Peter Girling's Blog

The latest research from flat and house share website, Spareroom, highlights some serious problems at the heart of the UK’s rental industry.

In 2008, the government changed its policy to one which pays new claimants housing benefit directly to the tenant rather than the landlord and also changed the way new tenants entitlements are calculated. In some cases, this reduced tenants LHA housing benefit payments, requiring them to make up the shortfall in rent. Both changes have clearly made an impact.

And from April 2011, the way in which LHA entitlements are calculated was changed once again, meaning that the shortfall tenants were expected to pay increased.

Since then, over half of all landlords have experienced problems collecting rent and this problem is more pronounced with social housing tenants, with 87% of landlords claiming rent is not being paid on time or in some cases, not at all. Given these facts, it is not unsurprising that 86% want to revert to the government paying them directly and that 56% won’t accept social housing tenants at all.

However, important facts are being overlooked. One is the impact of the housing benefit cuts on peoples’ ability to pay and the second is the fact that many of the social housing tenants well be in their 60s and older without the means of working and earning additional income to supplement their rents.

In recent months, we have all seen inflation levels, food prices, utility bills and VAT rise – making it harder for the elderly to make ends meet. The low interest rates have also diminished returns on any savings. The housing benefit cuts will have come as a serious financial blow to the over 60s living in social housing – what they don’t need now is for their landlords to give up on them.

We welcome the Chancellor’s decision to raise the state pension by £5.35 in Tuesday’s Autumn statement. The soaring cost of living, combined with low interest rates and poor returns on savings has hit pensioners hard in the past 18 months. This move goes some way to alleviating their struggles in the current difficult economic climate. However, there is not such good news for the elderly in terms of housing. Whilst today’s announcements included a mortgage indemnity scheme to help up to 100,000 people buy homes with 5% deposit, a £400m scheme to kick-start stalled construction projects in England and 50% discount for social tenants wanting to buy their own homes – strikingly the majority of these plans are aimed in the main at helping first time buyers get onto the property ladder rather than older people at the other end of the market. Many elderly people no longer desire homeownership. They want to downsize and there is an acute shortage of appropriate retirement housing in the UK to buy or rent so why are no provisions being made for these people?

Eight million people currently live in under-occupied homes and many are older people. What’s more, this number has increased by 45% since 2003 because people are living longer and there aren’t enough suitable alternative homes available. Arguably, if a greater number of retirement properties were built and the government incentivised people to move into them, many of these ‘family homes’ would become available.

Missing from the Autumn statement is joined up thinking on housing. A review of the number of empty and under-occupied properties and a strategy of providing quality retirement homes is needed urgently.

Today a new report from campaign group Intergenerational Foundation highlighted the high levels of under-occupied homes and the growing divide between the ‘haves’ – older property owners and the ‘have nots’ – young people struggling to get on to property ladder. However, it failed to mention that ‘home hoarding’ by the elderly is often not out of choice.

According to the report, there are 25 million unused bedrooms and 8 million under-occupied homes in the UK. This is a growing problem as the under-occupation of housing has jumped by 45% since 2003 because older people are living longer and staying in the family home rather than downsizing to more appropriate accommodation.

It is true elderly people in the UK are based in under-occupied homes worth an estimated £3 trillion. However, many are desperate to sell their homes and release their capital to downsize or rent but there simply isn’t enough of the ‘appropriate’ accommodation referenced in the report – far from it. There is a shortage of suitable housing accommodation to buy or rent for retired people in the UK and this is crux of the crisis.

With RPI currently running at 5.6% and utility companies putting up their prices, many older people are facing a bleak winter in homes that are too big and they can’t afford to run. They may have property, but they don’t have cash and will struggle to meet the rising living costs. So, although this report highlights an important issue, it is more complex than declaring it a generation divide.”

The government is failing to address these problems. Whilst it recently announced two new housing schemes which will see up to 200,000 new homes being built in the UK, retirement housing wasn’t on the agenda – neither was under-occupancy. It is time for joined up thinking on housing to ensure ‘appropriate’ options for all age groups. Only then will we see an end to housing hoarding and the current property bottleneck.

This week’s report from The National Housing Federation highlighted a number of serious issues blighting the UK housing industry. It stated that the UK’s ‘chronic’ undersupply of homes is reaching crisis point; and whilst the government wants to embark on a £4.5bn project to build 170,000 affordable homes over the next four years, developers are cautious, fearing that people will not be able to raise the finance for mortgages against these homes.

It is clear that the combination of high house prices and borrowing costs is making homeownership out of reach for an increasing number of people. The number of home owners is estimated to decline from 67% to 63.8% in the next 10 years – a factor which will push up rental prices up and arguably, push quality down. Things are also looking bleak in the social housing market. A recent report from the National Landlords Association claimed that over half of UK landlords plan to cut the number of properties they let to social housing tenants as a result of government cuts to Local Housing Allowance. With 1.5 million people on the waiting list for social housing already, surely this is a ticking time bomb for the government?

An obvious solution is being overlooked. 80% of elderly people in the UK are homeowners. They are sitting on property worth an estimated £3 trillion – many of which are under occupied family houses. These are the high quality family homes that are currently chronically undersupplied. If elderly people were encouraged to move into suitable, high quality retirement housing to rent or buy these homes could become available. Herein lies another problem – retirement homes are also in chronic undersupply. The government needs to work backwards to solve this Catch 22 situation. Rather than simply ‘Get Britain Building,’ it needs to first needs to think about how to solve the crisis and look first at building attractive retirement properties which might get the market moving again.

Like most people, I was shocked and saddened by the appalling scenes of riots and looting across London and other parts of the UK. One of our developments in South London was in lock down last night in expectation of the troubles, with elderly residents worried about their safety. Fortunately, the majority of our developments have house managers on site to reassure residents and all our developments are secure. We want to reassure residents in all our developments across the UK that we will do all we can to maintain their safety and security.

Whilst we felt more reassured by the presence of police reinforcements in the Capital last night and relieved that there wasn’t any trouble in Bromley, it was worrying to see copy cat rioting in both the West Midlands and Manchester. From the television images and eye witness accounts pouring in, the majority of these rioters were teenagers and even children, with no respect for authority or themselves.

But, whilst commentators and the government deliberates on the motivations behind the riots, it strikes me they are a culmination of the UK’s deep rooted social and culture problems, and the rewards of political inefficiency.

For many years, standards of education have been slipping in the UK. Youngsters are not being trained, there is a lack of apprenticeships and suitable jobs. These ‘children’ are facing a hopeless future, they have nothing to do and so think they have nothing to lose. Our society and culture reveres consumerism and instant reward – and this seems to be the only priority for these young people. But these problems and issues have not appeared overnight. They have been ignored by this government and previous governments, and arguably were bound to surface sooner or later. What is needed now is strong leadership, but equally for measures to be put in place that tackle the roots of these problems in the homes, schools and communities that have been so badly affected.

Many an ‘old fogey’ has suggested bring back National Service, which is often loudly pooh poohed. But this idea does have much merit whereby young people can be taught respect for their peers, pride in their appearance, as well as a useful trade. It does not have to be a military-based training, but a compulsory two years where young people could be trained by the State as carpenters, joiners, electricians, plumbers, decorators, carers, gardeners, mechanics, cooks and all the other trades we need etc., giving them useful qualifications and much needed self esteem. Come on Government let’s have some positive leadership and stop worrying about being re-elected in three years time.