London's housing crisis is now the North East's 'nightmare'

Residents of run-down areas of Hartlepool, Middlesbrough and the economically devastated coastal towns of County Durham might be surprised to discover that they are living in the UK’s hottest property investment hotspot.

And investment we are told in every news bulletin is what our country sorely needs, right?

But if you head on down to Eldon Lane or North Ormesby it might not look like the right kind of investment is coming their way.

Because what they aren’t seeing is a big improvement in housing quality, or lots of new services. Instead, they are just seeing more people as poor or poorer than their own families and often with a bucket-load of issues to resolve, turning up in their hard-pressed neighbourhoods. People looking for jobs and help from local services, that are already hard-pressed trying to meet local needs after over a decade of austerity and local council funding cuts.

So what is going on? And what exactly is this particular investment surge in the North East all about?

Follow the money

Investors are motivated by one thing – returns. In other words profit - and the name of the game is getting more out by putting less in.

And that’s where the North East’s housing comes in. The predominantly poor quality, aging and under-insulated homes of the North East’s poorest and most run-down neighbourhoods are cheap to buy, and, as long as you can find someone to pay the rent, you’re quids in.

According to research by property investment experts Hamptons, returns in many areas of Teeside, Tyneside and Wearside now top a whopping 10% a year.

10%, think about getting that kind of interest on your savings, if you’ve anything left to put away after paying the inflated food and utility bills that we’ve all been sucker-punched with in recent years.

As a result we’ve seen a boom in Buy to Let purchases by landlords ‘investing’ in these areas. Over 40% of all home purchases across Middlesbrough were by this route. Naturally the majority of these aren’t local residents and even those resident in the region aren't likely to be housed in its poverty hotspots. But it is those poverty hotspots that will be funding the lifestyle uptick for these so-called investors – much of it paid for with public money.

At Action on Empty Homes we’ve always kept a close eye on housing in the North East, that’s partly because it has always had the unenviable distinction of being the English region with the highest percentage of long-term vacant homes in official Government figures. Although it’s worth saying at this point that there are far more empties in the North West and London, both having over 135,000 each, against the North East’s 51,000 - but they are larger regions (so the vacancy percentages are lower) – but we’ll come to London’s empty homes a bit later...

The other reason Action on Empty Homes keep an eye on North East Housing is because we know some great housing organisations bringing some of those empty homes back into use for those in need of secure and decent homes, people like Community Campus in Teeside and Back on the Map in Hendon, who turn neglected empties into warm and secure homes, after a bit of tender loving care and improved insulation, to change the lives of their local residents for the better in the process.

The trouble is that some of their newest neighbours aren’t getting quite the same deal from their landlords, because as the Northern Echo has been reporting in recent weeks London Councils are now exporting homeless people to the North East’s latest property (or was that poverty?) investment hotspots.

And the homes those Londoners are getting sent to are often far from what they need. Homes in very poor condition, which is the same problem homeless North Easterners in private sector temporary accommodation often find (as the Echo also recently reported) – but its probably even worse if you’ve just found yourself in a place where you don’t know anyone or where to get help from.

‘I thought people still got to choose where they lived in a free country?’ - you might say, if you haven’t been following the story.

But the sad fact is that, in 2024, if you’re poor and homeless that isn’t the case.

And numerically speaking if you are in that position, you are actually more likely to be a homeless Londoner than to come from any other part of the country. In fact, get this, you are actually more likely to be a homeless Londoner than to come from the whole rest of the country put together.

That can’t possibly be true can it? Well yes, it is, though it looks like some London boroughs have a little levelling up scheme of their own going on and that’s bad news in the competition for homes and services in the North East.

The latest data shows that there are 117,450 homeless households in temporary accommodation in England, including 151,630 children (data from March 2024). Of those over half were Londoners. And 36% were placed outside the borough where they became homeless – so much for choice and local homes for local people, right?

That means our national housing crisis is very much about London getting its housing wrong, or at any rate more wrong than the rest of the country, which hasn’t exactly had a boom in high quality affordable homes in recent years either – especially not if you're on average or below average incomes and need to rent.

And it seems that if you’re a homeless Londoner who is additionally vulnerable and can’t find a free lawyer or a generous housing charity to represent your case – or you simply don’t have the knowledge, energy or mental capacity to fight what your council tells you is your only housing option – then you might just find yourself with a train ticket to Teeside or County Durham and the number of a landlord who is about to receive a big cash handout from your London Council.

Why do they do this? – well it saves money certainly, even when London Councils outbid what North East locals will pay in rent, it is still a lot cheaper than renting temporary accommodation in London.

Campaigners in London such as Housing Action Southwark and Lambeth [HASL], who monitor London Boroughs relocation of the homeless, have seen a marked change in recent years, with the North East now entering the picture as a long-distance relocation option for impoverished Londoners. Back in 2017 placements in the North East were virtually unheard of. Sadly that is no longer the case.

According to FOIs by HASL the worst boroughs for exporting homeless families out of London include Enfield, Waltham Forest and leafy Barnet. All these places have their problems but a quick Google might suggest that they are a bit different to Hendon or Hartlepool, for all that the exorbitant rents and house prices down South are pushing ever-more families into poverty.

The campaigners recent report states: ‘Forcing homeless households into the private rented sector and out of London is increasingly looking like a political choice by a number councils intent on cleansing their borough of homeless families. 5 councils account for almost three-quarters of all households forced into the private rented sector outside of London. These councils are Waltham Forest, Barnet, Redbridge, Enfield and Barking and Dagenham. More than half of Waltham Forest Council’s placements were outside London, and more than 4 out of every 5 placements by Enfield Council were outside of London. There is no just explanation for why Waltham Forest and Enfield try to force so many families outside of London, when so many other London councils keep homeless households in temporary accommodation and inside London.’

And that last line is important, because not all councils in London are doing this – some like Islington have simply said they aren’t going to place homeless Islington people outside their borough at all. And in the recent HASL survey 7 councils made no ‘offers’ of housing outside London.

Now you might say that at least homes in the North East are getting used to house people but the question I’d like to ask is two-fold, first why don’t we house these homeless families in homes we all own – council homes where the money paid in rent goes back into looking after the home, not helping an absentee landlord buy up his next cheap home to make a profit from (often without even ensuring that it is going to be affordable to heat, or comfortable to live in, for the tenants they’ll be asking a hard-pressed London Council to send their way).

Second, can’t we at least establish that the answers to local problems should be local ones and that means that while the North East might be the most welcoming region in the land, it doesn’t have to welcome all the poorest and most troubled families that other regions don’t want or can't afford to house. Especially not when London Councils can outbid local ones for the limited and often poor quality housing that is available.

What we would like to see is councils getting the powers and investment to buy up and do up local empty homes - to turn them into much-needed social housing. Long-term empties are up 30% across England since 2016 but in London of all places they’ve risen 80%.

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So let's see London start sorting out its problems with its 135,000 empties and then the North East can house some local families in its 50,000 or so – or at any rate those that are really long-term empty - at least 30,000 and probably closer to 40,000 in the North East alone. At least half a million (yes 500,000) across England.

Then after we’ve got all these up to decent standards and back into use perhaps we can have a look at exactly how much housing we do need to build - and how much of it should be high quality new public housing with controlled rents. That, might actually help people who do want to buy the new homes private sector developers are always so keen to build everywhere, to save up to do so. Instead, we now see so many of our poorer young families in the region bouncing from benefit support to food bank use, even when most are actually in work.

Chris Bailey, is National Campaign Manager for Action on Empty Homes and used to live in Newcastle upon Tyne, his wife is from Hartlepool.

For more information on Action on Empty Homes campaign see www.actiononemptyhomes.org