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When does a UK Housing Crisis Become a Housing Disaster ?

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When does a UK Housing Crisis Become a Housing Disaster ?

I've been pondering this question recently, and think we may be in a disaster situation .

After chatting with council housing staff,  and finding out they agree with me that the point is not far away that the councils will run out of money to pay for major housing services.

They tell me private landlords do not want to rent to HB tenants, manyof which are working full time , but on low incomes 

Often, If you search on www.spareroom.com for shared rented houses with strangers,  (often all low income individuals can afford)    you will find no offers from private landlordswithin 20km of some cities.

So if you become unemployed & need HB, you become homeless, struggling to find a hostel room or B& B (often available only for a week ) from dwindling council resources.

The self employed with variable income appear to have been cut off by UC , genuine cases or not..

Perhaps it will be Shipping Containers & Hexayurts all round for these folks, at the moment, many are not even being offerd this

Quote

From a few months ago, but worth a mention ..

Universal credit ‘penalises the self-employed’ report warns

https://www.theguardian.com/society/2017/oct/29/universal-credit-penalises-the-self-employed-report-warns

 

  Quote

The LITRG expresses most concern over the “minimum income floor” (MIF), a claimant’s expected monthly income after tax and national insurance have been deducted. It is used to calculate universal credit payments but can penalise low-paid workers whose monthly income fluctuates, and result in some having their entitlement to state support severely curtailed. Documents from the Office for Budget Responsibility suggest that the government stands to reduce universal credit expenditure by £1.5bn by 2021-22 as a result of the MIF.

Anne Fairpo, chair of the LITRG, said: “The last 10 years have seen a significant rise in the number of people who are self-employed, many of whom are on a low income and therefore unable to afford professional advice. Universal credit is gradually replacing working tax credit as the primary welfare support for low-income working-age people.

“Perhaps the most concerning part of the self-employment regime under universal credit is the minimum income floor, which fails to account for fluctuating earnings or one-off large business expenses.

“This can lead to a situation where a self-employed claimant with fluctuating earnings can receive substantially less universal credit than an employed claimant earning a similar annual income above the level of the current minimum income floor. We cannot believe that is an intended consequence.”

The government has already introduced a 12-month “start-up period” when the MIF does not apply in an attempt to lessen the impact on entrepreneurs. However, Andy Chamberlain, from the Association of Independent Professionals and the Self-Employed, warned that it was not enough.

“Fluctuating income, typical among self-employed people, can make it extremely difficult to meet the requirements of the minimum income floor,” he said. “Unless the self-employed business can reach the minimum amount required every month, access to credit is stopped. The majority of the self-employed have been operating for over 12 months, so the start-up period that has been offered does not solve the problem,” he said.

The LITRG, an initiative of the Chartered Institute of Taxation, calls for self-employed claimants with fluctuating income to be able to average their income over a period of up to a year. It also demands changes to the calculation of the MIF and an increase in the start-up period from one to two years.

 

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Housing disaster sounds about right. I do love the thought of shipping containers on village greens though.

I suppose council tax will go flying up now and paid directly to landlords to house people as unemployment starts to rise.

 

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27 minutes ago, Saving For a Space Ship said:

Often, If you search on www.spareroom.com for shared rented houses with strangers,  (often all low income individuals can afford)    you will find no offers from private landlordswithin 20km of some cities.

 

Really I can find loads looking in SE1, saying that I think the cost of housing is a disaster for the UK.

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Becoming?  Its been sliding that way for years..

The homeless figures being the most obvious indicator, but there is loads of other more subtle information that UK Housing is a disaster area for many people.

Any sensible government would have seen the problems brewing in 2013 and taken action to stop runaway HPI, reduce Housing Benefit and do more to stop the problem impacting the growth, productivity and stability of the UK.

Instead we got Help-to-Buy.

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2 minutes ago, london_thirtythree said:

Becoming?  Its been sliding that way for years..

The homeless figures being the most obvious indicator, but there is loads of other more subtle information that UK Housing is a disaster area for many people.

Any sensible government would have seen the problems brewing in 2013 and taken action to stop runaway HPI, reduce Housing Benefit and do more to stop the problem impacting the growth, productivity and stability of the UK.

Instead we got Help-to-Buy.

2013?  They should have done something in 1999!  (2013 their hands were partially tied by owning banks).

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2 minutes ago, iamnumerate said:

2013?  They should have done something in 1999!  (2013 their hands were partially tied by owning banks).

I have some sympathy with politics for not being perfect - so would agree that any ideal government would have stepped in during the 2000's to limit the BTL boom, as a good eye could probably have predicted that this would become damaging.

But I don't expect government to be ideal as everyone is rarely perfect.

However by 2013 I think you have to be (willfully?) blind not to see the problems this was storing up - and so my sympathy starts to fall away.

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2 minutes ago, london_thirtythree said:

I have some sympathy with politics for not being perfect - so would agree that any ideal government would have stepped in during the 2000's to limit the BTL boom, as a good eye could probably have predicted that this would become damaging.

But I don't expect government to be ideal as everyone is rarely perfect.

However by 2013 I think you have to be (willfully?) blind not to see the problems this was storing up - and so my sympathy starts to fall away.

Ideal?  Blair's wife decided to invest in BTL in 2002 - that is far from ideal.

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3 hours ago, Saving For a Space Ship said:

When does a UK Housing Crisis Become a Housing Disaster ?

 

When it adversely impacts TPTB...some way to go for that yet...they are profiting and doing very nicely from the situation.  Unrest and disorder are likely to be the outcome if we continue on current trajectory.  Then they may recognise this as a disaster.

I never liked the term 'housing crisis' - this suggests something unexpected and sudden when in reality this was all by slow design.

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I just read that the charity Shelter has said " it is no longer right to talk about a housing crisis in Britain but, in their opinion, it is “a national emergency”

https://www.bbc.co.uk/bbcthree/article/1e6c9bcb-31b9-493b-9018-f6f4b94f9552

so thought it worth bumping this thread

(new hpc thread just started on the story at link )

 

Edited by Saving For a Space Ship

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1 hour ago, Saving For a Space Ship said:

I just read that the charity Shelter has said " it is no longer right to talk about a housing crisis in Britain but, in their opinion, it is “a national emergency”

https://www.bbc.co.uk/bbcthree/article/1e6c9bcb-31b9-493b-9018-f6f4b94f9552

so thought it worth bumping this thread

(new hpc thread just started on the story at link )

 

Just as well the issue was dealt with so decisively in the recent budget....🙄

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The HB to UC part of the problem can be fixed at the stroke of a pen [and zero taxpayer cost].

Require DWP to offer tenants the option [keeping the principle they have control] to have rent paid direct to their LL.

Allow AST to contain binding and legally valid agreements that they make use of that option.

The question is why have they not already fixed this. Who is benefitting from not doing it?

 

Edited by ebull

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A nation of home owners.

A nation of home renters.

A nation of homelessness.

The timeline of housing failure and a country all to hell bent looking rich globally masking poor locally.

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4 minutes ago, maverick73 said:

A nation of home owners.

A nation of home renters.

A nation of homelessness.

The timeline of housing failure and a country all to hell bent looking rich globally masking poor locally.

Pretty direct route to third world levels of inequality and lack of opportunity. Disgraceful.

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On 08/02/2018 at 09:59, london_thirtythree said:

Becoming?  Its been sliding that way for years..

The homeless figures being the most obvious indicator, but there is loads of other more subtle information that UK Housing is a disaster area for many people.

Any sensible government would have seen the problems brewing in 2013 and taken action to stop runaway HPI, reduce Housing Benefit and do more to stop the problem impacting the growth, productivity and stability of the UK.

Instead we got Help-to-Buy.

I agree, we've long been there. I'd say we passed 'crisis' in the early noughties, 'disaster' probably in the late noughties and for the past couple of years I've been dubbing it - for myself and the one friend I have who doesn't go blank, and maybe on here - a "nationally ruinous, personally devastating, decades-long housing catastrophe". Anything much less than that really understates it. It's twisted our economy into a pretzel, we're in a weird economic Wonderland.

Also agree that any sensible government* would have seen the problems brewing and done something but I reckon they should have picked it up in 2003, not 2013. It seems to me that there's a conscious or unconscious effort to stop us looking back too far. This has been going on for ages and has its most substantial roots in the turn to neo-liberalism in the 80s - I know I'm not saying anything there that's too new or controversial for this board.

*Do we mean a government that actually wishes to govern for the benefit of the populace? I think things have been and are exactly as successive governments have wanted them to be. What we're seeing is a system working - tin foil hat emoticon!

image.png

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21 minutes ago, North London Rent Girl said:

I agree, we've long been there. I'd say we passed 'crisis' in the early noughties, 'disaster' probably in the late noughties and for the past couple of years I've been dubbing it - for myself and the one friend I have who doesn't go blank, and maybe on here - a "nationally ruinous, personally devastating, decades-long housing catastrophe". Anything much less than that really understates it. It's twisted our economy into a pretzel, we're in a weird economic Wonderland.

Also agree that any sensible government* would have seen the problems brewing and done something but I reckon they should have picked it up in 2003, not 2013. It seems to me that there's a conscious or unconscious effort to stop us looking back too far. This has been going on for ages and has its most substantial roots in the turn to neo-liberalism in the 80s - I know I'm not saying anything there that's too new or controversial for this board.

*Do we mean a government that actually wishes to govern for the benefit of the populace? I think things have been and are exactly as successive governments have wanted them to be. What we're seeing is a system working - tin foil hat emoticon!

image.png

Agreed. I think in 2003 HPI was something batshit like 30%, but at the slightest sign of a wobble in 2004 the BoE cut interest rates and things went even more mental until the GFC. Like you, I think there's a conscious effort to stop people looking back too far, probably so TPTB can claim it's a "recent thing" and they have "policies to help".

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Every previous crash has started with a recession and distressed/unemployed sellers pushing the market prices down.

I wonder if this time we could see it happen the other way around, started by the housing market falling + rates rising and then people still in good jobs suddenly realising they have unsustainable levels of debt.

Imagine you have a 500K mortgage while earning 50K and then after a crash the house is only worth 250K and rates are inching up towards 10% - do you choose 20 years of penury trying to pay off the debt or bankrupcy?

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Who would get a 500k mortgage on a 50k salary? That seems about as unlikely as rates rising to 10%. 

Fair to say that a rise towards even 5% would lead to financial hardship for some, that would mean around £500 on a £200k mortgage.

IMO the most likely path would be the one that most homeowners won't realise, relatively small decreases or stagnant prices on a backdrop of inflation. Over a decade that is a real significant fall. Someone that had their wealth tied up in their house might not notice is that much, but someone who had the equivalent in the stock market or equivalent assets earning real returns would see their purchasing power of houses increase. 

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20 minutes ago, Habeas Domus said:

Every previous crash has started with a recession and distressed/unemployed sellers pushing the market prices down.

I wonder if this time we could see it happen the other way around, started by the housing market falling + rates rising and then people still in good jobs suddenly realising they have unsustainable levels of debt.

Imagine you have a 500K mortgage while earning 50K and then after a crash the house is only worth 250K and rates are inching up towards 10% - do you choose 20 years of penury trying to pay off the debt or bankrupcy?

Recessions happen when the various credit inputs that feed economic activity slow and reverse. Even though the UK govt continues to maintain a modest deficit the credit impulse it delivers is manifestly too weak to lift the economy away from the zero lower bound (GDP is a flow not a stock, which is why monetarism has never worked). House prices in Greater London are clearly at the limits of affordability even with the current raft of subsidies, as demonstrated by the continuous falls we've seen all year. Clearly, If the same constraint is hit nationally, it's quite possible that an hpc will drive the economy into contraction/recession rather than the reverse. In fact, I am expecting this very outcome next year.

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On 08/02/2018 at 10:02, iamnumerate said:

2013?  They should have done something in 1999!  (2013 their hands were partially tied by owning banks).

+1,000

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I also think it can be traced back to 1999, the effects of globalisation  and  weaknesses of the uk economy. Tony blair opens up uk labour market to european workers without transitional arrangements, to boost a deindustrialised economy with motivated but cheap eastern european labour.  At the same time, debt is used to compensate for lack of wage growth, leading to asset inflation(houses). Those who make most money do so from property speculation or rent seeking behaviour. 

Problem is, as the government knows too well, the show can only stay on the road with overly cheap abundant debt. 

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On 08/02/2018 at 09:59, london_thirtythree said:

Any sensible government would have seen the problems brewing in 2013 and taken action to stop runaway HPI, reduce Housing Benefit and do more to stop the problem impacting the growth, productivity and stability of the UK.

Any sensible govt would not have allowed uncontrolled immigration from Africa and Asia as the Blair govt did which added to 3 m EU migrants has put enormous pressure on house prices and rents. yet still so many of the snowflake generation want to be in the EU- turkey voting for xmas. 

On 08/02/2018 at 10:08, london_thirtythree said:

so would agree that any ideal government would have stepped in during the 2000's to limit the BTL boom, as a good eye could probably have predicted that this would become damaging.

But I don't expect government to be ideal as everyone is rarely perfect.

No govt gets it all right or all wrong. Even though some would not accept that. 

On 03/11/2018 at 22:32, Si1 said:

Pretty direct route to third world levels of inequality and lack of opportunity. Disgraceful.

The increasing level of automation and AI will do far more to cause poverty and unemployment - jobs are being lost every week now to it but this does not get reported.  

11 hours ago, nothernsoul said:

Tony Blair opens up uk labour market to european workers without transitional arrangements, to boost a deindustrialised economy with motivated but cheap eastern european labour. 

Agree 100% but the snowflake generation think you are a mad racist if you dare to point out the obvious truth.  

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As this thread has started to pick up on migration to the UK; a point I never understood about the Brexit argument was that it only deals with migration from within the EU which is probably the least culturally challenging to the balance of the UK population.  Its also the form of migration that is most likely to be reversed as people move backwards and forwards within the EU.

Edited by dougless

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  • 407 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?


      • down 5% +
      • down 2.5%
      • Even
      • up 2.5%
      • up 5%



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