The housing crisis, a ticking bomb

I hadn't heard that about Germany but I do know the percentage of people renting is much higher than the UK. Tenants have a good security of tenure as long as they pay the rent as agreed.

Germany has also had very lttle house price inflation in the last 10 years.

Many people rent when they are young and middle aged before buying a piece of land in the country to build a house on.

With reference to the talk of other countries, As far as I am aware in Germany they have 100 year mortgages which makes the properties more affordable. The idea being that the house is passed onto family when the owner dies and the family continue to pay the mortgage. Not too sure how this would work over here though

child poverty and accidents

"For some reason British people like to live in houses with a garden instead of flats, as most other global urban families do. I dont know why this is. confused"

Because children need space to play. In some areas parks are full of broken glass, condoms, dog mess and antisocial youths.Transport to the seaside/countyside is expensive and not everyone can afford to run a car.Other active hobbies are expensive too.

Poor kids in flats in urban areas are cooped up and this isn't healthy. There are a lot of cars on residential streets now making them less safe places to play out. More poor children are killed in road accidents than affluent ones. Outside space would a necessary feature of decent housing in this country IMO. Can't speak for the urban landscape/situation in other countries as I don't have enough knowledge to make a comparison.

Agreed. There is not really enough protection for either landlords or tenants.

TBH, the mortgage industry cause part of the problem. They are very reluctant to lend on any property where a tenant has any right of tenure. They want an absolute right to kick a tenant out at a moments notice if the mortgage is not paid.

In my view tenants should be allowed to stay in a property until the end of their tenancy as long as they keep paying the rent to the mortgage company - even if the landlord defaulted. In fact, as a tenant, I would much prefer to be paying my rent to the mortgage company so I am sure the mortgage is beig paid by my rent and not just being kept by the landlord. That would give tenants and mortgage companies more security.

"they do have protection! They can evict them and keep the deposit."

The deposit is pretty cold comfort when a tenant does thousands of pounds worth of damage, and buggers off owing 6 months rent and having cost you large amounts in eviction costs.

beenbeta- they do have protection! They can evict them and keep the deposit.
Also re:council houses, there are long waiting lists because some people dont have access to the private sector (deposit/previous history/pets/DCs) and some people want security of tenure, which you get in the public but not private sector.

niceguy- you are right in that the solution is wage inflation to 'catch up' with house price inflation. I think that is inevitable, the question is 'how long will it take?'

Dreaming of sun- if tenants had more rights you wouldn't have 'no' landlords you'd have no 'rouge' landlords. But people should be encouraged to move out of oversized properties.

Paul88- I agree about getting rid of the London weightings. We need to decentralise the economy and be like almost every other country in the world which has different cities for different functions eg finance, politics, media, culture etc

Hogsback- The UK actually has less urban sprawl than USA eg if London had the urban sprawl of Los Angeles then it would stretch from Brighton to Cambridge! it is the restrictive planning laws that have caused this. Our 'green' belts aren't actually good for the environment as they mean people commute further to work.

For some reason British people like to live in houses with a garden instead of flats, as most other global urban families do. I dont know why this is.

hogsback - perhaps the cost of property is lower and the returns (rental) are better in those countries.

a tennant who redecorates is a joy. no way would i agree to subletting - you would have absolutely no control over who moved in.

we would stop letting anyway...obviously couldn't speak for other landlords

dreaminofsun utter nonsense. Tenants have far more rights in the US, Germany etc. they can even redecorate! and have pets! and sublet!

Those countries all have active rental markets with professional landlords and in fact it's far more normal to rent, and not seen as second-best as it here.

Having been a tenant for 25 years with private landlords I think that both tenants and landlords need more protection.

The current situation of typical 6 - 12 month shorthold tenancy agreements is rubbish but it is also bad that landlords have so little protection from tenants who fail to pay rent or trash their property.

Bottom line is that residential renting should be like commercial renting with a minimum 5 year term and the right to sublet if you need to leave early.

edwardo - if tennants had more rights you would have no landlords and no rental properties. its risky enough already and is not as lucrative as many people think - especially if you have a dodgy tennant who trashes the place or owes you rent.

why shouldn't a 20% deposit be seen as realistic? it's called saving your money and only buying a house when you can afford it. A practice in place for centuries. What's really not realistic was for banks to ever have offered 100% or 125% mortgages that relied on house price rises.

Thanks for the link to the Shelter page - very interesting, and I think they make some good points, particularly that the new homes need to be desirable.

We've got an application to build a group of affordable houses near our village at the moment - sandwiched into a strip of land between the local tip, with lorries in and out all day, and the main road. Now, who on earth is going to want to want one of those houses? Really unfair for the potential inhabitants. And, no doubt, they'll still be costing £220k or so, which isn't at all affordable.

i really think the way forward is to legislate better rights for tennants, this would give renters the same security of tenure as homeowners, it would weed out all "bad" landlords and free up some of the more affordable properties for 1st time buyers.

in addition its not realistic for banks to be requesting 20%+ deposits from home owners particularly 1st time buyers.

the government has to look after citizens more and bankers/landlords a lot less!!

@dreamingofsun

"i think things should be done to encourage people to locate to areas where the population density is currently lower. and build some housing there if required. that way its not all concentrated in the south with the corresponding pressure on the infrastructure"

I have an idea - lets get rid of 'london weightings' where people get paid more for the same job in the SE of england. This has just fed the market and caused prices to rise faster - vicious circle in action. Of course all teachers / nurses / police officers will have to move away as they won't be able to afford to live there, and then, when the schools have no teachers all the parents will move away - somewhere along the way rents and house prices will drop enough to become affordable again ...

more seriously: those people who bought at the top of the market - what a nightmare. Going bankrupt (or the less extreme options that are available now) is one way out but not an attractive one. No answer really but keeping the housing bubble is not a good option either.

@ chil1234

the thing is there is a big difference between a "stagnant" market and "dropping" prices. and yes as stated in my previous post i do need to move my house is tiny, was bought when i was just married and was all i could afford. i now have 1 DC and another on the way.
unfortunately due to the current "stagnant" market my house won't sell and i'm in negative equity despite having a deposit when i bought.

what people are suggesting on here is to raise the interest rate to bring prices down, this would mean my house payments would no longer be affordable and i would still be in huge debt if it were sold/repossessed as the prices are driven down, i know i'm not the only one in this situation, basically every 1st time buyer who bought in 2006/2007 is in the same circs. as a result we'll all be homeless as the queue for inadequate social housing gets bigger and bigger.

There is another crisis brewing in the Housing Association sector.

While things were booming many Housing Associations sold some of their stock to developers every few years to fund the shortfall between the rents they were bringing in and the maintenence costs plus interest payments on loans they had taken out to fund the portfolio of properties.

Now there is a pubic spending squeeze and house prices are falling many Housing Associations are desperately short of cash and some will go bankrupt. They will be taken over by private companies and inevitably rents will rise to market levels.

It always annoys me when I see discussions about waiting lists for council houses. Well yes. If I was stood in the street giving away gold bars I'm sure a queue would form quite quickly. If council houses had market rent levels then the waiting lists would disappear.

The only solution to our housing crisis is for house prices and rents to fall dramatically to affordable levels. The Govt should let the market work. Housing Benefit has pushed up private rents in some areas. Remove Govt support and tax houses properly as investment assets and prices will fall and people will be able to afford to rent or buy them.

Reforming private rental agreements to give security to tenants would also be necesary so people did not have to buy just to get security of tenure.

The Bank of England and Govt is terrified of letting house prices fall though as it would ruin the banks again and trigger another financial crisis.

The thing is...what is affordable housing?

The market is fluid and prices go up as demand does. It comes down when times are hard. Ergo the prices are what people can afford....therefore by its very definition its affordable!

Now ok i accept that in many parts of the country there will be people who cannot afford to buy a house but seeking to push prices down to make houses "affordable" is a terrible idea.

Firstly affordable to whom? The single guy on minimum wage? A dual income family? Who defines affordable?

Secondly if you push prices down, market confidence goes down. People stop spending and thus you end up with another recession!

What we need is more stable prices. The best case scenario is for the next few years for the market to be flat so incomes can catch up with prices.

"unfortunately there will be many many people financially crippled if house prices reduce to levels many of you are talking about."

I have to correct you. You're not 'crippled' if house-prices fall. You can't sell and cover your debt in a negative equity situation, admittedly, but you have accommodation and you can keep up the payments. You are in a better position to people who are homeless.

I bought a house in 1990 just before prices crashed that time around. It's not a new thing. Five years of stagnation later prices started to rise again, and there's no reason why that wouldn't happen this time because the housing stock is still relatively short. Unless you have some urgent need to move house or you can't afford to pay the mortgage any more, it's really not a disaster.

Interesting information on the housing crisis and building new homes.

england.shelter.org.uk/campaigns/housing_issues/building_more_homes

Just thought I'd share this for those that want to know more.

unfortunately there will be many many people financially crippled if house prices reduce to levels many of you are talking about.

i bought my house (which is tiny) and far too small for my family for £115000 in 2007 immediatly before the market crashed unfortunately i'm already stuck as i'm in negative equity already.

i did not buy above my means i bought what i could afford at the time, which was tiny and 6 miles from the nearest town, and as a first time buyer me and DH didn't have a huge deposit (5%) if the prices drop any more what do you suggest for the thousands (i'm guessing) of families in my situation?

i don't think that 'just building more houses' is the answer. you could build over the whole of the south and i bet there would still be people asking for more housing.

i think things should be done to encourage people to locate to areas where the population density is currently lower. and build some housing there if required. that way its not all concentrated in the south with the corresponding pressure on the infrastructure.

i also think that ways of encouraging people to live in the size of property their require should be used, eg why do single people get a council tax discount, especially those living in large houses?

We need to build at much higher density in cities. We have one of the highest national population densities but insist on low densities in our cities. Compare London to Paris or NYC. Low density urban housing simply encourage urban sprawl, impacts on agricultural land and increases commuting distances while doing nothing to improve the housing situation.