ROOF Blog archive

The government is to offer cash rewards of up to £500 to people who report neighbours they suspect are unlawfully subletting their council home.

Ministers have been told that between 50,000 and 200,000 social rented homes in England are occupied by unauthorised tenants, at a time when waiting lists are full and housing projects have stalled.

They are expected to target 8,000 tenancy cheats in a first wave of investigations this week across 145 local authorities after a trawl of council records by the Audit Commission.

There is a growing crisis as demand for social housing has soared during the recession.

About 1.8m households are on waiting lists in England, while just 60,000 social homes have been built in the past two years.

John Healey, the housing minister, said: ‘We can’t allow cheats to hang on to the tenancies of council houses they don’t need and don’t live in.’

The crackdown will be difficult for subletters, who have no rights or protection if a social home is reclaimed, and who can be evicted in as few as seven days.

Labour’s strategy for tackling poverty has reached the end of the road and Britain risks a return to Victorian levels of inequality, according to a major two-year study by the Labour-affiliated Fabian Society and Webb Memorial Trust.

With 20 per cent of the population still stuck in poverty, the report calls for sweeping reform of the tax and welfare systems under which higher earners would finance more generous, universal benefits.

With all three main parties committed to cut spending to reduce the huge deficit in the public finances, the authors are worried that the battle against poverty will suffer.

They urge the parties to sign up to a new ‘poverty prevention strategy’ – not for the next Budget, but for the next 30 years.

Tim Horton, the Fabian Society’s research director, said: ‘We could be at a tipping point that sends Britain back towards Victorian levels of inequality and social segregation, and makes the solidarity which could challenge that social segregation ever more difficult to recover.’

The Chancellor should double the tax relief on income made from renting out a spare room when he delivers his pre-Budget report on 9 December, according to the National Landlords Association.

The NLA hopes that Alistair Darling can be persuaded to raise the tax-free ‘rent-a-room’ threshold from its current level of only £4,250 – a level it has remained at since being introduced in 1997.

Since that time, rents have more than doubled in most parts of the country, shrinking the value of the original income threshold.

The NLA is one of several organisations supporting the Raise the Roof campaign, which is lobbying for an increase to £9,000 per year.

‘Raising the tax-free threshold for live-in landlords would provide an important boost to homeowners who are facing difficulties meeting their mortgage payments,’ said Chris Norris, NLA policy manager.

‘For many, the extra rental income really could mean the difference between paying the mortgage and losing their home.’

Evidence is growing that the worst is over in the recession-hit property market following a string of cautiously optimistic assessments from the UK’s leading housebuilders.

Persimmon set the tone this month when it predicted a moderate recovery. Barratt, the UK’s largest housebuilder, and Bovis Homes echoed that sentiment with similarly upbeat forecasts.

The number of new homes being built rose to its highest level for over a year in the three months to October, with work starting on 25,000 new properties, an increase of 27 per cent compared with the same period last year.

However, housebuilders are reluctant to be too bold over the prospects of a sustained recovery because of the fragility of the market and the uncertainty over the continuing availability of mortgages.

‘We are way ahead of where we were this time last year, but we’re not out of the woods yet and there could still be plenty of problems for the industry were the banks to pull back lending,’ said Bovis’ chief executive David Ritchie.

Opinion is divided over whether buying or renting is the better housing policy.

Centre for Social Justice Executive director Philippa Stroud argues that property ownership is still one of the best defences against poverty.

Royal Society for the Arts chief executive Matthew Taylor counters that home ownership has increased social inequality in terms of the life chances and assets of people who own their own homes, arguing instead that we should foster a massive expansion in the private rental sector and improve the quality of the houses on offer.

Net migration – the number of people who come to live in Britain minus the number who move abroad – fell by more than a third to 163,000 last year, its lowest level since Poland joined the European Union.

The Office for National Statistics said the fall from 233,000 in 2007 was mainly driven by a rise in emigration to a 17-year high: 427,000 people left Britain to live abroad, up from 341,000 the previous year.

The increase was mainly due to the number of Poles returning home.

Asylum figures show a further fall in the number of fresh claims for refugee status between July and September this year to 5,055 – a decline of 24 per cent compared with the same period in 2008.

Refugee welfare groups said the fall in asylum numbers was not necessarily a matter of celebration but raised fears that the tightening up of Britain’s borders was denying sanctuary to those who needed protection.

Charities are urging the government to do more to help tenants, claiming 1.3 million low income households are struggling with their finances.

Shelter and the Money Advice Trust said 90 per cent of households earning under £20,000 (£25,000 in London) are in financial trouble, compared to 56 per cent in 2006.

They want the government to address affordability in the private rented sector and offer advice and support. Nearly 50 per cent of those in trouble had not received advice in the last year.

According to the survey carried out by the two charities, four out of 10 people on low incomes said their debts were impacting on their health – rising to 50 per cent among households with children.

It also found 60 per cent of households in receipt of housing benefits or local housing allowance received less than the cost of their rent.

Shelter director of policy and campaigns, Kay Boycott, said many tenants at the lower end of the private rented sector faced a ‘daily battle’ to ‘keep their heads above water’.

‘The government must recognise the significant role the private rented sector is playing in bearing the brunt of this recession by increasing funding for advice and support services, and setting out a long-term vision for the sector,’ she said.

Greg and Diane Horoski bought their home before the boom and, when house prices soared, increased their mortgage to finance a small business.

Interest rates rose, health bills poured in, and then the housing market crashed so that they ended up owing thousands of dollars more than their bungalow was worth.

Yesterday they went to court in New York expecting to be thrown out – but instead they emerged with their debt of $500,000 (£300,000) written off and a mortgage-free home.

Judge Jeffrey Spinner ruled that their lender’s behaviour had been ‘harsh, repugnant, shocking and repulsive to the extent that it must be appropriately sanctioned so as to deter it from imposing further mortifying abuse’.

The decision, which is to be the subject of an appeal, offers possible relief for some of the 7.5 million Americans who are behind with their mortgages and face losing their homes.

One in seven homes in America is now in the process of being repossessed as many families find it impossible to pay off the high-interest mortgages that were handed out in abundance when the property market was at its height.

Millions of pounds of bridge and road repair funding was announced yesterday for Cumbria, as residents picked their way back into soaked and stinking properties for the first time.

Work will start as soon as is practicable on temporary crossings at the site of wrecked bridges, whose collapse is forcing long detours for people trying to get to work or school.

Priority action is meanwhile targeting structural and power safety checks, as well as clearing debris from rivers.

About 11,000 households north of Workington were warned last night to make arrangements for emergency telephone links if, as expected, the Calva bridge across the Derwent collapses.

The Conservative Party would scrap home information packs (HIPs) ‘in a matter of weeks’ after coming to power, the Shadow Housing Minister Grant Shapps said yesterday.

The pledge follows claims by estate agents that the packs are impeding a housing market recovery, as potential sellers regard the typical cost of between £300 and £400 as another disincentive at a time when homeowners are already reluctant to move.

One of the reasons that property prices have risen since April is that the amount of stock on the market is low. Mr Shapps said: ‘House prices are rising because supply is restricted. HIPs have not helped.

‘The main priority is to scrap them. They are easy to suspend and there are emergency powers we can use to do so. This can happen very quickly. HIPs will be gone in a matter of weeks.’

Banks were today accused of profiteering from homeowners during the recession, as it emerged that the average interest charged on variable-rate mortgages is 4.2 per cent higher than the Bank of England’s base rate.

The average Standard Variable Rate mortgage now charges interest rates of 4.7 per cent, down only one per cent over the past year – when the base rate fell by 2.5 per cent. Vera Cottrell from consumer watchdog Which? said the variable rate market was ‘raising serious concerns’.

She said: ‘Lenders are getting away with charging very high mortgage rates right now, many have an incredibly high margin between base rate and the interest being charged. That’s offering consumers a poor deal.’

Demand to build council homes is far exceeding government expectations, putting pressure on the Treasury to release extra cash as part of the spending review next month.

The pressure amounts to an end to the 20-year effective moratorium on council house building, amid a new cross-party consensus to build council homes.

Nearly 90 local authorities, including large Conservative ones such as Birmingham, have bid to build a further 3,500 council homes as soon as possible.

The Department for Communities and Local Government (CLG) had planned and budgeted for a demand to build 1,200 homes.

The bids come on top of 49 councils that were given the go-ahead by CLG in the summer to build 2,200 homes on the condition that they were on site by March next year.

The unexpectedly large number of local authorities bidding in the second round represents the largest potential council house building programme in more than two decades.

The Government’s stamp-duty holiday on properties sold for less than £175,000 has not helped nearly as many homeowners as first predicted.

Figures obtained by property website zoopla.co.uk show that in the first 12 months of the holiday until 1 September, buyers saved just £173m compared with the £600m predicted by the Government.

A combination of factors lies behind the disparity. First-time buyers – the most likely to benefit from the holiday – have found it hard to get mortgages due to tight lending criteria. Transaction levels have also been lower than normal across the whole market with a shortage of properties to buy.

Conservative councils are less likely to grant planning permission for new homes than other local authorities, according to research by McGrigors, the commercial law firm.

The gap is not large – 63 per cent of applications were approved by Tory-controlled councils compared with 69 per cent in authorities under Labour, Liberal or no overall control.

But given that the Conservatives control half of all councils with planning permission powers and are likely to make further gains in elections in May, the outlook could well be an even more severe housing shortage in the long-term, the law firm said.

On top of that, Conservative control is most heavily concentrated in the south-east where housing shortages are most acute.

Six of the 10 local planning authorities with the lowest approval rates, all below 45 per cent, were run by the Conservatives. They were Castle Point, Wycombe, Chiltern, Wokingham and Reigate and Banstead in the south east, and the Forest of Dean.

More help was offered to struggling homeowners as the government officially named 34 repossession ‘hotspots’ across the country – including Sedgefield, Tony Blair’s old constituency, and four areas of London.

John Healey, the housing minister, warned that the risk of repossession would ‘stay high throughout next year’, prompting his department to announce it was stepping up support for homeowners in financial difficulty by extending a campaign offering impartial free advice, and tightening rules to make sure repossession is always the ‘last resort’.

More than 300,000 families have already benefited from the advice and support the government has put in place during the recession, the communities and local government department said.

Healey said he was extending the local drive to encourage people to seek mortgage help and advice into 34 areas considered at greater risk due to high levels of unemployment and numbers of court orders for repossessions.

The Council of Mortgage Lenders (CML) reported yesterday that buy-to-let lending rose by 10 per cent in the three months to September, compared with the previous three months, after a period of near-hibernation for landlords who were hit particularly hard by the mortgage drought.

The CML said that buy-to-let demand for new purchases was ‘appreciably stronger’ than for remortgages, amid continuing lending constraints that force landlords to stay on their existing deals.

The CML pointed out that although the slight uptick in buy-to-let lending was welcome, it was from a low base.

Michael Coogan, director-general of the CML, said: ‘At this stage the recovery is modest, but the figures show that buy-to-let is here to stay.’

The Council of Mortgage Lenders (CML) has cut its forecast for the number of repossessions this year to 48,000.

Having anticipated 75,000 repossessions in 2009 in last year’s housing market forecasts, the forecast had already been revised down to 65,000 in June, but is now being cut again in recognition of lender forbearance, government measures and the beneficial effect of continuing low interest rates which are helping most borrowers facing difficulty to keep their homes.

Commenting on the latest arrears data and on the new forecasts, CML director general Michael Coogan said: ‘In terms of new lending next year, we expect a modest increase.

‘But it is difficult to see the case for a dramatic upturn in the absence of significant improvement in the wider economic picture. There is a risk that public spending cuts and higher taxes could choke off recovery. So, although we have become more optimistic, we remain cautious about market prospects.’

The immediate prospects for Britain’s economy are grimmer than in any previous forecast and output is unlikely to revert to pre-crisis levels before 2011, the Bank of England said in a stern warning yesterday.

Presenting the Bank’s quarterly Inflation Report, the Governor, Mervyn King, was at pains to stress that, while the economy might soon return to modest growth, that was not necessarily a cause for ‘bunting and celebration’.

The fall in GDP of about six per cent had been severe and the ‘prolonged period of balance-sheet adjustment’ now beginning would hold back growth, Mr King said, adding that output was ‘unlikely, at least for a considerable period, to return to a level consistent with a continuation of its pre-crisis trend’.

The economy, he said, had ‘only just started on the road to recovery’ and the Bank believed that inflation was ‘on balance more likely to be below the target than above it for most of the forecast period, though by the end the risks are broadly balanced’.

Research by the thinktank Resolution Foundation shows low-income households – with an average of £15,800 at their disposal – are walking an increasingly precarious financial tightrope.

It has found that 24per cent of low-wage households spend more than a quarter of their monthly income on debt – twice the number from three years ago.

The study shows nearly a third of low-income households have high loan-to-value mortgages and are in negative equity, making them vulnerable to homelessness if they lose their job.

Sue Regan, chief executive of Resolution Foundation, said: ‘What’s important is not so much about when we get out of recession. It’s how sustainable the economy will be going forward if we increasingly see low-income households default on loans or lose their house.

‘If we don’t address this, it has got big economic ramifications for UK plc.’

The foundation is calling for high-street banks to involve themselves more in debt counselling when low-income households miss their first mortgage payment.

A subprime lender has agreed not to repossess for at least six years the home of a man who fell into arrears in what is believed to be the first legally binding deal of its kind in the UK.

Blemain Finance, an arm of the Blemain Group, reached the agreement in a High Court case with Peter Bentley, a carpenter from Bridgend who had lost wages as he cared for his sick father.

The deal is the latest victory by aggressive personal claims companies that are taking on companies responsible for a spate of lending during the credit boom to households that are now struggling to repay.

Personal insolvencies continue to rise, with almost 100,000 in the year to September.

Carl Wright, of Cartel Client Review, the Manchester-based personal claims company, which took Mr Bentley’s case, has been using a clause in the 1974 Consumer Credit Act to argue that many lenders have an ‘unfair relationship’ with uninformed consumers, who often sign up for loans they can ill-afford and which carry heavy penalty charges.

More than 900,000 homes and businesses in England and Wales could be at the highest risk of flooding by 2035 without increasing investment in defences, the Environment Agency has warned.

The agency said the number of properties at the highest risk of inundation could rise by 60 per cent from current figures of 560,000, as it outlined a new five-year strategy, including plans to protect an extra 200,000 homes and businesses from flood waters.

The agency said that in the past five years, 156,000 properties had been protected against flooding.

Chief executive Paul Leinster said: ‘Less waste is going to landfill, more properties are protected against flooding, pollution incidents have halved since 2000 and there are more fish and wildlife in lakes and rivers.’

But he warned: ‘Climate change is already affecting the UK and the challenges we face as a result are only going to get tougher and more properties could be at increased flood risk.’

London Mayor Boris Johnson has urged MPs to show children living in overcrowded homes the same concern as they have shown battery chickens.

More than 270 MPs have signed a parliamentary motion calling for better living conditions for chickens.

The mayor and Shelter are calling on the government to rewrite definitions of overcrowding, which they say was promised in 2004. About 330,000 children in London live in overcrowded homes, Shelter says.

Current legislation passed in 1935 means a family of four living in a one-bedroom flat are not classed as being in overcrowded accommodation.

Shelter’s director of policy and campaigns, Kay Boycott, said the number of children living in overcrowded homes has gone up 10 per cent in two years. ‘People cannot afford to move to larger homes when they have children,’ she said.

‘The legal standard for accommodation needs to be rewritten by government. Living in confined conditions has a devastating effect on family life, especially children’s safety, health and education,’ she added.

Construction will start on a third fewer social homes next year, in a vivid sign of wider impending restraints on government spending.

The news comes as the country’s property quango the Homes and Communities Agency (HCA) reveals that the value of its development assets has plunged £1.1bn as a result of the housing crash.

But this financial fillip will only have a temporary impact, according to targets set by the HCA. Overall completions will continue to rise from a total of 55,625 this year to 61,500 next year, partly as a result of the government’s injection of money.

But housing starts will drop away next year, suggesting that there will be fewer completions in the coming years.

Only 29,900 grant-funded housing starts are scheduled for 2010-11, a drop of 34 per cent from the 45,500 target for the current financial year.

Of those, the number of social rented homes built under the National Affordable Housing Programme will halve from 30,389 in 2008-09 to 14,500 next year.

Britain’s estate agents have reported the most widespread surge in house prices since the pre-crash days of late 2006, with cheap money and a shortage of properties creating boom conditions in parts of the country.

In its monthly snapshot of the market, the Royal Institution of Chartered Surveyors (RICS) recorded evidence of gazumping and sales of £5m homes, and predicted that the pick-up in selling prices would continue over the coming months.

Although sales of homes remain around half the levels seen before the crash, a separate report also out today from the British Retail Consortium found that shops selling household goods and furniture were benefiting from a rising property market.

RICS spokesman Jeremy Leaf said: ‘Although the supply of property is beginning to pick up, it is still insufficient to keep pace with the increase in demand, which points to further price gains in the near term.’

The government is expected to announce modest rent reductions for around two million housing association tenants, despite a survey of tenants showing that most are against a rent cut.

The associations – the main providers of social housing – fear that such cuts will lead to a sharp fall in the level of affordable house building because they will be unable to raise the necessary loans for new building.

But ministers are determined to press ahead with the first ever rents cut, despite an opinion poll by the National Housing Federation (NHF), which represents the associations, showing that almost 70 per cent of tenants do not want a reduction.

The NHF says that even a small cut will reduce their income, already well down as a result of the recession, by millions of pounds.

NHF chairman, David Orr, said: ‘Faced with such a shortfall, associations could be forced into cutting back dramatically on the key services tenants really value, such as anti-social behaviour programmes, job training schemes and education initiatives.’

Tenants living in social housing would be able to benefit from a national house-swap scheme planned by the Conservatives, Grant Shapps, the shadow housing minister, said today.

He told the National Housing Federation conference that the Tories wanted to make it as easy for social tenants to move as it is for people living in private housing.

Under the current arrangements, social tenants are four times less likely to move than people who rent privately.

‘If you are a social tenant, you don’t have the same opportunities as other renters or home-owners. The system means that your aspirations are squeezed, your expectations lowered, and your horizons are limited,’ Mr Shapps said.

‘Today I can announce that a future Conservative government will facilitate a nationwide affordable-house-swap programme.

‘We will introduce an open database connectivity platform to ensure that – for the first time ever – every family in social housing will have the chance to relocate by exchanging their home for another one, anywhere in the country.’

The economy shrank by 0.4 per cent in the three months to the end of October, an unchanged rate of contraction from the third quarter, the National Institute of Economic and Social Research (NIESR) has estimated.

The projection of continued weakness came after official figures showed that industrial production in September had picked up after factory stoppages caused a sharp fall in output during the summer, but there were no signs yet of a sustained upturn.

NIESR director Martin Weale, said: ‘People have been hoping for a clear recovery and that isn’t visible yet. The past pattern doesn’t lead us to think there has been a strong turnround.’

Mr Weale foresees the economy bouncing along the bottom at depressed levels of output for some time, even if spending brought forward to the fourth quarter to avoid the hike in VAT rates early next year provides a modest boost to growth in the short term.

Estate agents reported that five house hunters were registered with them for every property they had on their books last month.

But the high level of demand is failing to translate into increased sales, with estate agents selling an average of 7.7 properties each, down from 8.5 in September.

The number of buyers also dipped slightly to 287, down from 294 in September. But it remains a significant increase on the 196 house hunters for the same month last year, according to the National Association of Estate Agents (NAEA).

The heightened demand is a result of fewer properties on the market, with estate agents reporting that the average number of properties available for sale per branch dropped from 62 in September to 57 in October.

Melanie Bien, of mortgage brokers Savills Private Finance, said: ‘Family homes are in particularly short supply and prices are being sustained because of the demand for each property that comes onto the market.

‘Until more properties become available and finance is more readily accessible to those with small deposits, the number of transactions will remain woefully low.’

Shelter is calling for greater tax breaks for householders who rent a room to lodgers, because the tax threshold – the amount a person can receive in income before paying tax – is so low it puts people off from offering a room to potential renters.

The present threshold of £4,250 hasn’t changed since it was set in 1997, despite rent rises of more than 110 per cent since then.

But Shelter believes many more homeowners, especially those struggling with mortgage costs, would rent out a room if they didn’t have to worry about tax repercussions.

Shelter director of policy and campaigns Kay Boycott said:

‘In the current economic climate, many homeowners are battling to meet their mortgage payments and many are looking for options to maximise their income.

‘If the rent-a-room threshold was higher and the scheme better publicised, it could prove a real incentive for people to take in a lodger, and the take up of rent-a-room opportunities could increase.’

Shelter is calling for the threshold to be raised to £9,000 a year to reflect rising rents, which would cost the Treasury around £5 million per annum, plus a publicity drive to ensure greater take up of the scheme.

Northern Rock has had its busiest quarter as a mortgage lender since the credit crunch two years ago, lending £1bn in the three months to the end of September.

But the nationalised lender, which is to be split into a ‘good’ and ‘bad’ bank before being sold off, is continuing to suffer a rise in the number of customers falling behind on their mortgage payments.

In the third quarter 4.11 per cent of its mortgage customers were three months or more late on their repayments compared with an industry average, compiled by the Council of Mortgage Lenders, of 2.42 per cent.

The lender blames its problems with arrears on the Together product sold by the previous management which allowed customers to borrow up to 125 per cent of their value of their home.

Northern Rock chief executive Gary Hoffman stressed that the bank was trying to avoid repossessing the homes of customers facing payment difficulties:

‘We continue to invest a lot of effort in our approach to debt management and to providing the best possible support we can in all circumstances’, he said.

The housing market rebound showed no sign of slowing in October, according to the latest figures, with prices rising by 1.2 per cent.

Halifax said that the increase was the fourth consecutive rise by its measure.

House prices are now 7.1 per cent higher than they were six months ago and 2.9 per cent higher than in December last year, the lender said.

Prices in the three months to October were 2.9 per cent, or £4,667 higher than in the previous three months.

Halifax said that there were early signs that more people were beginning to put their homes on the market as conditions improved; a trend that economists have said could lead to a relapse in recent price rises.

Howard Archer, chief economist at Global Insight, said: ‘Personally, I’m sceptical that house prices can go on rising for much longer. That’s not to say that they will fall off a cliff – I just don’t think the economy is strong enough to sustain these increases.

‘A relapse in house prices will be even more likely if the recent firming trend leads to more properties coming on to the market, thereby moving the supply-demand balance away from vendors towards buyers.’

Crisis, the charity for homeless people, is launching a campaign to resist unpopular plans by the government to ask housing benefit claimants to pay back up to £15 a week they are allowed to keep if they negotiate cheap housing deals.

The Department for Work and Pensions had planned to end this after calculations showed it could bring in £160m.

For some of the least well-off, the change could amount to £15 a week, reducing by a fifth the cash in hand of someone receiving jobseeker’s allowance of £69 and leave some of the poorest families across the country some £780 worse off over the year.

Leslie Morphy, Crisis chief executive, called on the government to reconsider, saying: ‘This proposal would have a grave impact on some of the poorest households.

‘It’s not even likely to make the savings the government hopes, because claimants will no longer have an incentive to seek cheaper properties and landlords may simply raise rents to meet the maximum local authority level.

‘For people who are already struggling to make ends meet, losing a huge chunk of their income will make it even harder to get by and we are worried that this could lead to an increase in debt, rent arrears and homelessness.’