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Guest blog: Shelter's Chief Exec on the rise of unaffordable housing(574 Posts)
This week, to highlight the fact that housing is increasingly unaffordable for many, Shelter published research which showed what our weekly shop would cost if food prices had risen to the degree that housing costs have done over the last decade.
In this guest blog, Shelter's Chief Exec Campbell Robb warns that unless something changes, the next generation will find it even tougher to get a stable and affordable home.
What do you think? Are you struggling to get on the property ladder, with rising rents making it increasingly difficult to save for a deposit - or are you worried for your children's prospects? How do you think the situation could be improved? Post your URLs here if you blog on the subject, or tell us what you think here on the thread.
MoreBeta, I agree we need to get the price of property down, but how can that be done? What do you mean by 'allowing the market to work'?
Where to start with housing in the UK....
1. Foreigners have inflated London to the point of insanity. My flat in London is now 'worth' more than GBP500K apparently. We put it on the market and Europeans are the ones making offers. It doesn't take much to put the pieces together. I think there is a lot of dirty money from Europe in London real estate.
In addition, the new wealth from Russia and the Far East has moved in. It is shocking that you can live in the UK and not pay taxes on your worldwide income. That needs to change and we will see house prices in central London fall which will have a knock on effect for everywhere else in the country.
2. Rental Market: Here in the US, land of rampant capitalism, when we rented the increases in rent were set by the town we lived in. They calculated the increase based on the increase in property taxes and mortgage rate changes. The biggest increase we had was 4%. People were up in arms about it too. The increases are announced in June and landlords had to inform you 3 months prior to the annual lease coming up if they were increasing the rent.
Oh and lord help you here if you don't offer safe housing as a landlord. The town will do the work to bring the home up to code and place a lien against the house. Good luck getting your permit to rent through if you have one of those liens.
The crap that goes on in the UK wouldn't last five minutes here.
MIRAS was another distortion in the housing market designed to encourage people to buy rather than rent.
At least in the 1950s homeowners had to pay income tax on the implied rental value of their home to recognise that fact that they were in effect enjoying rent free housing whilest being allowed to claim MIRAS.
Then they removed the income tax element and kept MIRAS right at the time there was high wage inflation in the 1960s and 1970s and the whole myth and love affair of the 'boomer' generation began. Of course they took away MIRAS once the boomers had reached middle age.
The boomer generation have paid no tax on their unearned housing wealth apart form stamp duty but tenants have to pay rent out of taxed income. No wonder so many people are trapped in rented accomodation paying.
solopower - the Bank of England is distorting interest rates by forcing them down to almost zero and well below what the capital market would charge.
In addition banks are being allowed to 'extend and pretend' lonas on property where the person is not paying the mortgage in order to avoid repossessions and hence have to take losses on the mortgages they extended in the boom years.
Govt and Bank of England are terrified of creating a triggeringa wave of repossesions which is why we keep seeing rates being kept low and all sorts of schemes to pump up the housing market.
When DH and I bought our house we were both junior civil servants and we could just afford this house and took in a lodger for 2 years which helped with renovations.
Our house is now worth 7 times what we paid for it - we could not afford to buy it now with our present salaries despite me recently getting a senior management job.
If DD wanted to buy a house at age 23 like DH and I did round here she would need to come out of University and earn £250k! With a £50k deposit!
No way could that happen - and I'm boggled at how the houses which do go on sale round here are snapped up - £1m for a family home - someone has money, but I don't see how anyone on a fairly normal wage can afford to buy here.
I haven't asked people but I can only assume there is a lot of inherited wealth or a massive amount of debt.
I know my friend has extended her mortgage and will be paying it off when she is 67!!!! I don't see how this can continue, and I foresee a lot of people living with their parents for quite a long time.
hi haven't read all the posts sorry.
just wanted to comment on how it's not just the private market. i live in a HA property. when i moved in 4 years ago the rent was £65pw. it is now £89pw and will go up again by the maximum legal amount come april 1st probably to somewhere between £100 and £110pw. when it went up to £89 last april i was shocked that it could have risen by nearly 50% in 3 years. the private rentals market around here has done nothing like that and at this rate within another year or so it will be just as cheap for me to rent privately.
the HA was given my LA's entire housing stock for £1 since which time the rents have rocketed across the board to being very close to the private rent rates. cheaper housing is ceasing to exist here even for those lucky enough to get social housing.
if i had rented privately i would not have had to shell out to install electricity into the back passageway (it was that or make a choice between having a fridge or a washing machine as there wasn't space for both), pay to have washing machine plumbing put in, pay to decorate the whole house which was a mess of holey, flaking bare plaster or to pay put flooring throughout the whole thing. i made those investments thinking well at least the rent is cheaper. now either this april or next april it won't be cheaper the same price could see me in a fully maintained, all mod cons house.
not sure if this has already been mentioned but i think if you were to break down the stats of rising rent prices a large proportion of it would be made up by housing associations rocketing up rents of social housing at record levels.
for those thinking that rent is really cheap i am obviously not in london. i live in a 2 bed semi and within 2 miles of here you can 3 bed houses for £495pcm. if my rent goes to £110 in april as i expect that means i'll be the same or more for my 2bed.
Where do you live Swallowed? Would love to know where you can get 3 bed for £495 always on the look out for a cheap place to move to the South is killing us
Housing market in the UK stinks. What worries me most is that, having been kicked out of life's reward systems, eg a home or a work pension, the younger generation are going to either stop work or leave the country.
The younger generation with any sense, that is. On the subject of housing, your rent is paid whether or not you work, so what's the point.
don't want to say where i live on here piggy. the 3bed £495 wouldn't be in the nicest part of town i admit - for another £100 it turns out you can get leafy terraced street in nice part of town with original floorboards and features.
though of course i'd have to find the money and energy to actually move.
It is ridiculous and we are storing up big problems for the future stability of this country if we allow the housing/rentals market to continue to be a means by which the older generation are shafting the young.
We urgently need reform of renting law to bring it into line with other European countries where it works better, and the government needs to stop throwing everything it's got at keeping the housing bubble inflated. A minority here is being pandered to and it does not benefit the nation as a whole.
And I say that as a home-owner (able to buy thanks to inheritance and parental help) with plenty of housing wealth in my extended family.
It'll be "interesting" to see what happens when the 60/70/80 year old homeowners get too infirm to live in big houses and start to sell them to pay for nursing care. That money won't go to inheritance, but into the care home industry and to local councils.
Maybe it'll happen over too long a period of time to make much of a difference.
It'll also be "interesting" to see what happens when you get a generation of infirm elderly who have nothing to sell to pay for care. In Europe I believe a lot of that cost passes down to next of kin. In Germany there's a scandal going on at the moment about elderly infirm being shipped off to care homes in Eastern Europe because it's cheaper.
(obv when I say "interesting" I mean in the sense of interesting times - may we not have to live in them..)
A cheer went up at the far end of the village green. It woke me from the daydream I was enjoying whilst gazing into the fire. The pot of soup hanging from the tripod would soon be ready, and myself and my family were hungry. That seemed less important now.
I stood up, and noticed the others around the campsite doing the same. We all looked toward where the cheer had come from. We knew what it meant. It was happening more frequently now, that last one was only 3 weeks ago.
I saw the family quite quickly this time, the wife was leading them through the campsite, weaving between the tents. Without exception the people on their route stood and applauded. The husband was red faced, and looked shocked. He kept turning his head, making sure his daughter was keeping up with them.
No more living outside for them. No more living in a tent. I was pleased for them, but still couldn't help but wonder when it would be our turn. The winter was just beginning, they were lucky with the timing.
The thought crossed my mind again, how crazy it was that it had come to this. It wasn't that long ago that the death of a parent was a sad event, not a cause for celebration. But now it was that family that were the lucky ones, finally moving into a REAL HOUSE of their own. Finally inheriting a home. Incredible.
The family had gone from the village green, and were racing down a side street towards their property. I watched the others sit back down again, many were attending their own soup pots hanging over their fires like I was. It was getting dark now and we all wanted some warmth inside us.
Not for the first time, I hoped for the day when all boomers would be gone, and we could start again, living indoors.
Just Imagine That.
1. reduce immigration. we can't house our current population so why increase it?
2. If you want to get rid of private landlords find other ways that they can save for their pensions. the current pension industry has had so much bad press and the costs are so high people don't see it as a good investment
Building over large swathes of greenbelt is a horrible thought. Developers should be made to build on brown field sites. Those large houses that people are talking about OAP's living in normally have large gardens as well - so lets build estates on them.
Something feeding the problem is that for some reason people seem to very firmly believe that they are entitled to have their property go endlessly up in value. We don't seem to have learned anything at all from the crashes.
I mean, a house is an investment like any other. Its value can go up OR down, and you just have to suck it up if you need to sell at a time when its value is down - don't pin all your financial planning on the assumption that it will go up in leaps and bounds.
You shouldn't really expect to get anything out of your house other than the historic long-term average value rise, which is about 2.4% a year in real terms.
Good blog post
I was a single parent when my DD was small, and by the time she was 5 we had lived in 4 different private rented houses (one of which was found unfit for habitation by the local council, though they did nothing to help us get out of there). It was awful, moving so often.
DP and I have given up on the idea of 'getting on the property ladder' as a bad job. We've chosen instead to live in a housing co-op which, though it has its own set of difficulties, gives us a secure tenancy for as long as we pay the rent.
We paid £1 to buy a share in our co-op and become shareholders of the company that owns our home. We then rent our accommodation at a fair rent (set at just below current LHA levels at the moment) and when the mortgage on the property is paid off, the rents will go down to cover just what is needed for repairs/insurance/council tax etc.
I totally agree with whoever it was upthread that said housing should not be something individuals see as a way of making a profit. Its a basic need! Secure and safe housing is everyone's right, its at the bottom of that Maslow's (?) pyramid.
I like the way trailer park/caravan living is being mooted as a possible solution. I have a lot of Traveller friends for whom that way of life is being made almost impossible, so maybe the economic situation will make it a more accepted lifestyle
Even the Daily Fail are coming round to the idea that converted vehicles make very good affordable homes
FairPhyllis, I agree. One reason why the expectation of rises is a problem is that it encourages people to continue living in large houses long after they need the space because even with the higher running costs, it makes financial sense for them to do so. Hence the normal process whereby older people move out and people with young families move in just hasn't been happening as it should.
The problem is only partly one of shortage of housing. It is also that the normal mechanisms that ensure the houses broadly end up with the people who need them are broken by the housing bubble. It is utterly insane. Families with children crammed into little flats, elderly people rattling around in big houses, and as long as prices are expected to go up the people with all the wasted space have no rational reason to move out so can't be blamed for not doing so.
Every time there's a new building of flats going up in Bromley, why are they "luxury"? I suppose, if they put "good-value, reasonably-priced housing for people who just want to buy something", it wouldn't sell. At least not here. Or would it?
Good-value, reasonably priced housing would go like hot cakes... to buy to letters.
queen where do you find out about such co-ops? Sounds fab.
MoreBeta, thanks for the explanation. I am still puzzled, though, because some of what you said seems to be a good thing to me. No-one wants more repossessions, surely.
And low interest rates are good for people with mortgages.
I suppose there are always winners and losers, whatever the government does. But I wish we were more interested in social justice in this country, and less inclined to demonise other sectors of society - who are often even worse off than ourselves.
And this baby boomer thing. Some of them worked the system and got rich - but we would all have done exactly the same things as they did, given half a chance. They (we) were a lucky generation - free education and healthcare, less crowded roads, fewer cars, more green spaces, more jobs - and more decent, family-sized council accommodation. So many of the important things in life. We can have that again, if we vote for people who think those things are important. On the other hand, if we vote for people who believe that rich people share what they've got and it will trickle down to the poorest of us in the end, we will wait for ever.
Btw, the vast majority of 55 - 75 -year-olds are not rich, and some are very scared indeed about their futures.
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