Category Archives: Affordability

Manchester’s looming housing crisis set to worsen sharply as population growth outstrips new build

Manchester housing cris
Manchester’s brewing housing crisis set to worsen over next five years.

Manchester’s growing housing crisis is expected to worsen sharply over the next five years. New analysis reveals that the city’s population is growing almost 15 times faster than new homes are being built.

Property adviser JLL predicts that house prices in Manchester are expected to increase by 28.2% due to growing demand from a surging population and insufficient supply.

In  2016 alone, Manchester residential property capital values grew by 16%. Overall prices in the North West are predicted to rise 18.1% until 2021.

Low levels of new-build

The North West’s and Manchester’s imbalance between supply and demand is the main reason property value growth rates are currently outpacing the rest of the UK.

According to the latest official figures, just 290 homes were built in Manchester in 2015-16. This brings the total number of dwellings (houses and flats) to around 218,500. At the same time, the city’s population increase by 10,000 according to population projections based on  2014/15 figures.

The imbalance between population growth and new-build is now one of the worst across the whole of the UK. Only Westminster and Kingston upon Thames in London saw a bigger gap between the rate of population growth and new houses being built.

Greater Manchester

The housing crisis is not confined to the city center alone. In Oldham the population is growing at five times the housebuilding rate. Meanwhile, the populations of Stockport and Salford are both growing three times faster than new homes are being built in the area.

Across the conurbation only two boroughs, Bury and Wigan, saw the number of new homes grow faster than the population increase.

Manchester’s housing shortfall is now publicized widely on property investment forums. In January, the letting agent Martin & Co identifed Manchester, Cardiff and London as the most lucrative places to invest in buy-to-let properties. Rental demand was cited as one of the strongest indicators for profitable buy-to-let locations.

Once again renters will be the biggest losers. According to John Goodall, CEO of Landbay: “Tenants will have little choice but to compete for what properties are on offer. As a result we expect rents to rise faster than the pace of inflation next year, with growth tripling to 3% by the end of 2017.”

The Renters Alliance helps renters with bad landlords and letting agents. If you have a story you would like to share, please contact the National Renters Alliance through our website or email us at contact@nralliance.co.uk

Share this article

Rents fall for first time in six years

London House Prices Fall

The average monthly rent for newly let properties has fallen for the first time since late 2010 according to the estate agency Countrywide.

The fall in rents is believed to be caused by a large recent increase in  the supply of properties becoming available. This was possibly attributable to some landlords rushing to buy last year before a 3% stamp duty surcharge came into effect.

In contrast to the usual pattern of rent rises in London and declines in the rest of the country, nationwide rents have continued to rise. Rents fell by nearly 5% in the past year in the capital to an average of £1,246 a month. In  South East England they fell by nearly 3% to £1,152. The average cost of a new tenancy in England, Wales and Scotland is £921 a month, down by  0.6% in the year to February.

Brexit effect

According to Countrywide’s research director Johnny Morris, “Rents are growing in most of the country but falls in London and the south east are dragging down the national growth rate. Early signs point towards 2017 being a rare year where rents rise faster in the north of the country than in the south.”

Morris also added that brexit and economic uncertainty also appears to be weighing on London house prices. “Economic and housing sentiment – both in sales and rental markets – has been affected by our vote to leave the EU, in London more than anywhere else. This uncertainty causes tenants to be more cautious, meaning less likely to move and more likely to look for cheaper accommodation, eg sharing. With the private rented sector home to around three-quarters of new migrants, any future substantial shift in migration patterns would likely have a knock-on effect on rents.” Morris said.

Countrywide’s data does conflict however with the most recent figures from the Office for National Statistics (ONS).
Its latest figures for the year to January 2017, the ONS showed that across the UK rents for private tenants had risen by 2.2.%.
When the figures were published last month, the ONS commented that “inflation in the rental market is likely to have been caused by demand in the market outpacing supply.”

Countrywide said it expected the apparent over-supply of rental properties to be flushed out of the market in the coming year. Average national rents are then expected to start to grow again after that.

The Renters Alliance helps renters with bad landlords and letting agents. If you have a story you would like to share, please contact the National Renters Alliance through our website or email us at contact@nralliance.co.uk

Share this article

Seven disgraceful statistics about renting in London

Rent Costs London

1. London Renters spend 60% wages on rent

The English Housing Survey reports that Londoners spend an eye-watering 60% of their gross earnings on rent. Excluding housing benefit this figure rises to 72%.

Even more shockingly, 16-24-year-olds are forced to pay 88% of their income on rent in the capital. When housing benefit is included this falls to 81%. However this age group is particularly vulnerable to reductions in housing benefit.

2. It is cheaper to commute from Madrid each day than rent in Camden Town

Renting a flat in Camden Town and working in Liverpool street will cost a Londoner £2,128 monthly or £25,532 yearly.

If the same Londoner rented a flat in Madrid’s city centre and booked return flights from Madrid to Stansted from Monday to Thursday, he or she would spend £1,725 a month or £20,708 a year.

3. The average rent on a two-bedroom flat is £707 a week or £100 a day  

Figures from property investment firm London Central Portfolio (LCP) show that the average rent on a two-bedroom flat in central London is a whopping £707 a week.

Average rental prices of rooms in a flat-share in Paddington (Zone 1), can cost around £1100 a month.

Council taxes are also a significant  consideration. Areas like Richmond and Kingston tend to be the most expensive at around £1929 a year.  Cheaper areas include Wandsworth where council tax averages £823 a year.

4. London professionals are being forced to live “12 to a house”

According to Ealing Central and Acton MP Rupa Huq, London professionals are being forced to live “12 to a house”, thanks to the soaring rents.

In a House of Commons debate Huq said: “Renting is no longer just a transitory thing for those who are in their twenties. It’s becoming routine for people further up the age scale.

“Many in my constituency in their 30s on good money find themselves sometimes 12 to a house with shared sitting room and kitchen.

“At that age, ‘who stole my cheese?’ should not be a way of life.”

5. By 2025, more than half of people under 40 will be living in property owned by private landlords

Over half of 20 to 39-year-olds will be renting from private landlords by 2025, according to accountancy firm Price Waterhouse Coopers.

PwC economists state that: “For 20-39 year olds, we would expect over half to be renting by 2025, implying a continuing rise in the size of ‘Generation Rent’.

The report suggests that home ownership levels will continue declining to dramatic new levels, dropping below 60% by 2025, as the rise of ‘tenant nation’ looms.

6. The UK has the highest private rents in Europe

A study by British Housing Federation found that rents in the UK are the highest in Europe.

In countries like Germany and Holland, private rents are around 50% cheaper than in the UK.

David Orr, chief executive at the National Housing Federation, said: “British renters get a raw deal in comparison to their continental counterparts. Not only do they face crippling rents, but renters in the UK have almost no certainty about whether they will be able to stay in their home from one year to the next.”

7. One in three rented homes are “not fit to live in”

One in three British three homes do not meet the government’s decent home minimum standard, according to 2014/15 English Housing Survey.

A Parliament report published last year admitted that there have been no minimum property standards for private rented housing in England since 2006.

Furthermore, more than 170 tenants are being evicted every day according to 2015 Ministry of Justice figures.  In total 42,728 evictions recorded in England and Wales in 2015.

According to Gillian Guy, CEO of Citizens Advice, “It’s hard to feel at home in the private rented sector. People can struggle to lead a normal life when their home is in a state of disrepair and they could be told to leave at any time. But many feel powerless to speak out.”

The Renters Alliance helps renters with bad landlords and letting agents. If you have a story you would like to share, please contact the National Renters Alliance through our website or email us at contact@nralliance.co.uk

Share this article

London Homeowners Slashing Prices As Political Uncertainty and High Prices Impact Demand

London House Prices Fall

London home sellers are having to cut asking prices for their homes and are offering greater discounts as high house prices and brexit uncertainties impact demand.

Lucian Cook, residential research director at Savills claims that price cuts seen in prime central London following the Brexit vote are now filtering through to outer boroughs. “Affordability issues are now a problem after a decade of house-price growth, and buyers are finding they increasingly come up against mortgage-lending limits.”

The latest slowdown in London house price growth comes after home prices in the capital have surged by around 86 percent since 2009. London house prices are now 14.2 times the average buyer’s gross salary according to the research firm Hometrack. This is the highest house price to salary ratio on record and more than double the rate for the UK as a whole.

Data released by the  Council of Mortgage Lenders also shows that there has been a fall of 12 percent in the number of mortgages advanced to first-time buyers in London.  High London asking prices have in many cases now exceeded lending limits allowed to banks under rules set by regulators in 2014.

Central London hit hardest

The house price decline has been most notable in central London. Average prices were cut by 8.2 percent in Kensington & Chelsea on an annualized basis compared with 7.8 percent in July.  Westminster and Wandsworth have been similarly affected recording 7.7 percent and 7.1 percent declines respectively.

london_house_prices

In an apparent reversal of typical trends, outer boroughs have been less affected than prime central London. The percentage of sellers cutting asking prices in January rose in all but two of the capital’s 33 boroughs compared with July.

Listings reductions

According to the property website Zoopla, 37.1 percent of property listings in Merton have been reduced.  John J. King, managing director at broker Andrew Scott Robertson added that sales are down “about 25 percent in the past six months, as they were already affected by stamp duty and the referendum made things worse.”

In Kensington and Chelsea 35.4% of listings have been reduced. Estate agents attribute the fall to changes in stamp duty and the effects of the Brexit vote. However, the house price declines may already be leading to greater interest in buying in the borough. Toby Whittome,  a broker at real estate agent Jackson Stops & Staff, claims that “applicants looking to buy are up nearly 40 percent in January, but that doesn’t necessarily result in sales, as people are hoping and waiting for some good news about stamp duty and clarity over the possible impact of the referendum.”

Ealing has also seen a considerable number of price reductions. Following five to six years of steep price increases, 35.4 percent of listings are now reduced. According to Alex Jerram, a broker at Dauntons, a two-bedroom new build in the borough now costs the same as one in Pimlico. “You cannot justify asking the same price for a property in greater London as one in central London. If sellers really need to sell, they have to reduce prices.”

The Renters Alliance helps renters with bad landlords and letting agents. If you have a story you would like to share, please contact the National Renters Alliance through our website or email us at contact@nralliance.co.uk

Share this article

Top Civil Servant in Charge of Housing Says Housing Crisis Will Continue Under Current Government Policies

generation-rent

One of the Government’s most senior housing civil servants has admitted that new government policies will not end the housing crisis and that homelessness will continue to rise.

Questioned by MPs about why the Government is failing to build enough homes, the Permanent Secretary to the Department for Local Government Melanie Dawes admitted that Theresa May’s new policies will not stop the country’s housing crisis from continuing “as it has done for decades.” Miss Dawes added that she was “simply being honest” when she revealed that houses prices are set to stay out of reach of those who cannot offered a property and that homelessness will continue to rise.

The revelation  comes less than one month after after ministers launched a new White Paper “Fixing our broken housing market” which promised radical policies to solve the housing crisis and increase the supply of new homes.

When asked whether the housing crisis will ever resolve itself, Miss Dawes claimed that “It will continue as it has done for decades, I agree, and that will show itself primarily in affordability and in some places in homelessness”

Revelations about the UK’s inability to tackle the housing crisis comes as average house prices have surpassed ten times the average salary in some parts of the country. In November 2016, data published by the research firm Hometrack showed that with house prices in London are now 14.2 times the average salary. Cambridge, Oxford and Bristol  were also identified as highly unaffordable cities with house price-income multiples close to those in the capital. At the same time the number of households made homeless has risen to more than 50,000 per year.

Commenting on the comments made before the public accounts committee, Labour’s shadow housing minister, John Healey, claimed that Miss Dawes’ appearance confirmed the Government’s policies were not working. “It’s clear that the Government’s housing plans have failed, are failing and will continue to fail.”
“Since 2010, home-ownership has fallen, homelessness has more than doubled and affordable house-building fell last year to the lowest level in 24 years.
“After seven years in Government, there’s now a huge gap between the rhetoric and record of Tory Ministers on housing. We need less hot air and more homes from Ministers to fix this housing crisis.”

During the presentation of the Government White Paper in Parliament, the Communities Secretary Sajid Javid, said: “The housing market in this country is broken and the solution means building many more houses in the places that people want to live.”

Mr Javid also claimed that relative to population size, Britain has had Western Europe’s lowest rate of house-building for 3 decades. The Communities Minister claimed that the Government would honour its 2015 manifesto promise to preserve the green belt yet remove the Government’s role in land-banking and free up more public sector land more quickly. Furthermore, in a reversal of decades of housing proposals, the white paper indicated that new homes will be built to rent rather than for first-time buyers.

The extent of the housing crisis comes as data show that private sector rented housing is the most expensive and has the lowest standards of any housing type.  According to Parliament reports, private renters now spend an average of 49% of their income on rent despite nearly one-in-three privately rented houses failing to meet minimum government housing standards.

The Renters Alliance helps renters with bad landlords and letting agents. If you have a story you would like to share, please contact the National Renters Alliance through our website or email us at contact@nralliance.co.uk

Share this article

Central London House Prices Underperform the Rest of the UK Falling the Most in Six Years

London price decline

House prices in London posted their largest yearly fall in almost six years in February according to the property website Rightmove. The figures represent the first annual decline in London house prices since April 2011.  It is believed that high asking prices and fears over Brexit have been putting off buyers.

While February asking prices are up compared with January, the 2.6 per cent increase is the weakest monthly gain for a February since 2009 during the height of global financial crisis.

Across the capital, house prices fell by 0.4 per cent compared with last year with the average property in London now costing  £641,116. Reversing the trend of a stronger performance compared with the rest of the UK, the London housing market under-performed the rest of the country during 2016. The latest sign of housing market weakness continues the trend set in the second half of last year. In addition to Brexit fears, tax increases on investors in the early part of the year have been suggested as factors in reducing demand for prime London real estate.

Nationally annual house price growth slowed to the weakest in almost four years this February with average property asking prices rising 2 per cent to £306,231. This represents the weakest February property performance since 2009 well below the 5 percent average gain for the month over the past seven years.

The picture across London as a whole is more mixed. Central London led the price slowdown with asking prices falling 2.1 per cent compared with February a year earlier whereas  Outer London suburbs registered a price increase of 1.4 per cent. However, comparing the relative performance between January and February, inner boroughs outperformed as owners of more expensive homes boosted the average by listing their properties for sale after the Christmas break.

Continued

Sign up to the Renters Alliance newsletter

Rightmove claims that potential buyers may also have become price-sensitive as inflation erodes real incomes. The company’s director miles Shipside added: “Perhaps we’re approaching the territory where many buyers are unable or unwilling to pay what sellers are asking, given the negative combination of rises in the cost of living, tighter lending criteria, and a dose of Brexit uncertainty. Values have boomed since 2013, so it’s not surprising that upwards price pressure is running on tired legs.” 

Share this article

Private renting virtually impossible for benefit claimants

House to rent no dss

Increasing numbers of Housing Benefit claimants are being excluded from the private rental sector as the number of properties listed as ‘No DSS’ grows according to a House of Commons Briefing Paper. ‘No DSS’  (standing for “Department of Social Security” which was replaced by the Department for Work and Pensions 16 years ago) means the landlord or agent won’t rent a property to someone on housing benefit or local housing allowance.

The House of Commons reports corroborates anecdotal evidence from the Hackney-based private renter information and campaign group Digs which found only one studio flat on the market available to Housing Benefit claimants in a survey of 50 local estate agents between December 2015 and February 2016.

Despite calls from  renters rights groups to outlaw the proscription of renters receiving state benefits on discrimination grounds, the House of Commons briefing paper stated that such restrictions on Housing Benefit claimants is “unlikely to amount to direct discrimination as income and employment status are not protected characteristics under the Equality Act 2010.”

The paper also highlighted other factors which may be exacerbating landlords’ reluctance to let to Housing Benefit claimants which include:

  • uncertainly around the roll-out and implications of Universal Credit
  • the payment of Housing Benefit in arrears
  • restrictions in mortgage agreements and insurance requirements
  • impending tax changes resulting in landlords focusing on “less risky” tenants.

The House of Commons report was soon followed by significant coverage of the publication of a list of banned tenant types from Britain’s biggest landlord, Fergus Wilson, which included tenants receiving benefits. Mr Wilson also included workers on zero-hour contracts, single parents, battered wives and plumbers on his list of undesirable tenant types.

Sign up to the Renters Alliance newsletter

In addition the the reluctance of many landlords to rent to people on benefits, mortgage lenders may also be exacerbating this situation. In 2012 for example, the buy-to-let lender, The Mortgage Works, stated that no new mortgages would be advanced to landlords whose tenants received benefits. This condition was later withdrawn after significant negative press coverage. Other property letting websites also include a search filter to screen out properties which do not allow tenants on benefits.

This situation is of such importance to large numbers of renters that the housing charity Shelter has published a guide for benefit claimants to  convince a landlord to rent to them.

 

Share this article

One in five private rented homes suffer fuel poverty

 

fuel_costPrivate sector renters are one of the groups with the highest risk of suffering from fuel poverty according to figures recently released from the Department for Business, Energy and Industrial Strategy.

More than 2.3 million families, equivalent to around 10% of households, are living in fuel poverty in England.  The situation is particularly bad for private sector renters with one in five households renting from private landlords affected. The highest risk however, at 25% of all households, was found for single parents with dependent children.

Overall Birmingham is the most affected city in terms of absolute numbers with around 60,000 households unable to afford adequate heating with Leeds, Cornwall, Manchester and Liverpool occupying the top five local authorities where households struggle with heating costs. In terms of the proportion of households classified as fuel poor, rural areas of England are the worst affected, with more than 20% of households on the Isles of Scilly classified as fuel poor. Other areas identified as badly affected include Eden in Cumbria, Richmondshire and Ryedale in North Yorkshire, and West Devon.

Officially a household is in fuel poverty if its income would fall below the official poverty line after subtracting the cost needed to adequately heat a home. It has been calculated that on average households which meet this definition would require an extra £371 to be able to adequately heat their homes.

The issue of fuel poverty and energy costs is a recurring theme in UK politics. Reacting to the report, the shadow business secretary, Clive Lewis said that the figures showed that the Conservative Party had to take action to tackle high energy prices charged by the big energy companies.

“Under the Tories’ lack of an energy plan, Britain is facing an energy bill crisis, with over 2 million families who can’t afford their energy bills.”

Mr Lewis continued to assert that a Labour government would confront the problem by increasing clean energy generation capacity and tackling energy bill rises for households.

Sign up to the Renters Alliance newsletter

<--SIGNUP EMAIL FORM-->

To date the successive Conservative governments of David Cameron and Theresa May have favored the provision of greater consumer information and the easy switching of energy supplier as a mean to reduce household fuel expenditure. These include announcements earlier this month that the business department would publish an energy supplier league table to allow consumers to better assess their energy usage and compare energy suppliers. However, some critics of these proposals note that tariff transparency has been promoted throughout the Brown and Cameron administrations with relatively little effect on reducing household energy bills.

Announcing the league table measures, the business secretary, Greg Clark, said: “Millions of people across Britain continue to pay too much for their energy. The measures announced are a positive step to help more people benefit from increased choice and competition.As the government has made clear, where markets are not working for consumers – in energy or otherwise – we are prepared to act.”

Share this article

London house prices predicted to fall 5% in 2017

London House Prices Predicted to Fall 5 per cent

Property prices in central London are expected to fall by 5 per cent in 2017 according to property data firm Rightmove.

The situation across London as a whole however was mixed with a significant variations between market conditions in prime central London and peripheral areas.  Outer London property prices are expected to see an approximate 3% increase in prices in 2017 Rightmove suggests with prices across England and Wales expected to rise by two per cent as a whole next year.

Brexit uncertainty continues to be a serious issue  with respect to property price forecasting. As yet the government’s desired outcomes and the negotiating position it will adopt following the triggering of  Article 50 to begin the two year countdown to leave the European Union remains unknown. Prime Minister Theresa May says she is committed to triggering the start of formal Brexit negotiations by the end of March next year and is expected to make announcements on the Government’s preferred future relationship with the EU in the New Year.

The disconnect between property prices in central London and the rest of the UK may be symptomatic of London’s traditional early reaction to changes in the British economy. During the 2007 global financial crisis and subsequent recession, prime London properties were the first affected by the downturn but were also the fastest to recover.

To date predicted negative economic data following the UK’s decision to leave the EU have failed to materialize. The British Chambers of Commerce revised up its forecast for economic growth next year but downgraded the outlook for 2018 due to inflation pressures and ongoing economic uncertainty about Britain’s future trading relationships with the EU. In terms of GDP forecasts, the Chambers revised upwards UK GDP growth forecast to 1.1% from 1% for 2017 after stronger-than-expected economic performance following the June Brexit vote.

Share this article

Sadiq Khan asks LSE to investigate London housing market

sadiq_khan

London mayor, Sadiq Khan, has asked the London School of Economics to carry out a comprehensive inquiry into the impact of foreign investment on London’s housing market.

The inquiry which is expected to report back to the Mayor in the spring will investigate the dependence of property developers on foreign buyers and the number of properties kept empty.

Sadiq Khan is keen however to stress that the report is not intended to provide material which might be used to curtail the rights of overseas buyers in London.  Announcing the study, the Mayor underlined the importance of foreign investment in London but also noted that further study was needed to understand the connection between London’s property affordability crisis and foreign investment. The Mayor added that many Londoners were concerned about the number of homes left empty and the link between empty properties and overseas investors.

The current study follows numerous reports that London is being used as a safe-haven for Russian Oligarchs, Chinese Princelings and Middle Eastern Sheikhs.  Many properties in the capital are held by companies in offshore tax havens and many are unoccupied. Khan’s predecessor in City Hall, Boris Johnson, notably called for property developers to market new homes “first or equal first” to Londoners rather than to overseas buyers.

Share this article