Guest blog: Shelter's Chief Exec on the rise of unaffordable housing

[JessMumsnet]

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.

I know a lot about the London renting market. I am not sure London is ever muchlike the rest of the country and there are a lot of people who want to rent not buy. I also (just) remember the 1970s rent act, when tenants could stay for life on sums like £10 a year and the result? There were virtually no properties to rent in the private sector anywhere. It really really hard to find anywhere. It was a really thing to remove rent control and let the market decide.

Yes, people can move to cheaper areas. As I said my grandmother's house (not sure if she owned or rented it) costs £50k today.

On the comparisons now and then... Mine above and this

.e.: 1997 NQ £35,000 2011 £59,000
Flat £95,000 Now £275,000
Ratio 2.7 Ratio 4.6

Depends where you live. In Zone 5 (outer London)
1984 7500 head of dept teacher and my salary the same. House £40k
2013 those houses cost £275,000 so about 7x increase in the house price. BUT remember interest rates are about half what they were so people can borrow twice as much for the same cost and basic rate taxes are lower. The salary we are looking at is £40k now which has gone up at exactly the same rate. I was asked to write an article comparing then and now and it was fascinating. All this whinging about how hard it is now. It is always hard for everyone everywhere.

In those days very hard to get any kind of loan even if you'd saved with the same lender for 15 years. These days harder to get a 90% loan but not impossible, they were available to my daughters when we checked and there were no interest only deals at all around in the past and now there are.
Also the lenders are more careful at looking at your expenses now - childcare costs (buy before you breed). They did not used to be. They are being cautious to reflect the difficult market.

The biggest issue has always been raising a deposit. Many people have never been able to afford in British history. It is much easier now than it was in say 1920 to buy your own home in the UK. There are also properties to rent available in a free market. I am seeing it on both sides as one child is letting out and had also been a tenant.

I don't know what fridge's and partner's joint income is but I would be surprised if there were nowhere in London at all they could buy - there are flats near me from £165,000. 90% loan = £148,500 divided by the traditional 3.5 joint incomes perhaps means you'd need £20k income each to buy in outer London and be able to raise £8k each for the deposit. Of couse you h ave to start small and outer London and move up over time. Many people are too snobby to slum it like those of us who have managed to get ont he ladder over the years have been able to tolerate. Is it about people being spoiled and expecting that wonderful perfect new home rather than the rotting old tiny thing in the grotty area that you do up?

agree the situation is crazy and (surely?) unsustainable.

the cost of housing is completely disproportionate to the average income. for example, in 2001, i was 21 and was earning 15k. i was renting a nice (although small) new build city centre apartment for £330 a month, leaving me around £700 for bills, food and general living. i was quite well off really. yet i have friends in their 20's who are still earning 15k and yet they are lucky to find even a scummy house-share for that money. what chance have they got in life? and what chance will our DCs have?

something needs to be done, no idea what to be honest :(

My £95k bought me a small 2 bed flat five minutes from Liverpool Street !! Now, where in London would I get a 2 bed flat (900 sq ft) for £95k. Interested, have been out of London for 8 years, so no real idea.

We had a mortgage many moons ago.When dp made redundant we moved to Ireland.Have been back in UK 3 years now and thank God we rent through an estate.We had considered renting in a village where ds2 goes to school and I work and where ds1 can get bus to school to save £300+ a month in petrol but we cannot give up the security we have where we are now.We cannot risk a house being for sale and the insecurity.

badmiss - so why not encourage jobs in your area. Ok so they might be slightly lower pay rates than london, but your living costs are lower. surely that helps everyone - you to live where you do and the people in the south who are grossly overcrowded?

dreamingofsun Back in the real world, how? I can't afford to buy a house, let alone start a business or an employment scheme. In an ideal world, that would be a fantastic solution, but in the real world, not going to happen. I have been turned down for every business idea I've had, if I can't get the credit for a mortgage, they won't give me credit for a business idea either... because I have nothing (a house) to stand as security. It's a vicious circle.

If you have no money, there is no way of generating it without capital.

Is it about people being spoiled and expecting that wonderful perfect new home rather than the rotting old tiny thing in the grotty area that you do up?

No it's about unaffordable housing as part of an asset bubble formed in part by the deregulation of the banks which led to irresponsible lending and borrowing causing housing to approximately triple over a period of just ten years during which there was negligible wage inflation. This bubble caused the inevitable crunch in 2008 causing insolvency of the banks leading to tax payer funded bailouts and artificially low interest rates down to a level not seen for 300 years causing a depression from which the uk has yet to recover. Its been covered in a few of the papers.

Oh no wait, its that an entire generation all have flat screen tvs, silly me.

badmiss - i'm not talking about you generating employment. If the minimum wage was varied - depending on the local cost of living then it might encourage companies to establish away from the south. i'm sure there's probably other ideas like this for people in the know. there are too many people in the south....lets think about moving them and the jobs north - especially lower paid ones since the cost of living in the north is so much lower.

Our economy and unemployment will not go back to as was before 2007 until house prices unfortunately crash. We are not as a country able to grow wages until we meet the levels of eastern countries wages. Everyone wants cheap goods and manufacturers send their production to China and other lower wage economies. This in turn costs jobs. Banks may well go to the wall when interest rates do rise a few percentage points . Only then will there be a chance of property being at an affordable level for many. Why cant the government see we are walking on a knife edge, if they started a massive home building project now it might save the day. The countries debt levels are horrendous and it only needs a shock to our credibility and high inflation and it may be upon us. They did not see the 2007 banking crisis , yet many ordinary folk were posting on forums and telling people to get into gold as they expected the economy to implode. We came to within an hour of the |ATMs being shut down . Here we are 5 years later and things are still deteriorating.
I can?t believe how ineffective and arrogant the last two governments have been, in the private sector they would have been sacked as incompetent

Then they came for the low paid in the south and sent them north lol
They would have to pay about £450 for anything reasonable to rent.
On minimum wage both would need full time employment , and they may stand a chance of buying after saving a bit of a deposit. You can buy a three bed up here for 50k and a better area would be just over 100k
I know someone who is buying a nice house near Cleethorpes for 78k
Prices have gone down maybe 12% over the last year. At auction they go for small change sometimes

I bought in Carlisle in 1991 for £32k (on n £11k salary) - just under 3X but was nervous even then of losing my job - and having a mortgage so made sure I bought a Victorian terrace with a seperate front room. That meant I could rent out both one of the two bedrooms and the front lounge and continue to pay the mortgage if the worst happened.

Although I have moved on jobswise I know the payscales and reckon staying put I would now be on £25k - and the same house would be £83k ish (STILL just under 3X) assuming they are actually selling at the moment.

Thought that might be an interesting comparison......however I don't know the jobs market in Carlisel - I suspect it isn't strong.

dreaming people have mentioned that repeatedly and had the obvious fact that the cheaper houses areas are cheaper because the wages are lower and that's if you can even find a job.

i call the job pages the 14k pages here because that seems to be the standard wage employers are offering whilst also wanting qualifications, experience and quite often your own car.

and of course there were luckier times ffs. property is all about luck - if you are in the position to buy during a slump period you get a cheap house and if you are able to stay in it and not have a disaster like me of needing to sell in a recession then all you do is sit it out and pay your mortgage and the prices will go up again and in any case you bought in a slump so the prices don't fall to below what you paid anyway.

if say my boyfriend and i had stayed together and in the house we bought in i think 95 for £37k - that wouldn't have been worth less than £120k even in the worst of this last slump. it's now back at around £130-£135k. we could not have lost! we could at the time have borrowed up to 70k and still been within 3.5x his salary (i was studying and working part time) but we didn't need or have to - we got a lovely townhouse for 37k and didn't stretch ourselves. our mortgage was low enough that we could save plentifully and/or have a nice lifestyle. if we'd still been in there when this recession hit we'd have had the luxury of 0.5% interest rates and paying off huge chunks of the capital for years.

it's not about some golden long era it's about luck of timing. for some these slumps are a godsend they are in a position to buy and can snap up cheap housing.
i would say that when we bought that house a lot of houses of the first time buyer kind got snapped up by btl landlords at that time who've made an absolute fortune. anyone with a bit of capital and credit rating could make their future fortune.

the btl'ers who tried it later when prices were high will have made nowhere near as much but the reality is they don't have to - as long as someone else is paying the mortgage they have a golden goose for the future should they really be expecting to make a fortune in the here and now too out of it? it is greed. i don't feel sorry for people who are not making a fortune out of renting out a second house - even if they only break even over the first 10 years they're sitting on a future fortune of an owned home they never paid for.

also it is if you are prepared to take risks on the property market. A couple of people I know have moved up the ladder to really nice large properties in affluent areas. Their old house is let as they couldn't get the asking price so they must have huge loans and take a gamble. It might have tennants but then again it isn't guaranteed.

Myself and DH are Mr and Mrs cautious (as are my DP's and my In laws). People borrow against their own home and take out another mortgage whilst already having one in the equity of their own home. They are taking a risk and could end up with nothing.

Sometimes it is luck and judgement and being prepared to take a risk. People don't necessarily have any capital or maybe a small amount. They just borrow against their original house.

Also it is much easier to trade up in a slack market. we lost on our first house but got the house we are in now for less than if it had been a seller's market. would have loved to move again but couldn't and watched others leave the area. have extended instead but will move eventually.

I agree with the 'luck theory' or timing, anyway.

I have a friend who owns in excess of 20 houses - ftb properties - which are let out for a healthy income, she bought in early 2000's. Another who sold in London after the prices went up - she is now mortgage free in massive house in another county, like many others who have done the same thing.

Xenia - Many renters are already 'slumming it', not because they did not get on 'the ladder' - maybe lost their jobs or had a marriage breakdown (which can be caused by 'slumming it'). Your children only grow up once and in sub-standard housing their chances of an accident in the home are higher. This is not a time to 'slum it' and its right to fight for better housing.

When we were renting (with children) we were forced to move by landlord selling up 3 times. Its just not secure and you look at all the DIY programmes/adverts (on your massive flat screen!) and know they're for the 'owners' not you and you can't do your place up how you want it - not even to be safer for your children.

Squatting is/was more secure than renting sometimes! It was your own 'space'!

Landlords used to let you do what you wanted, even the private - it was the households home, not the landlords.
Now they don't. They're over possessive and its created a homeslessness bug thats affecting more and more people. Yes OK when young and single, not OK when you have responsibilities and family.

If landlords want to make money on property they need to stop wanting it all their own way and be properly regulated over rents, longer lets for families and reasonable freedom for families to improve their property as a homeowner would do.

This is an area where Shelter could get involved and make a real difference.

So frustrating, and looks like Government plans are to increase inheritance tax thresholds to help boost social care provision in old age.

Really interesting post. Scary what the situation would be if food had risen as sharply as house prices.

I can see it from both sides. We are renting at the moment (having sold our house and our purchase falling through). We are lucky in that we will be able to buy another house when the right one comes along. I also have two investment properties, which I rent out, so it is interesting to see things from a tenant's point of view (hopefully I will be a better landlord because of it).

Landlords will only invest if they can get a "return" on their capital and know they will be able to get their property back in a decent state. As landlord I have had tenant trash house and go AWOL, so it's a real concern (I like to invest in my properties, making them energy efficient etc and it's a bit of a bumer when someone runs off with your radiators). As tenant, I know how frustrating it is to be on a short tenancy with no security and not able to make improvements (I'm experiencing the joys of single glazed windows and damp at the moment).

TBH I don't know what the answer is and feel desperately for anyone trapped in poor housing. I suspect, at the same time, that lack of council housing and funding going into social sector has something to do with it. I know on the continent things are very different, with the rented sector enjoying good returns, in some countries, and tenants longer and more secure leases. I will defintely be checking out the stuff on Shelters site and some of your blogs.

sarah - thats an encouraging post. I would say its obvious that longer more stable tenancies mean families taking more card of their home (your house). Six months is a joke if you've no where else to go.

Oops - chipatti's burning - such an interesting talk thread!

I meant 'care of their home'.
Why do things 'for tenants'? They are not house guests, you're not a hostess - if that makes sense.

Why do things 'for tenants'? They are not house guests, you're not a hostess

This is why there is such friction between tenants and 'owners'. Its unlike any other business, and yet any old fool could get a mortgage for a buy to let. Most of these clowns are not even remotely business people, and yet they were given the power in the form of credit to own other peoples homes. They are very very average people, they should not be in business at all, especially not a business where their low intelligence and selfishness has such a profound affect on others every day lives.

A terrible situation.

monday - perhaps we should just restrict BTL to landlords with degrees then - would that make you happy?

diamond - not sure i understand why a longer tenancy woujld mean they take more care of a home. It would still mean our ex tennant who paid no rent wouldn't pay any, just for a longer period of time. Or the one that releaved his anger by putting his fist through things - there would just be fewer undamaged doors.

Parliament A clearing house for the rich
Trickle down didn?t work

He who dies with the most toy?s wins

Democracy ain?t working

no not degrees but i do think inspections, licenses, legislation, rent control etc would narrow them down a bit. those who couldn't live up to those would need to sell up to private buyers or btl landlords capable of operating at those standards and margins.

roneik try this: recession - a clearing house for the rich.

they love these times - they get to buy up more and more cheaper than ever.

swallowed - that all sounds very expensive. we already pay ground rent, a maintenance charge, mortgage, an annual charge to the leaseholder to have our tennant 'vetted' and not sure if it still exists but an efficiency review. then there's periods between tennants and not insignificant damage and non payment caused by bad tennants.

if you get a tennant trashing the place or refusing to pay rent it can take months to remove them already.

yes i know you don't care - but our current tennant has been with us for about 5 years or so. the end result of what you suggest is that she would be homeless because we would sell up