TOP of the wishlist of every would-be homebuyer are two things: more
affordable housing and mortgages that do not spring nasty surprises. Gordon
Brown extended the promise of both this week, in an announcement that
coincided with figures showing first-time buyers are taking on record levels
of debt.
More lower-priced homes are to be built; meanwhile easy-to-understand,
long-term fixed-rate loan deals will be the cure for the repayment shock
blues, the malaise of the summer of 2007. About 750,000 people are now
contemplating an increase of roughly a third in their mortage repayments, as
the discounted fixed-rate offers that they took out two years ago expire. It
is as if their lender had suddenly turned from Primark into Harrods.
The response to Mr Brown’s plans was mostly cynical, and not only because the
proposals had a familar sound. For example, previous projects to deliver
more dwellings, such as the Millennium Communities Programme, have not
reached their targets, mostly because of planning delays. Mr Brown may wish
to liberalise the planning regime. But opposition is already mustering on
websites such as planningdisaster.co.uk, where the Campaign to Protect Rural
England, the National Trust and others are mustering public support.
A great number of parents are now voicing their concerns over their children’s
much reduced chance of ever buying a home while prices remain steep. But
will these same mothers and fathers happily contemplate the construction of
more new homes in their neighbourhoods if this extra supply dents property
values and spoils the view?
For Mr Brown long-term fixed-rate loans lend stability to the housing market,
a view with some validity. Americans used to prefer this type of borrowing.
Their recent enthusiasm for loans with “teaser rates” – which reverted to
exhorbitant standard rates – has been a key contributory factor in the US
housing market slump.
However, the short-term discounted fixed-rate loan offers available in the UK
bear no comparison with such offers. Moreover, lower initial repayments must
always be more attractive to anyone embarking on a house purchase than the
guarantee that their monthly bill will remain at the same level for the next
25 years.
Despite their dislike of repayment shocks, most first-time buyers would
probably still rather take a bet that their income will be higher when their
two-year fix comes to an end and larger repayments loom than take a 25-year
gamble on the direction of interest rates.
First-time buyers do need Mr Brown’s help, however. And there is a far easier
way that he could be of assistance. According to the Property finder
website, some 420,000 homes stand empty in a state of disrepair. Surely
these should be part of the solution to our housing crisis?
MIND THE GAP
Three words summarise the current state of the housing market: “stark regional
differences”. There is no option but to mind the gap as both Nationwide and
the Royal Institution of Chartered Surveyors (RICS) provide evidence that
conditions are anything but uniform. Some areas, such as Northern Ireland –
up 54 per cent since June 2006 and 7.8 per cent over the last quarter –
have, to date, seemed immune to the more expensive cost of borrowing, while
others were close to submission, even before the blow of last week’s fifth
successive rate increase.
But although there is mounting evidence of a widening in the North-South
divide, this is not the whole story. Sometimes the statistics are awkward
and will not submit themselves to simplification, as the Nationwide
highlights.
In England, the annual pace of growth in the South (11.7 per cent) has been
almost twice that in the North, where, in places such as Liverpool, prices
have remained unchanged since June 2006 – a state of affairs that is not
stopping projects such as the planned construction of a 54-storey apartment
block. This will be the highest living space in the UK, in a city already
controversially oversupplied with flats. In Sheffield and Sunderland,
however, prices are 20 per cent higher than a year ago. London (up 15.7 per
cent over a year) looks a laggard by contrast.
But what lies in store for all these areas? Here two words will suffice: more
cooling, even in still-booming locations. Most RICS members report greater
caution among buyers. This Greek chorus on housing market events also notes
that foul weather has dampened spirits, but perhaps not as much as the
prospect of another upward move in interest rates.
YOU CANNOT BE SERIOUS
The recent undersupply in this column of “egregiously, outrageously,
overpriced” American homes (the words of a US property market commentator)
has upset some readers. But this week we can bring you a Beverly Hills
mansion complex on the market for $165 million. For this price you could
have a house in Holland Park and another in Belgravia. anne.ashworth@thetimes.co.uk
I agree that empty properties should be brought into use. To propose the ridiculous levels of housebuilding proposed is criminal - how long can we sustain building 200,000 a year?
Actually, the situation is getting stranger. The Campaign for the Protection of Rural England stated the figure for empty properties in 2006 to be 600,000. I have also heard this week from an estate agent friend that already in Hampshire some 3000 new houses lie empty as well as a couple of thousand new flats in Southampton alone. Why are we building more? Is it we have built the wrong ones or people just cannot afford them?
Andy Webb, Southampton, UK
There is no way on this an RSL or LA could simply take on an empty house tart it up and re-let it. If only life was that simple.
Our customers demand far more now. A roof over their head is not enough. Expectations are so high.
Speak to any housing provider (RSL or LA), and take a look at the customer surveys - they make interesting reading.
L Roberts, Hayle, Cornwall
We (me and my mates down the pub, that is) reckon that
a) Councils should be forced to use the powers that they already have to sequester property that has been empty for more than six months and put it ot good use.
b) It seems that government isn't interested in utilising existing unused property, rather, they prefer to build new; and this gives us pause for thought - we wonder why this is? The more cynical among us can't help thinking that there may be ulterior motives involved.
c) By bringing this massive estate of unused property into the market, it should not be beyond the wit of man to utilise some of it, at least, to provide young people a means of getting their foot on the property ladder.
d) If nothing else, it should work towards stabilising the property market, and could help to lead the way to getting people oriented towards the renting of property (as per some of our European cousins), instead of being obsessed by the idea of ownership.
Mike Thomason, Bury St. Edmund's, Suffolk
It is not too difficult to eliminate the housing problem in my opinion. Owners of empty properties,residential and commercial, should be charged the full council tax or commercial rates on these properties and this should be increased by say,15% every six months if the property remains empty. No doubt it will work wonders.
Adrian, London,
I recall the dreadful mistakes made by both Labour and Conservative Governments after the war in respect of their house building programmes.So many of these brand new properties had to be demolished ,sometimes within 20 years of being built,because they had proved totally unfit for human habitation.I only hope that these promised lower price homes will be designed and built to a much higher standard and that they are not just some gimmick thought up to pretend that our housing problem has been solved.Many people had to suffer appalling living conditions all because the attitude was to put quantity before quality.I hope extremely stringent quality controls are put in place and that the designs are scrutinised very carefully before work starts.Otherwise disaster waiting to happen again !
Mike, Dunstable, England
I am after permission to use an image for a magazine publication from the women only beach story, and would need a high resolution image. Who do I contact regarding this issue?
clare, london, UK
Local Authorities have had the power since April 2006 to take into management any property in their area that has been empty for more than 6 months.
They don't have to spend capital, CPOing them - they can simply take them into management and then let them out to people who need housing.
If the empty property needs repairs the Local Authority can recover the cost from the rental income.
This would save them having to build 420,000 council houses.
Are any Local Authorities using this power?
K Worrall, Manchester, England
"New" Labour put forward an orthodoxy: there is not enough housing. Anyone who questions that view has committed a thought crime.
Timothy Martyn you are absolutely correct. Property left empty for more than a specified time should be subject to compulsory purchase.
Denis, london,
Local councils now have the powers to approach owners who leave properties empty for more than 6 months with a view to taking them over, refurbishing them and then renting them out - with the rent going to the owner. They can only use these powers in full if they have tried other means to persuade the owner to do something - more councils should take this route - it is not the same as compulsory purchase - the owner benefits from having their house done up and professionally rented out - the local community benefits and so do the new occupants.
We live in a small village just outside Norwich - there is a lovely house right next to the school that has stood derelict for years - it is quite immoral that such property should simply go to waste and yet nothing is done. I am no socialist but the owner should at the very least be paying full council tax - since we have to provide the facilities as if they lived in the property.
Huw Sayer, Norwich, England
where are these empty houses? where are the jobs for the people who would live in them?
to blythely assume that jobs are there for the future renters/owners is living in cloud-cuckoo land...
stop raiding the pension funds and encourage people to put money into their pensions again... the only reason house prices are stupid is because people have no confidence in pensions and have pulled their money out and put it into bricks and mortar... hoping to cover the mortgage by renting it out...
a massive correction is long overdue... a lot of people will soon get behind with the payments after the last few interest rate rises have made it through...
there will be repossesions all over again and the blame lies squarely at the foot of Labour for robbing the pension funds.
paulc, gloucester,
Anne states that "...According to the Property finder website, some 420,000 homes stand empty in a state of disrepair. Surely these should be part of the solution to our housing crisis?..." I agree with this entirely. To make this solution actually happen would require compulsory purchase of housing left empty for more than 6-12 months. Is anybody suggesting this? No. Is anybody drafting legislation to make it happen? No. Is anybody willing to bell the cat? No. So it's not actually going to happen, and we'll still be left in the same mess we're in now. Oh joy.
Timothy Martyn, Southampton, Britain
The best way to avoid interest rate rises, fluctuating interest rates, unbearable council tax rises, and the National Identity card being forced upon you is to sell up and take your equity abroad where you can afford to buy something outright, municipal taxes are a often a fraction of those in the UK.
If there is an ID card scheme in the country of your choice, a bit of cardboard with your name and photo riveted on to it will in most instances suffice if indeed you are expected to carry one at all!
How much longer of course UKplc can continue to replace it's citizens (who take their wealth abroad with them thus removing it from the UK economy permanently) with Eastern European's and others who send a large proportion of their earned income back to their home country to improve the living standards of their families (thus removing the money from the UK economy permanently) remains to be seen.
Of course according to Zeitgeistmovie.com the Bank of England just prints some more money!
james Duncan, London, England
This is history repeating.
Steve Lynch, peterborough, cambs
Some common sense please?
What is the alternatiive to buying?
Renting I think.....
As landlords are not charities they make a profit.
It will always cost more to rent than to buy.
Having experience of the idiocy of being told that you don't earn enough to be able to save money by buying should be an essential qualification of property journalists.
JDS
J D S, Cardiff, Wales UK
There is a solution - its called 'Council Houses'.
Renting without making a profit is, and always has been, the answer.
Sadly, many today dont know what the notion of publicly-owned housing is.
Imagine doing something and NOT making a profit - shock , horror.
Local councils buy up all the 420,000 houses and rent them out at 15% of income. Done.
Harry wolf, Vancouver, Canada
Good idea with empty houses but why not build a few of those 54 storey apartment blocks in London as well? I'm sure if they were made nice enough people would want to live in them and it HAS to be one of the most efficient uses of land (which of course means less houses needed on flood plains or in the countryside upsetting the NIMBY's).
OK - in the centre of town might interfere with somebody's right to have an unobstructed view of St Pauls but surely in the suburbs would be OK?
Jonathan Speck, London , UK
There is an innovative new scheme called www.rentb4ubuy.net that is great for first time buyers. It's so cheap to buy - believe me, i'm buying a flat now through them now. Gordon should take note.
dan, nottingham, UK
The empty 420,000 provides evidence in support of the many of us who believe that speculative activity and not undersupply of smaller homes is at the root of the shortage of property for first time buyers.
This government has not discouraged greedy speculation but in fact encourages it with tax incentives. The banks also join in, offering easy access to mountains of credit to those who already have a portfolio of property with inflated equity.
The sad truth in Gordon Brown's Britain is that the way to make a fortune is to be lucky enough to own property to start with, then use your position to buy loads more property, then either leave it empty or rent to people who would have loved to own their own home, while the price escalates.
The way to lose a fortune is to be a first time buyer, suckered into supporting the rotten system and keeping the gravy train going for banks and speculators.
Mark Graham, Belfast,
Makes about as much sense as fudging about obsessing about plastic bags, 4x4s and carbon offset schemes when every year deforestation accounts for more carbon consequence (in terms of 'sink') than the US produces (as emissions).
Priorities, anyone? Prevention better than cure?
It's all about seeming to do things than actually doing anything worthwhile these days.
Surely repair or restoration can be accorded value in the target-obsessed, and rewarding political cultures of today.
Peter 'Junkkdotcom' Martin, Ross on Wye, UK
Funny old world. Houses around me in leafy Berkshire are simply not selling. The vendors are slowly dropping their asking prices 25k at a time. It must be really galling to read about 11% House Price Inflation in a year, when you've had your property on the market for 6 months and dropped the price 50k.
There is a huge divergence between reality and the way property journalists and other vested interests (the BANKS!) constantly talk the market up. Well you can't talk people into daft mortgages in a rising interest rate environment - so the market is now falling. Uncomfortable reading I know, but not, of course for the millions of youngsters priced out of the market by greedy Buy to Let investors.
Mike Wilson, Reading, England
When interest rates reach realistic levels so will house prices.
Brent Calvert, london,
Every area should have an empty homes strategy, but information is very difficult to find. As a first-time buyer myself, I started investigating this route but came to a dead-end.
CB, Sussex,
Gordon Brown spoke about the release of government land owned by defence, NHS etc as the way to hit the new house targets however I am sure that he will not let these organisations sell the land for anything less than market value which will again help to exclude first time buyers. If he had any real desire to help first time buyers he would create JV's to build on government land and sell it at cost to the JV.
Harv, Nottm,
Wow Anne,
Finally bringing some realism to the discussion.
House price correction is unavoidable now
Michele, Richmond, UK