The news that large mortgages are becoming harder to find for first-time buyers will hardly come as a surprise. According to a new survey, published as part of the Chartered Institute of Housing's UK Housing Review for 2010/11, the number of loans requiring borrowers to find a deposit of 10% or less fell from 245,000 in 2006 to 28,000 in 2009.
In other words, mortgages of 90% or more (including 100% mortgages) are becoming scarcer and scarcer. Instead, on average, first-time buyers need a 30% deposit before they can buy a home.
Yes, this may be bad news for some households hoping to become home owners, but we shouldn't we also applaud banks for resisting the temptation to return to the reckless lending that led to the credit crunch and recession? Personally, I find it incredible that any bank will offer a 100% mortgage following events of recent years.
The solution, surely, is not only to build more homes that can be sold at affordable prices (so bringing down the cost of the deposit), but also to promote private renting at market prices along with intermediate renting by housing associations - both of which are, in fairness, advocated by the CIH.
The problem, of course, is that housing finance depends upon individuals and organisations spending money they don't have - at least in the short term. A few years ago, the government was complaining that housing associations do not 'sweat their assets' enough (in other words, borrow more from private lenders). Within months, as borrowing became riskier, many associations were applauding themselves for not taking the government's advice.
Local authorities would love to become larger borrowers, but the government is reluctant to allow this as it suggests public sector borrowing is out of control.
Until we decide exactly who should be borrowing what (and from whom) it is hard to see how the housing finance system will make much sense to anyone or work effectively to the general good.
Wednesday, 26 January 2011
Monday, 17 January 2011
Yes. There is a crisis in social housing.
Unusually, I woke up on Saturday morning to hear the BBC's Breakfast programme running a story about social housing. Spurred by newish local authority figures showing that more than 11,000 households joined housing waiting lists in the third quarter of last year, the BBC had assembled an impressive roster of figures, all of whom agreed there is too little social housing.
Even housing minister Grant Shapps was persuaded to utter the word 'crisis', although that is far easier when you've been in government for less than a year. David Orr, chief executive of the National Housing Federation, had left his tie at home as if to demonstrate that it was Saturday, but otherwise explained decisively where the fault lay.
For, without wishing to let Shapps or his party completely off the hook, there is little doubt that Labour's failure to build sufficient social or low-cost housing in the years prior to the credit crunch and recession has mostly created the situation we are in now.
The last set of English local authority housing statistics showed there were 1.75m households awaiting a council or housing association home last April and it will be a major surprise if that figure does not rise by April 2011.
At the same time, government figures in December showed that councils are dealing with more cases of homelessness, and predicted that, shortly, there will be more families living in temporary accommodation.
So where do we go from here? Grant Shapps may be a fairly media-friendly politician but, in truth, it is hard to find anyone in the housing sector that believes the coalition government sees housing as a priority, or that it has credible plans to boost the amount of social or affordable housing available.
Too much depends on the market, or even the whim of local people. There is the 'new homes bonus', which essentially consists of bribing councils to approve development in return for extra council tax, along with the 'right to build', encouraging communities to come up with their own local housing schemes. Neither is likely to result in a significant increase in social housing.
Instead, much rests upon whether housing associations (in the first instance) opt to provide new homes at higher (or what the government calls 'affordable') rents with shorter-term tenancies. If they do, the proceeds could be used to pay for further housing. We will know by April whether this option has many takers, but don't hold your breath for quick results. In the meantime, numbers waiting for social housing can only increase.
Even housing minister Grant Shapps was persuaded to utter the word 'crisis', although that is far easier when you've been in government for less than a year. David Orr, chief executive of the National Housing Federation, had left his tie at home as if to demonstrate that it was Saturday, but otherwise explained decisively where the fault lay.
For, without wishing to let Shapps or his party completely off the hook, there is little doubt that Labour's failure to build sufficient social or low-cost housing in the years prior to the credit crunch and recession has mostly created the situation we are in now.
The last set of English local authority housing statistics showed there were 1.75m households awaiting a council or housing association home last April and it will be a major surprise if that figure does not rise by April 2011.
At the same time, government figures in December showed that councils are dealing with more cases of homelessness, and predicted that, shortly, there will be more families living in temporary accommodation.
So where do we go from here? Grant Shapps may be a fairly media-friendly politician but, in truth, it is hard to find anyone in the housing sector that believes the coalition government sees housing as a priority, or that it has credible plans to boost the amount of social or affordable housing available.
Too much depends on the market, or even the whim of local people. There is the 'new homes bonus', which essentially consists of bribing councils to approve development in return for extra council tax, along with the 'right to build', encouraging communities to come up with their own local housing schemes. Neither is likely to result in a significant increase in social housing.
Instead, much rests upon whether housing associations (in the first instance) opt to provide new homes at higher (or what the government calls 'affordable') rents with shorter-term tenancies. If they do, the proceeds could be used to pay for further housing. We will know by April whether this option has many takers, but don't hold your breath for quick results. In the meantime, numbers waiting for social housing can only increase.
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