Posts with tag: housing crisis

What’s in Store for London House Prices?

Published On: May 7, 2015 at 10:41 am

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It would be an ideal situation for London property prices and non-London prices to even out. But the recent average between the two places London house values extremely higher than those around the country.

For the two to meet, London prices will have to fall considerably, or non-London prices will have to accelerate upwards.

What's in Store for London House Prices?

What’s in Store for London House Prices?

If either of these things happen, now would be the best time to leave London and get more for your money elsewhere. If you have already left the capital, you’ll be pleased to hear that London prices have slowed down in the last few months.

In the prime central London market are stories of homes selling for much less than they should have, that’s £10m instead of £15m. This could be down to the rising pound, which has risen 20% against the euro since last summer. This makes the UK much more expensive for European investors who would have entered the market a year ago.

And naturally, the general election has had an affect. But with today being the day, the property market should seem clearer now that campaigning has ended.

There is also concern that banks such as HSBC or Standard Chartered will leave London to avoid rising bank charges. House sales and prices will be affected, as they would be if Labour wins the election and mansion tax is introduced.

There is the possibility of a 50% rate of income tax, meaning that those at the top end of the market will be on lower net incomes. Labour has also pledged the abolition of non-dom status.

Additionally, the buy-to-let sector in London could be under fire if taxes on these investments are altered. This would greatly impact the general market, as there is a higher proportion of rental property in London than elsewhere.

But also, we should be looking outside of the UK, and noting that the world’s wealthy are getting poorer. Saudis are experiencing falling oil revenues, the Russian economy is in a bad state, and China’s crackdown on corruption is stopping people gaining wealth.

With less super rich overseas buyers and existing investors put off by UK taxes, it is unclear what will happen to prime central London property prices, and therefore the rest of the country.

London Council Accused of Social Cleansing

Published On: May 7, 2015 at 9:41 am

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A council in London has been accused of social cleansing after sending a letter to their tenants suggesting they move to Birmingham.

The letter, sent by Wandsworth Council, has been shared on social media and states that the Council has a number of private rental sector homes “within the areas either directly within or near the surrounding areas of Birmingham.”

Recipients are told that the Council will pay for any “bedrooms given up”, as well as aiding with the cost of moving.

It is thought that the Council are targeting pensioners in particular, as they are exempt from bedroom tax.

Labour’s parliamentary candidate for Battersea, Will Martindale, posted a photograph of the letter on Twitter, and said that the person who received it felt “not wanted” in her local area.

Martindale says: “It’s just wrong to pressure local families to leave Battersea and move to Birmingham. The real answer is to build more homes that local people can afford to rent and buy.

“This Tory council is out of control. First, they moved local homeless families to Leicester and Portsmouth. Now they offer some of our most vulnerable residents cash to move 100 miles away from their jobs, friends and schools.”1

The Housing and Community Services have conducted a report on the proposed Wandsworth Moves and Mobility Scheme. It claims that the Council hope to move 600 “under occupiers”1 – tenants who live in homes where not all bedrooms are occupied – in the next three years.

A Wandsworth Council spokesperson says: “This is a scheme that has been in place in Wandsworth for many years. Every other London borough has a similar policy.

“What is does is provide choices and incentives for tenants in larger properties to hand them back so that they can be used to provide new social rented homes for families on waiting lists who may be living in overcrowded conditions and need a bigger property.

“Offering a financial incentive is one of the ways in which tenants who don’t need such big homes can be encouraged to give them up.

“As the letter makes crystal clear, it is not compulsory and no one is forced to leave, but some residents are quite happy to move out of London because they may have family connections in other parts of the country or are looking to make a fresh start outside the capital.”1 

The Independent recently undertook a study that found over 50,000 households have been moved out of London in the past three years.1

This figure indicates that a huge amount of families cannot afford homes in their area and are therefore being relocated out of their communities to places away from the capital.

1 http://www.independent.co.uk/news/uk/politics/generalelection/general-election-2015-council-letter-encouraging-tenants-to-move-from-london-to-birmingham-accused-of-social-cleansing-10228380.html

 

 

Number of First Time Buyers Drops

Published On: May 6, 2015 at 12:31 pm

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Young people are still struggling to buy a home as the amount of first time buyers dropped in the past year.

The National Association of Estate Agents (NAEA) found that just one fifth of residential property sales in March were to first time buyers, compared with a quarter in March 2014.

Research found that only 22% of homes were bought by this group, the lowest figure since July 2014. Experts expect that things could get worse for aspiring buyers, as there is a shortage of available homes and prices are still increasing faster than wages.

Property prices in England and Wales have risen by 5% in the past year; surpassing wage increases at 1.8%, found Land Registry.1

Price increases vary around the country; with London experiencing annual rises of 11% and the North East seeing a fall of 3%.

The NAEA’s Mark Hayward says: “Affordability is still a big concern. People’s incomes are not rising as fast as house prices and a lack of supply is driving prices up further. It could get worse for first time buyers.

“We have not yet seen the effect of the pension reforms, which could see people cashing in their pensions and rushing to invest in property, increasing the competition.”1

The Mortgage Market Review, introduced last April, brought in stricter affordability rules for buyers. It is believed that this contributed to the fall in numbers. Lenders are now required to conduct thorough checks on borrowers’ incomes and spending habits.

One of Britain’s leading academics says that the country must build more homes and challenge opposition from locals for the sake of “our children”.

Number of First Time Buyers Drops

Number of First Time Buyers Drops

Dame Kate Barker, former Bank of England (BoE) policymaker, has called for radical reforms to avoid a major housing crisis and help young people to buy a property. She would also like to see more public land made available for housing by tackling complaining locals if their arguments have “no substance”.

At a lecture by the Cambridge University Land Society, Dame Kate said: “The housing system today is unfairly weighted towards those already owning a home, or lucky enough to inherit funds from property ownership.

“Existing homeowners should recognise the stark truth that if they insist on keeping new development away from them, and on keeping all the profits from higher prices, we will not be able to house our children in a fair manner, and in some cases perhaps they will not be housed at all.

“The next government needs to act radically and coherently.”

She said that the general election housing manifestos are not “fully convincing” and that politicians are not brave enough to take bolder action by naming areas that need development, in case they become “unpopular”.1 

The Conservatives have promised 200,000 starter homes for first time buyers by 2020 and Labour will abolish Stamp Duty for first time buyers on homes less than £300,000.

The Centre for Economic Performance (CEP), part of the London School of Economics, resonated Dame Kate’s concerns, stating that Britain’s planning system lets Nimbies – local opponents – “employ endless ways to block new developments.”1

Academics at the CEP said that property prices have risen faster in the UK than almost any developed nation in the past 40 years. The prices of homes in central London per square mile are more expensive than New York, Paris and Geneva.

The CEP’s Christian Hilber says that Government schemes like Help to Buy have driven up demand and pushed up prices rather than helping the supply problem.

He says: “These policies may thus be an ineffective waste of taxpayer money at best, and counterproductive at worst.”

He also finds that places with the worst housing issues, in London and the South East, generally have stricter planning restrictions. It is often easier to gain planning permission in the north as unemployment levels are higher and developments could bring jobs.

Hilber continues: “If the South East, the most tightly regulated English region, had the regulatory restrictiveness of the North East of England, house prices in the South East would have been roughly 30% lower in 2015.”

He also says that planning laws should be changed to “allow developers to compensate Nimbies in an attempt to gain planning permission.”1 

Estimations suggest a decline of 20,000 first time buyers between the first quarter (Q1) of 2015 and Q4 2014. Your Move expected the amount of sales to first time buyers in Q1 2015 to be around 61,000, the lowest quarter for two years.

It says: “A lack of new homes is catching up with the property market.”1

Housing charity Shelter’s Chief Executive, Campbell Robb, says: “Yet again, we see in black and white the huge hurdles aspiring homeowners are facing thanks to our housing shortage.

“There might be talk of a cooling market, but the millions of people saving hard for a stable future will know a very different reality: their dream of a home has jumped another £9,000 out of reach.”1

1 http://www.dailymail.co.uk/news/article-3063372/Fresh-housing-gloom-time-buyers-one-five-house-sales-people-buying-property-12-months.html

 

Foxtons Sees Profits Drop Ahead of Election

Published On: May 3, 2015 at 4:16 pm

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A slowdown in the property market approaching the general election has affected revenues and profits at London estate agent Foxtons. Buyers and sellers are awaiting the result of next week’s poll.

The chain made revenues of £33.1m in the first three months of the year, a 3.1% drop on the first quarter (Q1) of 2014 when the sales market was its strongest since 2007.

Sales commissions also fell almost 12% to £15.5m in Q1, but lettings were up, with a 5.4% increase to £15.9m. Mortgage broking also rose by 13.5% to £1.6m. Foxtons made underlying profits of £8.3m, which is around a quarter less than the same period in 2014.

Foxtons Sees Profits Drop Ahead of Election

Foxtons Sees Profits Drop Ahead of Election

Chief Executive of the firm, Nick Budden, says: “As expected, property sales transactions in London have remained relatively flat since the end of last year with many potential buyers and sellers apparently delaying their decisions until the outcome of the general election is known.

“Encouragingly, growth in our lettings business has continued from the momentum we saw at the end of last year.”1

Foxtons is not anticipating a market boost until there is security after the election. Rival company Countrywide, Britain’s largest estate agent, cautioned this week that market transactions in the first six months of the year would be substantially down on last year’s levels due to the election. However, it is predicting a recovery in the second half of 2015.

The outcome of the election is unclear. Nate Silver, who correctly predicted the results in every state of the US 2012 election, expects a “messy outcome” for the UK, resulting in a possible coalition.1

The sudden drop in profits caused Foxtons to reduce its staff, after hiring more last year for the anticipated long-term improvement. Currently, the firm employs 1,270 people.

Despite the dip, Budden thinks that the long-term fundamentals of the London housing market are secure. Many of Foxton’s branches are situated in less central parts and have reported better levels of volume growth recently.

Foxtons has continuously expanded, opening five new branches in areas such as Walthamstow, northeast London, and Bromley, southeast London. It now has 56 offices. Another two are scheduled to open this year.

Shares in Foxtons increased by 6% to 312p.

1 http://www.theguardian.com/money/2015/apr/30/foxtons-blames-election-for-slowdown-in-london-property-market

Just 43 Homes in London are Affordable for First Time Buyers

Published On: May 1, 2015 at 3:36 pm

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The shocking fact that only 43 properties in London are affordable for first time buyers defines the housing crisis. But who is to blame for this?

Housing charity Shelter released a study this week that found just 43 homes in Greater London are still affordable for the average first time buyer.1 They analysed the salaries of people in different regions, found out how much the banks would lend them, and compared these numbers to the cost of a family home.

In areas such as the North East only 42% of homes are affordable, which is worrying in itself.

Just 43 Homes in London are Affordable for First Time Buyers

Just 43 Homes in London are Affordable for First Time Buyers

But when you look at London, the findings are appalling. Only 0.1% of properties with two or more bedrooms are affordable for the average first time buyer. If you are a Londoner who doesn’t own a home, and doesn’t have parents who will give you £30,000, then buying a home is not a likely option.

The reasons for this are clear. London does not have enough homes. The amount of people living in the capital has risen by almost a fifth in only 15 years. The number of homes has not. Therefore, prices have soared.

Many people have blamed property developers who are supposed to be doing the building. They fight to get out of obligations to include affordable housing in the huge blocks they do build. But the term affordable housing has been given a new meaning; now, it can mean up to £2,800 per month.

However, it’s the Government who sets the rules for the developers. The new affordability definition was handed to the developers and means up to 80% of market rents.

Developers also have to react to Government policy in other ways. The price of homes correlates to the price of land in the areas people might want to live. The property price boom means that houses can be sold at higher prices, but the developers need to pay more for the land to put new homes on.

This is why building in London is so difficult. For those that do build, huge amounts are apartments in skyscrapers. Unless something happens to make building in the capital less expensive, developers won’t be interested in the measly profits.

If the developers aren’t to blame, could it be the Government’s fault? Going back decades, the Government has made it more difficult for councils to build, introduced limiting planning rules and excused developers.

Some are arguing that if the private sector isn’t creating enough homes, then the state should be. Some people believe the only way out of the crisis is for the Government to fund a large building programme. But none of the political parties have proposed this in their election manifestos.

Could it even be down to the public? With campaigns against skyscrapers, less are built. With protests against freeing London’s greenbelt, less is made available, despite there being more land in Surrey offered to golf courses than housing.

Buyers want prices to come down, but don’t realise what must happen to make that possible. Homeowners don’t even want values to fall. So what can politicians do?

1 http://www.theguardian.com/commentisfree/2015/apr/30/housing-crisis-first-time-buyer-affordable-homes-london

 

 

 

 

The Housing Crisis is Breaching Human Rights

Published On: April 30, 2015 at 11:56 am

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A report by charities has found that the housing crisis in the UK is in breach of United Nations (UN) human rights standards.

The UN human rights commitment to provide people with adequate housing has been violated because the housing crisis is so serious. The housing charities highlight spiralling rental costs, harmful conditions in properties and increasing levels of homelessness.

The report also warns of “profound issues of lack of supply, increasing housing costs, lack of security of tenure and homes of such poor quality that they are unfit for habitation.”

The group, called Just Fair, is made up of Crisis, Oxfam, Amnesty International, Save the Children and UNICEF UK.

The report’s author, Dr. Jessie Hohmann, a law lecturer at Queen Mary University of London, says: “It is quite clear we are in breach of our UN obligations. It is possible to take policy steps to protect the most vulnerable and marginalised, but the UK government has decided not to do that. Since the 1980s, we have lost any concept of housing’s social function, and that is why protest movements are gaining ground.

“Without decent housing, you can’t experience an adequate life in society, but now housing is seen just as an asset.”1

In the 40-page document, Just Fair revealed:

  • Private rent costs are double those of council properties, at £163 per week. A quarter of renters depend on housing benefit to pay.
  • A third of properties in the private rental sector do not meet basic health, safety and habitability standards.
  • The amount of people sleeping rough in London rose by over a third between autumn 2013 and autumn 2014, and funding for shelters dropped.
  • Last December, there were around 62,000 families in England living in temporary accommodation. This is the highest number for five years, with a further 280,000 households at risk of homelessness.
  • The amount of families living in bed and breakfasts has more than tripled from 630 in 2010 to 2,040 in 2014.
  • “Exceptionally high” levels of homelessness and the rising number of families at risk of homelessness represents “a serious failing in the government’s obligations.”
The Housing Crisis is Breaching Human Rights

The Housing Crisis is Breaching Human Rights

The organisation says that the UN requirements to “recognise the right of everyone to an adequate standard of living”, including housing, can only be breached in instances of “force majeure”, such as natural disaster or war. Cuts made when the country is in financial crisis should be ended when the crisis finishes.

The shocking report arrives as politicians deliver their housing policies in the general election campaign. Chief Executive of Crisis, Jon Sparkes, says that the report “should be a wake-up call for all political leaders.”

Recently, Labour announced their rent controls proposal. Find out more: /milliband-gives-his-answer-to-housing-problem/. The Conservatives have vowed to extend the right to buy scheme to housing association tenants. Read more: /how-would-the-conservatives-right-to-buy-work/.

Housing protests have also emphasised the public’s frustration over the state of the property market. Read about the Reclaim Brixton demonstration: /the-purpose-of-brixtons-anti-gentrification-protest/.

The Just Fair report is critical of the coalition’s housing policies: “Problems in realising the right to housing are linked to a political climate of austerity, and attendant cuts to state social security and other benefits. The resulting situation is accurately identified as one of crisis.”

It also cites one of the most serious problems as the failure to build enough homes, which goes back to Labour and Conservative governments.

Some of the things worsening the crisis are the removal of bedroom tax, the “stark undersupply” of new homes and insecurity of tenure in the private rental sector, says the report.

Additionally, it states: “It should be a matter of significant concern that one third of households in the private rental sector are living in housing that is substandard to the point that it is unsafe or unhealthy.”

The report revealed that “revenge evictions”1, when tenants are evicted when asking for improvements, are too common, with around 200,000 in 2013. That is a breach of the UN’s prohibition of arbitrary eviction, claims the report.

Brandon Lewis, Conservative housing minister, responds to the findings: “We inherited a broken housing market after Labour’s housing crash.” He adds, “there is more to do”, but the Conservatives will provide 275,000 new affordable homes in the next parliament. 

Lewis continues: “Despite the need to pay off Labour’s deficit, Conservatives in government have worked hard to increase house building to its highest since 2007 and delivered 217,000 new affordable homes. We will ensure economic growth and stability to allow continued investment in frontline services for homeless and the vulnerable.”1

Labour’s Emma Reynolds says: “Under David Cameron, house building is at its lowest levels in peacetime since the 1920s, there is a severe lack of affordable homes, families face growing insecurity in the private rented sector, and there has been a dramatic rise in homelessness and rough sleeping. Labour will take action to tackle this crisis.

“We will get 200,000 homes built a year by 2020, boost the number of affordable homes built year on year, reform the private rented sector and we will set out a long-term strategy to tackle homelessness and rough sleeping.”1

Crisis’ Jon Sparkes explains: “Rough sleeping has risen by 55% in the past five years. This dreadful state of affairs is the result of successive governments’ failure to tackle the housing crisis, combined with severe cuts to housing benefit that have left growing numbers of people struggling to keep a roof over their heads.

“The housing crisis will not solve itself. We desperately need more affordable homes as well as political action to fix our broken private rented sector.”1

The report will inform a UN review of housing in England this autumn. The Joseph Rowntree Charitable Trust largely funded it.

1 http://www.theguardian.com/society/2015/apr/28/uk-housing-crisis-in-breach-of-human-rights