Times are tough so invest in your home

Why property prices, buying or renting, are not worth it!

Many people nowadays, worry terribly about the crisis facing housing in the UK with entrenched and seemingly endless challenges, such as overvalued properties, a population explosion and a shortage of properties on offer, both to rent, and to buy.

If you are struggling to get on to the property ladder, or if you have just given up all hope and are trying to rent somewhere, you would be well aware of how little is on offer, and how shockingly expensive it has become.

In the UK today, put quite simply, there are more people living here than houses available.

This causes a supply and demand effect, with prices rising faster than ever before, even taking into account the “crash” of 2007/2008 where a sudden stop befell property that had been rising beyond anyone’s expectation, and beyond the reach of anyone who didn’t already own their own property.

What has possibly caused the homes shortage in the UK?

Housing is a real hot topic just now and many people, especially if the recent local and European election results are to be dissected, seem to think that the problem lies with immigration, although in reality this is one major factor but not the whole story.

One of the biggest factors in the shortage of property is not just mass immigration and demographic shifts but that of the LACK OF homes available.

The government themselves admit that there is a chronic shortage and the government online website actually admits that……..

For decades, there have not been enough homes to meet the needs of our growing and ageing population. From 2009 to 2010, only 115,000 new-builds were completed in England – fewer than any year in peace time since the 1920s and nearly a quarter of a million homes in England have stood empty for more than 6 months. Source www.gov.uk

In addition, after the 2008 crash, lenders were unwilling or unable to lend money, not just to home-owners in the form of mortgages, or re-mortages to fund home improvements, but the amount of money that was available to be lent to builders and construction companies to actually build more homes and to date, this has not changed in any meaningful way.

There have been various piecemeal proposals put together, such as encouraging people in under-occupied council homes, to downsize and allow their home to be lived in by families, but if the UK lets in millions of Eastern European families, who of course will rent the homes, where do British families look for housing?

However, saying that, the media of late have seemed to suggest the problem is solely the fault of mass immigration into the United Kingdom, and that’s it, nothing else, it’s all their fault.

Not quite.

It’s not just the immigrants fault!

Borat style video
Yagshemash! I rent house, very nice, how much??!!!

As we explore this issue we find more and more that it’s not just the fault of a bunch of people from Romania, far from it, they may be PART OF the problem, as some people think, but let’s look wider than that.

Under-occupation is something that could be looked at, plus reducing the amount of empty homes, which, according to the emptyhomes.com website, currently stands at around 640,000 houses devoid of anyone living there (2013), not including 2nd homes which have had a negative effect on mainly rural and seaside communities.

In fact many local governments have lobbied MP’s and Councillors hard to even BAN the sale of houses as second homes, the south west of England being a prime example, Cornwall alone having at least 20% of it’s houses owned as second homes.

What would Sarah do?! LOL!

Sarah Beeny, a well known face on the telly about all things property related, poured scorn on the notion of discriminating against 2nd home owners and denied that second homes are responsible for the housing crisis and banning them is “quite extreme”.

She said:…….  “Maybe make a second home less appealing, but the tax benefits are not there already. Owning a second home is better in theory than in practice.”…..

However the three biggest factors, it would seem, are the effects of a huge population increase in a short space of time, the lack of funding available for construction and also the lack of land to build on in the first place.

Other, tertiary factors, affecting the housing crisis could also include a better life expectancy amongst the UK population and the rise in recent years of single person households, all of whom, whether OAP’s or thrusting young single executives, still need a place to live.

What solutions have been put forward by the government?

Maybe it’s the fall-out from Mrs Thatcher’s right to buy scheme in the 1980’s, but homeowners are largely considered Tory, or so Helen Lewis of the Observer would have us believe.

In a well-written article on this very topic she advocates that despite the Tories suggesting that hard work equals rewards, and if you work hard you will become a home owner, however, one only has to look at the gap between earnings and house prices to see that this, nowadays at least, is a largely redundant ideal.

She says…..

On the country’s median salary of £26,000, even a dual-earning couple will struggle to buy the average house at £250,000. …………..(In London, the situation is flat-out ludicrous: the average salary is £34,000 and the average house now costs £458,000.

And it will have risen another £200 between me typing this and you reading it.). Source: Observer.co.uk (April 2014)

One other approach has been to relax the planning laws in the UK but so far that has largely benefited existing homeowners wishing to build extensions, and the law also advocated small changes to town planning etc, which have bizarrely been met, on the whole, by refusal from many local authorities.

A street of post war council houses, Whitleigh, Plymouth

Is it the local councils fault?

Local authorities are also held to account in many people’s eyes for the lack of social housing stock as more or less no council homes are built nowadays, with local governments’ expecting the shortfall to be met either by the already overstretched private sector, or by new building schemes being given approval as long as the builder includes affordable homes.

The myth of “Affordable” housing

This word is shaken around liberally like salt on fish n chips by MP’s, developers and local councils, but what is delivered rarely is what is promised and is simply a drop in the ocean compared to the real needs of the citizens of what is supposed to be a thriving economy in a modern world.

Does the private sector contribute an adequate amount of affordable housing?

In a word, NO.

The developer of a housing estate, if forced to, will create a small handful of homes deemed “affordable” to satisfy planners and gain permission to build the estate,  but these houses are often far lower quality and much smaller than all the others on the estate.

In many cases, it could be argued that the word “affordable” is stretched to it’s very limit and benefits only the very deep silver-lined pockets of the bosses at the national home-builders.

“A recent housing development near my home in Devon has 3 bedroom houses for sale, and I mean SMALL 3 bed homes, for £317,000!!!!!”.

From my own viewpoint, In 2003 I could buy a 3 Bed house around here for as little as £40,000. Well guess what?. That is all they are worth. The cost or value of the bricks and mortar etc, the actual “thing” of a house, not what everyone thinks its worth, even allowing for inflation. It’s not worth the money.

The banks and the finance companies that “own” mortgages want to keep their investment safe, but in reality your house is NOT worth even HALF what it is currently valued at.

Remember if you have taken out a mortgage over the past 10 or 15 years, (and I guess that will be quite a few of you), ……..


To get a mortgage on that, as a first time buyer, a deposit of at least £70,000 would be needed, both parties would have to have very good, secure jobs, and be prudent with your outgoings (as per the changes in the Mortgage code April 2014) which although a positive step in making sure any borrowing or lending is responsible and affordable, making a dream of owning a normal home virtually impossible.

Situations like this are repeated up and down the country, forcing people to rent, which has of course made rental prices shoot up to almost be unaffordable themselves, and as you can imagine, if a couple are forced to pay £1000 a month rent, how will they save for a deposit to buy a new house?

 What does the EU think about Britain’s housing crisis?

The BBC reported that on June 2nd, the European Commission suggested that not only should the UK raise taxes on higher value properties, it should also build more houses and adjust the Help to Buy scheme to help more people.

The commission said council tax bands should be revalued, which would inevitably put up council tax bills for some people however with anti EU sentiment running strong, the measures were cautiously welcomed but at the same time taken with a pinch of salt.

The EU’s main argument was that council tax bands have not been updated for about 20 years and the government was taxing smaller houses far too high and larger homes not enough.

Whilst an interesting theory, I don’t think the EU’s advice will solve the crisis at all.

What is the solution to the housing crisis?

Based on the evidence we looked at above, and considering a recent study by the Future Homes Commission, a body instigated by the Royal Institute of British Architects (Riba),  the UK needs to build, on average  300,000 new homes EVERY YEAR to meet the current population growth, and that is not taking into account the fact that the UK is a small and overcrowded island already so heaven knows how many more people will come here and where they plan to live!

The most sensible, albeit radical, approach be to shut the UK borders and end the free-for-all that immigration has become, (without wanting to sound like I work for UKIP, which of course I do not!) because as long as the population increases, the acute shortage of housing will become worse, pushing prices upwards even still.

The negative side to this is the fact that new homes can only be built when land is available and as this is a small island, there is not much land available to build on, unless we start building on greenbelt land, with obvious negative effects to the natural environment. This is not considering the extra pressure on services, roads, schools hospitals and so on.

Just a thought….

Perhaps, with a rapidly eroding coastline, two problems could be solved at once, with the reclamation of land from the sea, specifically in areas that have suffered erosion, creating new, seafront building land, and protecting the coast too.

I have seen this first hand whilst working in Gibraltar, but other countries such as Holland, Norway and Sweden have successfully reclaimed land previously under water, so why cant the UK?

So the answer is: More finance needs to be forthcoming from the banks, the greedy financiers who, it could be argued, caused the financial crash a few years ago: More land to be made available for house building, taking into account the social and environmental effect of these new homes, and finally the population explosion must come to halt, sooner rather than later.

It would be unfair to lay the blame on the people moving to our country as individuals, many of whom bring great skills and benefits to our land, but the blame must be put at letting that amount of people in, in such a short space of time. And just to prove I’m not writing this for UKIP (!), Sir Andrew Green, chairman of Migration Watch recently said that…

“There’s been a remarkable silence on the impact of migration on housing demand,”

He directly quotes the government official figures, which could be argued are greatly undersetimated anyway, that more than one 3rd of all new households in England alone, during the next quarter of a century, will be the result of immigration.

Moving aside from that, he goes on to argue that even if the current relatively low level of housebuilding going on in the UK just now, there would rather scarily, be a SHORTAGE of at least 800,000 homes by the year 2033!

So it’s NOT just Borat’s fault?!

No. Although mass immigration HAS HAD a profound effect and WILL HAVE and even greater effect in years to come if not tackled, the main problem seems to be the lack of money to finance building, the artificially high “value” of all homes in the country today and the LACK OF available land to build upon.

And this, dear reader, is my opinion on solving the current housing crisis facing Britain today.

A struggle of short housing supply and high demand for homes, against a rapidly growing population, on a small island.

What do you think? Do you agree or disagree?

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