'Housing market in crisis' - NHF

The National Housing Federation's analysis of the housing market, commissioned from Oxford Economics, has raised a storm in the mainstream media with its prediction that home ownership in England will slump to just 63.8% over the next decade.

Huge deposits, combined with high house prices and strict lending criteria, have sent home ownership into decline, the Federation said.

The Federation warned that the housing market will be plunged into an unprecedented crisis as it forecast steep rises in the private rental sector, huge social housing waiting lists, and a house price boom – all fuelled by a chronic under-supply of homes.

• In England, the proportion of people living in owner occupied homes will fall from a peak of 72.5% in 2001 to 63.8% in 2021.
• In London, the majority of people living in the capital will rent by 2021 with the number of owner occupiers falling from 51.6% in 2010 to 44% by 2021.
• The North East will be the only English region to see any increase in owner occupier numbers over the next decade, rising marginally from 66.2% to 67.4%.
• The average house price in England will meanwhile rise by 21.3% over the next five years from £214,647 in 2011, to £260,304 in 2016, according to the researchers.

At the heart of the problem remains a chronic under-supply of new homes. In 2010/11 just 105,000 homes were built in England – the lowest level since the 1920s. Last week, figures released by the Home Builders Federation showed that the number of residential planning permissions granted in England in the three months to June fell by a quarter to just over 25,000.

NHF Chief Executive David Orr, writing in his blog, said:

"We have a hellish combination of circumstances that begins to look like a perfect storm.  People can’t save enough to put together the £50,000 deposit they might need to buy a modest home. Rents in the private rented sector are often over £1,000 a month for a small flat. Housing associations have to rent some of their homes at 80% of these market rents just to be able to build the new homes we so desperately need. What kind of offer is this for the young family struggling to make ends meet? These are hardly the conditions that give us the best chance to build a nation at peace with itself."

The NHF is calling for suitable surplus public land to be made available for the building of affordable homes, for local authorities to regularly assess housing need and for ministers to make a renewed commitment to building the homes the country needs.

According to Inside Housing, Housing Voice, the affordable homes alliance and the House Builder’s Federation (HBF) have backed the NHF's case.

Housing Voice said a Royal Commission must be launched and highlighted a recent YouGov poll which showed that affordable housing was of greater concern to the public than crime or education.

The HBF said the government must “hold its nerve” on the National Planning Policy Framework. An HBF spokesperson said:

‘We totally support the NHFs call for more housing. We need more housing of all types and the government must create a framework within which that can be delivered.

‘The current consultation on the NPPF is vital. Government must hold its nerve and create a system that delivers enough land in the right places to provide the housing the country needs.’

The NHF report has received massive media coverage. Radio 5 Live dubbed today 'Four Walls Day' and 5 live Breakfast talked to first-time buyers about the difficulties of getting a mortgage, and whether the banks should start relaxing their lending criteria again, as well as interviewing the Housing Minister, Grant Shapps.

Shelagh Fogarty's midday programme looked at the issue from both sides of the council housing officer's desk, and this evening on Drive, the presenters speak to a family of four who live in one room, and ask why more new homes aren't being built.

According to @grantshapps, the minister has given at least ten media interviews on the subject today. He also issued an official response, saying he wanted to see a period of house price stability, but pledging support for first time buyers.

"That's why I've held summits with lenders to encourage them to do more to help people take their first step onto the housing ladder, and I've launched the FirstBuy scheme as a valuable alternative to the Bank of Mum and Dad for those struggling to get together that much-needed deposit.

"But we also need to get Britain building again. That's why I've announced plans to release thousands of acres of public land for housebuilding. And despite the need to tackle the deficit we inherited, this Government is putting £4.5 billion towards an Affordable Homes programme which is set to exceed our original expectations and deliver up to 170,000 new homes over the next four years."

Home ownership more affordable says Halifax

The last few days have seen a flurry of reports on the state of the housing market. Today's news is full of the National Housing Federation's gloomy forecasts, but the weekend reports were a little more upbeat - at least until you read the small print.

The the country's largest mortgage lender reported that the affordability of home ownership had hit a 12 year high, and that buying a home costs over £100 a month less than renting.

The Halifax claimed that the proportion of disposable income devoted to mortgage payments stood at 28% in the second quarter of 2011: the lowest level since 1999 and down by almost half from a peak of 48% of average disposable earnings in Quarter 3 of 2007. The main drivers for the decline are falling house prices and lower interest rates. However, the average deposit increased from 20% to 25% over the last four years.

Further research from the Halifax claims that cost of buying a home for first-time buyers is more than £100 a month lower than renting. The average monthly costs associated with buying a two bedroom flat in the UK for a first-time buyer added up to £567 in July 2011, 16%, lower than the typical rent paid on the same property type of £677 a month. The actual difference varies across the UK, and is only £9 a week in the South East.

This is in contrast to 2008 when the average cost of buying was £212 more than the average rent paid. But the current differential would be wiped out by a rise of just 1.5% in the Bank Rate.

The number of first time buyers has fallen by 23% in the last three years.

The Halifax's housing economist Suren Thiru said that the uncertain economy is putting many people off entering the property for the first time. She said:

“While these affordability gains are welcome, conditions in the housing market for those looking to get onto the property ladder remain challenging. Difficulties in raising a deposit and the current economic uncertainty are likely to mean that number of prospective first-time buyers entering the market will remain relatively subdued in the near term.”

Houseboats the answer to housing crisis?

The government is encouraging councils to grant planning permission for more residential moorings, and so enable people to live more cheaply than on land.

Housing minister Grant Shapps pointed out that half of the population live within 5 miles of one of the country's waterways, and that new moorings could be eligible for the New Homes Bonus, generating cash to invest in new marina or waterside recreational facilities. He said:

"Whilst they will never overtake bricks and mortar in putting a roof over the heads of families, innovative new ways of housing families - such as residential moorings - play an important role in allowing people to live near to their place of work, children's school, or family, and where perhaps they would not be able to afford to otherwise."

Sally Ash, Head of Boating at British Waterways said:

"We welcome the Minister's encouragement to local authorities to support the creation of purpose built residential mooring sites which we hope will help to alleviate localised congestion along the towpaths.  We are also pleased to note the reassurance from Mr Shapps' department that people can qualify for housing benefit for help with mooring fees."

British Waterways has recently published guidance for development of new residential moorings sites as an aid to local authorities and private investors.

However, as a recent case in the Isle of Wight has shown, houseboat owners renting their moorings have no protection from eviction under the Housing Acts.

The Court of Appeal ruled that a converted World War II landing craft on which a couple have lived in Bembridge Harbour for 20 years was a chattel, capable of being floated away when it was first moored, and so the owners had no protection under the Housing Act to remain at the moorings when asked to leave by the landowner.

FIPs funded by venture capital

Nick Hurd, the minister for civil society has announced a scheme to attract philanthropic investment into projects that aim to reduce state dependency.

Social Impact Bonds will attract socially conscious investments into schemes such as family intervention projects. The investors fund the scheme upfront and, if it is successful, the government returns the investment with further dividends for exceeding targets.

Four councils are piloting Social Impact Bonds - Hammersmith & Fulham, Westminster, Birmingham and Leicestershire - and will fund intensive help for families blighted by ASB, crime, addiction and poor education.

The Government has committed to support the growth of the Social Investment Market with Big Society Capital (formerly Big Society Bank) and around £600m for social finance products like Social Impact Bonds.

Talking on Radio 4's Today programme, Sir Ronald Cohen, co-founder of Social Finance likened the bonds to venture capital schemes that had 'revolutionised' entrepreneurship in this country.

On the same programme, Guardian columnist Polly Toynbee said that the schemes were "incredibly complicated", would "drain off money" to accountants, and "the government will have to pay out whatever the results".

Shapps heralds in disposals consultation

Housing Minister Grant Shapps has launched a consultation paper proposing changes to consents for councils to dispose of housing land. Shapps claims that these changes will result in more funding for affordable housing.

Local authorities hold land for housing purposes and powers to dispose of such land, but this can be done only with the consent of the Secretary of State.

The Government feels that the current consent regime runs counter to the principles of localism and decentralisation and will be less relevant under self-financing.

The proposals seek to give councils a general consent to dispose of assets at market value. The main exceptions to this are:

• the Right to Buy - which remains largely unaffected
• sell and lease back schemes - where the local authority would move from landlord to tenant
• transfer of ownership to council-owned company

Central government is looking to retain some control over assets are sold at a discount. This is to ensure that the sale will benefit the community.

The consultation also proposes to allow local authorities to retain their proportion of receipts from sales - but they must be spent on affordable housing, regeneration projects or paying off Housing Revenue Account debt.

LHA caps fail to stem rent increases

Iain Duncan Smith's attempts to influence private sector rent levels through Local Housing Allowance caps have failed to have an effect since being introduced in April, according to two reports.

The Rental Index, published by FindaProperty reports that private sector rents rose 1.9% in the Apr-Jun quarter and have reached a record average level of £876 per calendar month.

It also reports increased availability of private sector lets and increased rental yields for landlords - pointing towards a buoyant sector that doesn't need benefit-funded business.

FindaProperty's data is based on rental asking prices on property websites and has been used by the DWP to model private sector rent levels.

Along similar lines, market researchers BDRC Continental have found that 'one in four private landlords have already begun to look at reducing the number of LHA tenants in their portfolios, and a higher proportion (32%) will do so when capping affects their lettings. Half of the landlords surveyed claim they will be less likely to accommodate LHA claimants as tenants in the future'.

The evidence indicates that the private rented sector doesn't need to reduce rents and doesn't need to house Local Housing Allowance claimants, which will increase pressure on local housing authorities and the social housing sector.

Planning minister battles for development

According to the Financial Times, planning minister Greg Clark has come under fire from the National Trust and CPRE for pressing on with his 'presumption in favour of development' policy.

Mr Clark hopes that the new presumption could help revive Britain’s housebuilding industry and address what he terms the housebuilding “crisis”. He has the backing of the NHF's David Orr, who the FT quotes as saying it is “possibly the most useful thing the coalition government has done”.

The National Trust believes that the town and country planning system has served the country well by protecting open countryside, preventing sprawl and safeguarding designated areas and historic buildings. It says that the removal of detailed government guidance for local authorities leaves too much power in the hands of developers who will only need to demonstrate that their proposals will deliver growth.

The CPRE has also focused on the proposed powers for developers stating that "they will place the countryside under increasing threat and leave local communities and planning authorities largely powerless".

The DCLG consultation on the Draft National Planning Policy Framework ends on 17 October 2011.

Cameron calls for a 'social fight-back'

Prime Minister David Cameron has spoken about his plans to mend British society after last week's riots. The speech, delivered at a youth club in his Oxfordshire constituency, calls for a 'social fight-back' by citizens facilitated by the Government.

Cameron stated that the riots were not attacks on the state or other institutions, but were simply bad behaviour exhibited by people with an "indifference to right and wrong....with a twisted moral code....with a complete absence of self-restraint".

To prevent such disorder occurring again, he set out his agenda on a number of issues including:

• Politicians - can and should speak their minds on behaviour and morality.

• Government policy - every aspect will be reviewed to mend Britain's 'broken society'.

• Police - a renewed emphasis on electoral accountability and 'bobbies on the beat' as well as special measures to tackle gang culture.

• Families and parenting - 'a clear ambition [to]turn around the lives of the 120,000 most troubled families in the country'.

• Schools - 'an education system which reinforces the message that if you do the wrong thing you’ll be disciplined'.

• Respect for community - volunteers and civic leaders are to foster a sense of social responsibility at the heart of every community rather than carry out 'Whitehall diktats'.

• Responsibility and welfare - using the toughened up conditions contained in the Welfare Reform Bill.

• Human rights and health and safety - by looking at creating a British Bill of Rights.

• National Citizen Service - an existing programme that should become 'a rite of passage' for all 16 year-olds.

The policies and programmes outlined in Mr Cameron's speech appear to rely heavily on volunteers and he makes no promises about funding.

In a response to the speech reported in the Guardian, Labour Leader Ed Miliband highlighted the 'shallow' nature of Cameron's pledges by calling for a commission to investigate and learn from the riots.

Eviction for rioting tenants

The government has called on councils to evict tenants for rioting and is considering whether to review eviction powers for social landlords.

Prime Minister David Cameron told MPs at an emergency meeting of Parliament yesterday that "Local authorities and landlords already have tough powers to evict the perpetrators from social housing. Some local authorities are already doing this. I want to see others follow their lead and we will consider whether these powers need to be strengthened further."

This pledge comes after Housing Minister Grant Shapps, writing on the social networking website Twitter, said "I'll back social landlords who evict tenants involved in any rioting" and "Those who engage in serious anti-social behaviour in any neighbourhood should not benefit from social housing".

In a written statement to Parliament Communities Secretary Eric Pickles said he wants to change housing law so social landlords can evict tenants convicted of criminal activity beyond their local neighbourhood.

"My department is proposing to make necessary changes to housing legislation so that landlords will have even stronger powers to evict tenants who engage in serious anti-social behaviour or criminal activity such as rioting beyond the local neighbourhood. We intend to consult on this proposal immediately as part of the ongoing consultation on anti-social behaviour."

He also welcomed the decision of Hammersmith and Fulham, Greenwich, Southwark and Manchester councils to seek to evict their social tenants found guilty of rioting, and encouraged more local authorities to follow suit. Inside Housing has reported that Salford ALMO Salix Homes is working with police to evict rioters.

The housing law blog - nearlylegal - offers a legal perspective to evicting tenants involved in rioting. It considers the relevant grounds for an eviction, what is meant by 'locality' and the implications for this being scrapped and if the rioter is not the actual tenant.

Hannah Fearn, writing in the Guardian's housing network offers an alternative viewpoint, "Evicting tenants for rioting and looting will only push the problem under the carpet, but housing still has a key role to play."

"Westminster council said it considered social housing a privilege, not a right, and by committing acts of vandalism tenants forgo that privilege. This language is itself confusing. In a world where housing shortages are so acute that only the very poorest qualify for new social housing tenancies, surely the sector lays down a security blanket rather than offering a privilege. Evicting problem tenants, whether rioters and looters, or those committing antisocial behaviour, pushes the problem under the carpet only to find it poking up again in the next borough."

Freedom of Information 2.0

Francis Maude last week launched an online consultation on the government's plans to make more data publicly available.

The government's proposals, which have been dubbed Freedom of Information 2.0, would create both "pull" (a right to data) and "push" (a presumption of publication).

The consultation seeks the public’s views on:

• How we might enhance a 'right to data', establishing stronger rights for individuals, businesses and other actors to obtain data from public service providers
• How to set transparency standards that enforce this right to data
• How public service providers might be held to account for delivering open data
• How we might ensure collection and publication of the most useful data
• How we might make the internal workings of government and the public sector more open
• How far there is a role for government to stimulate enterprise and market making in the use of open data.

Also of interest to housing associations will be the range of organisations (providers of public services) that the policy proposals should apply to? The consultation asks "What threshold would be appropriate to determine the range of public services in scope and what key criteria should inform this?" This follows Grant Shapps announcement to this year's Harrogate conference that he would consult with housing associations later this year over whether to extend Freedom of Information (FOI) requests to include social landlords.

Maude is also consulting on creating a public data corporation that would provide more open access for data held by government bodies.

Both consultations close on 27 October 2011.

Plans to criminalise fraudulent subletting

The Telegraph reported at the weekend that the government is planning to make illegal subletting of social homes a criminal offence.

Referring to an estimate of 50,000 fraudulently occupied homes, housing minister Grant Shapps told the paper “Social housing is really precious and it’s not right that tenancy fraud and abuse locks out some of the most vulnerable families from getting a roof over their heads.”

Back in March 2010 the New Local Government Network called for an addition to be made to the Housing Act so that the 2006 Fraud Act could be used to prosecute individuals subletting social housing - a proposal supported by the Chartered Institute of Housing.

Labour housing minister at the time John Healey promised action, telling the Times six weeks before the election  “I am looking to make this a criminal offence, with tough penalties for the worst offenders to deter those who are thinking of making a fast buck from council housing.”  

Shapps launches ASB eviction power consultation

Following a series of recycled news articles and 'deja vu' tweets, Housing Minister Grant Shapps has announced plans to speed up the process for evicting persistent perpetrators of ASB.

The main proposal is to introduce a new, clearly defined, route to possession for serious, housing-related ASB that has already been proven by another court. This is termed a ‘mandatory power’ and will be based on the process for ending introductory tenancies.
 
DCLG intends to publish final proposals for a mandatory power of possession in the light of responses to this consultation and proposals for the Home Office's suite of ASB tools and powers.

The closing date for feedback is 27 October 2011.

Government wants to instil fear in public sector workers

The Coalition's policy minister Oliver Letwin was reported in the Observer as saying that the government is determined to instil "fear" among those working in the public sector, claiming that they had failed for the past 20 years to improve their productivity.

He warned that it was only through "some real discipline and some fear" of job losses that excellence would be achieved in the public sector.

He said:

"You can't have room for innovation and the pressure for excellence without having some real discipline and some fear on the part of the providers that things may go wrong if they don't live up to the aims that society as a whole is demanding of them." 

"If you have diversity of provision and personal choice and power, some providers will be better and some worse. Inevitably, some will not, whether it's because they can't attract the patient or the pupil, for example, or because they can't get results and hence can't get paid. Some will not survive. It is an inevitable and intended consequence of what we are talking about."

Mark Serwotka, general secretary of the Public and Commercial Services Union (PCSU), describing the comments  as "nonsense", adding:

"Public sector workers are already working in fear – fear of cuts to their job, pension, living standards and of privatisation. Far from improving productivity, the cuts are creating chaos in vital public services."

An editorial in today's Telegraph welcomed the willingness to weed out under-performers but, citing the severance package of a senior civil servant who was in charge of personal taxation at HMRCduring a period of underperformance, concluded that "it is vital that the Government imposes employee contracts that ensure failure is not handsomely rewarded".