Page last updated at 05:46 GMT, Saturday, 6 February 2010

Housing shortage 'risks overcrowding'

By Brian Milligan
Business reporter, BBC News

Housebuilding in the UK has slowed  sharply
Housebuilding in the UK has slowed sharply

A lack of new homes being built in Britain has left millions of people living in overcrowded conditions, the National Housing Federation has said.

The organisation claims the economic downturn has led to a 30% decline in house building in the past two years.

Industry figures suggest 122,000 new homes will be built in the year to April 2010 - fewer than at any time since 1923, excluding the war years.

The UK needs a million new homes to be built, the federation says.

No privacy

Michael Miah and his family, live in Oldham, Greater Manchester, and are among the estimated 2.3 million people living in overcrowded conditions.

Ten members of the family, including a son with severe learning difficulties, squeeze together in a three-bedroom flat.

Michaeil Miah
One day our dreams will come true - to have a big house and a happy family, with no arguments
Michael Miah

Mr Miah's bedroom has space for two double beds pushed together.

"My two young children sleep on this side. Me and my wife sleep on that side," he said.

Privacy is out of the question, and there is no room for the seven children to do any homework. There is mould on the walls.

"One day our dreams will come true," he said. "To have a big house and a happy family, with no arguments."

But Mr Miah and his family have already been on the waiting list for 16 years.

Empty sites

House-building peaked in the UK in 1964/65, when the industry put up 387,000 new homes, many in high-rise blocks that were later discredited.

By 2007/8 that number had fallen to 176,000.

There isn't enough mortgage finance around
John Stewart
Home Builders Federation

"We already have a problem in the housing market," says the NHF's David Orr.

"This is rapidly turning into a crisis."

The immediate problem is not a shortage of sites, the major problem holding back the development is the lack of availability of mortgages.

On most new housing estates, developers build about 60% of homes for private buyers while 40% are made affordable or are sold in shared ownership schemes.

But if they cannot sell the private houses, the public ones will also not get built, meaning affordable loans are key.

"There isn't enough mortgage finance around," says John Stewart of the Home Builders Federation.

"Banks typically require a 20% or 25% deposit. Many first-time buyers just can't find that kind of money."

One example is a former margarine factory in London's docklands where developers had planned to build 1,800 new homes.

Last year they pulled out of the project, opting to wait until the economic situation improved.

The site, on a bend of the River Lea, remains shrouded by hoardings, and there is little hope of building getting started soon.

The industry accepts that the government has put extra resources into house building.

Stimulus measures have included the Kickstart scheme to try and get mothballed sites up and running again, and Homebuy Direct to support would-be buyers.

But the industry fears that the Department of Communities and Local Government will come under pressure to reduce budgets next year by about 18%.

Cuts on that scale would be disastrous, it says, and would lead to even more overcrowding in Britain's existing housing stock.

This report can be seen on BBC One's Breakfast from 0600 GMT on Saturday 6 February and on the BBC News Channel.

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