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UK Housing Crisis: More than 8.4 Million Affected

There has never been any doubt as to the extent of the severity of the UK housing crisis. However, a new report published by the National Housing Federation claims that the issue is significantly worse than previous estimates suggested.

According to the NHF, there are currently at least 8.4 million people living in England in an insecure, unaffordable or unsuitable dwelling. The report also suggests that the housing crisis is having a detrimental impact on all age groups and all regions across the country.

In response to the report, government representatives once again stated that 430,000 additional affordable homes have been made available since 2010, underlining a so-called commitment to affordable housing. Nevertheless, the figures from the NHF paint a picture of chronic overcrowding and affordability issues, resulting in millions living in entirely unfavourable conditions.

The study was carried out for the National Housing Federation by Heriot-Watt University, analysing data gathered from more than 40,000 people for the annual Understanding Society survey. The findings were reached by scaling up the figures to match the population of England, which currently sits at around 56 million.

According to the report published by the NHF:

  • At least 3.6 million people in England live in overcrowded homes
  • More than 2.5 million cannot afford their mortgage or rent payments
  • A further 2.5 million live in properties they can’t afford to move out of, which may include living with an ex-partner, adults living with parents, unwanted house sharing and so on
  • Approximately 1.7 million people live in housing that is not suitable for their needs, such as elderly residents in properties they cannot safely move around
  • A minimum of 1.4 million people live in homes considered ‘poor quality’ that do not satisfy their basic requirements
  • Up to 400,000 people are either homeless or face the risk of becoming homeless – a figure that incorporates people in temporary accommodation, individuals living in homeless shelters and those who sleep rough

The report published by the National Housing Federation also highlight the fact that many of those affected by the housing crisis have more than one of the issues outlined above. For example, it is not uncommon for people to live in overcrowded homes that are not suitable for their needs and still struggle to meet their monthly rent payments.

Calls for More Social Housing

One of the most important findings highlighted in the report was the estimated 3.6 million people who are only able to live comfortably and within their means in social housing. This would amount to around twice the number of people currently on the social housing waiting list, according to official government figures.

On average, rents for tenants in social housing are approximately 50% cheaper than comparable properties from private landlords. Nevertheless, there is already a huge deficit in availability, as demand for social housing continues to outstrip supply. According to the NHF, the country currently needs a minimum of 340,000 new homes to be built every year, including no fewer than 145,000 social homes to cope with demand.

“From Cornwall to Cumbria, millions of people are being pushed into debt and poverty because rent is too expensive, children can’t study because they have no space in their overcrowded homes, and many older or disabled people are struggling to move around their own home because it’s unsuitable,” commented Kate Henderson, Chief Executive at the National Housing Federation.

Meanwhile, the government reaffirmed its commitment to clamping down on illegal and unscrupulous landlords, ensuring property letting costs are brought under control and capping deposit requirements for private property lets. A representative of the Ministry of Housing, Communities and Local Government said that these and other efforts are currently saving private tenants a collective £240 million per year.

Other Finance News

House Prices in Britain Hit Slowest Growth Period Since 2012

New figures published by the Office for National Statistics (ONS) have painted a somewhat bleak picture of the UK Housing market. As Brexit uncertainty continues to affect demand, national house-price growth for Britain fell to just 0.7% for July – a significant fall from the 1.4% in June. This is the slowest recorded growth rate since 2012, according to the ONS.

Four of nine English regions experienced significant falls in average house prices, concentrated primarily in the north-east. Year-on-year, the average UK property price increased a disappointing £2,000 to hit £233,000 in July.  Average house prices remain at their lowest in the north-east, where a typical home now costs £127,000. This is also Britain’s only region where average property prices are still below those recorded before the 2008 financial crisis.

Much of the slowdown has been blamed on Brexit uncertainty, with both buyers and sellers showing reluctance to make important decisions. Some economists have stated that falling house prices could play into the hands of first-time buyers, though there is still enormous disparity between average earnings and typical UK property prices.

Unsurprisingly, London is still the most expensive place to purchase a property in the UK – average property prices having fallen 1.4% to hit £478,000.

Speaking on behalf of Zoopla, research and insight director Richard Donnell warned that the current trend was likely to continue well into next year.

“The reality is that buyers are simply being more cautious and this has reduced the impetus for house-price growth,” he said.

“Weaker levels of house-price growth are set to be a feature of the market for the rest of this year and the first half of 2020 at least.”

Significant Declines in the South East

Following in the footsteps of London, the South East of England now seems to be headed for an on-going market correction. Founder and director of independent estate agents James Pendleton, Lucy Pendleton, commented on the ‘dramatic’ situation in the region.

“Until now it was London undergoing a bit of a reality check, but the south east has stolen the capital’s crown as the biggest loser in dramatic fashion,” she said.

“The property market across the whole of the south of England has seen annual falls of late and in a funny way that’s a good thing,”

“It is encouraging sellers to be more realistic, particularly those who are selling in London and buying elsewhere.”

PwC economist Jamie Durham highlighted how despite 17 consecutive months of property value declines, London’s property market remains almost completely inaccessible for most.

“Nonetheless, the capital remains the most unaffordable in the country at an average price of £478,000,” he said.

“Among other factors, the capital and surrounding areas are particularly affected by Brexit uncertainty, and price growth is likely to remain weak or negative until this uncertainty subsides.”

The Brexit Effect

One of the few things on which most economists agree is the extent to which the so-called ‘Brexit effect’ is maintaining a stranglehold over the UK property market. Particularly from the buyer’s side of the equation, it’s understandable that consumers and investors simply don’t have the assurances they need to make such enormous decisions.

Irrespective of whether or not the UK crashes out of the European Union on October 31, experts aren’t expecting to see a radical turnaround in the near future at least.

Company News

UKPF Demonstrates Capacity to Perform in Two New Cases

At UK Property Finance, we’re always proud to share our success stories with the world. Having recently assisted two more clients with what seemed difficult tasks, we’ve once again demonstrated our capacity to perform when put to the test.

Along with a cost-effective remortgage in just 9 days for one client, we successfully organised two main-stream mortgages for an experienced investor with complicated requirements.

Here’s how the team at UK Property Finance handled these challenging cases:

Case 1: Scott – 9-Day Remortgage

Our Northern Irish clients were looking to urgently raise funds by way of a first charge mortgage on their unencumbered main residence to consolidate historic gambling debts, repay expensive payday loans and carry out some major upgrading works inside the home.

Both clients were self-employed and had an adverse credit history. UK Property Finance were able to clearly relay the clients circumstances and source the most competitive fixed-rate deal in the market that met their needs and preferences with no upfront fees payable. They were also able to use the lender’s solicitors at no cost to them.

Our UK wide document collection company met with our clients on the same day as initial contact and all required information was immediately gathered from the client at the start of the application process. This meant that once the application was submitted, UK Property Finance were able to process the application immediately to offer and completion took place 9 days after initial contact with minimal further involvement from our clients.

Case 2: Levy – Two Mortgages to Purchase a New Investment Property

Our client was looking to purchase a Buy to Let (BTL) property, which they intended to convert to a House of Multiple Occupancy (HMO) to increase the value and potential rental yield. They had a small amount in savings and wanted a mortgage for the remainder of the purchase price. However, due to the condition of the property, they were not able to raise all they needed to borrow by way of a first charge mortgage on the property to be purchased.

Luckily for our clients, they had an unencumbered residential property they were willing to use to raise the extra funds. UKPF were able to remortgage their residential property to raise capital towards the purchase, with the remainder coming from a mortgage on the purchase property.

We were able to obtain a mainstream deal for our client, by utilising our excellent lender relationships and by clearly explaining to the lender the nature and timeframe involved in the works needed to finish the HMO conversion.  The lender as such provided our client with a mainstream BTL product.

Due to our streamlined processing route, UK Property Finance were able to process the cases quickly and efficiently and negotiate with the client’s solicitors, in order to ensure that both mortgages completed simultaneous. The client now has a further investment property added to his portfolio.

Ask the Experts…

At UK Property Finance, challenging cases and urgent financial requirements are our forte. Whatever your requirements and however many times you’ve been turned down elsewhere, we’ll help you access to finance you need at a price you can afford. Contact a member of the team at UK Property Finance anytime for more information.

Other Finance News

Could Buy to Let Investors Rescue Plymouth’s Empty Student Homes?

There’s a growing housing issue in several major UK cities, which contrary to the usual trend concerns supply outstripping demand. Regions with sizeable student populations are typically goldmines. For around 75% of the year, tens of thousands of properties are needed to accommodate learners. All of which adds up to a guaranteed income for building owners and landlords…in normal circumstances.

Unfortunately, things appear to have taken a turn for the worse in Plymouth.  This autumn, it’s estimated that up to 2,000 student bedrooms across the city could be vacant. All at a time when demand for quality student properties should be outstripping supply by a significant margin.

According to a local student letting expert, far too many flats have been built across the city at a time when student numbers are actually in a state of decline.  The result of which is a crisis in the making, wherein any number of major developments risk standing vacant during peak student season.

A particularly severe issue for the city of Plymouth, which relies heavily on a sizeable year-round economic contribution from its student population.

“I’m seriously concerned,” said Henry Hutchins, chief executive of Clever Student Lets.

“I can see between 1,500 and 2,000 empty units in Plymouth.”

He also reported dealing with at least one landlord who now faces going out of business, which has been unheard of for student property owners over recent years.

The speed at which new student properties have been built across Plymouth has resulted in far more vacant inventory than the city needs. Over the past year alone, an additional 5,243 student bed spaces have appeared across Plymouth.  Many of which accommodate imposing skyscrapers and former commercial properties.

Far from accommodating a swelling student population, all this is happening at a time when student numbers in Plymouth are on the decline. According to official figures from the University of Plymouth, the city’s approximate student population has plummeted from 32,000 in 2010/11 to 21,000 in 2017/18.

Experts have also commented on the declining numbers of international students choosing to study in Plymouth.

Mr Hutchins highlighted the economic impact of approximately 11,000 fewer students living and studying in the city.

“Students are spending £300 million a year in Plymouth so if you take out 30 per cent fewer students that’s about £90 million less being spent in the city centre,” he said.

“I’m worried about that spend and the effect it will have on retail and employment.”

“The whole market is under pressure. I’ve been stating this for two years and no one has taken notice and now it is going to have a real effect in Plymouth.”

He and other experts are predicting a slow but gradual increase in student numbers over the years to come, but can also see a number of student flats and buildings being repurposed into conventional apartments.

“They might have to re-jig the market,” he said.

It’s therefore possible that the issue could play directly into the hands of the savvy buy-to-let investor. On one hand, it’s often true to say that purpose-built student apartments aren’t of the same quality standard as more conventional city-centre flats. They also tend to be smaller in size and of a somewhat nonstandard configuration. All of which could add up to significant re-development costs for investors.

At the same time, however, desperation and urgency on the part of vacant property owners could lead to significant price reductions. The money saved on the initial purpose of the property could therefore be used for renovations and/or repurposing, before letting it out at a profit.

There’s also talk of some vacant student inventory being acquired by social housing groups, though none have passed comment on the issue so far.


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