What impact are the Welfare Reforms having on Brixton?

[co-op]

The 15% rise is very real - I've seen some RICS surveyor valuations in Brixton go up by as much as 25% since April last year. There is not a huge amount of good stuff on the market and a lot of people are after the same places. Half decent flats are selling before the particulars have even been drawn up and lots of buyers are facing sealed bids.

I checked out the example you posted and I am fairly certain that the advertised flat is not the same one which sold in 2009 for 290K. Zoopla says 34A sold for 290K in 2009 but if you check planning records here you'll see that 34A is a 2 bed ground floor with a garden. The flat for sale on Zoopla for 250K (under offer) is a 1 bed first floor with access to a communal roof space.

Well if you're right that would explain that example - and tbh it seemed a bit extreme (firstly most people simply can't afford to take that kind of hit in a couple of years) so I should have raised an eyebrow at it, but it was a quick search to make a point.

But I'm still going to call BS on 15% this year - or in the last year for that matter. Obviously there are people with money around who have assumed that you Cant Lose On Property and they are presumably going to be shelling out top dollar, there's the whole two-tier economy in London etc. But there's absolutely no way the market is roaring up. I can certainly find real terms price falls in Lambeth and have been able to for a year or so. And that I haven't seen since the 1990s or even the 80s if you're talking Brixton.

If all these slavvering buyers are all over the place, why are so many flats sitting in the market for over a year? Much more in many cases. I think a few people get lucky when they sell and hook a wealthy mug but there aren't enough of them around for everyone.

 

[co-op]

twice what you are able to pay

Yep, "affordable" is a classic bit of contemporary nuspeak. It actually means "unaffordable".

 

[sparkybird]

Minnie
The reason is that while you get a mortgage on your part of the flat (25, 50% etc) you still have to pay rent on the bit you don't own. Plus there'll be a service charge for communal areas, lifts and sinking fund for repairs. Overall, it works out pretty expensive, but I guess the 'good' bit is that not all your £ is going on rent to pay someone elses mortgage

I don't know how young people manage these days (unless they have the Bank of Mum and Dad). Thank goodness I'm old! Although I do remember mortgage interest rates going up to 15% - that was a bit scary..

 

[Minnie_the_Minx]

Minnie
The reason is that while you get a mortgage on your part of the flat (25, 50% etc) you still have to pay rent on the bit you don't own. Plus there'll be a service charge for communal areas, lifts and sinking fund for repairs. Overall, it works out pretty expensive, but I guess the 'good' bit is that not all your £ is going on rent to pay someone elses mortgage

I don't know how young people manage these days (unless they have the Bank of Mum and Dad). Thank goodness I'm old! Although I do remember mortgage interest rates going up to 15% - that was a bit scary..

As, I see. So really, "affordable" housing is only for people on £25k or over bearing in mind property prices in London.

I don't know these things as I know on my "wages", I'll never be able to afford to buy

 

[Rushy]

Well if you're right that would explain that example - and tbh it seemed a bit extreme (firstly most people simply can't afford to take that kind of hit in a couple of years) so I should have raised an eyebrow at it, but it was a quick search to make a point.

But I'm still going to call BS on 15% this year - or in the last year for that matter. Obviously there are people with money around who have assumed that you Cant Lose On Property and they are presumably going to be shelling out top dollar, there's the whole two-tier economy in London etc. But there's absolutely no way the market is roaring up. I can certainly find real terms price falls in Lambeth and have been able to for a year or so. And that I haven't seen since the 1990s or even the 80s if you're talking Brixton.

If all these slavvering buyers are all over the place, why are so many flats sitting in the market for over a year? Much more in many cases. I think a few people get lucky when they sell and hook a wealthy mug but there aren't enough of them around for everyone.

I'd be really interested to see a couple of these examples which evidence a significant sale price fall (rather than asking price) over the past 12 months. Unrealistically priced or problem properties sit around whatever the state of the market - even in 2006/7. My old neighbour had his beautiful but unmod house (no central heating even) on and off the market for ten years. Every time he would put it on for about 20% more than it was worth. By the time it became worth that amount his expectations would change and he'd jack the price up again. Lovely old bloke who had bought it in the sixties for less than 1% of the price he was asking and totally convinced that, despite the lack of buyers, he knew the real market value of his home and that any thing less was ripping him off and cheating him out of his pension.

 

[Ms Ordinary]

My school services the Coldharbour ward and we've been told to expect an influx of potentially vulnerable children whose parents will be moving in from the rest of London, most of which is still more expensive than Lambeth.

I can see that happening - people in rented accomodation forced out of places like Westminster & Hackney, but trying to provide some continuity for their families, maybe keep the older ones in the same secondary school through their GCSE's, or stay within affordable commuting distance for work.
Lambeth & Southwark would seem like a good option at the moment, rather than moving further out and changing schools etc., as they aren't (yet) quite as badly affected by the LHA changes.

I guess that will increase demand for rented accommodation & prices will go up even more, and then the LHA limits (based on local market rents) will start to mean people on Housing Benefit can't afford to rent here either.

 

[ViolentPanda]

I don't understand. Can you explain what this means? Why are the welfare reforms going to "socially cleanse" areas of london?

Is it the LHA changes? So people won't be able to afford to top up from the HB limits to their rent? And why does this mean rents won't decrease? Surely less people able to afford it means less demand doesn't it?

Only if supply and demand are somewhere approaching balance. As it is, around here (and in most of London and indeed the Home Counties), rents won't decrease because demand for housing outstrips supply quite markedly, so rents get "bid-up" - the landlord seeks what the traffic will bear. This means that for those in private rentals as the average rents in the area rise, the rent becomes less affordable. Assured Shorthold Tenancies (the standard in private rentals) also give very little security of tenure - a maximum of 8 weeks at the landlord's notice - so that if a landlord does decide they could "do better" than their current tenant, they can get rid of them quickly.

The "social cleansing" I mention is of those parts of the population classed as "poor" who don't live in social housing. this will screw them, and there's nowhere for them to go, because the rent they can afford will be able to get them less and less.

I'm not saying it won't happen, I'm just confused.

It's a confusing issue, especially as it affects areas differently.

 

[co-op]

I'd be really interested to see a couple of these examples which evidence a significant sale price fall (rather than asking price) over the past 12 months. Unrealistically priced or problem properties sit around whatever the state of the market - even in 2006/7.

Annoyingly I can't access a forum where I listed a few not that long ago as it seems to have crashed this afternoon and I don't have time to find them again - basically trawling through pages of zoopla is quite time consuming. Should stress that these are not falls in the last year (not surprising really as almost no one sells inside a year) but (real) falls on previous purchase price - or in a couple of cases properties on the market at exactly what they were bought for 2-5 years earlier. They were all fairly bottom end things, ex-council or small flats in 30s mansion blocks which might need a lot of work. Doing a really quick trawl of zoopla just now I couldn't find one that I did recall (in New Park Rd) but it's gone so maybe that corroborates what you're saying to some extent but then again I was looking at it last summer so it kind of should have by now.

It may be that there has been a bit of a bump, and maybe at the bottom end because of the stamp duty holiday and spring being when people go out and buy. I find it a bit surprising that people are doing this but nothing should surprise me really, the whole property thing is such utter bullshit.

My old neighbour had his beautiful but unmod house (no central heating even) on and off the market for ten years. Every time he would put it on for about 20% more than it was worth. By the time it became worth that amount his expectations would change and he'd jack the price up again. Lovely old bloke who had bought it in the sixties for less than 1% of the price he was asking and totally convinced that, despite the lack of buyers, he knew the real market value of his home and that any thing less was ripping him off and cheating him out of his pension.

Sounds like my sister! Quite a common story - there's properties on rightmove that have been on for 3+ years - I mean there's no way that person really wants to sell, they're just fishing really.

 

[co-op]

Apologies for the derail btw, it's an interesting thread.

 

[leanderman]

In terms of affordability, the same surprising rises are happening in rent.

Lots of Brixton people on twitter are complaining about unfair hikes.

 

[Laughing Toad]

Mouseprice shows SW2 has an average 4.10% house price growth this year. It gives some examples.

(sorry I can't format it properly)



£320,000 Jan-11 £407,500 Dec-11 177 Sternhold Avenue
£187,000 Mar-10 £250,000 Oct-11 Flat 12 Hunter Court, 10 Herbert Mews
£315,000 Jan-09 £500,000 Dec-11 123 Strathleven Road
£37,500 May-97 £349,500 Nov-11 27 Goodman Crescent
£41,500 Dec-99 £145,000 Nov-11 Flat 4 29 Montrell Road
£49,950 Apr-97 £220,000 Jan-12 Flat 8 Wyatt Park Mansions Streatham Hill
£311,853 Jul-99 £1,025,000 Oct-11 39 Telford Avenue
£200,000 Nov-05 £336,500 Jan-12 35 Dumbarton Road
£66,000 Apr-98 £199,950 Oct-11 30 Crownstone Road
£145,000 Nov-98 £410,000 Oct-11 53 Salford Road

 

[CH1]

I am constantly amazed by this property thing in London.

Everywhere else in the world (US/Ireland/Spain particularly) there have been property crashes.
I reckon that housing benefit paid to landlords is what has held things up here.

Personally I reckon we could be headed for a property led dip - in with case those lucky blighters with shared ownership tenure may come off best, since only 25% or 50% of their capital investment is at risk.

As for me - I've had the letter from Greenock: "We wrote to you to explain that the government was proposing to limit how long people can get Employment and Support Allowance. This proposal has now been passed by parliament and your Allowance is due to end on 30th April ".

I'm going to have to get my finger out - either taking in washing, or perhaps taking in illegal Columbian immigrants like my neighbour does next door.

 

[leanderman]

I am constantly amazed by this property thing in London.

Everywhere else in the world (US/Ireland/Spain particularly) there have been property crashes.
I reckon that housing benefit paid to landlords is what has held things up here ...

Yes. Housing benefit is a welfare payment for the rich.

Landlords get the government to pay their mortgage, they pay next to no tax on rental income and then they find it easy to dodge capital gains tax if they ever sell.

It's a racket. I need to get in on it.

 

[leanderman]

Mouseprice shows SW2 has an average 4.10% house price growth this year. It gives some examples.

(sorry I can't format it properly)



£320,000 Jan-11 £407,500 Dec-11 177 Sternhold Avenue
£187,000 Mar-10 £250,000 Oct-11 Flat 12 Hunter Court, 10 Herbert Mews
£315,000 Jan-09 £500,000 Dec-11 123 Strathleven Road
£37,500 May-97 £349,500 Nov-11 27 Goodman Crescent
£41,500 Dec-99 £145,000 Nov-11 Flat 4 29 Montrell Road
£49,950 Apr-97 £220,000 Jan-12 Flat 8 Wyatt Park Mansions Streatham Hill
£311,853 Jul-99 £1,025,000 Oct-11 39 Telford Avenue
£200,000 Nov-05 £336,500 Jan-12 35 Dumbarton Road
£66,000 Apr-98 £199,950 Oct-11 30 Crownstone Road
£145,000 Nov-98 £410,000 Oct-11 53 Salford Road

These figures are astonishing. Just the top three:

£87k gain to £407k in 12months (29%)
£63k gain to £250k in 18months (34%)
£185k gain to £500k in 35months (59%)

 

[Gramsci]

Isn't 'affordable' usually related to rentals anyway?

The new definition of "affordable" will be that its 80% of private rental. In areas like London where private rental landlords can get high rents this could mean that people who are on benefits or who top up there low income with benefits for housing costs wont be able to live in certain area of London. The Government is introducing caps on housing benefits. It will be up to claimant to top up benefits for housing costs if there is a shortfall.

 

[Gramsci]

This is anecdotal but Ive seen an increase of rough sleepers in central London. Im around there a lot.The homeless tend to gravitate to West End even if they are made homeless elsewhere. I know as one told me its safer than Brixton. Not sure if this is already impact of economic crisis plus welfare "reforms". A sign of things to come. Though in run up to Olympics I notice that Westminster and Police are cracking down on street performers and the homeless who hang around.

 

[soupdragon]

The Guardian has a homelessness map:
http://www.guardian.co.uk/news/datablog/interactive/2012/mar/08/homelessness-map-england
The Lambeth stats for Oct-Dec 2011 is 157 households accepted as homeless (1.25 per 1000 households).
Croydon accepted 291 (1.99 / 1000 households) and is looking to move homeless people to Hull:
http://www.guardian.co.uk/society/2012/feb/18/london-homeless-forced-move-hull

As well as become literally homeless / on the streets, the expectation is that people will start to sleep on sofas, larger families move into single rooms etc.

 

[leanderman]

The housing benefit cap was no great surprise though, considering the high rents in central areas of London.

 

[Monkeygrinder's Organ]

These figures are astonishing. Just the top three:

£87k gain to £407k in 12months (29%)
£63k gain to £250k in 18months (34%)
£185k gain to £500k in 35months (59%)

If a house is bought and then sold again for a lot more in a short space of time is that not quite likely to be because the owners have done it up then sold it on, more than showing a general trend?

 

[Minnie_the_Minx]

If a house is bought and then sold again for a lot more in a short space of time is that not quite likely to be because the owners have done it up then sold it on, more than showing a general trend?

£87k to £407 in 12 months? How much doing up is involved for a house price to increase that much?

 

[Winot]

D'you reckon it's possible to buy a property in Brixton by text using Brixton Pounds? You'd get an extra 10% of the asking price and could split it with the vendor.

 

[Monkeygrinder's Organ]

£87k to £407 in 12 months? How much doing up is involved for a house price to increase that much?

I think it meant an increase of £87k, from £320k to £407k. Still a lot but...

 

[Ms Ordinary]

As well as become literally homeless / on the streets, the expectation is that people will start to sleep on sofas, larger families move into single rooms etc.

Surely the former rather than the latter - isn't there some overcrowding legislation that landlords could fall foul of, if they rent a room to an entire family, even if they were willing to?
But you could easily say you had one child not three, in order to rent a one-bedroom flat... (HB would know, but the landlord wouldn't).

 

[soupdragon]

Surely the former rather than the latter

I think Shelter expect people to try to cope in a range of ways instead of present themselves as homeless. The latter will obviously still cause a general increase in problems and distress for people.

The council are trying to renegotiate rents with landlords, but I don't know how effective that is.

 

[Gramsci]

Surely the former rather than the latter - isn't there some overcrowding legislation that landlords could fall foul of, if they rent a room to an entire family, even if they were willing to?
But you could easily say you had one child not three, in order to rent a one-bedroom flat... (HB would know, but the landlord wouldn't).

Also some of the people I know from abroad do this. One or a couple rent a flat or house. Then they get more of there friends living there without telling the landord. Some landlords turn a blind eye to it.

 

[Kanda]

If a house is bought and then sold again for a lot more in a short space of time is that not quite likely to be because the owners have done it up then sold it on, more than showing a general trend?

We've done zilch to ours and it's gone up 60k in 2 yrs apparently.

 

[Gramsci]

The housing benefit cap was no great surprise though, considering the high rents in central areas of London.

Do u mean u agree with the cap?

 

[leanderman]

Do u mean u agree with the cap?

Not really. But nor do I like landlords getting rich on housing benefit.

 

[leanderman]

If a house is bought and then sold again for a lot more in a short space of time is that not quite likely to be because the owners have done it up then sold it on, more than showing a general trend?

Most of the big gains come from people buying in the depths of the financial crash or its aftermath.

 

[soupdragon]

I don't understand. Can you explain what this means? Why are the welfare reforms going to "socially cleanse" areas of london?

Is it the LHA changes? So people won't be able to afford to top up from the HB limits to their rent? And why does this mean rents won't decrease? Surely less people able to afford it means less demand doesn't it?

I'm not saying it won't happen, I'm just confused.

It's worth reading a bit of the reports I linked to at the beginning – the changes are massive and complex. For example they are no longer going to link LHA to rents but to Consumer Price Index (which doesn't increase at same rate as rents).

As you can see the Cambridge report refers to "spatial segregation of low-income households" - which comes across as another way of saying "social cleansing". Lambeth welfare strategy manager recently said that in the next few years, "we may come to think and feel about Lambeth differently to how we do now" - meaning it's going to become unaffordable for many people who currently live here.

Links are here: http://www.cchpr.landecon.cam.ac.uk/Downloads/hb_reform_london_spatial_implications-cchpr2011.pdf

http://england.shelter.org.uk/__dat...y_for_low_income_private_renting_families.pdf