Housing Justice Digest is a weekly summary of housing, homelessness, regeneration and social policy stories from the general and specialist press. This is a sample issue of Housing Justice Digest - for further information on subscribing to Housing Justice Digest see the Housing Justice Digest home page
Housing Justice Digest 25 September – 1 October 2006
HOMELESSNESS
Scottish homelessness rises
New figures from the Scottish Executive have revealed that there was a 4% increase in the number of homelessness applications in Scotland in the year to March 2006. In total 59,970 applications were made and on 31 March 2006 8,135 households were in temporary accommodation – an increase of 8% on 2005. At that time 2,798 of the households in temporary accommodation contained children or a pregnant woman and 134 of these households were in bed and breakfast accommodation. In total 55 households were in unsuitable temporary accommodation as defined by the Homeless Persons (Unsuitable Accommodation) (Scotland) Order.
Inside Housing 29/09/2006
Audit Commission warns of Supporting People being swallowed up by Social Services
The Audit Commission has raised fears that the Supporting People programme is at risk of being taken over by local authority Social Services departments. Speaking at the National Housing Federation annual conference the AC’s Dommini Gunn warned that supported housing staff are so keen to develop links with health and social care that housing was in danger of being overlooked. Gunn commented “people who specialise in supported housing have tried so hard to get people in social care and health to understand, they have almost immersed themselves in that language and the importance of social housing issues have been lost.” Gunn went on “Supporting People is still not very sexy in terms of economic development, owner occupation and new build schemes, with health, there is still a huge gap of understanding.”
Inside Housing 29/09/2006
HOUSING POLICY
Brown pledges to invest in social housing
Chancellor Gordon Brown emphasised the role of social housing in his speech at the Labour Party conference in Manchester. Brown pledged to sustain investment in socially rented housing whilst also emphasising the importance of shared equity and owner occupied housing. Housing Minister Yvette Cooper emphasised Brown’s speech saying that it’s a sign of his commitment to social housing. Attendees at the Conference welcomed the commitment to social housing but asked for greater detail, David Orr of the National Housing Federation commented “we are excited by that possibility [of more investment] as we believe that there is capacity and potential to increase substantially what we are able to deliver. I think we now have a series of political commitments to growth in principle without money being attached to it. We need to wait for the CSR but I hope the numbers are big.” Housing was the second most popular issue for Labour Party delegates to debate. For the third year running delegates voted to allow councils to exercise the so called fourth option of directly investing in housing themselves. Communities Secretary Ruth Kelly however stated that the fourth option would cost £12billion which she said would see a return to higher inflation and higher interest rates.
Inside Housing 29/09/2006, Regeneration and Renewal 29/09/2006
PRIVATE HOUSING
Houses in 10% of towns subject to inheritance tax…
New figures from the Halifax show that the number of towns where the average cost of a house is above the inheritance tax threshold has more than doubled over the last 10 years. Halifax figures show that average houses prices in 10% of English towns were above the £285,000 inheritance tax threshold- a trend that is likely to continue so that by 2020 homes in 20% of towns will be above the threshold unless it is reformed.
Inside Housing 29/09/2006
…As more and more house sales become liable for higher rates of stamp duty
The Halifax has also released figures which show that since 1997 house prices have increased by almost three times but that Stamp Duty thresholds have not increased to compensate. As a result the government received £5.5billion from the tax in the last financial year – eight times the amount it received in 1997. Martin Ellis of the Halifax called on the government to increase the thresholds inline with the increases on house prices since 1997 and commit itself to continuing to increase them: if this had been done the lower threshold would now be £650,000 and the higher rate £1.3million rather than £250,000 and £500,000. A Treasury spokesperson noted that only one in six house buyers pay inheritance tax at the higher rate.
Observer 01/10/2006
Warning over ‘everlasting’ mortgages
Mortgage advice website moneysupermarket.com has warned that house buyers are in danger of still having to make mortgage repayments after retirement. In a survey they found that a third of borrowers increase the term of their mortgage when they change lender as a result of moving or remortgaging. A spokesman for moneysupermarket noted “it is clear that this is a short-sighted solution. The smart option is to keep the total term the same.”
Daily Telegraph 29/09/2006
House prices rise 1.3% in September
The latest information from the Nationwide Building Society shows that house prices increased by 1.3% in September – the biggest monthly rise since January and resulting in an 18 month high annual rate increase of 8.2%. Fionnuala Earley of the Nationwide commented “just like the weather, the housing market was unseasonably warm in September as August’s interest rate hike did nothing to cool the rate of house price inflation.” The average price of housing bought with a Nationwide mortgage was £169,413 and has risen £35 a day over the last year. Nationwide reported that demand was strong with approvals for mortgages running at 20% higher than the long-term trend. The Nationwide figures caused concern to some economists; Howard Archer of Global Insight commented “house prices may well see further marked increases in the near term, given the current level of mortgage activity, survey evidence showing strong buyer interest, strong demand from the buy to let sector and a reported shortage of properties in some areas. This will be of concern to the Bank of England, and increases the likelihood that the Monetary Policy Committee will push through another interest rate hike in November.”
Daily Telegraph 29/09/2006, Guardian 29/09/2006, Times 29/09/2006
Fears expressed over the sustainability of the housing market
Mortgage providers have expressed concerns about the affordability of housing and the sustainability of the housing market – the Council of Mortgage Lenders points to figures showing that the number of homes repossessed is at its highest level for five years. A Hay Group report underlined the unaffordability of housing – it showed that typical borrowers are spending 51% of their monthly pay on mortgage repayments.
Independent 28/09/2006
Docklands repossessions rise
New figures from estate agents show that the Docklands area of East London has seen a large rise in the number of repossessions over the last year as a result of buy to let landlords buying up new properties and then finding that they are unable to let them at high enough rent. Adam Stackhouse of estate agents Chesterton estimates that 25-30% of the properties on the agency’s books are repossessed, he commented “they started to gather momentum 18 months ago and have grown steadily ever since. Amateur buy-to let investors who simply barnstormed into the market have found themselves in over their heads.” Problems come he notes because the rents do not cover full mortgage costs. Often the repossession comes if landlords are unable to find new tenants. Stackbridge pointed to one flat on his books which is for sale for £1.95million, he noted “it used to rent for £1,500-2,000 a week. When the tenant moved out the owner couldn’t cope with the rental voids. It’s a big financial burden to carry empty property for a prolonged period.” Landlords can usually rely on capital growth to ultimately allow them to make a profit on a property but in Docklands the number of repossessions and newly built flats coming on to market has meant that prices are dropping. However agents say that longer term the repossessions could bring benefits to area as owner-occupiers replace investors.
Sunday Times 01/10/2006
French mortgage company sets up in London to finance cross-channel house purchases
French mortgage company Crédit Foncier has set up an office in London to offer mortgages to British people looking to buy houses in France. The French company says that it is able to offer mortgages at cheaper rates than British banks as the French system of mortgages is controlled by tighter legislation which eliminates uncertainty and enables lower rates of interest to be offered for fixed rate mortgages. About 20,000 British people bought homes in France in 2005, making up 48% of all overseas buyers and French mortgage companies have seen a steady stream of customers. Crédit Foncier is the first to open an office in London and plans to offer bi-lingual advisers and an English language hotline for any queries buyers may have over taxation and property ownership in France.
Times 28/09/2006
B&Q to sell wind turbines
DIY shop B&Q is set to start selling budget wind turbines as it believes that there is demand among customers for environmentally friendly energy production. The wind turbines will cost £1,498 including installation; solar panels will also be available for a similar price. First of all the shop will assess customers’ homes to ensure that there would be adequate wind to operate the turbine and that the housing is not located in a conservation area where regulations will prevent installation. The shop estimates that turbines will pay for themselves in three-four years if major modifications do not have to be made to existing plumbing or heating systems. Ian Cheshire of B&Q said that the turbines would initially offered for a five week period to gauge the level of interest but he said he expected strong demand, he commented “with high energy prices projected to continue rising, coupled with increasing mortgage payments, we predict that consumers will increasingly look to energy efficiency for cost reductions. Cheshire said that if the mass marketing of the technology could drive prices down they would become a common home improvement. Commenting cynically he said “in the end we believe that just another way that you add value to your home will be by making it more efficient and costing less to run.”
Daily Telegraph 29/09/2006
Caution expressed over Open Market HomeBuy
The introduction of the pilot project of the government’s Open Market HomeBuy scheme on 1 October has been greeted by warnings from financial advisers over its suitability for borrowers. The scheme will allow buyers to buy 75% of a home with the remaining 25% being split between the government and the lenders. The scheme is aimed at ‘key’ workers such as nurses, teachers and police officers as well as social housing tenants and those on the housing list who want to buy their first homes. Any first-time buyer can therefore apply for the scheme although priority is likely to be given to public sector workers. Borrowers have to arrange their mortgage with one of the four financial institutions –Halifax, Morgan Stanley, Nationwide and the Yorkshire Building Society- involved in the scheme and will probably pay a premium of 1% on standard mortgage rates. The borrower will pay no interest on the 25% stake for five years but from year six the lenders will start charging interest on their 12.5% of the equity. The equity loans will need to be repaid at the end of the standard 25 year mortgage period or when the property is sold. Financial adviser Melanie Bien of Savills warned that it would only help a very small number of people and highlighted the problems, she commented “the rates of interest are not that great and most are variable, which isn’t ideal for first-time buyers. The redemption penalties last for five years – a long time to tie yourself in, plus buyers are signing away a share of the future profit on their property. If prices increase substantially they may regret this.” Bien concluded “it suits those who can’t get on the housing ladder any other way. If buyers have other options, they should go for them.”
The Guardian has a guide to the new scheme at money.guardian.co.uk/weekly/story/0,,1883965,00.html
Guardian 30/09/2006 Independent 30/09/2006, Independent on Sunday 01/10/2006, Observer 01/10/2006, Sunday Times 01/10/2006, Times 30/06/2006
Squatters get licence to legally occupy Hampstead home
Housing association Circle 33 has adopted a novel approach to squatters who moved into one its empty properties in Hampstead – it offered them a licence to occupy the house until it is redeveloped. The five storey property in an area where houses normally sell for £6million was acquired by Circle 33 when the previous owners, the United Women’s Homes Association, moved out in December 2005. Squatters forced their way in three months later and Circle 33 sent a letter telling them to move out. The squatters responded by saying that they were fulfilling a caretaker role and making improvements to the house and so should be allowed to stay. Circle 33 agreed to this; as it would save them £6,000 a week in site security costs, and have granted a licence to the 13 squatters to occupy the premises until it is due to undergo modernisation. Circle 33 expects to begin improvements so that it can be used as social housing in March 2007. The move was welcomed by the Empty Homes Agency, David Ireland of the Agency pointed out that there are 290,862 long term empty homes in the UK and 121,179 homeless households and stated that they would like to see more use made of short-life housing. Kim Parkins of Circle 33 commented “this agreement is a creative and pragmatic response in the circumstances… it allows the building to be secured and maintained while planning for its future is still under way.” Phoenix, one of the squatters, commented “it’s nice to know that we’ve got a place where we can stay and rest for a while. I’ve been evicted five times in the last 11 months and it’s very, very tiring.”
Guardian 30/09/2006
Cheltenham the best place to live in Britain
The Gloucestershire town of Cheltenham has been judged the most desirable place to live in Britain in a survey carried out by propertypriceadvice.co.uk. The website ranked all of the country’s 1,833 postcode areas according to the rise in average house prices over the past year, crime and unemployment rates, average incomes and the availability of local amenities such as schools and healthcare. Lousia Fletcher who carried out the survey said there were a number of factors that made Cheltenham top, she said “commuter links to Cheltenham have been getting much better, the quality of life there is very high: there are great local schools and a real sense of community. Cheltenham is also very well located for lots of cities.” Other locations in the top ten ranking include Openshaw in Greater Manchester, Godalming in Surrey, Wapping in London, Bilsington in Kent, Tetbury in Gloucestershire, Ormskirk in Lancashire, Spennymoor in County Durham, Penn in Buckinghamshire and Edenbridge in Kent. Bottom of the ratings was Fareham in Hampshire, Middlesbrough and the Birmingham district of Edgbaston.
Independent on Sunday 01/10/2006
REGENERATION
Regenerated Manchester the talk of the conference
Delegates at the Labour Party conference in Manchester, led by the Prime Minister Tony Blair, have praised the regeneration of Manchester that has gone on over the past 10 years. The catalyst for the investment was the 1996 IRA bomb explosion in the main shopping area; following on from the bomb government and private investors have poured money into the city leading to an urban renaissance. The City Council have set out to attract residents back to the city centre as part of the regeneration effort – as a result the city centre population has expanded from 900 in 1991 to 16,000 now and is projected to rise to 30,000 by 2016. The new cityscape has Britain’s tallest tower block and an extra 20,000 city centre homes with a mixture of distinctive architecture styles. As a result of the new development 25,000 new jobs will be created in the legal, financial and professional services field by 2016. Major employers such as Barclaycard, the Bank of New York and the BBC have decided to move to Greater Manchester to take advantage of the regenerated city centre. Manchester City Council leader Sir Richard Leese said he was pleased by the conference visitors reaction to the regeneration, he said “we have hosted cabinet ministers, a former American President, business leaders from around the world. Manchester has shone under the glare of the spotlight.”
Sunday Times 01/10/2006
SOCIAL HOUSING
Cooper claims it would be “bonkers” to end secure tenancies
Housing Minister Yvette Cooper has claimed that it would be “bonkers” if secure tenancies were ended when tenants could afford to buy their own homes. Speaking at the National Housing Federation conference she said that the tenancies for life issue needed to be resolved but that stability was the crucial issue for tenants, she noted “we should not underestimate the importance of security to people. What we cannot do is have a situation where a person gets a job then they have to move of their home. That would be bonkers.” She continued “one of the reasons that people become homeowners is that they want to be able to move when they want to.” The issue of tenancies for life has been raised by housing professionals in their discussions over the wide ranging review of social housing being carried out by Professor John Hills.
Inside Housing 29/09/2006
SOCIAL POLICY
British debt double rest of EU average
The average British citizen owes twice as much money on average as people in the rest of the European Union according to new research produced by Datamonitor. It found that the average British person owes £3,175 in unsecured borrowing –mainly overdrafts, personal loans and on credit cards- compared with the average of £1,588 owed by citizens of the other 24 EU nations. As a result Britain accounts for a third of all Western Europe debt, Paul Marsh of Datamonitor commented “while the UK enjoys a buy-now pay-later culture many major European countries have a culture of saving and frugality. Countries such as France and Germany are particularly debt averse.” The extent of the problem was highlighted in a separate report from One Advice which showed that the average 18-24 year old now owes £2,860 and that over 100,000 young people have debts of over £5,000. The Alliance and Leicester Bank has warned that high levels of debt will restrict the choices available for first-time buyers; it said that many students with debts of at least £6,000 were finding that they could not obtain a mortgage. The bank advised potential first-time buyers to pay off their debts first before considering buying a house.
Daily Telegraph 28/09/2006, Independent 28/09/2006
Housing Justice Digest is produced by Luke Evans, Policy and Information Team,Housing Justice, 209 Old Marylebone Road, London, NW1 5QT www.housingjustice.org.uk/housingjusticedigest
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