4 5
Housing and the recession
Recent moves by the Government to assist people under threat of repossession are welcome
and need to be built on. The Government is now a major stakeholder in the banking sector -
After many years of councils finding the rules skewed against them when it came to building
it should use this position to promote policies and practices that are in the interests of society
new homes a constellation of factors has come together to cause a welcome ‘turning of the
and take action on reducing repossessions and stopping aggressive recovery tactics being
tide’ in the Government’s attitude towards council housing. In January 2009 Gordon Brown
used by banks and other mortgage lenders. For example, there have been reports of heavy
stated that;
handedness in trying to recover debts from customers which is in breach of the Banking
Code. It is reported that staff in recovery departments operate on targets and bonuses for
“In the past we have placed restrictions on local authorities delivering social housing. But let monies paid back by debtors causing an incentive to put in place re-payment plans debtors
me today be clear, if local authorities can convince us that they can deliver quickly and cost cannot afford and the potential harassment and intimidation of debtors
9
.
effectively more of the housing that Britain needs, and if local authorities can build social
housing in sustainable communities that meets the aspirations of the British people for the
Additionally, 13% of accommodation
10
is privately rented. A coalition of Shelter, Crisis,
21st century, then we will be prepared to give you our full backing and put aside any of the
Chartered Institute of Housing and the Citizens’ Advice Bureau has formed around concerns
barriers that stand in the way of this happening”.
1
that the explosion of ‘buy to let’ mortgages in recent years’ has meant there is now a rising
number of tenants in private rented accommodation whose landlords have, or will, default
It is the worsening economic situation that has arguably played the biggest role in bringing
on the mortgage. In the second half of 2008 the number of buy-to-let properties being
about this change of attitude, however, and has pushed the issue of housing up the
repossessed had doubled from the same period in 2007. It is estimated that “there may
political agenda.
be around 8,000 buy to let repossessions in 2009, many of which could result in tenant
evictions”
11
. These tenants have few legal rights.
The Government’s current targets on social housing were set in 2007 and are for an increase
of 70,000 more affordable homes per year by 2010-2011 including 45,000 more social homes.
In evidence to the House of Commons Communities and Local Government Select Committee,
Though a step in the right direction it was clear even at the time it would not meet the scale
the Tenants Services Authority (TSA) – the social housing regulator – reported in December
of the housing need that exists. Since then the economy has worsened. Figures released in
2008 that it had a ‘watch list’ of 6 housing associations who were facing threats to their
January 2009 show there are now almost 1.8 million households, or 4.5 million people, on
financial health
12
. The TSA report ‘Global Accounts 2008’ – an overview of the financial
local authority social housing waiting lists – 1 in 12 people in the country
2
. The National
health of the sector – reported that “whilst the sector overall, and the majority of
Housing Federation reports that nearly 5 million people are expected to be on social housing
associations, are well placed, the significant levels of new private finance and the continued
waiting lists by 2010, while a wave of repossessions could further add to the crisis
3
.
importance of shared ownership sales means that some organisations are exposed”
13
. The
Select Committee concluded that “housing associations have become reliant on the market
The impact of the recession on one of the most basic of needs, shelter, is far reaching.
to fund new developments. Without an increase in Social Housing Grant, many new
Approximately 70% of housing is owner-occupied
4
and data from the Council of Mortgage
affordable homes will not be delivered”
14
. Housing Associations are finding it difficult to
Lenders (CML) shows there were 40,000 repossessions in 2008 – a 54.4% rise from 2007
5
,
shift stock built ‘for sale’ as potential purchasers are unable to access finance. Switching
amounting to 1 in 290 mortgages. At the end of 2008, 1 in 53 mortgages were in arrears of
grants to ‘for rent’ would assist.
three months or more. The forecast from CML is that there will be 75,000 repossessions in
Unite members working in Housing Associations have reported that as finances are squeezed
2009
6
- representing 1 in 156 mortgages
7
.
organisations are trying to shave costs by bearing down on the terms and conditions of staff,
The fear of having your home repossessed in the current economic climate is one that runs
and reducing the numbers of staff, particularly in developing housing associations, with a
deep. A recent ‘Which?’ survey found that 1 in 3 of the population are worried their home
detrimental impact on the quality of service.
may be repossessed; 6 out of 10 workers said they were concerned that they or their partner
There is also a concern that as the ring-fencing of the ‘Supporting People’ funding (which
may lose their job, with 43% saying they would not be able to keep up with their mortgage
funds support for vulnerable people in supported housing) has ended, councils facing
if the main earner in their household was out of work. As a consequence, three-quarters of
financial pressures may ‘siphon off’ money from the fund putting extra pressure on already
people want the Government to do more to help struggling homeowners.
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stretched services.
1
Speech to New Local Government Network annual conference, 29th January 2009
9
Bank staff are harassing customers with talk of home repossessions and blacklists, The Times, April 12th 2009,
2
DCLG figures giving local councils 2008 social housing waiting list figures, http://www.communities.gov.uk/documents/housing/xls/144458.xls
http://business.timesonline.co.uk/tol/business/industry_sectors/banking_and_finance/article6078489.ece
LGA press release, One person in twelve now waiting for social housing, http://www.lga.gov.uk/lga/core/page.do?pageId=1518784
10
DCLG Housing Statistics December 2008, http://www.communities.gov.uk/documents/statistics/pdf/1095351.pdf
3
National Housing Federation press release, More than 2.6 million people to live in overcrowded housing by 2011, as recession bites – warns Federation,
11
All figures and estimates from A Private Matter? Private tenants: the forgotten victims of the repossession crisis, March 2009, Shelter, Crisis, CAB and CIH.
15th April 2009 , http://www.housing.org.uk/default.aspx?tabid=212&mid=828&ctl=Details&ArticleID=2106 The rise in ‘buy-to-let’ repossessions in 2007 to 2008 was from 1,100 to 2,300.
4
DCLG Housing statistics, December 2008 (http://www.communities.gov.uk/publications/corporate/statistics/housingstatistics2008)
12
Inside Housing, 19th December 2008, http://www.insidehousing.co.uk/story.aspx?storycode=6502338
5
20th March 2009 ‘Inside Housing’ magazine http://www.insidehousing.co.uk/story.aspx?storycode=6503726
13
‘2008 global accounts of housing associations’, TSA, http://www.tenantservicesauthority.org/server/show/ConWebDoc.17678
6
CML, 20th February 2009, http://www.cml.org.uk/cml/media/press/2108
14
Housing and the Credit Crunch, Communities and Local Government Select Committee Third Report of Session 2008-09, February 2009, page 3
7
11.7million mortgages in the UK (see CML press release, Response to February mortgage approvals data, 30th March 2009) divided by 75,000
8
22nd March 2009, http://money.uk.msn.com/investing/news/article.aspx?cp-documentid=15253968
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