Letters: Tenancy rights need a shakeup to protect ‘generation rent’

The modest housing market reforms advocated by the Institute for Public Policy Research (IPPR) are welcome, but could take decades to slow or even reverse the trend towards "generation rent" (Housing market fears as 'generation rent' keeps away from property ladder, 31 May). In the meantime, we are leaving more and more people in one of the most insecure rental sectors in Europe. In London, two in every five private rented homes are in a bad state of repair, and tenants who complain can easily be evicted – or given a huge rent rise – in retaliation. Young Londoners, for whom home ownership is furthest from reach, might like to see tighter mortgage regulations but they also really need a radical shakeup of tenancy rights.

Jenny Jones AM

Green party group, London Assembly

• The National Housing Federation predicts the average age of first-time buyers could soon rise to 43. As I'm nearly 43 I thought I would ask my bank manager about my chances of raising a £150,000 mortgage on the feeble remnants of my public sector income. Sure enough, the adverts were right in saying that I could have a response in less than 15 minutes … it took closer to 15 seconds for her to say no.

I suck the straw of my conciliatory fruit smoothie and ponder the problem. Maybe the price of property is too high? Maybe if they were to build more houses they would be more affordable. Not enough builders? Well, Bob the builder is currently signing on so he's free to work. Not enough land? Yes, that's pricey stuff, but then again even Holland manages to have enough houses for its people. Not enough capital? Hang on, didn't we give the banks a trillion pounds … surely they owe us?

The last of the smoothie slurps away, leaving me one remaining thought: some people don't want the value to fall. Some people ... like it this way.

Katherine Fyfe

Exeter, Devon

• Could the Institute of Public Policy Research explain why its report failed to address the issues of high rent and security of tenure for long-term tenants? It is surely only justice for tenants as the principal stakeholders that they should have some "share" in the property depending on the length of their tenancy. The IPPR should also address the issue of a Fair Rent Act. It would restructure the housing market, weeding out those landlords who so irresponsibly drove the market on the back of the high rents of their poorer tenants to the advantage of the first-time buyer.

Peter Hack


• When will the campaign start to remove housing as an "investment" and replace it with housing for those who need homes? How about a law enabling the selling of privately rented houses to tenants, as council houses were?

Rev Tony Bell

Chesterfield, Derbyshire

Housing marketMortgagesRenting propertyPropertyFirst-time buyersHousingguardian.co.uk

Trading up, trading down – in pictures

From a listed former convent to an old school house

Jill Insley

Mortgage approvals fall to record April low

Figures from Bank of England show number of loans for house purchase at a four-month low, while consumers' appetite for borrowing remains limited

The number of loans approved for house purchase fell by 4% to a four-month low of 45,166 in April – the lowest figure for that month since records began in 1992, according to the Bank of England.

Some economists blamed the low figure on the bank holidays and the royal wedding, but others said they are evidence of a continuing depression in the housing market.

Loan approvals for remortgages also fell – by 10% to 28,091 in April compared to 31,201 in March, and down 20.8% on the 35,501 loans approved in February.

While gross lending secured on dwellings rose marginally to £11.2bn compared to £11.1bn in March, the Bank of England also said net mortgage lending was just £0.7bn in April, up from £0.5bn in March but low compared to long-term norms.

Howard Archer, chief economist at IHS Global Insight, said the Bank figures indicated that tough conditions remain for the housing sector: "Mortgage approvals have actually averaged around 90,000 a month since 1993, while a level of 70,000-80,000 has in the past been considered consistent with stable house prices.

"The relapse in mortgage approvals in April from an already low level reinforces our belief that modest falls in house prices are more probable than not over the coming months."

Brian Murphy from independent mortgage brokers Mortgage Advice Bureau was unsurprisingly more bullish: "The raft of bank holidays and the royal wedding inevitably skewed the April data, so an overall drop in the number of loan approvals and remortgages comes as no surprise. The nation went on holiday.

"During May, activity bounced back and returned to the steady growth trajectory of February and March – albeit one that is naturally still at historically low levels. The ongoing drop in the number of remortgages reflects how people increasingly believe an interest rate rise is unlikely in the short term and that, if one does come, rates overall will remain very low for the foreseeable future."

April figures from the Building Societies Association (BSA), also released today, show gross lending by mutuals falling to £1.66bn from £1.74bn in March, though the April figure is a significant increase of 19% on the £1.4bn advanced in the same month in 2010.

Adrian Coles, director-general of the BSA, said the year-on-year increase reflects a decision by mutuals at the start of the year to lend more: "We have come through the recession and are well-placed after two difficult years. We want to lend more. First-time buyers think they cannot afford to buy, but mutuals' pricing has improved now and there are attractive products out there."

Meanwhile, the Financial Services Consumer Panel (FSCP) today outlined its six point plan for a "sustainable and healthy mortgage market". It wants to see the Financial Services Authority's Mortgage Market Review include, among other things, effective regulation to help consumers; regulatory policy to take account of wider social and economic implications; and lenders being required to judge affordability and suitability for individual consumers.

Adam Phillips, chair of the FSCP, said: "Over the last few years we have seen some reckless lending by banks. Stronger regulation is undoubtedly needed to stamp out bad behaviour. However, there is a need for a balanced approach which takes full account of the social implications of any change."

Limited consumer appetite

The Bank of England also announced that consumer credit rose by £0.5bn in April compared to the previous six-month average increase of £0.4bn. Credit card lending rose £0.3bn while other loans and advances rose £0.2bn. As in previous months, consumer appetite for taking on new borrowing appears to be limited while people remain keen to reduce their debt.

This is borne out by statistics from the BSA which show savings held with mutuals increased by £1.5bn in April compared to an increase of £0.9bn in the same month of 2010.

Coles said: "The significant inflow of funds into savings accounts during April was helped particularly by strong deposits into Isa accounts compared to April last year.

"However, it will be difficult for deposit takers to maintain a positive inflow of funds this year given the squeeze on household finances. The added competition from state-backed NS&I [products] could also make attracting funds more challenging."

MortgagesPropertyBanks and building societiesBorrowing & debtMortgage lending figuresHousing marketBank of EnglandMark Kingguardian.co.uk

Calling all Castaways: Taransay island up for sale

Be a castaway every day of the year – Taransay island was the setting for the original BBC series and is on the market for £2m

In pictures: Taransay island

A beautiful Hebridean island, made famous by the reality television series Castaway, is being put up for sale complete with spectacular white beaches, a private herd of deer, wild otters, trout and seals.

The uninhabited island of Taransay in the Western Isles has seen pagan Celtic settlers, a massacre involving warring medieval clans and in 2000, a group of 36 city dwellers and a large television film crew trying to survive unaided on the edge of the Atlantic.

That BBC series, which made a star of one equally rugged young castaway, Ben Fogle, but upset others who took part, transformed the island from a secluded spot for the hardiest and best informed travellers into one of the Hebrides' most famous private islands.

Made up of two treeless, cliff-fringed and wind-battered islands connected by a wide, sandy isthmus, Taransay is being sold by its owners, Angus and Norman MacKay, two locally-raised brothers who live on the neighbouring island of Harris, for offers in excess of £2m.

With a history of habitation stretching back to at least 300AD, Taransay was bought by their father John MacKay in 1967 for £11,000. It once had three villages but the last family left the island in 1974, leaving the properties derelict and a place mainly for sheep grazing, and intrepid travellers.

When it was selected for Castaway, several houses were upgraded, leaving three – the farmhouse, the old school chalet and a more basic bothy with beds for 10 – for the MacKays to rent out as self-catering holiday homes.

They have only rudimentary services, but some of the most spectacular sunsets over the Atlantic and sunrises over the sharp-peaked mountains of Harris immediately to the east.

The island, thought to be the largest uninhabited island in Scotland, is being sold in its entirety with a working sheep farm – currently at 680 breeding ewes – and with 200 red deer, its holiday homes and an offer from the MacKay's to sell a landing point on the beach on South Harris for its new owner to pull up and store the boat required to visit their property.

John Bound from estate agent CKD Galbraith, which is selling Taransay, said the sale was quite rare. At 3,445 acres Taransay is unusually large to be sold in its entirety. And the MacKays – one a farmer, the other a business man – are selling up for pragmatic reasons, he said.

"The sale is purely a business decision; it suits both families now, the timing and everything," Bound said. "It's quite unusual to get an island of this size where everything is owned. Usually something has been sold off or is crofted. Anyone can now buy it in its entirety."

The firm said the island had the potential to continue as a holiday letting business, but also for its country sports, deer stalking and its fishing. Taransay offered "the country sportsman an abundance of activity whilst protecting the biodiversity of the island, with hill lochs teeming with brown trout, first-class coastal and sea fishing, as well as a herd of around 200 head of red deer providing some enjoyable and sustainable stalking."

The temporary Castaway islanders, watched by 9m viewers at its peak, lived in "pods" in the deserted village of Paible, where they raised their own pigs, cattle and chickens, and grew their own vegetables. They enjoyed electricity, supplied by a wind turbine and a small hydro-electric scheme, and a water supply. Of the original 36 castaways, 29 stayed on the island for the full year. Most returned to their normal lives; Fogle went on to become a television presenter, including for the BBC nature and farming series Countryfile.

PropertyScotlandSeverin Carrellguardian.co.uk

Can the trustee of a will dictate a house sale?

Q I need some advice regarding a property my brother and I inherited.

Would renting my flat require a buy-to-let mortgage?

Q My fixed-rate mortgage ends soon, and I am planning to let my property for six-12 months while I take a career break. I understand that if I were in the middle of my deal I would need to seek "permission to let". But since my deal is almost over and I want to re-fix, should I seek a residential or buy-to-let mortgage?

My current provider said that after I am granted permission to let I would simply re-fix on another residential mortgage. However, I have seen better rates with other providers, so if I apply for a new mortgage with someone else would it then have to be buy-to-let, or can I apply for a residential mortgage and seek permission to let at a later date?

Home ownership out of reach for many Londoners

Nine of the country's top 10 most expensive neighbourhoods are in London, a survey finds, as Land Registry figures show capital house prices rose by 3% in April

More than 220,000 Britons own a property worth in excess of £1m – more than the population of Newcastle or Brighton and Hove.

Despite recent falling property prices, the UK still has 5,922 "million-pound" streets, where the average property costs more than £1m. London is home to the biggest number of expensive streets with 2,290, followed by Guildford, a popular commuter town, with 89, and Cobham, a hotspot for footballers, with 78.

Unsurprisingly the Property rich list 2011, published by property website Zoopla.co.uk, shows that Kensington in west London is by far the most expensive neighbourhood in the country, with house prices averaging £1,737,862.

Nine out of the top 10 most expensive neighbourhoods are in the capital, with Virginia Water in Surrey the only exception. But nine on the list have also seen average house prices fall over the past 12 months, with Hampstead in London the only area to see prices rise.

Topping the list of the most expensive streets in Britain once again is Kensington Palace Gardens, otherwise known as Billionaires Row – where the average property price is a staggering £19.2m. This exclusive gated street is home to Saudi and Brunei royalty, Russian oligarchs and Britain's richest man, Lakshmi Mittal, who rather unimaginatively owns not one but three properties on the street.

The most expensive counties or unitary authorities in Britain are Windsor & Maidenhead, where average house prices stand at £389,120, London (£387,119), Surrey (£371,984), Hertfordshire (£300,914) and Oxfordshire (£284,402).

Although more than half the country's property millionaires live in London, their money does not buy them much in the way of space. In Chelsea you can buy a three-bed flat in Cadogan Gardens for £1.45m where you have to share the garden and there is only 40 years left on the lease.

You could get a four-bed house in Callcott Street in Kensington for £1.8m, but will then need to spend tens if not hundreds of thousands of pounds on a complete modernisation, while the back garden looks suspiciously like a parking lot.

Capital gains

The situation has got worse for those aspiring to buy in London in the last month: according to the Land Registry house prices in the capital increased by 3% in April alone, a huge leap considering they have risen by 5% in the past year.

Peter Rollings of London estate agent Marsh & Parsons said: "The figures show a monthly jump of 3% in April, but in some prime parts of London we can confirm they are even higher: in Hammersmith and Fulham and Kensington and Chelsea, where we have seven offices, the rise is 6%.

"The reason is that there is still a shortage of property on the market – around 50% of its long-term average. However, although there is a pent-up demand building, some potential buyers are still being restrained by the inadequate availability of mortgage finance.

"Today, the CEBR stated that house prices are close to bottom and that London will rise 2% faster than the rest of the UK. That being the case, London represents good value – especially for overseas buyers who can leverage the relative weakness of sterling against the dollar and euro."

The Land Registry's house price index showed an average increase of 0.8% in England and Wales in April – the first time the monthly figure has been positive since the start of the year – but prices are still -1.3% down over the year. The biggest fall occurred in the north-east where prices dropped -1.7% in April and -8.1% over the year.

House pricesPropertyHousing marketJill Insleyguardian.co.uk

Castaway island Taransay is up for sale – in pictures

The remote island setting for the original BBC series is on the market for £2m

Is home ownership really so desirable? | Owen Hatherley

High levels of debt and stress encourage acceptance of low wages and long hours. There's a lot to be said for renting

"No man who owns his own home and lot can be a communist." So claimed William Levitt, the American property developer who created the American suburban landscape in the 1950s. Levitt built thousands of mass-produced, detached, identikit yet individualistic houses, made so cheaply as to be economically sold to lower middle- and even working-class buyers. Take away the second clause – The Good Life notwithstanding, suburban gardens have seldom been put to any useful purpose – and you have the rationale for the huge changes in housing in Britain over the last 30 years. Under Margaret Thatcher, John Major, Tony Blair and Gordon Brown, an attempt was made to create a "property-owning democracy", banishing the spectre of socialism in the process. But has David Cameron inadvertently started to break the pact?

This week's report by the Halifax on home ownership corroborates a fact obvious for some years now – that, as property becomes more and more expensive, especially in the south-east of England, a generation is growing up unable to buy a home. One of the UK's largest mortgage lenders reports that two thirds of "potential first-time buyers" have no prospect of taking out a mortgage, and partly because they lack the appropriate thriftiness. Aside from this blaming of the victim – given that real wages are either stagnant or falling, and have been for decades, it's in poor taste to moralise about credit – it clearly believes that home ownership is a good and desirable thing. Is it?

In the 1970s, many saw the property-owning democracy on the horizon, and considered it a dangerous, albeit refined, piece of bribery. In his classic Working for Ford, sociologist Huw Beynon found that many trade union activists at the Ford plant in Halewood, Merseyside, refused to take out mortgages or buy houses. He quotes one shop steward as saying: "[The workers] get made up, earn a lot more money and then the company starts encouraging them to buy a house, to get a car on the company's scheme. I know this for a fact. Then when they're up to their neck in debt they put the screws on them, and they've got no chance. A shop steward should never be in that position, where he can't afford to go on strike pay. I'd never buy a house when I was a shop steward. I don't think any steward should."

Then, the Ford Motor Company's own mortgage schemes were a front in a class war; since 1979, it has been official policy, with the introduction of the Right to Buy council housing combining with a refusal to build any new council housing stock. Together, they decimated secure, comfortable rented accommodation. If this was a trick, as the Halewood stewards suspected, then most of us fell for it. Today, crippling levels of household debt, repossession and housing-related stress coincide with low wages, long hours, and extraordinarily few strikes. It's hardly a coincidence. A housing crisis, with millions in insecure or overpriced housing, doesn't necessarily lead to anger, to a demand for something better – it leads to fear, anxiety that even the Barratt Homes rabbit hutch you've acquired could be easily lost.

The UK's preponderance of home ownership is matched only by the poverty of its homes. The most expensive in Europe, they are also the most dilapidated when old, the smallest when new. And yet, from the London county council's arts and crafts estates of the 1890s to the Trellick Tower in the 1970s, we once had some of the world's finest low-cost rented housing. It was not owned by us as individuals, struggling to meet the instalments – it was owned by us collectively, as a public good. Rather than wishing cheap mortgages back, we need to be thinking outside of our own homes and lots.

Housing marketHousingHomesPropertyReal estateCommunitiesOwen Hatherleyguardian.co.uk

Banks must make mortgage conditions tougher for homebuyers, says IPPR

IPPR also wants more controls on buy-to-let lending to stop property speculators feeding runaway housing market

Homebuyers should be legally required to put down a minimum 10% deposit and borrow no more than three and a half times their income to purchase a property if Britain is to avoid another damaging boom-bust cycle, according to a report by the Institute for Public Policy Research (IPPR).

Today's report by the thinktank also argues for controls on buy-to-let lending to deter property speculators from ramping up the market.

The report sets the IPPR against most of the mortgage industry, which is campaigning for the Financial Services Authority to use "affordability" tests rather than formal caps on loan-to-value and loan-to-income. The FSA will be issuing a consultation paper this summer as part of its Mortgage Market Review, but so far it has stated that it believes LTV caps would be "too blunt a tool" to impose on lenders.

The IPPR said that easy lending practices by British banks before the onset of the credit crunch had left UK households with bigger mortgages, relative to their income, than in any other major economy.

"Almost all of the increase in household indebtedness in the UK has been as a result of more mortgage borrowing. At the end of 2009, the UK household sector had debts totalling £1.53 trillion, of which £1.19 trillion (78%) was secured on dwellings."

The UK has the highest levels of mortgage lending as a percentage of GDP – 81% – higher than the US (73%), Canada (49%) and western Europe (44%) – as well as the highest levels of household and business debt relative to GDP.

IPPR director Nick Pearce said: "Britain has suffered four housing bubbles in the last 40 years, each of which contributed to major economic and social problems.

"We must learn the lessons from this economic history. A central plank of economic policy should be to target moderate increases in house prices, rather than allowing runaway house price inflation which is always damaging in the long run.

"The housing minister, Grant Shapps, has tentatively floated the idea of aiming for house price stability but he and George Osborne should go further and make it an explicit policy objective. We need tougher mortgage market regulation from the FSA, especially caps on 'loan-to-value' and 'loan-to-income' ratios."

According to campaigning group Shelter, first time buyers back tighter rules on lending despite the fact it will stop some people getting a mortgage.

In a YouGov poll, commissioned by Shelter, 75% of potential buyers said the banks must be forced to behave more responsibly. Four out of 10 said they did not believe that the banks could be trusted to lend responsibly in the future, and nearly a third (28%) said they had been offered a bigger mortgage than they had asked for, or knew someone who had.

Campbell Robb, chief executive of Shelter, said: "People really want simple, commonsense rules in place to ensure people borrow money responsibly. What is most striking is the level of support among first time buyers who clearly want greater protection and are well aware it might limit their chances of getting mortgage credit in the future.

"So far the voice of the consumer has been completely drowned out by the mortgage industry. We must not let banks go back to the old ways of irresponsible and reckless lending."

The IPPR report is among the first to call for stricter regulation of the resurgent buy-to-let industry. It said deposit requirements on buy-to-let mortgages should be raised and lenders should ensure that rents cover repayments.

It said: "IPPR wants to deter small time speculators from seeking excessive capital gains from the buy-to-let market, since this activity feeds housing bubbles.

"The UK has the lowest level of institutional investment in private rented housing in Europe. We should be encouraging institutional investors to 'build-to-let' while discouraging individual property speculators using buy-to-let mortgages which can artificially inflate our housing market."  

PropertyBanks and building societiesMortgagesFinancial Services Authority (FSA)RegulatorsGeorge OsborneEconomic policyHousingBorrowing & debtCredit crunchHouse pricesFirst-time buyersPatrick Collinsonguardian.co.uk
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