ROOF Blog

According to the Times today, Gordon Brown could announce as soon as next Tuesday a ’mortgage rescue’ package – a series of measures aimed at encouraging councils and housing associations to offer struggling homeowners financial help in return for a financial stake in their homes. The newspaper understands that town halls will also offer first-time buyers help with deposits in return for a small equity stake, and local government will also be given extra money to buy empty, unsold, new property. But the government appears to have vetoed a proposal to allow councils to compete as mortgage lenders, and has withdrawn plans for a stamp duty holiday.

The eco-town saga rumbles on as Tesco confirms it has pulled out of one of the proposed developments. Tesco owns 80 per cent of the land that was going to be developed into Hanley Grange, a 12,000-home town near Cambridge. After opposition from local campaigners and councils, Tesco announced yesterday that it was dropping the eco part of the proposal, but may try to press ahead with a conventional development. This takes to a quarter the developers on the shortlist for 15 eco-towns who have now abandoned the project.

And local opposition has also given hope to some residents in east Manchester who feared their homes would be demolished as part of a regeneration scheme. Around 550 homes on Toxteth Street are facing compulsory purchase orders under the government’s Pathfinder scheme where their homes will be pulled down and replaced with two and three storey townhouses, and while many owners sold up, about 70 people are still holding out. They are arguing that compared with demolishing the properties, the community benefits, environmental impact and cost of ‘rehabilitiation and refurbishment' will transform the area.

The government has released its code of guidance that local housing authorities should take into account when framing their allocation schemes to offer a choice of accommodation to housing applicants. The guidance says that choice-based letting schemes can have a positive impact on the way social housing is viewed.

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.

UK household income has doubled in real terms during the past 50 years, and our spending patterns have changed. In 2006, basic necessities including food, accounted for a smaller proportion of the household budget, while more was spent on housing, leisure activities, travel and cars. In 1957 three items – food, fuel and rent, made up nearly half of all household expenditure. By 2006, the cost of housing including mortgage repayments, home improvements and rent had more than doubled and now take up 22 per cent of household spend, up from 9 per cent in 1957.

Meanwhile the strength of the housing market has been blamed for British households’ lack of savings. The proportion who save money has increased by only 6 per cent in the past 50 years – from 37 to 43 per cent. More than half do not put money aside regularly, and Capital Economics believes that the housing market has exerted a strong influence on the number of savers, as mortgages repayments absorb more of family budgets and savings are dismissed as a lesser priority.

A campaigning group, Splinta, wants sellers to keep the right to put their home on the market before their home information pack (Hip) is finalised. Currently, owners can market their properties as soon as they have commissioned a Hip, but from June this year, the Hip will be needed first. Splinta fears the move will be another blow to the ‘health of the housing market’.

According to fund manager Neil Woodford of Invesco, house prices will fall by up to a tenth this year, with the average home dropping by £18,500 or £50 per day. He warns that losses will be large for owners of new-build flats aimed at the buy-to-let investor, which he says are ‘almost unsellable’.

Repossessed homes are already ‘flooding the market’ according to Europe’s largest residential property auction house, Allsop. Almost 40 per cent of homes currently on their books are being sold by banks and building societies after repossessing them. This is double the proportion for the same time last year.

European governments and the European Commission are being urged to hasten the development of houses that produce no greenhouse gases and to better enforce green building codes as a report from the European Energy Network (ENR) is released today. The ENR says that national governments should prioritise the introduction of energy performance certificates that give a house an energy rating. Britain will be introducing certificates and have set a target of building zero-carbon homes, to start from 2016.

The National Housing Federation has attacked yesterday’s Cave report on regulation for being too bureaucratic and short changing tenants (it wanted housing association boards clearly accountable to tenants). However, the CIH welcomed Cave’s ‘tenant-first approach’.

Ruth Kelly’s full speech at Harrogate, which includes more on the Cave review and Communities England, is now on the DCLG website.

Also at Harrogate, the key role housing plays in community cohesion was highlighted in a speech by Housing Corporation deputy chief executive Steve Douglas. And CIH president Paul Diggory called for £11.6bn for housing in the spending review and said buy-to-let tax reliefs were harming first-time buyers.

Mortgage lending reached a record £30.6bn in May – 5% up on a May 2006 – according to CML figures released this morning. However, the rate of growth was down from the 12-14% seen in the last few months.

An SNP scheme to give a £2,000 grant to first-time buyers in Scotland has been assessed as ineffective in Australia, where the idea was pioneered, reports the Herald.

The Mirror has details of 47 Labour MPs – including Ruth Kelly – with majorities smaller than the waiting list in their area.

Super-rich foreigners are using non-domiciled tax privileges to drive up house prices, reports The Independent.

A million tenants living in private rented housing are living with the fear of eviction if they compain about poor conditions, according to a report today by Citizens Advice. The report calls for protection against retaliatory eviction. More details are in the next issue of ROOF, published next week.

House prices have already reached 10 times earnings – the nightmare scenario predicted last week for England by 2026 – in many rural areas, according to Stuart Burgess, chairman of the Commission for Rural Communities. Speaking ahead of a conference tomorrow, he said prices were already 13 times earnings in areas such as national parks.

Britain’s top 10 housebuilders have enough unused land with planning permission to build 225,000 homes – double their current output, according to a Royal Town Planning Institute research reported in the Financial Times today. RTPI policy director Kelvin MacDonald says in a Guardian article that it is wrong to focus just on the planning reforms as the solution to the housing crisis.

Conservative housing spokeman Michael Gove called for a government apology over the collapse of Move UK, the national mobility scheme for social tenants, in oral questions in the Commons yesterday. Communities secretary Ruth Kelly said she regretted the collapse and would work to develop the choice-based lettings scheme to offer more mobility.

The National Association of Estate Agents has condemned the new timetable for the introduction of home information packs (HIPs) as ‘a shambles’. It wants energy performance certificates should be introduced immediately and the rest of the packs scrapped pending further consultation.

Papers including the Daily Mail cover research from the Halifax showing average house prices are now more than £100,000 even in the cheapest towns in England.

The Mail also reports a forecast from the respected Ernst & Young Item Club that interest rates will stay ‘painfully high’ until at least 2011.

Young people leaving care are being placed in unsuitable accommodation where they are harrassed and bullied by other tenants, according to research by the charity Rainer reported in The Guardian.

Former home secretary David Blunkett says council homes should be given first to Britons on the waiting list to help tackle angle about immigrants jumping the queue, reports The Observer.

The Observer also reports on cold-calling canvassers persuading tenants to take on huge right-to-buy loans.

The Financial Services Authority has warned banks they are taking on ‘substantial risks’ with sub-prime mortgages, reports Saturday’s Financial Times.

Papers including the Guardian and Telegraph cover plans for ‘sin bins’ for anti-social families in yesterday’s launch of the government’s network of family intervention projects.

The Financial Times reports on contrasting indicators for the housing market: the latest RICS survey showing that the house price bubble is still growing and a report from Datamonitor that says it may be about to burst.

The Housing Corporation has announced extra incentives to tenants buying under the struggling social homebuy scheme. Tenants who part-buy will get a discount when they staircase up as well as when they buy their intitial share.

Leading UK sub-prime lender Kensington has issued its second profit warning in three weeks, according to the Evening Standard.

FRESH CONFIRMATION of the squeeze on first-time buyers comes in new figures from the CML today.

The average first-time buyer borrowed a record 3.29 times their income to buy a home in November and the average advance is now almost £114,000. Meanwhile, interest payments now make up 17.8% of their income, the highest proportion since 1992. The figures are especially worrying when you consider that these are the people who actually succeeded in buying, that many of them still had to rely on help from their families and that interest rates increased in November and again this month.

Last week the RICS reported that the up-front costs of buying a home – the deposit and stamp duty – now account for 82% of the annual take-home pay of the average first-time buyer household. This prompted it to brand government plans to create an inclusive society as ‘a pipe dream’.

NEW POWERS for tenant management organisations to take out anti-social behaviour orders and new funding [customary caveats about whether it really is] for arm’s length management organisations were served up alongside the tea and toast at a Downing Street breakfast summit for housing stakeholders this morning.

Go here for the No 10 briefing and here for the DCLG press release.