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  • Stickies & Evergreen

    Housing crisis? You ain't seen nothing yet! A "perfect storm" is brewing.

    Thanks to Nick Parkin for drawing my attention to this blog by Giles Peaker of Anthony Gold.

    It expresses grave concerns about the Housing and Planning Bill and how it is going to impact on the provision of social housing.

    Giles describes it as a "back of a fag packet" bill and goes as far as to say that the Government does not know what it's doing!

    Meanwhile, Dorian Gonsalves of Belvoir has issued an appeal to the Government about social housing.

    Dorian comments: "With net immigration currently at over 300k, over 1.5m people on council waiting lists, population forecasts as high as 85 million by 2050 and 10 million people already renting it is clear that much more social housing is required.

    The Government has pledged 400,000 new builds in the next five years, but it is likely that 200,000 of these will be in and around London and locations won't be ideal due to lack of building land at sensible prices. The remaining 200k will be spread across the other 1000 or so towns and cities across the UK, so there will probably be just 200 new affordable properties in each town or city".

    Dorian and Giles are not alone in their concerns.

    One MP voting against the Bill was Green MP Caroline Lucas, who represents Brighton Pavilion.

    She said: “The housing crisis is biting hard. Renting is unaffordable, our social housing stock is dwindling and buying a home is still an impossible dream for many. And, as with so many of the challenges our society faces, it is the young who are suffering the worst.

    “The Government had an opportunity to utterly rethink the housing model – but instead Parliament is being presented with legislation that’s going to make the situation far worse – and put another nail in the coffin for British social housing".

    We already know that the number of families in temporary accommodation has reached a 12 year high.

    The number of families with children living in emergency B&Bs in England rose by 45% in the 12 months to the end of September, the highest level in 12 years, official figures show.

    A total of 3,000 households with children were in bed and breakfast-style accommodation on 30 September 2015, the Department for Communities and Local Government (DCLG) said. Of these, just under a third had been in that kind of accommodation for more than six weeks.

    The figure is the highest since the summer of 2003 and underlines how councils are struggling to find suitable lodgings for homeless families.

    The DCLG said the main reason for the loss of a settled home was the end of a private tenancy and that it had become an increasingly frequent cause in the past six years as the number of tenants in private rented homes had risen.

    Now add into the mix that we don't have enough bricks or bricklayers to build the 400K homes that are needed!

    The last time Britain managed to build over 200,000 homes in a year, which was in 2008, it required stocks of 1.1bn and production of 1.9bn bricks to fulfil orders and keep prices stable enough to facilitate construction .

    Britain’s brick stocks fell to a low of 323m in October 2014, but rose slowly to 535m at the end of October 2015. In 2004, stocks were at 617m and brick production reached 2.87bn , while ten years later in 2014 just 1.8bn bricks were produced. The massive drop in production is due to a number of brick factories being mothballed immediately after the 2008 financial crisis.

    A flurry of deals and takeovers in the brick industry in 2015 saw production rise, but to reach the scale of housebuilding needed and without having to heavily import, production will need to at least double.

    The Office for National Statistics puts the number of construction workers at around 2 million: this figure has been broadly steady for the past decade. According to Randstad (pdf), a construction recruitment firm, 980,000 construction workers built an estimated 148,000 houses in 2015. The workforce will need to at least double to meet Osborne’s targets as well as the homes already planned: to double output will involve twice as many construction workers. Randstad’s research shows construction productivity currently stands at one house per 6.6 construction workers. This means extra skilled jobs, for 27,000 bricklayers, 89,000 plumbers and 100,000 carpenters, according to Randstad’s analysis.

    But the workforce is ageing faster than it is being trained. The current workforce shows 7% of construction workers are aged 16–25, while 10% are aged 56–60 and 9% are over 65. It’s the latter two figures that are crucial: with 165,000 on-site construction workers and 50,000 white-collar staff delivering just shy of 150,000 homes, reaching the levels we need each year will require a further 123,000 new workers, according to EC Harris’ Mark Farmer.

    The EC Harris report People and Money (pdf) explains that by 2019, at least 224,000 workers will need to have been added to the total construction employee numbers, and a further 700,000 people will be required to replace retiring workers. But construction attracted fewer than 20,000 first-year trainees in 2013 – 5% of the number needed. The number halved between 2005 and 2013, and has yet to pick up.

    I comment:

    Forget crisis, the above is a blue-print for a housing disaster!

    With news that landlords and agents can be fined up to £30K for supplying a sub-standard home, stamp duty tax hikes, Clause 24, tightening of mortgage criteria, and increasing legislation, it would appear that the social housing sector and the private rented sector are going to be squeezed and that the housing crisis is actually only just beginning!

    Of course, the people who are going to be most impacted by these policies are tenants, who will not only experience less choice of housing, but also higher rents, and fewer options.

    This is all without economic influencers such as interest rate rises, inflation, etc. It really feels to me that a perfect storm is brewing for the U.K.'s housing market.

    Thoughts on this anyone?

    [Image: house.png]Related content:

    "Cut immigration to solve housing crisis" says Migration Watch boss

    6 babies have been born for every house built in Britain since 2010

    Osborne admits in 2014 that "housing crisis will be with us in 10 years time"
    Hi, just to point out that the NL post isn't by me, but by J, a barrister. But I agree with it completely!

    Giles Peaker

    Anthony Gold Solicitors

    Thanks Giles, sorry for any confusion!

    It's quite farcical, don't you think?

    Do you believe the main impact will be in London or is this a nationwide issue?
    On the forced sale of council housing stock, worst in London by a long shot. Some councils (Islington, Camden, Westminster etc) looking at 60-70% of their stock being over the proposed value threshold for selling off.

    Other parts of the bill will hit nationally. S.106 agreements to have properties for sale, not rent, 'pay to stay' on council tenancies which will actually cost councils money (any extra income goes to treasury).

    It is a very very ill considered bill, on the whole.

    Giles Peaker

    Anthony Gold Solicitors

    Commentary from the Guardian on this topic:

    Chief executive of the Chartered Institute for Housing Terrie Alafat is worried about the future of housebuilding: “Our fear is that some of the proposed measures in the housing and planning bill will make it incredibly difficult for councils to build new homes – and that vital council housing could be lost,” she says. “According to our analysis, almost 7,000 council homes a year could be lost when right to buy is extended to housing associations if no extra funding is provided. We also have serious concerns aboutpay to stay, which we believe could discourage social housing tenants from increasing their earnings or finding work, as well as pushing people into housing benefit entitlement.

    “Many people aspire to buy a home – and no-one is saying the government shouldn’t support that – but what about people who simply can’t afford to buy?”

    Alafat says the country needs a range of housing that is affordable for everyone.“Even products like starter homes may not make home ownership affordable for people on lower incomes. If the government is going to build a million homes by 2020 it will need to have all parts of the industry firing on all cylinders and building all types of housing. That means homes for rents that are truly affordable, for shared ownership and for private rent too.”

    If passed, the bill represents the death knell for social housing, argues Colin Wiles, an independent housing consultant and former housing association chief executive. “The housing bill signals the end of the road for truly affordable housing in England,” he says. “The government’s obsession with home ownership means that it will be giving a tax-free windfall of up to £112,000 to people who are not in the greatest housing need. That’s how much a few lucky homeowners could walk away with after five years if they buy one of the government’s starter homes in London.”

    But the windfall is at the expense of the wider population in housing need. “Meanwhile, the supply of social rented homes is set to fall almost to nothing and councils will be forced to sell off some of their most valuable assets,” he says. “The policies in the housing bill will make life worse for hundreds of thousands of people on low incomes.”

    Full/source story

    Don't panic as Mr Mainwaring would say!

    I think it's really worth breaking down how people are living as it gives a bit of a different view of the housing crisis - as for most people in the UK there really isn't one.

    English Housing Survey says over 50% of people in England now own their home OUTRIGHT with no mortgage. They have very little housing crisis, bar a few struggling to maintain them.

    Secondly most other people have a mortgage and only tiny percentage are in arrears - the number of repossessions during this recession was half that of the 1990s.

    Thirdly many FTBs could get on the housing ladder as the property value sold most in the UK is £125,000 - averages distort the facts of house prices. Properties in the East Midlands for example can be bought for less than £50k via shared ownership and less than £80k for an existing home. That means with a 5% deposit, they need just £5k to buy a home, between two people that's pretty affordable.

    It is a complete myth that private renting is 'extortionate' or 'unaffordable'. For many, renting privately versus buying the same house with a 95% mortgage and being responsible for repairs etc is thousands of pounds cheaper a year than buying.

    Students now have access to renting from institutions or from private landlords - the latter of which tend to be cheaper, few areas as far as I am aware are short of stock although some are oversupplied on some property types eg Nottingham.

    Those already in social accommodation with 'life long' tenancies whether they would be eligible for them in today's market or not.

    Those tenants in housing association accommodation eligible for massive discounts to make a fortune on their property if they can afford to buy.

    This means the mass majority of millions of people in the UK already have a decent roof over their head and are just fine.

    So who does the housing crisis apply to? In my view there are three types of housing crisis:-

    1. Rogue /amateur landlords due to the rules not being enforced properly who do fleece tenants and house them in substandard accommodation. Government/local authorities need to sort this out. They managed to issue and support admin for 10 million parking tickets in 2014, surely they can weed out rogue landlords?

    2. Tenants renting privately who desperately want to buy and need to be near work so can't move elsewhere. This is especially hard if they have no bank of mum and dad to help them. Areas such as London/Bristol/Edinburgh/Harrogate have a worse problem, it's not just affordability it's the fact there is so little stock available as turnover has plunged and new builds are out of their reach, so they only have access via shared ownership and although building rates are up, they aren't matching demand.

    3. The +1.5 million people on council waiting lists that no-one seems to care about but housing associations and their model is now being changed so much it will either kill off social housing and cause mass homelessness (remember the 80s?) or it could revolutionise the sector and actually help supply more social housing. Some are being brilliantly looked after though by landlords and specialist letting agents like Castledene, but others are absolutely at the mercy of rogues or in B&B accommodation, which is a disgrace in this day and age.

    The problem with the latest Housing BIll is it does little to address the real housing crisis and could in fact make it a lot worse.

    The sad thing to me is a whole generation of 20 somethings aren't bothering to save or even investigate buying as they are constantly told rubbish stats which don't actually apply to them and spending the money on other things instead.

    The second awful thing is many are also being made to feel miserable for being in rented accommodation as if they are 'missing out' when in actual fact it may well be the right place for them and perfectly cost effective. If only we could make sure they chose an ARLA/NALs/RICs agent or a good landlord eg RLA member then they would have no worries and always be well looked after.

    Education is the key, nence doing what I do, but many MPs/organisations etc don't want people to know the reality of the housing crisis as it doesn't suit their aims, nor does it make great headlines!
    Property Analyst, Speaker, & Founder of PropertyChecklists
    Twitter: @katefaulkner @checkproperty

    I don't think that the Bill is ill thought out at all. It has a simple clear aim, an aim that I have been talking about for some time - cutting the Housing Benefit (not called that now) bill, which is/was the single highest expense of the government. Back in the 80s & 90s the Housing Benefit bill was fairly modest because most benefit recipients lived in low cost accommodation (mostly Council Housing, but even PRS was cheap).

    Then RTB & BTL transferred low cost rented accommodation into high cost & the Housing Benefit became a problem. The 50s & 60s solution (build housing and rent it cheap) isn't politically acceptable to this Government so the plan is to use market forces to move low (or no) income people to cheap areas.

    This provides opportunities for LL in Scotland, N.Ireland, the cheaper Northern Areas and the Welsh Valley to provide low cost accommodation at fantastic yields, and will leave a void in the London market for low cost accommodation.

    I have no doubt that the Bill will get pushed through Parliament, the political issue will come when hundreds of thousands of people are forced to relocate from where their families were brought up. Will they go quietly, or will it be a rerun of Poll Tax - riots in the streets of London?


    It won't cut the HB bill. In fact it will raise it. By removing social housing stock, it will leave the PRS as the only option and in all but a very few areas of the country, this is more expensive. Remaining social housing will also be more expensive, pushing up HB

    The great fantasy (which is what it is) of moving large numbers of lower earners to Scotland and Northern Ireland will not come to pass. Not least because there aren't the jobs. (Which means that even if it did, the HB and benefit bill would rise). But the idea that somehow London could function without anyone earning less than £40k pa is absolute nonsense.

    Pay to stay would catch a couple both on minimum wage. This is what is being called 'higher earners'.

    If the bill is not ill thought out, then it is extremely stupid.

    Giles Peaker

    Anthony Gold Solicitors

    In a lot of the country private rentals are probably cheaper than state social housing, the reason is that the social landlords pay no income tax, no stamp duty, no inheritance tax, no corporation tax etc

    So if the private landlord is charging £550pm while the local social is chagrining £450 on the face of it the social is cheaper but a private higher rate tax landlord will pay 40% of that £550pm to the government and at some point inheritance tax too and landlords sell about once every 15 years so stamp duty and legals too. Overall it costs the state less to pay the housing benefit to a private landlord of £550pm and get half of it back via taxes than to pay a social landlord £450pm who will pay no taxes

    I take a limited perspective; and always look for the positive opportunities in any situation like this.

    I wonder what impact that technological advances will be having on the building industry?

    For example - I have often wondered why there is not (to my knowledge) a gadget invented for distributing cement mortar (in perfect thickness) onto a row of bricks, ready for the next course to be simply popped on top very quickly - and with some fancy technique created for locking the vertical joints, too.

    That's just one example. Modular housing techniques interest me at the moment - as do eco-energy strategies. Being a designer in part, I think there is a lot of potential in canny interior design in our older houses and flats, as well. Think about a mezzanine floor, for example (and the space available beneath it) - just what that can do to create multi-functionality in one room space.

    This is not by way of countering the 'disaster waiting to happen' picture painted here: just to look in at it from another angle.

    07 42 777 88 79  Property researcher & collaborative sourcing assistant - consultancy & mentorship at times, by request First Finders (residential & commercial land & property: UK, & abroad) Wessex Property Management Services (facilitation & advisory service for property owners) Golden Gate Gardens (specialist garden and landscape design service)