industry news
Rents rising faster than house prices
Rents across the UK are set to rise considerably faster than house prices over the next five years, according to property agents Savills as the property boom appears to be over. Savills are forecasting that rents will go up
by 19 per cent between now and 2021, while house prices will flatline by comparison and only rise by 13 per cent. The gap will be even more pronounced in London, where it said rents will rise by 24.5 per cent, while house prices are predicted to rise by just 10.9 per cent. The reason was "post-referendum
economic uncertainty" and weaker consumer sentiment. By next year Savills are forecasting that average house prices will not increase at all, with falls of up to 2.5 per cent in Scotland and the North East. This will be followed by a two per cent increase in 2018. However, prices in the north of England
will start to "outperform" by the end of the five year period. At the same time demand for rental properties will increase, it said, as first-time buyers struggle with affordability. Since June’s Brexit vote, estate
agents have reported a fall in the number of sellers coming to the market. Data from the website House Simple showed that in four out of five towns there was a fall in the number of new listings in October.
Fewer sellers
Savill’s UK head of residential research, Lucian Cook said he expected the number of homes changing hands to fall by 16 per cent in 2017 to just over 1.1 million and that it would drop further the following year. This fall will be driven by a decline in buy-to-let landlords following recent and impending tax changes. In April, the upfront costs of buying a
rental property was increased with a stamp duty surcharge and from next spring, the tax relief that landlords can claim on mortgage payments will start to fall. Data compiled by Savills using its own
research and figures from the Office for National Statistics shows the average cost of a UK home increased by £47,900 between August 2011 and the same month in 2016, to £214,000. Over the same period, prices in London
went up by £192,100, to an average of £481,000, while at the other end of the scale in the north-east prices rose by £10,100, to £122,000. Growth is expected to be lower over the
next five years, with Savills anticipating that UK prices will increase by £27,900 by December 2021, to £241,900.
HA continues its push into PRS
London based housing association L&Q has continued its push into the private rented sector with a £70m deal to build a new 178-home development in west London.
The 70,000-home landlord has joined Arc Ltd and builders O’Shea to develop a mix of shared ownership and PRS homes, as well as 42,000 square feet of retail space at The Oaks in Acton.
The association is working on plans to finalise its takeover of East Thomas, while also planning to build 16,000 PRS homes, as part of its plans to build 100,000 new homes.
Another benefits saving hits tenants on Universal Credit
The Government has announced the Local Housing Allowance cap for general needs accommodation will be pushed back a year to 2019, but it will now apply to all tenants on benefits. Previously the cap was only going to apply
to new tenancies. Work and Pensions Minister Lord Freud said the change would “ensure simplicity and a streamlined process”. But in making the announcement he
omitted to say the Treasury estimates the change will save the Government an additional £160m in 2020/21 and a further £125m in 2021/22. Housing associations bosses have criticised
the change saying it will have a seriously detrimental impact on tenants, with individuals and families forced into poverty and debt.
Impact
The Scottish Federation of Housing Associations (SFHA) said there are currently around 241,000 tenants in Scotland who will be hit by the new LHA cap. Both the SFHA and the National Housing Federation are particularly concerned about the impact on under-35s on the lower shared accommodation rate of LHA. Lord Freud said tenants who are moved
from housing benefit onto Universal Credit after April 2019 will be protected “in cash terms” under a transitional arrangement.
Sam Lister, Policy and Practice Officer at the Chartered Institute of Housing, said the protection in cash terms could mean the Government tops up a payment to tenants who received more under the old system. However, this would mean the benefit
payment is frozen at current levels, and does not take account of inflation. He said the top up would save the Government more money in the long term because the change effectively freezes their benefits at current levels until the calculated rate catches up with it and overtakes it.
Welfare benefit reformer retires
One of the architects of the recent reform of welfare benefits has resigned from his ministerial position. Lord David Freud, the minister for welfare reform who has overseen the introduction of Universal Credit, decided to step down at the end of December. Since his appointment to the Department
for Work and Pensions six years ago Lord Freud has overseen the design and introduction of the controversial Universal Credit system. He also oversaw the controversial bedroom tax, under which social tenants of working age deemed to have spare rooms have their benefit reduced.
16 | HMM January 2017 |
www.housingmmonline.co.uk Lord Freud said:“At the heart of our reforms
is desire to give people independence to improve their lives. For too long, people have been trapped by a byzantine benefits system, leaving them powerless. As I retire from my ministerial position, I leave with full confidence in the future of Universal Credit.” The introduction and roll-out of Universal
Credit has been hit by a series of IT problems and delays. Former Work and Pensions Secretary Iain Duncan-Smith resigned from the Government early in 2016 in protest at the continuing cuts in the welfare budget.
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