Families who lose home face six year wait for social housing as waiting list continues to skyrocket

People who lose their home because they can no longer afford mortgage repayments or who found themselves homeless for other reasons face the lengthy wait before they are permanently rehoused in a two-bedroom property, according to the chairman of the Local Government Association.

Sir Simon Milton warned that by 2010 around five million people would be on social housing waiting lists.

He said a combination of falling house prices, restrictions in the mortgage market, the economic downturn and a lack of affordable housing would continue to push up the number of families on social housing waiting lists.

Families who have their home repossessed face a six-year wait for social housing, according to the Local Government Association

He said: 'With the repossessions, the end of small deposit mortgages and the millions of people already on social housing lists, it will mean that those trying to get a home they could call their own from the council could wait more than six years for a two-bedroom house.'

In a speech to the Chartered Institute of Housing, he said strong house price gains in recent years had put unprecedented pressure on social housing.

The average cost of a home has risen by 156 per cent during the past 10 years, while wages have risen by only 35 per cent during the same period.

The affordability problems have been exacerbated by the credit crunch, which Sir Simon said had led to around 40 per cent of new mortgage offers being withdrawn, while lenders are demanding increasingly large deposits, making it harder for first-time buyers to get on to the property ladder.

At the same time housing associations are struggling to secure loans to build new affordable housing due to the credit crunch, while reductions in the overall number of properties being built by developers has also had a knock on affect on the number of new affordable properties being built.

The number of new homes being built by housing associations and local authorities during the past decade has fallen to its lowest level since 1947.

Sir Simon said: 'With the banks over-stretching their credit facilities it could well mean that in the coming months councils will have to help pick up the pieces as people end up on social housing waiting lists.

'Even when the economic good times were rolling, councils saw ever increased pressure on their social housing stock.

'Now that the credit crunch is upon the country it appears that thousands more people will look to councils to provide them with a permanent home as they either find it impossible to get on the housing ladder or see their home repossessed.'

He called on the Government to free councils from the overly tight financial restrictions they face so that they could meet demand for social housing.

This includes allowing councils to borrow on the open market in the same way that housing associations do, and reforming housing finance to give councils greater freedom to fund housing through so-called capitalisation, under which they can remortgage their assets to invest in housebuilding.

Local authorities should also be given greater flexibility to allocate housing based on local needs.

Sir Simon said: 'Social housing has to be a top priority because the harsh reality is that fewer people are getting on to the housing ladder.'