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Immigration is the hot topic in the news today, after the Office of National Statistics (ONS) announced it was revising it’s long-term immigration figures upwards by a third. For the past few years they had assumed that net migration figures – the difference between those leaving and those arriving – was 145,000 a year for the next two decades. However the new figures appear to be closer to 190,000 a year. The chairman of Migrationwatch, Sir Andrew Green said: ‘housing demand simply for new immigrants will increase from 200 a day to 260 a day for the next 20 years’. He added the impact would be even greater if children of new arrivals were included. Data from the Department for Children, Schools and Families also released yesterday show the change in demographics across the country – figures indicate that nationally 21.9 per cent of primary school children are now from an ethnic minority background.

Yvette Cooper told a meeting at the Labour Party conference that the government was prepared to ‘look into’ the issue of housing associations’ chief executive salaries. A survey by Inside Housing last week showed that chief executives received on average, a pay increase of 10 per cent over the last year, far outstripping front line staff. Shelter’s Chief Executive, Adam Sampson, warned that soaring salaries of senior housing association managers are damaging charities: ‘It becomes increasingly difficult to access good quality senior managers because if they were in the housing association sector they would get paid twice what we pay them’.

The government has also been urged to raise the rent thresholds on assured shorthold tenancies (ASTs) to safeguard private sector tenants in the face of spiralling rents. Landlords and lenders have warned that rent levels are increasingly breaching the £481 p/week mark – the maximum level for ASTs. Landlords not covered by ASTs do not have to sign up to the tenancy deposit schemes.

Boris Johnson was last night named as Conservative candidate for the London mayoral election after winning an overwhelming majority (79 per cent of the vote). He has promised to address the housing shortage in the capital.

And finally, a housebuilding company, Ballymore, has announced plans to build Europe’s tallest residential skyscraper in Manchester. The 60-storey structure, to include 700 flats, is being built next to Piccadilly and the company are believed to have spent £50 million for the site, and up to £250 million on construction.

Nationwide’s house price figures for September, released today, show house prices rose by 0.7 per cent in the month, defying rising mortgage costs and recent financial insecurities. Despite the increase, house price inflation over the last 12 months came down from 9.6 per cent to 9 per cent. Longer term, Nationwide said it expected there to be a slowdown in the growth of house prices.

The Financial Services Authority (FSA) released details of their investigation into payment protection insurance (PPI) and said that misselling was plaguing the industry. It accused some firms of duping consumers into buying the cover, failing to give clear information about the cost, or what the policy actually covered. As lenders add the cost of the cover to the loan, customers end up paying interest on the total figure, which can add up to a third to the cost – with some banks making as much as 70 per cent profit from selling them. However other critics of the system such as CAB and Which? accused the FSA of failing to quickly crackdown on the misselling during their two year investigation. A representative from Which? said: ‘We want the FSA to name and shame offending lenders so that people are aware of which companies are breaching the rules’.

In the States, the Securities and Exchange Commission is launching its own inquiry into whether credit rating agencies such as Moody’s and Standard & Poor’s were ‘unduly influenced’ by fees from Wall Street banks into awarding positive ratings to mortgage-backed securities. According to industry figures, about 25 per cent of sub-prime mortgages issued over the last two years in America were given a top AAA mark. Senior officials from the agencies are to appear before a Senate committee.

Ken Livingstone, London Mayor, used a keynote speech at the Labour Party conference in Bournemouth on Wednesday to accuse the Tory and Liberal-Democrat councils of blocking housing development in the capital because they fear they it will cost them votes in the May 2008 borough elections. Mr Livingstone singled out Southwark borough council which he said was dragging its feet over a housing development by not responding to planning applications and refusing to give up a share of council land. He plans on imposing his first borough council compulsory purchase order to push the development through: ‘Tory and Lib-Dem run councils are blocking the development of housing because they think it will alter the political complexion of their wards’.

And today, Mr Livingstone also outlined measures to increase the supply and choice of accessible homes in London. Two reports have been announced: one setting out targets of at least 10 per cent of new homes being either wheelchair accessible or easily adaptable for wheelchair use, and the other setting out what social landlords and other stakeholders need to do to ensure that deaf and disabled Londoners have information, access to and choice in housing to meet their specific needs.

July/August 2007

This issue’s cover stories:

No way out

Age special: how young and old are caught in the housing trap

Born homeless

Eight care homes before I was sixteen, but I was lucky, says Phil Frampton

No brainer

Poor housing equals poor prospects for British kids, Ruth Rendell warns

Blue build

The Tories should make new housing a key election pledge, says William Rees-Mogg

Dreams deferred

Guest-editor Simone Fergus on how her ambitions to get on in life are on hold, because she’s caught in the benefits trap

Evicted

A film about families being thrown out of their homes won a BAFTA this year. But what happened next?

On the treadmill

Young professionals face a lifetime of bonded labour, says Dr John Bone

Special focus: housing in an ageing society

Why this should be a government priority

So solid Crew

The latest on Debbie Crew’s campaign to stop landlords evicting tenants who complain

Rule and divide

Government should stop promoting split families, says Patricia Morgan

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Buy-to-let landlords could trigger a house price crash as increasing numbers are selling their properties according to a report in the Observer. Fearful of higher interest rates and a fall in prices, landlords are starting to panic sell. For many landlords the rental yield is very low – 4 per cent and lower is now typical in London and the south east – while the top buy-to-let mortgages are charging between 5 and 5.8 per cent. A spokesperson from the Royal Institution of Chartered Surveyors (RICS) said that smaller landlords, those with two or three properties, are most vulnerable. These smaller landlords make up 55 per cent of landlords, while the ‘professionals’ with more than 10 properties own 90 per cent of the buy-to-let stock in England and Wales.

Thousands of homebuyers have already abandoned plans to move house after the Northern Rock crisis last week. Estate agents are reporting that internet traffic to house buying sites is down a quarter over the past 10 days, as is the number of people entering their shops.

However it’s not so tough at the top. Sales of million pound properties have trebled in the past five years to 88,000 homes, according to figures by Halifax. Most top end properties were concentrated in London, but two of the biggest hotspots outside the capital were Cobham, Surrey, near to where Chelsea Football Club is building its new training grounds, and in the Cheshire districts. However Savills, the property agent, expects minimal price increases at best, and more likely falls in prices, in central London as weaker financial markets and fears over City bonuses and job security take their toll.

Cabinet husband-and-wife team, Ed Balls and Yvette Cooper have been accused of exploiting Commons expenses by registering their four-bedroom property in North London as their ‘second’ home which entitles them to claim allowances of up to £44,000 a year to subsidise their mortgage. Their other property, in Yorkshire, which they used to call their second home is now their main residence. A Liberal-Democrat spokesperson said ‘It is clearly advantageous for them to maintain that their more expensive home is their second home… They may not have broken the rules absolutely, but they have clearly broken their spirit’.

And finally, salaries of housing association executives have soared by an average of 10 per cent last year, according to an Inside Housing report, ignoring the Housing Corporation’s caution that huge increases could ‘detach them from the communities they serve’. In top place is the chief executive from Places for People whose salary was £257,928. In comparison, Unison, the union representing many of the front line staff, say that staff received salary increases of around 3 or 4 per cent.

Mervyn King, governor of the Bank of England has come under fire from a Treasury select committee for the Bank’s actions in the run up to the Northern Rock crisis and its management since. King blames four pieces of legislation which restricted the bank’s ability to deal with the four-day run on Northern Rock, which cost £2 billion in withdrawals. The Bank of England yesterday decided to pump £10 billion into the money market, just a week after the governor had said it would not. It has also emerged that the Financial Services Authority (FSA) has been monitoring Northern Rock since 9 August after the US Federal Reserve and European Central Bank both injected cash into the banking system.

Despite the extra £10 billion put into the money market, mortgage experts are warning that a quarter of a million homeowners face soaring repayments and possible repossession as rates for sub-prime borrowers in the UK will reach levels of more than 10 per cent when their current deals end. Stricter new borrowing rules will prevent homeowners with the worst credit rates from remortgaging, making them susceptible to more expensive variable rates.

However Abbey, Britain’s third biggest mortgage lender, was accused of fuelling the debt crisis as it launched a new home loan worth up to 125 per cent of the property’s sale price. The loan is structured so that a buyer can borrow 100 per cent of the value of the property, plus a further £25,000, in totally secured loans. It is aimed at first time buyers, but critics have highlighted that borrowers could lose their homes for missing a payment even on the portion of the loan beyond the property’s value. The Abbey defended its decision insisting that it would be useful for buyers who needed extra cash to furnish a property.

Ken Livingstone, Mayor of London, has set out his plans after being passed control of London’s £1 billion housing and planning budget. He announced on Tuesday that he wants to build 50,000 new affordable homes in London over the next three years. To do this it is expected that he will force 50 per cent of all new schemes to be set aside for affordable housing, and will increase the target for social rented housing of three or more bedrooms from 35 to 40 per cent of the overall supply.

House prices across most of Western Europe have stalled or begun to fall as borrowing costs increase and a fear of over supply take their toll, according to research by Knight Frank. The German market has been hardest hit, as an over supply of property has reduced house price inflation to a national average by 6.9 per cent. Globally, house prices rose by 7.8 per cent for the year to June, a slow down from 9 and 9.7 per cent over the previous three quarters – with Brazil, India and China likely to see big rises in the coming year. Latvia lead with house inflation of 37.7 per cent.

The Liberal Democrats are backing a zero-carbon Britain. In an announcement made on the opening day of the conference, the Lib-Dems have positioned themselves as the first political party to ‘tackle global emissions from every part of our economy: from transport, electricity generation, housing, offices and factories’. Among the proposals, the Lib-Dems plan to include a ban on all petrol cars by 2040, eradication of nuclear power, replacing council tax with a local income tax, encouraging green mortgages, building a high speed rail network, charging lorries to use roads, and maintaining airport levels at their present level. They are also planning to tackle poverty by reforming the tax credit systems and increasing child benefit by £5 per family per week.

The Commission for Racial Equality (CRE) which is being wound up this month after nearly 30 years, has made a plea to the government to root out inequality and encourage active civic participation by people from all backgrounds, otherwise Britain will remain a place of ‘inequality, exclusion and isolation’. Its legacy, due to be delivered tomorrow in a report ’A Lot Done, A Lot To Do, Our Vision for an Integrated Britain’, includes recommendations for greater discussion on identity and citizenship in schools, an emphasis to rid prisons of institutional discrimination and funding mechanisms for local authorities undergoing rapid population changes. The CRE believes that segregation – residential, social and in the workplace – is growing, and political and religious extremism is on the rise.

According to information commissioned by the Trades Union Congress, (TUC), migrants already live in sub-standard, dirty and cramped accommodation, provided for by their employer. The research discovered that living in employer’s accommodation makes it difficult to refuse to work extra hours. Conditions in rural areas were worse as there were few alternatives in accommodation. Migrants complained that they were being moved from one place to another and of ‘hot bedding’ when people were only given access to accommodation in shifts. TUC general secretary Brendan Barber compared the use of migrant labour to slavery and called for legal action to be taken against employers who exploited migrants.

Although the Chancellor assured customers that their money was safe and provided a cash injection of funds for the beleaguered Northern Rock, panic withdrawals have lead to nearly £2 billion pounds being withdrawn from accounts since Thursday’s announcement. Yesterday, the bank’s share prices plunged nearly 40 per cent. But Northern Rock wasn’t the only one feeling the credit pinch - Alliance and Leicester denied rumours that it too had asked the Bank of England for an emergency credit line, and saw its share prices drop by 31.3 per cent before rallying slightly. Property stock and housebuilders were also hard hit – British Land was down 5.3 per cent, while Barratt Developments lost 7.3 per cent. The Bank of England also promised a £4.4 billion injection into the money market to bring down overnight lending rates back down to 5.8 per cent from their 6-year high.

The Royal Institution of Chartered Surveyors (RICS) has released a report today showing that house prices fell last month for the first time in nearly two years. Demand is also falling, with the number of new buyer inquiries declining for the ninth consecutive month and at the fastest pace since August 2004. The largest falls were in West Midlands, North West and East Anglia, although in London, prices are still going up. The number of four-bedroom homes on the market has also declined by 51 per cent on a year ago, as the effect of Hips kicks in.

Councils in London are furious that the latest official immigration figures from the Office for National Statistics (ONS) do not include at least a further 24,000 people, resulting in a shortfall of £18 million in their funding. Westminster City Council has published research indicating that at least 11,000 short-term migrants and 13,000 illegal migrants are living in the borough at any one time, whereas the figures from ONS have shown a reduction of 15,500 in their number. As local councils are allocated money on the basis of the number of residents, at least 25 councils along with Westminster CC are attending a meeting today and are expected to call on the government to address the shortfall the councils face and to hold up their hands and admit they have ‘lost count’ of the number of migrants.

In an interview with the Daily Telegraph, the chancellor Alistair Darling, accused banks of lending recklessly and called on them to return to ‘good old-fashioned banking’, as consumer debt spirals to record levels with 1.7 million people affected according to Citizens Advice. Darling believes that banks need to know who they are lending to, how much they’re lending and what the risk is, saying that: ‘Institutions have in some cases been prepared to lend to people without checking if they were ever going to repay it.’ But he shied away from suggestions that the Government might intervene with tighter regulations.

Responding to this, the Bank of England governor, Mervyn King, said that the cost of borrowing was likely to rise whatever the Bank did with the official base rate. Mr King attacked the banks himself for their ‘risky and reckless lending’, and warned ‘the new element introduced by the recent turmoil is that effective borrowing rates facing households and companies will rise somewhat’. The Bank of England has no intention of bailing out irresponsible bankers, however, believing that it would only encourage them to make further speculative and risky decisions, although the Bank would still protect the public from the turmoil by ‘continuing to maintain economic stability’.

ROOF’s story into the link between US sub prime market and UK lenders (Raging Bull, May 2007) will be the focus of a File on Four investigation on lending due to be aired on Radio 4 on Tuesday 25 September. Subscribe to ROOF today and save 20% on the annual price. Get your own copy of ROOF for £35 or an organisational subscription for £64.

The Council of Mortgage Lenders (CML) revealed yesterday, a 9 per cent fall in the number of home loans taken out in July, from the same month last year – 93,700 compared to 103,000. Even on a month-by-month basis the figures drops by more than 5 per cent. The number of mortgages taken out by first time buyers fell even faster, down by 12 per cent from July 2006. First time buyers also have to borrow almost 3.4 times their gross annual salary, compared to 3.23 a year ago – paying out just under 20 per cent of their salary in interest repayments (July 2006: 16.6 per cent). The CML tried to play down the figures, saying that this was the third year in a row that a fall in lending has occurred between June and July.

But further evidence that a slowdown in the market is inevitable comes with figures showing that borrowing rates for buyers rose sharply in August. Whilst the Bank of England’s official rate remains at 5.75 per cent, millions of households face an increase in their mortgage rate of almost a quarter per cent to their highest rates since the end of 1998. The standard variable rate (SVR) – one of the most popular types of mortgages, rose to 7.69 per cent. The Abbey has said that it be the first high street bank to raise rates as a result, with Standard Life saying it will follow suit.

Meanwhile the Conservative Party has released details of a quality of life report due tomorrow. A proposal entitled Localhold has the Tories promising to stop rural villages becoming the preserve of the ‘middle class and middle aged’ by offering incentives for landowners to provide land for development on the guarantee that it is only offered to local people and families. The chair of the commission coming up with the proposal, John Gummer, is also planning on suggesting that more dense housing in inner cities is needed – not just more affordable housing, but also those worth more so that people can move up the scale as required, releasing the affordable options for those further down the property ladder.

This hasn’t stopped a group of leading environmental organisations from accusing the Labour party, Tories and Lib-Dems of falling short in their responses to the green agenda. Nine environmental organisations, representing over 5 million supporters, today published ’the Green Standard’ an assessment on the three main political parties. They found the Lib Dems faired best as they offer the ‘strongest set of policies on climate change, green taxations and green living.’ The Labour party fell down on its renewables and emission targets, while the Conservatives faced the most challenging problems given the ‘diverging views’ with the party. All parties failed in giving sufficient attention to policies to protect and enhance the countryside and wildlife. The standards were based on six tests in climate change – both UK and international; green living; natural environment; planning; and environmental tax and subsidies.

According to the Government’s own figures, released yesterday, house price inflation increased by 2 per cent during July, taking the annual figure to 12.4 per cent – the highest level since March 2005. The increase compares with other house price indexes reported in Roof recently, such as Halifax and Nationwide Building Society, which recorded increases of 0.4 and 0.6 per cent respectively, despite six interest rate rises in the past year. It must be noted that CLG figures are a month behind the other house price indexes.

It’s not easy being a renter either, as the Royal Institution of Chartered Surveyors (RICS) shows that rents on residential property in the UK for the second quarter of the year are rising at record levels. Buy to let investors and increasing tenant demand are being blamed for pushing rents up to their highest ever level. A balance of surveyors reporting rises in rents over those reporting falls came in at 39 per cent, up from 20 per cent in the first quarter, while the balance reporting a rise in tenant demand was 29 per cent up from 15 per cent. New landlord instructions (an indicator of buy to let activity) showed that 20 per cent more surveyors reported a rise than a fall, up from 8 per cent the previous quarter.

Citizens Advice has also warned that 1.7 million households have inquired about help with mounting debts in the past year to April. The record number is a 20 per cent increase on the last year, and debt caseload now makes up a third of the workload. Most inquiries dealt with credit and store cards, but there has been a sharp rise in problems with day-to-day living expenses, such as gas and electricity arrears and council tax problems. The total debt by consumers stands at £1,345.6 billion, exceeding GDP at £1,330 billion.

The Financial Services Authority (FSA) tried to calm fears about the impact of Victoria Mortgages becoming the first British lender going into administration as a result of their specialism in loans to sub prime borrowers with poor credit histories, yesterday. Sub prime lending accounts for about 10 per cent of the home loan market in the UK, but although Victoria Mortgages represents less than 1 per cent of the mortgage lending market, it is believed that about 380 customers will be affected. A spokesperson for the company said: ‘This is a line-of-credit funding problem rather than an irresponsible lending problem. This is not to do with arrears or repossessions….It’s about the global credit squeeze and the fact that funding has been withdrawn by the banks…’

Home Information Packs (Hips) become compulsory for three-bedroom homes in England and Wales from today. Generally opposed to by estate agents and surveyors, the Royal Institution of Chartered Surveyors (RICS) claims that the introducution of Hips for four-bedroom houses in August has more than halved the sales in certain areas of four-bedroom properties. The increased covereage means that 60 per cent of total housing stock is now covered by Hips.

The Trades Union Congress, meeting in Brighton for its annual conference, has launched a campaign calling for the abolition of rules that allow wealthy people to avoid paying UK tax by claiming they are non-domiciled in the country. With the top three per cent of the population owning three times as much as the whole of the bottom half, the TUC believe ‘the super-rich distort the housing market – with house prices following top pay, not average pay…The result is that many would-be first time buyers and vital public service workers can’t get a foot on the housing ladder and even chronic housing need is no guarntee of decent social housing’.

A survey by Inside Housing has found that some families are waiting a decade or more for a home of their own. One family waited 27 years for a four-bedroom property in the London borough of Westminster. With fewer family homes being built, and supplies of larger houses reduced due to right to buy policies, two of the 51 English councils surveyed, reported a 10-year average wait, 13 had an average wait of four years and 17 had an average of three or more years for a three-bedroom house.

A new twist on the north/south divide courtesy of the Mirror. People in affluent Didcot, Oxon, can expect to reach 86 before suffering a serious ailment while those in Middlesbrough’s docklands area of Middlehaven will on average fall victim to disease before 55.

Many homeowners have lost their homes despite assurances that their individual voluntary arrangement (IVA), agreement offered protection from repossession, reports the Guardian

The government’s latest homelessness figures for the second quarter of 2007 show that the number of households found to be homeless has decreased by 30 per cent since 1997/98.

Commentators have been busy following yesterday’s announcement from the Bank of England that interest rates are staying put. The Times contacted a number of economists and estate agents to get their take. Nationwide thinks demand is cooling and this will be reflected in the moderating of house-price growth. The Royal Institution of Chartered Surveyors (RICS) has a more pessimistic outlook, expecting the number of repossessions to continue to rise by over 50 per cent from the current level to more than 45,000 over the next year. An economist at Capital Economics thinks interest rates will rise to six per cent this year, but that any forced sales will not be large enough to trigger falls across the country as a whole. Most agree that the first time buyer market has slowed down.

English Partnerships has announced its shortlist of five housebuilders to build Britain’s first carbon-neutral village. Barratt Developments and Taylor Wimpey – Britain’s two largest builders; Places for People – a housing association; and MJ Gleesons and Edward Ware, two private firms, are vying to build 150 energy efficient houses on former state-owned land outside Bristol, six years ahead of the government’s deadline for ensuring that all new homes are carbon-neutral. It is believed that some of the bidders may plan to build the homes at a loss, absorbing the extra costs, as a marketing tool for what is expected to be a fast growing sector over the next few years.

A series of eight reports into the experiences and attitudes of children by the Joseph Rowntree Foundation (JRF) found the gap between outcomes of children from disadvantaged backgrounds and those from advantaged backgrounds is wider in the UK than in most other similar countries, with one in four children affected. The research also shows that children in poverty believe themselves that they face reduced educational prospects and future life chances.

And finally, a Labour MP has been accused of hypocrisy after buying a housing association property which she had vowed to help save. Emily Thornberry was approached by several tenants from the Ujima Housing Association which specialises in homes for black and asian families, after they were advised that the properties were being sold. The MP denies the claim that she was approached by the tenants before the sales went through. The £572,000 property is now being rented out as ‘cheap accommodation for youngsters’ that the MP and her husband know, and who would not be ‘able to afford to live in Islington otherwise’.

A report by the Royal Institution of Chartered Surveyors (RICS) has found that housing for first time buyers is at its least affordable than any time since 1990. A couple in the bottom quarter of earnings (£26,667) would need to save up the equivalent of 96 per cent of their annual salary to pay for a desposit and stamp duty on the typical home (£25,600) and then maintain that with 44 per cent of their take home pay spent on a mortgage.

Whilst the Bank of England is not expected to raise interest rates above 5.75 per cent when policymakers meet tomorrow, a senior economist at RICS said that the struggle first time buyers face in trying to get on the property ladder ‘may worsen if the turmoil in the US market forces mortgage providers to tighten lending criteria and demand higher deposits’.

Further reseach by the Trades Union Congress (TUC) showed that the average house cost the equivalent of nearly seven years’ worth of a worker’s salary. A decade ago this figure was just three and a half times the salary.

According to the UK’s biggest mortgage lender, Halifax, which released its house price index for August today, the average house price in the UK has almost reached £200,000. Prices rose by 0.4 per cent in August, raking the price to £199,770, pushing annual house price inflation up from 11.2 per cent to 11.4 per cent, this despite higher interest rates.

A Conservative Party think tank, the Public Services Improvement Policy Group, will suggest in a report out today that council and housing association tenants could get state aid to help buy a home, to transform ‘dead end ghettos’. Payments worth up to 10 per cent of the value of the rented home would be limited to well-behaved tenants who have held their tenancy for at least five years. If the tenants left the social rented sector they would receive their share as a cash payment towards their first property.

It’s a big news day for the Tories all round. Boris Johnson launched his bid for London Mayor last night amid much fanfare, a few jokes, and a rendition of The Clash’s ‘London Calling’. Calling the quality and price of housing ‘the single biggest issue’ for Londoners he announced his plan to put housing at the top of his agenda and pledged to build 36,000 homes in London a year – the types of homes British families want – saying he did not understand the ‘Ceausecu-esque obsession with building rabbit-hutch dwellings’.

Not to be out-done, Gordon Brown announced the government would embrace ‘a new kind of politics’ yesterday. He plans to involve opposition MPs, and use ‘citizen juries’ in a ‘citizen summit’, and has already recruited one Lib-Dem and two Tory MPs to lead three government reviews on security, children’s disabilities and rural housing. ‘The depths of our new concerns cannot be met by the shallowness of an old-style politics’ he said.

And finally, a study has found that ‘rowdy youths’ generate the most complaints about antisocial behaviour (ASB) from tenants living on estates. The study for Housing Corporation confirms that noise is the commonest trigger for ASB, followed by verbal abuse and youth nuisance. Only a small proportion of complaints come from serious ASB such as vandalism, violence or harassment. Housing associations are making more use of ASB orders, injunctions, possession actions or demotion orders to tackle the problem, with 79 per cent of them making use of at least one of the four main legal powers.