ROOF Blog archive

Caroline Flint yesterday announced plans to increase the amount of information available for potential buyers in home information packs to speed up sales. The proposals include calls for a property information questionnaire, providing information on building work carried out on a property, and an increase in the amount of information on leaseholds. The Conservatives have said it will lead to a council tax revaluation.

The report into the first collapse of a housing association has found the Housing Corporation ‘failed to take decisive action’ that could have prevented Ujima from going bust. The review said that regulatory tools had not been adequate to deal with an association that would not cooperate with the regulator and that the corporation should have intervened earlier. Bad management and an ineffective board at Ujima did not help. The report recommended that the risk ratings of every association with more than 1,000 homes be reviewed, and that a centralised system for handling whistleblowing allegations be set up.

One in four Britons will never own their own home although they would like to do so, according to research by Moneysupermarket.com. And a further 11 per cent say they will never own a property through their own choice. In a separate survey, 61 per cent of young professionals are struggling to pay their rent each month.

However, 70 per cent of buy-to-let investors are planning to increase their portfolios this year. While 65 per cent of those surveyed believed Britain was heading into a recession and 70 per cent thought house prices would drop in 2008, investors ‘recognised the demand for rented accommodation… is boosting rental yields considerably. Landlords can take advantage of the lower prices… and they are certain to achieve good returns over the long term’.

And finally, you know that the credit crunch is serious when beach huts are no longer selling for more than £150,000 these days. In some places, their value has fallen by as much as a third, and unofficial figures show that only about a quarter of those that would normally be selling on the market during summer, have made it this year.

A Treasury report looking at ways of reviving the mortgage market and headed by Sir James Crosby, has been released today. The report warns there is no quick fix and predicts that the shortage of mortgage finance will continue throughout this year and into 2010. It suggests ways of propping up mortgage lenders by allowing them to swap mortgage-backed securities for government bonds and argues against a US-style government agency to tackle the crisis. The funding of home loans should be left to the market, it concludes – albeit with some help from the government. The full report will be published in September.

The House of Lords is to rule on whether local authorities must rehouse people living in overcrowded conditions. Birmingham City Council is bringing the case after losing an appeal earlier this year, claiming there would be ‘dramatic financial consequences’ if it was forced to relocate all families living in overcrowded accommodation. The case is expected to be heard later this year.

The Conservatives are setting out their plans to tackle the ‘huge social gulf’ between the rich and poor in Britain’s cities. Shadow work and pensions minister Chris Grayling said the consequences of not bridging the gap were ‘enormous’ and set out a five-point plan, including better support for community groups working in deprived areas, job placements for 18-21 year olds, and a specialist ‘welfare to work’ programme in the poorest neighbourhoods. Both the Liberal Democrat and Labour parties said that the speech was just a rehash of old ideas.

Abbey National has taken over from Halifax as the UK’s largest mortgage lender. It now holds one in three new mortgages across the country, compared with one in five by Halifax. This is double the worth of mortgages since the same period last year. Halifax remains the largest mortgage lender in gross market share, which includes existing and new mortgages.

Yesterday the Land Registry released its house price report for May showing a fall of 0.1 per cent, meaning prices according to its estimate are approximately 3 per cent higher than this time last year. The Bank of England’s mortgage lending figures are also out, and underline the slowdown in the market. The number of mortgages approved for house purchase fell to 36,000 in June, down from 41,000 in May, and down 68.4 per cent on last year.

And finally, a couple whose home has been blighted by the noise from a wind farm have won a 20 per cent reduction in council tax. Although investigators did not find any noise problems they did concede that the construction of the wind farm had a ‘significant detrimental effect on the… enjoyment of their property’.

Alistair Darling is under pressure to revive the house market by bringing forward a new funding scheme. Under influence from the Council of Mortgage Lenders, the chancellor is considering extending the Bank of England scheme to exchange mortgage-backed securities for government bonds. The move is aimed at boosting the volume of lending and driving borrowing costs down.

But Government funding for new and affordable housing at the expense of improvements to existing housing stock is having a disastrous effect on some of the most vulnerable members of the community, says the Chartered Institute of Environmental Health. A spokesperson for the organisation said increased funding for new housing has come at the expense of assistance for existing housing.

Hometrack has released its house price index for July, showing house prices continuing to fall, with the greatest decline in London and southern England. It was the tenth monthly drop, down 1.2 per cent for the month and 4.4 per cent year on year. Properties are staying on the market for an average of 11 weeks, up almost a week in the past month, while sellers are getting on average just 90 per cent of the asking price.

However average house prices in England are set to rise by 25 per cent by 2013, according to a National Housing Federation report. The report believes prices will fall 4.4 per cent in 2008, down 2.1 per cent in 2009, recovering by 2010 and rising again by 9 per cent in 2012 and 2013. The federation’s chief executive said that as soon as the economic outlook improves, house prices will resume their previous upward trajectory.

Housing associations saw a surge of 117 per cent in shared ownership sales over the past six months, since the withdrawl of 100 per cent mortgages by high street banks.

Farmland in the UK has increased at its fastest ever rate, according to the Royal Institution of Chartered Surveyors . While house prices are falling, the soaring cost of food has pushed up demand of farming land and the cost per hectare has increased 32 per cent in the first half of this year while the number of transactions has also increased 50 per cent since the same period last year. However the number of ‘lifestyle’ buyers has fallen dramatically.

Five million people spent more than they earned each month, an increase of 8 per cent over the past three years, according to research by Legal & General, with the figure likely to get worse as the impact of the credit crunch and rising energy bills hit. Almost 82 per cent of people living in the north spend more than they earned, compared to three years ago, compared with 8 per cent of Londoners.

Hip Hip hooray – it’s the first anniversary of home information packs this week, but the debate over their purpose is still raging. While some research has shown that those with a Hip exchanged contracts 12 days earlier than those without, others blame the introduction of Hips as contributing to the falling housing market.

The Housing Corporation has released a new report into whether the needs for support and guidance of small housing association are being met. Small housing associations (those owning or managing up to 1,000 homes) make up 78 per cent of all providers of social housing and over 1,300 of them are registered with the Corporation. Key recommendations in the report focus on strengthening governance by ensure a ‘strong and experienced board’; providing better access to support and guidance; and developing greater partnership working.

In the meantime, many developers are flocking to the affordable housing market in a bid to protect their businesses from the credit crunch, while those who are already Housing Corporation partners have said they are looking to increase their social and affordable housing output.

Most first-time buyers say they expect they will be purchasing their homes a bit at a time in the future. Nearly 75 per cent of those questioned think the part rent, part buy scheme (known as New Build HomeBuy) would soon by the only viable option available to them.

Lack of leisure amenities could hamper plans to regenerate areas of England and Wales. Research looked at the number of cultural facilities such as theatres, restaurants, national heritage sites, the proportion of people employed in hotels and tourism, and number of sports arenas, and found that Fenland, Norfolk; Torfaen, south Wales and Corby in Northamptonshire had the worst facilities, compared to Manchester and many central London boroughs. While the data was ‘crude’, councils use it to consider what they can do to make an area more attractive.

More than a third of adults could survive financially for only 11 days if they were to lose their job or be too ill to work, although overall a typical person could survive 52 days before hitting financial disaster. The research from the Yorkshire Building Society found that most people have monthly outgoings of £1,445 (including council tax, luxuries. debt repayments) but savings of only £2,474, excluding money tied up in a pension fund, and few have insurance to protect themselves.

Housing associations could earn a lump sum for every tenant they help find a job, as part of the package to reform worklessness set out during the week. Work and Pensions secretary James Purnell said he wanted to devolve responsibility for providing employment advice from central government to providers working in the community. Several housing associations have bid for contracts, and the department for Communities and Local Government believes that social landlords’ relationships with their tenants put them in an ‘excellent position’ to help cut unemployment in their areas.

The housebuilding slump hit economic growth in the second quarter of the year according to figures from the Office for National Statistics (ONS). The economy expanded 0.2 per cent between April and June, the slowest rate of growth since the first three months of 2005. Construction output dropped by 0.7 per cent due to a ‘particularly large’ fall in housebuilding.

And finally, a house seller has announced he is cutting £1,000 a week from his asking price until the house is sold. The four-bedroom home started at £149,950 but is now down to £120,950, but the estate agent dealing with the sale expects the property to be snapped up shortly.

Destitution among refused asylum seekers and refugees in the UK has more than doubled in 18 months, according to a report by the Joseph Rowntree Foundation, which describes the government’s policy on the issue as ‘unacceptable’. The number of children affected has quadrupled and rough sleepers have increased by a third, and the report puts the blame predominantly down to error or delay in receiving benefits.

As the Bank of England released its July agents’ summary of business conditions, pressure mounts on the government to ease the bottleneck in the credit market. The monthly BoE figures indicate that four out of ten housebuyers in some areas are pulling out of sales, often after losing their nerve or failing to get a mortgage. Adding to the uncertainty, the Bank’s monetary policy committee meeting disclosed that members had considered increasing interest rates to limit inflation.

A Communities and Local Government committee has said England’s economy is threatened with ‘paralysis’ unless the government sorts out chronic problems with the planning system. Failure to recruit more planners and give existing ones more training will hinder the delivery of the government’s three million new homes, and will affect half of all local authorities by 2012. The committee has recommended a national advertising campaign to attract graduates into planning.

Meanwhile housing minister Caroline Flint has set out the government’s latest, and toughest, proposals on establishing green standards in new housing, in a progress report on eco-towns. The towns are expected to achieve zero carbon status in all buildings, including commercial and public buildings as well as homes; providing a minimum of 30 per cent affordable housing; allocating 40 per cent of land within the town as green space, of which half has to be open to the public as parks; and creating more options for travelling and reducing the reliance on cars, including one job per house being reached by sustainable transport.

New national guidelines for private and social landlords, managing agents, tenants and enforcers aimed at cutting the 300,000 fires in residential properties annually, have been released. They apply to existing residential accommodation including single family houses, bedsits, shared houses and flats, but not to new housing. It is hoped that it will help councils and fire and rescue authorities who enforce fire safety legislation adopt a more consistent approach.

Advice commissioned by the Local Government Association suggests the government plan for eco-towns may be vulnerable to a legal challenge. Council leaders are calling for a rethink, after advice said the plan would be ‘promoting a policy and process which would be inherently flawed’. The advice added that using policy statements to promote eco-towns is contrary to current planning legislation.

Mortgage advisers are giving customers poor advice according to research by Which? magazine. Which? researchers visited 50 banks, building socities, estate agents and independent advisers and found that 41 of them failed to provide the researchers with all the information required by the Financial Services Authority, while most of them appeared ‘more interested in selling insurance than giving tailored advice.

And the Financial Services Authority has told lenders it has increased measures against mortgage fraud. So far this year 17 mortgage brokers have been implicated in actual or potentially fraudulent applications, and the FSA said it is targeting 200 more firms to ensure they have sufficient checks in place. The FSA said the problem has become widespread in recent years due to ‘easy credit conditions and streamlined application processes’.

The British Bankers Association has released figures for June, showing the number of new mortgages approved by the major banks fell by 23 per cent to a record low, 67 per cent lower than June last year. Just 21,118 loans were approved in June, and the BBA said that the number of homes sold in 2008 is likely to be the lowest since the recession at the start of the 1990s.

But what the banks are losing in market share, they are trying to make up in fees. Charges to take out a mortgage have increased by up to 60 per cent in less that a year, according to research by mortgage adviser mform.co.uk. Comparing the fees on the ‘best buy’ mortgages, some banks and building societies are charging fees of up to £2,500, with the average rising to £938.

Meanwhile auctioneers Essential Information Group has revealed that the number of repossessed properties coming up for sale through auction houses had increased almost 300 per cent in three years, and up 66 per cent in the last year alone. A spokesperson for the group said that repossessions now made up more than one on five of properties offered at auction.

The Housing Corporation has delivered 51,095 affordable homes, which is 3,832 more than the target and 25 per cent more than last year. It adds that over 69,000 more rented homes now meet the decent homes standard, including 25 per cent of all rented homes being three bedrooms or larger, and it has achieved its value commitment with a third more homes built for only 15 per cent more funds. The figures are out in its annual report.

And finally the credit crunch has had its next victim - a housing fair showcasing cutting edge eco-home designs that was going to be held in Scotland nect year has been shelved until 2010. Organisers blamed the postponement on the economic climate and shortage of finance.

Iain Wright, junior housing minister, spoke out against criticism of the Housing and Regeneration Bill and the setting up of the Homes and Communities Agency, saying the agency was not a ‘centrally driven quango’ imposing ‘top down targets’. He also announced the establishment of new Community Land Trusts, that will own or control land for development. Mr Wright added that the name of the new social tenants’ watchdog had changed from Oftenant (Office for Tenants and Social Landlords) to Tenants Services Authority, saying that without exception he ‘failed to see anybody who liked the name’. The Bill was passed in the Lords with amendments and will now go to Royal Assent.

Statistics out from the National Housebuilding Council show that there was a significant drop in private sector housebuilding for the quarter to June 2008. The year on year decrease for the quarter was 51 per cent, while housing association registrations also fell 13 per cent in the year on year figures. Greater London was the only region to experience an increase in new home starts - increasing 8 per cent from the second quarter last year.

The cost of building a house that meets the highest environmental standards is up to 50 per cent greater than a conventional home. The figures, from the department for Communities and Local Government, estimate that the cost of meeting the highest code level ranges from £19,000 to £47,000 per unit, and is higher than building a zero carbon rated home due to the cost of meeting the thermal efficiency standard.

Meanwhile, the National Landlords Association is warning landlords of the risk of rent arrears if they do not carry out appropriate checks on prospective tenants. The NLA is encouraging landlords to make more checks, including the financial record and employment history of tenants. The NLA say that if a tenant fails to pay rent it could take up to six months to resolve, leaving the landlord out of pocket for half their rental income.

In the last week a number of lenders have started to reduce interest rates, dropping the average cost of a new, two-year fixed rate mortgage to below 7 per cent. Yesterday Barclays and Abbey National cut their rates, joining Halifax, Lloyds and Nationwide who cut their rates last week.

A former sub-prime mortgage lender is offering an 8 per cent discount to borrowers if they redeem their loans. The lender wants to get the loans off its books, but can’t find investors willing to buy them, so is making a cash-back offer to 400 customers. The company is also offering to waive its early redemption fee, and says that around 20 per cent of those offered the discount were expressing interest.

And finally a family is being threatened with eviction for keeping chickens in the backyard. The family keeps 25 birds and has been told by council officials that the chickens cannot be classed as pets and the family will be in breach of the tenancy agreement if they are not disposed of.

A source at the Olympic Delivery Authority has revealed that the authority may be forced to ask for government money earmarked for London’s housing associations to help fund the 2012 Olympic athletes’ village. Land Lease, the developer for the Olympic project, has struggled to raise its half of the £2 billion needed for the village as credit dries up. The company has already scaled back the number of units proposed – from 4,200 to 3,300 – while the ODA chairman last month admitted that the government would have to come in and support the village financially.

The government has pledged £80 million for ’extra care’ housing schemes on 25 sites, aimed at those with dementia. More than 2,000 flats are to be built to buy or rent by elderly and vulnerable people who want care and support services on site, and the option of staying with their partner. The government said it wanted residents to enjoy greater privacy, dignity and independence, while allowing homeowners a chance to keep some equity in their property.

David Blanchflower, a member of the Bank of England’s monetary policy committee, has said that the British economy will fall into a recession that could be deep and painful if interest rates are not cut sharply. He has been voting to cut rates for some time and said he was ‘amazed’ that some of his colleagues wanted to raise rates, as he would like to see them ‘well below’ their current level. He believes the slump in housing prices and the credit crunch are part of the ‘biggest economic problem since the great depression’.

Traditional village life is at risk as people are priced out of the countryside, according to research by the National Housing Federation, as villages become virtual ghettos of the rich and elderly. Most people could not afford to live in the country even if property prices fell dramatically, and the gap has worsened over the past six years – in 10 desirable rural areas the average house price is now more than 15 times the average local income. The federation’s chief executive called for a new target of 9,000 social homes to be built in the countryside a year, plus a duty on councils to consider sustainability before rejecting planning proposals.

Rightmove has released its latest monthly house price survey which shows that the average asking price last month dropped more than £4,300 (approximately 1.8 per cent) while the number of unsold properties reached record levels. In July estate agents had an average of 77 properties for sale, up from 74 in June; and they are spending an average of 87 days on the market before selling, up from 83 days in June. Meanwhile, homeowners in Britain are convinced that the fall in property prices will be higher than elsewhere in the world. Forty-two per cent of homeowners thought prices would fall but an optimistic 15 per cent ould still expected a rise in the year ahead.

Many people fear their prospects are being damaged by pressure on housing and schools from immigrants and their families. Although many valued signs of a more ‘multi-ethnic and multicultural’ country, poverty and lack of opportunities undermined social cohesion. The competition for council housing has been a main area of concern, as the number of people on council house waiting lists has increased by 650,000 to 1.67 million households since Labour came into power.

In London, the biggest council house building programme for a generation has been announced. During the next four years, 526 homes will be built on brownfield sites and underused sites on existing council estates in Westminster – it will include 104 shared ownership flats, 69 affordable starter homes, and 107 homes that will be sold at market price to help fund the scheme.

Mortgage lending in the UK fell by 32 per cent in the year to June according to the Council of Mortgage Lenders (CML). June is traditionally a busy time in the housing market, but there was a 3 per cent drop in lending for the month. CML is calling on the government to step up its support, saying that the help given to housing associations to purchase new-build properties were welcome, but is likely to have only a ‘marginal impact on the housing market’. Meanwhile the Chancellor’s tax receipts are diminishing daily as the economic downturn cuts stamp duty payments. The Treasury is fearful that it could lose as much as £5 billion, more than a third of revenue that had been expected.

Three-quarters of first-time buyers have decided to put their house buying plans on hold due to the current market conditions. A third of those questioned said they had attempted to buy a home during the past six months, but had been refused a mortgage. Instead, around 44 per cent of first-time buyers are considering buying abroad while continuing to rent in the UK.

As a result, private rental demand is up 41 per cent in a year nationwide, and this has increased rents in places such as London, Edinburgh, Bristol and Leeds. However, rents have fallen in cities such as Manchester and Birmingham due to the oversupply of new-build flats. But 71 per cent of tenants questioned in another study said that they did not intend to take out a mortgage and would continue to rent, while 60 per cent of mortgage holders said they would sell their homes and begin renting if mortgage repayments become too high.

Ministers are looking at ‘real-life’ measures to improve people’s lives and allow them to take responsibility for their own community regeneration. Hazel Blears announced yesterday that funding will be targeted at tackling economic challenges and antisocial behaviour, and increasing investment in housing and environmental improvements. Ms Blears also announced that a housing reform Green Paper due out later this year will set out proposals to help and encourage people living in social housing towards greater economic independence and will allow housing associations and local authorities to tackle worklessness.

Housing shortages and affordability issues are leading to higher house building targets in the South East, said the government. It is revising its figures with a ‘modest’ recommendation of a 4 per cent increase in housing provision for the region, bringing the total of house to be built to 33,125 a year. The government is arguing that there were more than 200,000 households on council waiting lists and more than 7,500 homeless households in temporary accommodation. Plans for more than 7,000 new homes to be built on a flood plain have been scrapped after 1,500 people signed a petition against the plans.

The Ministry of Defence released a paper yesterday with a series of improvements for armed service personnel. It recommends preferential treatment for troops and veterans in social housing and promises a £20 million scheme to extend affordable home ownership. The MoD has also promised to publish a 10-year strategy for the management of the land and housing it owns, leases and maintains.

And finally, the Royal Institute of British Architects has released the shortlist for ‘the building that has made the greatest contribution to British architecture in the past year’ in its Stirling prize. Three of the six buildings shortlisted are public buildings – a school, concert hall and courthouse – and a fourth is a housing project with one-third affordable homes. The final two are buildings abroad.

One in five families in rural England is living below the poverty line according to a report by the Commission for Rural Communities. The decline in services and less affordable housing are major factors in this trend, it said. The average house price in rural areas is more than £40,000 more expensive than in towns or cities, and it was worse the more isolated the area you live.

English Partnerships attracted a record £1.27 billion in private sector investment for 2007/8, a rise of more than 24 per cent on the previous year. It also exceeded all its ‘core’ targets, including reclaiming 289 hectares of brownfield land, while starting more than 11,000 housing units and completing more than 6,500 housing units.

However a report by Brian Pomeroy into the future of private shared equity market, which the government had hoped would attract billions of pounds in private sector cash, has concluded that there has been very little investment as a result of the credit crunch. It said that despite a variety of shared equity schemes, there had only been one private sector product launched and this has since been ditched due to a lack of interest.

The government has also been called on to ease public concern about migrants, by cracking down on landlords of houses of multiple occupation (HMOs). A Communities and Local Government committee said that poor management of HMOs, resulting in uncollected rubbish, fires and run down buildings, was creating community concern over the effects of migration. The committee called for the government to make it easier for councils to regulate HMOs.

Meanwhile a council has taken the initiative and set up a scheme to help mortgage holders and tenants who face eviction to save their homes. Fenland District Council and Citizens Advice (CAB) are running the scheme – providing an advocacy service and help in consolidating debts; while the government has agreed to fund the attendance of CAB experts at the county court eviction sessions. A local councillor said that the council thought it ‘prudent’ to have a scheme in place before the real impact of the economic downturn begins.

Plans for an eco-town near Cambridge have been shelved after the owners of the land refused to sell it to developers. Following pressure from the residents of the nearest conventional town, owners the Wellcome Trust decided not to sell the land to Tesco, who had been planning to build 12,800 houses on the site. It is the fifth eco-town proposal to be dropped, and developers have also already pulled out of 4 of the 15 proposed new towns.

New research has analysed some of Europe’s most exemplary eco-town projects and identified the critical factors behind their success. The main findings were that the UK could avoid further problems by ensuring that there is enough funding for infrastrucure in advance of the development. The analysis also suggested there should be more focus on locations, mix of uses and tenures.

And finally Dogs Trust, a charity to rehome abandoned dogs, wants landlords to be more open to allowing tenants to keep dogs in rented premises. Currently three in four landlords do not allow pets in properties, and with the demand for rented homes growing, the Trust suspects that the number of dogs they receive will increase. A spokesperson from the Association of Residential Letting Agents (ARLA) said it was ‘broadly supportive’ of the Trust but said it would struggle to change attitudes.

Households earning £60,000 or less will be able to rent at 80% or less of the market rate for up to three years in order to save up the cash for a deposit, under a new scheme launched today by Caroline Flint. Under the Rent to Home Buy scheme, people would have an option to buy 25% or more of the property at any time.

A new report from the National Audit Office says that it could take almost 200 years to regenerate the Greenwich peninsula if developers just meet their minimum house building obligations. A government agreement allows developers to take nearly two centuries to develop the land round the Dome without facing any penalties for making a profit from holding on to derelict sites.

The north south divide has been replaced by a widening gap between towns and cities that are ‘resurgent’ and those that are ‘stuck’, according to new research from the Work Foundation.

The number of home sales fell to its lowest level in 30 years in June, according to figures published today by the Royal Institution of Chartered Surveyors.

the Council of Mortgage Lenders yesterday published its submission to Sir James Crosby’s report on tackling funding shortages in the mortgage market. The submission calls for the Bank of England to provide more support for mortgage lending. Crosby’s interim report is expected in several weeks.

The State of the Countryside report 2008, published today, shows a 3% rise in the number of families living below the poverty line in rural areas as affordabilty continues to bite.

Shelter will be launching a new report Neighbourhood Watch, Building new communities: Learning lessons from the Thames Gateway, at a free seminar on 22 July at the St Albans conference Centre, London. To reserve a place email (JavaScript must be enabled to view this email address)

70 per cent of St Mungo’s hostel residents ready to live independently are unable to find suitable accommodation, new research by the charity has found. The critical shortage of affordable housing also means that 50 per cent of residents needing supported accommodation are also unable to find an appropriate place to live.

A new report commissioned by the government is expected to encourage affordable homes to be built around England’s historic market towns, in a bid to keep the villages ‘alive’ and stop them from becoming ‘exclusive enclaves for wealthy commuters’. The report, by Lib-Dem MP Matthew Taylor says that people born in popular rural areas face a particular struggle to get on the property ladder as out of towners and second homeowners price locals out. The report concludes that local authorities must allow limited new housing if there is demand from the community. New properties, it says, would only be available to those who can prove a local connection and would be capped in price indefinitely. The report is due at the end of the month.

A report from the Centre for Cities has also released its findings on the government’s pledge to deliver three million new homes – and says that a uniform national approach would not increase the overall supply of housing. The report argues that houses need to be built in response to the economic needs of individual cities - cities either need more houses or they need better houses, and local authorities should collaborate across boundaries rather than working in isolation.

In the meantime many homeowners are extending the life of their mortgages to cut repayments. Mortgage brokers have seen a rise of 10 per cent in customers taking a ’longer life’ option when their current deals end. Experts say that the move should be treated as a last resort as it may cut costs in the short-term, but adds tens of thousands of pounds to the cost of a mortgage in the long-term.

In England, housing minister Caroline Flint is drawing up plans to address the rise in home repossessions. The latest plan could see homeowners who are struggling to make monthly mortgage repayments being offered the chance to sell their homes to the local authority and rent them back as tenants.

Whilst in Scotland the Chartered Institute of Housing (CIH) has called for ‘imaginative’ measures to meet the government’s affordable housing target in the wake of the credit crunch. CIH said that to build 35,000 homes a year by 2015 the Scottish government would need to work with housing associations or councils to use homes or land, initially being developed by private firms, which are now lying empty. The government had recently announced it will provide £25 million to start a new generation of council housing building, to make available £250 million for shared equity schemes, and plans to put £25 million over the next two years into a fund to help those at risk of repossession.

And it’s still not good news for those in the private rented sector. A report by the Association of Residential Lettings Agents has found that rents are set to rise by as much as 15 per cent over the next two years. The report found that landlords have more than £500 billion invested in UK buy to let properties – more than the value of all privately owned commercial property put together. The author of the report, Professor Ball, said that buy to let investors helped stabilise the housing market as it accommodated people who would otherwise be overstretched and facing negative equity had they bought their own property.

Insurers and the government have struck a deal to ensure that most households at risk of flooding are still able to obtain home insurance. Insurance companies will guarantee protection to properties at medium risk of flooding and will continue to offer flood cover to those at significant flood risk providing there are plans to reduce the risk within five years. In turn the government has committed itself to a 25-year strategy to improve flood defences, and ensure housing is not developed in flood-risk areas.

The government’s White Paper – Communities in control: real people, real power – released on Wednesday, sets out proposals to give citizens and communities more power and greater influence over local decisions that affect them. The paper recognises the role played by housing professionals in creating successful communities. It proposes support for the development of strong housing cooperatives and wants to extend the expertise of tenant management organisations from housing to a wider neighbourhood management.

In response to the next three-year strategy in the housing market renewal (HMR) programme, Cabe, English Heritage and the Sustainable Development Commission have launched a new action plan. The programme was initially established in 12 pathfinder areas across the north of England to attract new households into neighbourhoods of deprivation and revive some 40,000 homes. However the market downturn has shifted the agenda away from housing into ‘design-led’ regeneration programmes that will deliver sustainable places and improve the quality of life.

Research by Inside Housing has found that at least 31 local authorities have said they will not meet the decent homes standard for their council properties, to be met by 2010. These 31 authorities will still have to carry out work on up to 87 per cent of their homes. Waverley Council, one of the councils affected, said that the way councils housing is financed hampers their ability to improve tenants’ homes and said if the housing revenue account was abolished, the council would be more likely to afford to improve the houses. The government argues that 95 per cent of councils will hit the target.

Following on from his announcement on Wednesday that he was investing £60 million into reducing the number of empty homes in London, mayor Boris Johnson wants to scrap Ken Livingston’s rule that half of all new housing built be affordable. Mayor Johnson plans to replace this with a city-wide target of 50,000 new affordable homes by 2011, with targets negotiated with individual boroughs; along with a higher proportion of intermediate rent and shared ownership properties.

Bank executives are expected to lobby the Bank of England today to extend the special liquidity scheme it put in place in April, to free up some money in the financial sector. The high street banks are arguing that the £50 billion scheme has not done enough to restore confidence in the markets. However Mervyn King, governor of the Bank, has already said that the scheme was not designed to restore the mortgage market to the ‘wild lending’ seen before the credit crunch hit.

And finally a council has had to apologise for sending voting papers to 500 dead people. The South Cambridgeshire District Council said it was regrettable that the voting papers have been sent to ‘a number of people who are no longer tenants of the council either because they have moved away, given up their tenancy, or … passed away’. Officials said the papers would be reissued and a new election held.

Some of the country’s biggest housing associations are attempting to revive the housebuilding sector as the credit crunch bites into their funding. Associations forced to cut back on development programmes for rented homes want a new ‘intermediate’ form of tenure introduced, with varying rents for people on a range of incomes, to replace the push for more home ownership. And while the government has only allocated £3 billion of an £8 billion purse earmarked for affordable housing, associations have asked that the remaining £5 billion be seen as a ‘war chest’ they can use for additional funding.

The government has given in to pressure and agreed to provide council housing tenants the same rights as those living in other types of social housing, in an amendment to the Housing and Regeneration Bill. The Bill which set up a new social housing watchdog – the Tenant Services Authority – had been expected to exclude council tenants. A National Housing Federation spokesperson said that they strongly believe that tenants ‘deserve the same level of protection regardless of who their landlord is’.

Children’s homes have been condemned as ‘inadequate’ by Ofsted, which now inspects the care system. The Safeguarding Children report said that care homes were failing to protect children from harm or neglect and was highly critical of the quality of accommodation local authorities make available for care leavers.

The Bank of England has held interest rates at 5 per cent this morning. This comes as news that mortgage rates have hit their highest level in more than eight years. Data from the Bank of England show that average monthly repayments have risen nearly £50 in the past month alone.

A Ministry of Defence (MoD) survey has found that nearly half of all UK military personnel is ready to leave the forces as concerns continue to be raised over the frequency of tours, levels of pay, and quality of housing and equipment. In all 40 per cent were unhappy with their service accommodation and 55 per cent were dissatisfied with the standards of maintenance of the service housing. Defence Minister Derek Twigg said that a number of measures had been recently introduced to try to overcome the perceptions, and over the next 10 years the MoD is spending £8.4 billion on accommodation for personnel.

The UK’s biggest mortgage lender, the Halifax, has released its house price index for June which found that prices had fallen 2 per cent for the month, and were down 6.1 per cent in year on year figures. The Halifax said the fall in price – the worst since 1993 – was due to a squeeze on spending power, rapid house price growth in the previous few years, and lack of availability of mortgages. The Halifax predicts that house prices across the country are set to fall by 9 per cent this year, up from ‘flat’ – its earlier forecast in February.

However, according to a report from the Royal Institution of Chartered Surveyors (RICS) first-time buyers on a low income would need to save a year’s worth of their take-home pay to pay for up-front fees. A couple in the bottom quarter of earners needed more than £27,000 to cover fees, stamp duty, and a deposit. This compares with twelve years ago (1996) where they needed just 21 per cent of their annual income. However RICS says that affordability has improved over the past few months, but the credit crunch has made it more difficult to climb on to the first rung.

Commons leader Harriett Harman came under fire after filling in during prime minister’s questions yesterday. Lib Dem MP Vince Cable urged the government to ‘get its priorities right’ and recognise the ‘deep crisis’ in the housing market. He also asked if the government would build up its sensible, ‘but pathetically small’ programme for acquiring property and give ‘genuine freedom’ to councils and housing associations to buy property. Ms Harman said that the government had ‘grave cause for concern’ regarding the market and was ‘taking action’.

The Council of Mortgage Lenders released figures for May showing that the number of loans for home purchases remains low at 52,700. This is a slight rise of 4 per cent from April, but 44 per cent down in the year since May 2007. Figures for remortgaging are also down – 14 per cent on the previous month and 23 per cent year on year.

The department for Communities and Local Government also released figures this morning, showing that the price of the average property fell by £724 between April and May, a drop of 0.3 per cent. In year on year figures, house prices grew 3.7 per cent to May 2008 compared with 4.9 per cent for the year to April 2008.

And Moneyfacts has published a review of mortgages showing deals are getting more expensive. Fixed rate mortgages continue to rise, with the average standing at 7.07 per cent. A spokesman said that ‘lenders needed to start playing the game fairly and pass on the cut in rates quickly’ to stimulate the market.

Second home investors should be stopped from buying properties in eco-towns, according to the chief executive of the National Association of Estate Agents. Peter King said that planning controls should ensure local buyers were not priced out of the market by buyers from outside the area or buy-to-let investors. NAEA believes that despite recent criticism of eco-towns, demand for properties will be high.

In Wales, a scheme to increase the number of affordable homes in all new developments was unveiled. Included in the plans was an announcement to allow local planning authorities to encourage ‘low impact development’ in farming areas.

Meanwhile in London house prices have fallen by around 7.5 per cent in the first six months of the year, while property transactions have fallen by 45 per cent since the same time last year. The figures from Savills show that rental growth is also slowing even though tenant demand remains strong, while houses costing more than £5 million are ‘relatively immune’ to the downturn affecting everyone else.

Yesterday the Royal Bank of Scotland published research predicting a 70 per cent fall in land prices, which is seen as a direct threat to housebuilders’ futures. Housebuilders are already in turmoil after analysts suggested that the downturn in the property market was to be ‘significantly’ worse than the 1990s. Persimmon, Barratt Developments and Taylor Wimpey have recently announced the axing of almsot 3,000 staff between them, while trading results for Bovis and Redrow are due this week and are expected to be bleak. Stock values have tumbled by as much as 14 per cent.

Almost 150,000 homeowners who took out a mortgage since early 2007 are facing negative equity. According to a CACI survey for the Daily Telegraph, one in eight of the 1.2 million people who bought a property now owe more than the home is worth, and if house prices fall by 20 per cent, up to 360,000 mortgages could be in negative equity by the end of 2008.

Pensioners’ spending on goods and services outstripped inflation during the past 10 years. Increases in the cost of housing, council tax and maintaining property contributed to raising their cost of living by 36 per cent, according to the study by insurer Clerical Medical. A spokesperson for the Department for Work and Pensions said that the government wanted to do more to help pensioners with food and fuel bills, adding that average net incomes for pensioners, after they’ve paid housing costs, have increase by 43 per cent since 1997.

The Bank of England’s monetary policy committee is meeting on Thursday to decide whether to hold interest rates on at 5 per cent. With concerns that the economic downturn is continuing, the Bank is anxious to bring inflation back to its 2 per cent target.

Meanwhile, the government is pocketing an extra £150 million in tax as a result of the worsening in commercial occupancy rates. The new empty building tax, introduced in April, was aimed at stopping property companies from leaving buildings vacant. However, since the tax was imposed, the number of empty buildings has increased by 15 per cent, resulting in the worst downturn for the industry in 15 years. This year, the government is set to raise £950 million from the tax.

And propertyfinder.com believes that dwindling housing stock could lift property prices within the next two years. The housing website says that buyer demand remains strong, and the decline in the number of homes being built is contributing to supply failure. ‘Unless there is a major expansion in building, housing prices can only go in one direction over the long term, and that is upwards,’ said a spokesperson. According to its research, the number of available properties is rapidly declining, and on current trends, supply will disappear altogether by 2011.

And finally, school children will be taught about how to handle money in three-year £11.5 million programme called the financial capability action plan. As part of an initiative led by the Treasury and the Financial Services Authority pupils will be shown how to draw up a budget, and learn how interest and different types of mortgages work. In 2006, the FSA warned that an entire generation was growing up with no savings, no pension and massive debts.

The Bank of England has released its credit conditions survey for the second quarter of the year and found that the availability of mortgages is likely to continue its decline during the next three months, while the number of people who default on mortgages is expected to rise. The Bank said a big factor in the tightening up was that lenders expect house prices to experience further falls. Chancellor Alistair Darling said yesterday that there was little the government could do to assist on mortgages while the wholesale credit markets remained frozen.

Meanwhile the European Central Bank has defied political pressure and announced it would raise interest rates to their highest level in almost seven years, with a quarter point increase. Fearful of inflation, the ECB president increased interest rates to 4.25 per cent in the first increase in more than a year.

MPs have voted to keep their second home allowance, worth up to £24,000, but decided not to give themselves an above-inflation pay rise. A review by a Commons committee had recommended that the ‘additional costs allowance’ for maintaining a second home should be replaced. However MPs will now only be subject to an internal audit, London MPs will receive a new weighting allowance of £7,500, and all MPs will get a 2.25 per cent pay rise. The Tories accused the government of sabotaging attempts to reform the system after 146 of the 172 MPs who voted to keep the allowances were Labour MPs, including 33 ministers.

Following Wednesday’s announcement that Taylor Wimpey will cut 900 jobs, it’s been revealed that housebuilder Barratt Developments will axe up to 1,000 people, or almost 15 per cent of its workforce. In the last of their figures available, the number of completions had fallen 5 per cent, while reservations were down 33 per cent, compared with a year earlier.

Council tax rebels are to have their bank accounts frozen instead of being imprisoned under new plans unveiled by Local Government minister John Healey. Ministers want to give town halls the power to refer defaulters to the civil courts rather than the magistrates’ courts, where their bank accounts could be seized. Last year more than £600 million of council tax remained unpaid.

And the bad news continues. UK households are 15 per cent worse off than five years ago as rising food and oil prices put the squeeze on household incomes. The report shows that after tax contributions and monthly household bills, the average family has just under 20 per cent left from its gross income, compared with 28 per cent in 2003. And average monthly mortgage repayments (based on a 25-year repayment mortgage at a standard variable rate) is just under £735, which is 78 per cent higher than 2003/4 – driven by higher interest rates and a ‘significant’ increase in the size of a mortgage.

But if it all gets too much, a Belgian architect may have the answer. He has designed a floating city in the shape of a lilypad that could be used as a permanent refuge for climate change migrants. The ‘Lilypad City’ could float around the world as an independent and self-sustainable home to 50,000 inhabitants. However he has yet to estimate building costs or how much it would cost to live on it.

Caroline Flint announced a series of measures designed to prop up the housing market yesterday. As reported in our daily news, she confirmed plans to change payments to housebuilders from the public sector so they receive more upfront money, while developing a clearing house to help housing associations find appropriate properties that developers cannot sell privately. Also announced is a £270 million fund to be allocated through the Housing Corporation to deliver 3,800 homes for social rent and 1,500 for shared ownership over the next three years. She is said to be considering plans to extend a £200 million scheme to buy new-build flats to rent to social tenants.

Meanwhile, the Local Government Association (LGA), a cross party organisation representing councils in England, is calling on the government to end the practice of putting rent from local authority homes into a government fund that is then redistributed centrally. The LGA is calling for council rent (totalling nearly £1 billion) to be used to build thousands of new council homes and improve existing stock where there is the highest demand for them. Last financial year local authorities built just 245 council homes compared to the 22,000 homes built by housing associations.

The House of Commons Public Accounts Committee has accused the Pathfinder scheme, a government housing programme launched in 2002 to revive the housing market in depressed areas of England, of being more successful at demolishing properties than building new ones. The Committee argued that the schemes have also threatened the historical character of some local areas, although more than £2 billion has been invested. While the scheme refurbished 40,000 properties, it demolished 10,000 and only built 1,000 new ones – which has lead the Committee to claim that waiting lists for affordable accommodation in some areas have doubled.

Housing equity withdrawal, the amount of money borrowed by people cashing in on the increased value of their homes, has dropped by 64 per cent, to a seven year low. During the first quarter of the year the amount of money borrowed against an increased mortgage was £5 billion, down from a little over £7 billion in the previous three months, and well down on the £13 billion from a year earlier. These figures are believed to add to the mounting pressure on consumer spending.

And in more figures released today British construction activity fell at its fastest rate in 11 years in June, adding pressure to the government’s housebuilding targets. The Chartered Institute of Purchasing and Supply (CIPS) added that the housing sub-index was also at its lowest ever, having fallen from 32.7 to 25.6 points in June for the seventh consecutive month. The institute said that the performance of the housing industry was ‘by far the worst, with activity levels falling steeply’.

The National Housing and Planning Unit has waded into the credit crisis saying that even if house prices fall by 15 per cent in the next two years, first-time buyers will not find it easier to get on the property ladder. ‘With affordability stretched many potential buyers will be locked out of owner-occupation,’ said the chairman of the unit. A survey conducted by NHPAU also found that 65 per cent of people in England believe that the government’s aim to build 240,000 new homes a year is ‘about right’ or ‘not enough’.

Yesterday chancellor Alistair Darling announced an increase of £15,000 to £50,000 to guarantee customers’ deposits should another bank go under in the wake of the failure by Northern Rock. But he stopped short of calling on the banks to fund the Financial Services Compensation Scheme after they complained that the move would divert funds needed to deal with the impact of the credit crunch. Instead taxpayers money will be used.

In the South West, estate agents have rejected calls to stop marketing properties to holiday home buyers. The South West Regional Assembly, which controls planning, says the practice of selling family properties as holiday homes was out of hand and prices across the area were ‘at least heavily influenced, if not dictated, by second home purchasers’.

Meanwhile Britain’s biggest builder Taylor Wimpey failed to raise around £500 million in an emergency cash injection and saw its shares halve this morning. The company has been forced to announce plans to close a third of its offices and cut around 900 jobs. The company said it had underestimated the scale of the downturn facing the industry.

Lord Rogers has questioned the ‘authority and objectivity’ of English Heritage after it rejected calls seeking heritage status for Robin Hood Gardens, an estate in east London. A number of eminent architects had claimed the estate, designed by Peter and Alison Smithson, was a modern masterpiece and compared its layout to Bath’s Georgian crescents. However English Heritage disagreed and said the estate was ‘not fit for purpose’ and it now faces demolition.

And finally, the cost of happiness for single people is £13,400 a year and for a couple with two children it is £26,800 a year before tax, according to a survey by the Joseph Rowntree Foundation. That is the amount they would need to earn to pay for essentials such as food and heating, and the odd treat of a cinema ticket or meal out, on top of rent for a modest council house. The survey found that, once the rent or mortgage is paid, singles would need £158 a week, and couples with two children £370 a week for a standard of living adequate enough to make them happy. The figures show that most people below the official poverty line of 60 per cent of median income do not receive enough to achieve an ‘adequate’ standard of living.

The Royal Institution of Chartered Surveyors is calling for a change in stamp duty laws that will benefit first-time buyers and poorer pensioners. Homebuyers have paid £31.5 billion in stamp duty tax during the past 10 years and experts say that neither of these groups should pay a penny more in a long overdue shake up of the current regime which it says is ‘unfair and ineffecient’. RICS feels that groups like pensioners who are only ‘asset rich but income poor’ should not have to pay such a large tax.

Nationwide released its house price index for June this morning. House prices fell on average by 0.9 per cent for the month. Although not as big as the record 2.5 per cent figure in May, it is a growing trend that now sees house prices 6.3 per cent lower than the same time last year and falling for the eighth straight month. The credit crunch and difficulty in getting good mortgage deals is to blame and has led tomany potential buyers staying put.

A 200 strong crowd – armed with a petition signed by more 60,000 people – gathered outside parliament yesterday to protest about eco-towns. The Conservative Party used the protest to announce that it was withdrawing its support of the governement’s proposed sites. Grant Shapps, oppostion housing spokesman, said that a series of government u-turns had ‘watered down’ the green component of the towns and ‘they would never be built’. But the government may seek to push through the towns through the new planning Bill recently passed in the Commons. Housing minister Caroline Flint has proposed that the housing corporation should pay larger upfront sums of money to developers (up to 80 per cent of the cost of a property rather than the 50 per cent now), to improve their cashflow. As part of a wider plan, Ms Flint is also likely to announce broadening of the range of organisations that can build homes; reforms to the mortgage market, such as allowing the housing corporation to act as a clearing house for unsold properties; and a new way of bringing land to the market for building.

As many as 15,000 estate agent jobs could be lost this year as commercial property agents are expected to cut or freeze 75 per cent of staffing, as the lack of cheap bank credit and a decline in property prices halts expansion in business. Meanwhile John Charcol, one of Britain’s biggest mortgage brokers, has announced it will cut its workforce by a quarter and close three offices, after a severe contraction in the mortgage market.