pledge on social rents. But this trickle of incremental announcements does little to address the urgent need that renters have for lower rents and stronger protections.

“Compared with the £10 billion being ploughed into the wasteful Help to Buy scheme, only £2 billion for social housing suggests the Government is still focusing too much on the symptoms of the housing crisis rather than its causes.

“Investment in social housing would mean permanent homes for the 75,000 families in temporary accommodation and lower market rents, whereas Help to Buy will get a small minority of renters into homeownership, while pushing up prices for the rest of us.”

Lindsay Judge, the Senior Policy Analyst at the Resolution Foundation, offers her thoughts: “The commitment of an extra £2 billion for affordable and social housing is a very welcome first step towards tackling Britain’s housing crisis. With over a million people on local waiting lists for social housing, it is a timely and necessary intervention.

“We are facing a huge social housing shortage. Back in 1981, three out of every ten families rented their home from the council or a housing association. Today, that figure has halved.

“But the size of the challenge is huge. During the Macmillan years, more than 100,000 council homes were built each year. Last year, there were just 1,840 new council homes built by local authorities, with housing associations adding another 25,000 affordable homes. Today’s announcement could mean a further 5,000 homes a year. That is welcome, but it’s equally clear more action will be needed.”

She concludes: “If Theresa May wants to lead the way on facing up to our housing challenge, she will need to ensure building happens on a scale we haven’t seen for a generation, with councils backed all the way to do so. And, in the meantime, families in the private rented sector should get the greater security they deserve.”

Government Challenged to Support Property SMEs

Published On: October 3, 2017 at 10:16 am

Author: Em Morley

Categories: Property News

Tags: government,housebuilding,housing crisis,property developers

LendInvest, the leading marketplace platform for property finance, hosted a cross-party roundtable at the Conservative Party conference in Manchester yesterday to discuss a package of support for property SMEs to scale up and deliver more homes across the country.

Government Challenged to Support Property SMEs

The invitation-only event was co-hosted by Prospect, the monthly political journal.

The Co-Founder and CEO of LendInvest, Christian Faes, led a conversation with a number of housing and business policy experts from across the UK. These included: Chris Philp MP, a member of the Chancellor’s Treasury team; Mary Robinson MP, a member of the CLG Select Committee; Richard Bacon MP and Peter Aldous MP, two backbench Conservative MPs with interests in housing; Richard Blakeway, the former Deputy Mayor of London for Housing and Homes & Communities Agency board member; Tom Bloxham MBE and Marc Vlessing, CEOs of property development companies Urban Splash and Pocket Living respectively; and David Ellison, a Manchester-based Labour councillor.

The roundtable discussion built on a report published by LendInvest in March 2017, titled Starting Small to Build More Homes: A Blueprint for Better Policymaking for Property SMEs. The report examines the challenges faced by property SMEs, such as constrained access to finance, and distorted policy around regulation, taxation and access to land.

The participants discussed in detail the disparity in opportunity between property SMEs and those in other sectors, and reflected on ways in which the Government should revise its treatment of small and medium-sized property firms, as well as recognise the positive contribution they can make to resolving the UK’s deep-rooted housing crisis.

Faes comments: “There are five times fewer small-scale developers today than in the last housebuilding boom, and not a single one of today’s top ten housebuilders was created before 1990. There is a clear monopoly in the sector. What was clear from our discussion is that more must be done to level the playing field for property entrepreneurs, so that they can do business with confidence. This means sweeping away barriers to finance and land for SMEs, as well as celebrating industry initiatives to improve skills in the sector. The cost of doing business must also be reduced.”

Bacon also says: “Politicians talk often about building more homes as if it were politicians who build them. Let’s stop focusing on targets and let the builders get on with it. The Government’s role is to remove barriers, not add to them.”

Andy Davis, the Associate Editor at Prospect magazine, adds: “At a time where the Government maintains ambitious housing delivery targets, we are seeing a generational loss of smaller housebuilders. If we are to see SMEs succeed and scale, we must challenge the regulatory system that is geared towards mass volume housebuilders and ensure that property entrepreneurs can access the finance they need for their schemes to take off.”

At the Conservative Party conference at the weekend, the Government outlined new plans to offer tenants greater rights.

Meanwhile, Jeremy Corbyn plans to introduce rent controls under proposals detailed at the Labour Party conference last week.

More People will Rent than Own their Homes in 8 Years, Economist Believes

Published On: September 22, 2017 at 9:03 am

Author: Em Morley

Categories: Property News

Tags: homeownership,housing crisis,renting,tenants

More people will rent properties than own their own homes in just eight years’ time, according to one economist.

More People will Rent than Own their Homes in 8 Years, Economist Believes

Sebastian Burnside, a Senior Economist at NatWest, believes that a major cultural shift in homeownership is on the horizon, with more private tenants than mortgaged homeowners in just a few years.

By 2025, Burnside claims that the number of mortgaged households will be just under six million, while the amount of households in private rental accommodation will be slightly more, at six million. This crossover is expected to happen in late 2024.

Burnside says: “We think it’s a fairly comfortable bet that, by 2025, we will have more households renting privately than owning their homes with a mortgage, which is a big cultural shift for a country like the UK and something that’s being driven by those underlying demographics.”

There are already more people owning their homes outright than people buying with a mortgage, and the number of outright homeowners is expected to continue climbing.

Since 2013, outright homeownership has been the largest form of housing tenure in the UK. By 2024, Burnside says that around nine million households will own their homes outright.

The amount of households in social rental housing is forecast to edge downwards, from four million today to just under that figure.

Burnside reports that fewer people are taking out mortgages because of the differences between their incomes and house prices. However, baby boomers are increasingly able to pay off their mortgages.

He insists that, as the private rental sector grows, lenders need to rethink their repossession strategies.

At present, lenders tend to treat homeowners who fall into mortgage arrears with more leniency than buy-to-let landlords; defaulting landlords typically have their properties possessed within months.

However, Burnside notes that possessing landlords’ properties quickly is problematic to their tenants, who often develop ties to the area they’re living in.

How quickly do you expect renting to overtake homeownership?

Britain’s Housing Crisis Driving a 50-Year Drain on Living Standards

Published On: September 20, 2017 at 8:08 am

Author: Em Morley

Categories: Property News

Tags: Generation Rent,homeownership,housing crisis,millennials

Britain’s current housing crisis is driving a worrying 50-year drain on living standards, according to a new report published today by the Resolution Foundation.

The average proportion of income that Britain’s families are spending on housing has trebled over the last 50 years, with young people today having to make do with longer commutes and smaller, insecure rental accommodation, the study found.

As Labour and the Conservatives head to their party conferences looking to learn lessons from the result of the snap General Election in June and the highest turnout amongst young people since 1992, the report starkly illustrates why the question of generational fairness and housing has become a totemic concern about living standards in Britain today.

The Home Affront report shows that each generation since the war has had to spend more of their income on housing.

The pre-war silent generation (1926-1945) spent just 7% of their income on housing at the age of 30. This figure more than doubled for the baby boomers (1946-1965), who spent 17% of their income on housing at that age. For millennials (1981-2000) now, they’re spending almost a quarter of their income on housing (23%) at age 30.

While housing costs have escalated, the baby boomer generation has been the biggest beneficiaries of improvements in the security and quality of housing that have taken place over this time, as homeownership spread.

Britain’s Housing Crisis Driving a 50-Year Drain on Living Standards

Those born in the late 1940s have enjoyed the highest ownership rates over the course of their lives, with each five-year cohort after them doing worse than their predecessors. Homeownership rates among young families born in the early 1980s are now around half that of those born 30 years earlier at the same age.

The Resolution Foundation notes that, while housing has been a growing drag on living standards for everyone, increased homeownership has boosted the wealth of older generations, as well as their income in later life, as a record proportion now own their homes outright.

In contrast, younger generations are being rewarded for the record amount they have to spend on housing with lower homeownership, greater insecurity and smaller homes, which are further from where they work.

The report shows that there are now as many young families (aged 25-34) living in the private rental sector as owning a home or living in the social rental sector combined (36%).

It also found that average floor space has fallen by 4% since 1996 for people aged under 45, while it has risen by 2% for those aged 45 and over. Young people today are also compromising on location, with millennials set to spend an extra 64 hours a year commuting to work by the age of 40 compared to baby boomers.

Home Affront warns that, while the passing of the financial crisis means that some young households will be able to become homeowners, the outlook for younger generations is on course to continue deteriorating.

Even in an optimistic scenario in which homeownership for young people catches up with the generation before them, the age at which most families will own their own homes could be delayed until their 40s – a decade later than when baby boomers got onto the property ladder.

Such a delay would mean that many more first time parents living in private rental accommodation, where two-month eviction notice periods are the norm, and facing the daunting prospect of having to save for a deposit while facing childcare costs.

The Resolution Foundation is calling on all political parties to make addressing Britain’s housing crisis a central feature of their domestic policy agenda, as it is a big part of the answer to ensuring that each generation continues to do better than the one before them. Bold policy action should include boosting housing supply and reforming the private rental sector so that it offers the quality and security that families need, the organisation insists.

Lindsay Judge, the Senior Policy Analyst at the Resolution Foundation, says: “The shock election results of the last 15 months have shown that significant discontent exists about the direction that Britain is heading, and housing is huge a part of this anxiety. Across the generations, many are worried about why today’s young adults have it so hard when finding a secure place to live.

“Britain’s housing catastrophe has been 50 years in the making but, while its effects are widespread, it is millennials who are truly at the sharp end. For older generations at least, rising housing costs have been accompanied by improvements in the quality and security of housing, as more families have been able to own their home.”

She continues: “The big danger today is that young people are having to settle for lower quality, longer commutes and less security in order to afford a place to live, despite spending a record share of their income of housing.

“It is vital that all political leaders recognise the scale of Britain’s housing crisis, which is placing an ever greater strain on families’ living standards, so that their response is suitably radical.”