5m to wait for social housing

Up to five million people could be forced onto social housing waiting lists within five years, warns the Local Government Association (LGA).

A combination of a slowing economy and the continued malignant impact of the credit crunch are likely to be behind the increase.

Demand presently stands at some four million people.

The report analyses academic and social policy research examining previous economic downturns and finds a series of inter-related economic factors are creating unprecedented demand for housing association properties.

It is now feared councils will struggle to meet this demand.

"With the banks overstretching their credit facilities it could well mean in the coming months that councils will have to help pick up the pieces as people end up on social housing waiting lists," said chairman of the LGA environmental board Cllr Paul Bettison.

"The days of excessive lending and risk-taking, which lead to this credit crunch may be over, but consumers have yet to see the government’s £50 billion bail-out to cash-strapped banks filter down to mean lower borrowing rates for potential homeowners."

Last month the Bank of England offered lenders up to £50 million in an asset swap system, loaning banks Treasury bills in exchange for mortgage back securities.

Despite this interest rates for mortgage products have remains stubbornly high, in part due to the continued high value of the London Interbank Offered Rate (Libor).

As part of a strategy to tackle the looming crisis, the government has announced plans to build 70,000 affordable homes a year by 2011, including 45,000 social homes for rent.

This is part of a scheme to build two million new homes by 2016, and a further one million, carbon neutral, properties by 2020.

"Even when the economic good times were rolling, councils saw ever increased pressure on their social housing stock," continued Mr Bettison.

"Now the credit crunch is upon the country it appears that many thousands more people will be looking to councils to provide them with a permanent home as they either find it impossible to get on the housing ladder or see their home repossessed."

The Council of Mortgage Lenders expects some 45,000 properties to be repossessed during 2008, a sharp increase on the figure for 2007, but well below the peak seen in the early 1990s.

Chris O'Toole