Friday, August 14, 2015

Housing - Gold Mines and Honey Pots

Ex-council flat in central London sold for record £1.2m. A three-bed property near Covent Garden, situated in Siddons Court, a mansion block which was once entirely owned by Westminster council, was bought for £130,000 in 1990 realises return on investment of more than 800% for owners. The property is not the first ex-council flat to be marketed for more than £1m this year. In May a two-bedroom home above Stella McCartney’s boutique in Fulham came on to the market for £1.15m. Last year, two large houses were sold by Southwark council for almost £2.96m and are now back on the market for more than £3m each.

Property experts say ex-council properties have become very popular with buy-to-let investors looking for easy to maintain, purpose built flats to let. They have been described as a gold mine for landlords, as rents in refurbished properties in some parts of London have hit £400 a week, while two-bedroom flats can command as much as £600 a week. In 2014, a two-bedroom flat in Siddons Court was advertised for rent at £525 a week. Since right-to-buy was introduced in the early 1980s more than 2m properties have been sold off across the country. Currently, council tenants in London can get discounts of up to £103,900 on their property if they decide to exercise their right to buy. Under new rules being brought in by the Conservative government the right to buy will be extended to all housing association tenants, while councils will be forced to sell off their most valuable stock to pay for replacement homes. Councils in London have warned that this could lead to the sell-off of thousands of homes in the capital.

Almost 40 per cent of former council homes sold on the cheap under the Government’s Right to Buy scheme are now being let out on the hugely expensive private rental market, enriching a new generation of landlords, according to a national study carried out by Inside Housing magazine. The government is presently preparing to extend full Right to Buy discounts – of more than £100,000 per property in London and £70,000 elsewhere – to a further 1.3 million housing association tenants. Figures released by 91 councils in England under the Freedom of Information act show 37.6 per cent of flats sold to tenants under the controversial policy are being sublet at up to seven times the cost of average social rents.

More than half the ex-council flats in six local authority areas are now being let privately with the highest - 70 per cent - in Milton Keynes. Stevenage, Corby and Blackpool all sold more than 60 per cent of their stock to people who are subletting their property.

Typical ex-council properties currently available for private renting include a four double-bedroom apartment in Archway, north London, for almost £3,200 a month; a two-bedroom flat in Bermondsey, south east London, for £1,700 a month; and a three-bed maisonette in the same area for £2,400 a month. The cheapest rent charged by registered social landlords in London is on average £450 a month in Lewisham, south east London, up to £559 a month in Newham, east London, according to figures compiled by the Greater London Authority.

Pat Callaghan, cabinet member for housing in Camden – where 36 per cent of the 8,922 leasehold properties are sublet, said: “Over the years I have seen many of our estates become virtual honey pots for estate agents and [private] landlords.”

Betsy Dillner, Director of Generation Rent, said: “Right to Buy is a perverse subsidy that worsens the overall situation of the poorest in society. Many of these properties are home to tenants who would qualify for social housing but pay vastly higher market rents that have to be covered by housing benefit, costing us all.”

It’s been another bonus year for bailiffs as relentless rent rises and welfare cuts continue to bite at the heels of hard-pressed families fighting to stay in their home. The number of people being evicted from their rented homes has increased by almost 50 per cent since housing benefit cuts were introduced four years ago, it has been revealed. Figures from the Ministry of Justice show that 10,361 households in England and Wales were repossessed by county court bailiffs between April and June this year – equivalent to more than 23,000 people. During the same period in 2011 there were 7,072 repossessions. The London borough of Newham had the highest number of evictions at 274 per 100,000 households in the area and London local authorities account for all but three of the 20 boroughs with the highest proportion of landlord repossessions. Thanet, Slough and Luton are the only exceptions.

Campbell Robb, Chief Executive of Shelter, said: “These figures are a stark warning that relentless rent rises and welfare cuts have contributed to thousands of hard-pressed families losing their home. Every day at Shelter we see the human cost of the country’s unfolding affordability crisis with growing numbers of families finding themselves on the verge of homelessness, and petrified that any small drop in income could leave them with the bailiffs knocking at the door.” 

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