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Town halls fear two million families will need social housing

Nicholas Cecil, Political Correspondent
16.05.08

Up to two million families could be on the waiting list for social housing within two years, town hall leaders warned today.

Councils are struggling to cope with the flood of people turning to them for housing because of soaring mortgage costs, high property prices - particularly in London and the South-East - and more repossessions.

Experts have already predicted that young middle-class people face having to live in council houses because they will be unable to buy or rent a private property.

Housebuilders have also slammed the brakes on starting new homes, particularly social housing, as the economy slows with the credit crunch biting.

The Local Government Association issued the warning that the number of families on the social housing waiting list, which was one million in 2001 and

1.6 million last year, could hit two million by 2010.

Almost half of councils say they cannot cope with increasing demand for housing. Paul Bettison, chairman of the LGA's environment board, said social housing had to be "a top priority" because fewer people were getting on the property ladder. "With the banks overstretching 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," he said.

"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 many thousands more people will be looking 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."

The LGA called for councils to be able to be given greater freedoms to increase their housing stock by being able to borrow freely and remortgage assets to reinvest. Housing minister Caroline Flint warned the Cabinet this week that housebuilding was "stalling" and that prices could fall be up to 10 per cent "at best" this year.

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LMD

I live in London and know many professionals who rent. I have not found one out of dozens who pay as much rent as they would have to if they were paying a mortgage on it.

This has been the case since 2005 i.e. rents have not covered the mortgages of BTL as prices became so high since then...

BUT BTL continued as capital appreciation offset it. Given over half the 2m BTL houses were bought since 2005, that is a lot subsidising tenants...

...and that is at a time when there is no capital appreciation. Rents have risen a bit BUT they are coming off 4.5% mortgages onto 6%+ rents have NOT risen 25%.

No matter how optimistic one is, how can 1m rental properties come on the market and then say rents can rise...there was no sudden surge in renters since 2005.

Demand? E. Europeans can now work in the rest of the EU and there economies are booming, whereas ours is slowing and our currency diving (remittances are then lower).

Repossessions rose when the economy was booming and rates lower. The problems will start now. People need jobs to rent private properties at market rates.

When the govt decides it can no longer hide the crash and taxes dive money because of the slowing economy, I suspect BTL will be an easy political target..

Taxes will rise for them as no one cares about them...only the middle class entered BTL...the working class never had private pensions to whinge about.

Nothing like 2005. No fiscal or monetary weapons left.

It begins.

- Trevor, South East

Due to the increase in the interest rate, I have to find �150 extra every month. With everything else going up apart from my wages and a family to look after, I am looking at the possibility of losing our home. The alternative would be to rent with the remainder of the sale of the house but the money would only last for 3 years. Thereafter, myself and my sons would be at the mercy of the council. It enrages me to see that politicians have their expenses paid for their second home (and their first) out of our pockets. They are not going to feel the crunch and therefore are totally out of touch with the majority of people. Let them feel the pinch and we will then see changes.

- Patricia, Harrow

What people choose to do with their own money is their own business: buy-to-let, stocks and shares or whatever else they want to invest in. I dispute that there are that many empty buy-to-let houses and flats in London, where's the benefit to the owners/investors in that? To my knowledge rents in the private sector have increased by 10% in the last year, so rental property should be profitable, especially as interest rates have been reduced lately

- Lmd, London