The number of people claiming housing benefit in the UK increased by 16,000 (0.4 per cent) between August 2006 and August 2007. The number of claimants in housing association tenancies increased while the number in local authority tenancies fell slightly. The government suggested this was due to the transfer of housing stock from local authorities to housing associations.
According to the Residential Landlords’ Association the government is looking at proposals to stop houses being used for private rented student accommodation. The government wants students to live in commercially provided, purpose built halls of residence. But the RLA argues that 75 per cent of students prefer the independence of sharing a privately rented property, and moving students into halls of residence would deprive entire local economies that provide for them. It is planning a nationwide landlords’ coalition to fight the government plans.
Bank of England governor Mervyn King said yesterday that there was little the governement could do to prevent a housing crash if that was what the market demanded. King dismissed measures being considered by Alistair Darling to end the mortgage drought such as extending the special liquidity scheme and having Treasury guarantee high quality mortgage-backed bonds to provide extra emergency financing for the banks and revive the mortgage market. He said that central banks should not supply funding to finance investment nor should the government have a major role in guaranteeing lending.
The financial advice website moneyfacts.co.uk has said that mortgages will never be as easily or widely available as they were a year ago. The number of available financial products is down 70 per cent, while rates and fees are up and maximum loan to value ratio has dropped to 80 per cent, down from 90 per cent a year ago.
However research by HSBC has found that a third of homebuyers are putting off purchasing because they believe that rates will be cheaper in six months. The research found that 98 per cent of those questioned were able to secure a mortgage, but were concerned with the rising cost of living currently and wanted the market to stabilise before taking the plunge.
According to reports in the Times the Financial Services Authority has been accused by mortgage lenders of being ‘unfair’ in its recent criticism of their repossession policies. The Council of Mortgage Lenders said the FSA was wrong to suggest the entire industry was at fault, and is unhappy about the way the FSA published its findings on 5 August of how lenders deal with customers who are behind on their mortgage repayments. CML said the findings were confusing to lenders and misleading to the public.