Housing stalls - but don’t expect a crash

NOT for the first time, the vultures are circling over the housing market. America’s sub-prime mortgage market has sneezed, but some say we will end up with the worst cold.

Economic Outlook: David Smith, The Sunday Times - September 16, 2007

A piece in America’s Business Week warns of “Britain’s coming credit crisis” – it claims that British house prices are 11 times the average salary (almost double what they actually are) and says Britain could suffer a worse fate than America.

The Treasury/Bank of England bailout of Northern Rock, Britain’s fifth-biggest mortgage lender, has echoes of past banking crises and appears to confirm the worst fears - full article

How Northern Rock’s risky strategy took it to the edge

The bank’s decision last week to ask for emergency funds was caused by its overdependence on already wobbly debt markets, writes Heather Connon

The Observer, Sunday September 16, 2007

The Bank of England’s rescue of Northern Rock is the most potent symbol of the crisis shaking the financial markets. Northern has never lent to American houseowners, never mind the high-risk ones who are now defaulting in droves, and bad debts on its British mortgages are close to record lows. Yet it is the first bank to need bailing out since new rules allowing rescues were introduced in 1988 - full article

Some facts about renters in the United States

RENTERS — About 32 percent of U.S. householders are renters, rather than homeowners; they occupy about 35 million rental units.

(AP) - Interactive Investor

COSTS — In San Francisco, a full-time worker needs to earn nearly $30 an hour to afford a modest two-bedroom apartment without spending more than 30 percent of income. In West Virginia, the same “housing wage” is about $10 an hour.

SHORTAGE — The National Low Income Housing Coalition says there are 9 million extremely low- income renter households and only 6.2 million units they can afford at 30 percent of income or less.

REMEDIES — A bill pending in Congress would establish a National Affordable Housing Trust Fund to build or rehabilitate 1.5 million low-income housing units over 10 years. Copyright 2007 Associated Press. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed - source

Don’t miss out on tax allowances, Leaders advise landlords

It is not uncommon for landlords to pay too much tax because they are missing out on the many tax allowances they are entitled to, according to local letting agent Leaders - one of the UK’s largest independently owned letting specialists.

Any profit made from letting a property is subject to UK income tax, whether the landlord is resident in the UK or not, and must be reported in a Self Assessment Return. However, certain deductions are allowable and Leaders believe that, with the growing numbers of buy to let investors entering the market for the first time, many landlords may not be aware of them.

With Tax Returns due by 30th September (if you want the Inland Revenue to do the calculations for you) or 31st January next year (if you will be doing the calculations yourself or using an accountant to do so), Leaders wish to remind landlords of their tax obligations, and of the allowances they are entitled to.

Continue reading Don’t miss out on tax allowances, Leaders advise landlords…

Assurances for Northern Rock mortgage customers

Customers with mortgages at Northern Rock were advised not to panic last night after it emerged the company had turned to the Bank of England for emergency funding.

SHÂN ROSS, The Scotsman.com - 14th Sept 2007

The firm - one of the UK’s top five mortgage lenders - has applied to the Bank of England as the “lender of last resort” after struggling to raise money to finance its lending since money markets seized up this summer.

The decision is extremely rare and was taken after consultation with the Treasury and the Financial Services Authority.

The move comes against a backdrop of widespread volatility on international markets over fears that banks may have to write off massive quantities of bad debt held in US mortgages - full article

Brown must scrap the HIPs disaster

HOME Information Packs (HIPS) always seemed like an idea cursed by the policy gods, and the packs’ introduction is already having the negative impact on the housing market that many had predicted.

Tomos Livingstone, Western Mail - Sep 14 2007

The packs went “live” on August 1, but for four-bedroom homes only. They were extended to three-bedroom homes earlier this week, and the rest of the market will follow by the end of the year.

Now the Royal Institution of Chartered Surveyors tell us that the market for four-bedroom homes has diminished sharply, with sellers rushing to get their properties on the market before August 1, while those who were wondering whether to sell have decided against.

We hate to say we told you so, but, well, we did - full article

Boom turning to gloom as house prices begin to show signs of falling

The first signs that Britain’s long-running housing boom could be over have begun to appear, with prices across England and Wales falling last month for the first time in nearly two years. Five interest rate rises in the past year have made it increasingly difficult for first-time buyers to get on to the housing ladder, according to a report published today by the Royal Institution of Chartered Surveyors.

Angela Balakrishnan, The Guardian - September 13, 2007

The report said that even before the recent turmoil in financial markets, the number of buyers coming into the property market had fallen to a three-year low. House prices fell in England and Wales in August for the first time since October 2005 - full article

Tenent demand outstrips supply

Tenant demand now outstrips supply in all areas of the rental market, even as private landlords continue to invest in the sector. This is revealed in the latest quarterly survey of ARLA member letting agents.

Housefund.co.uk - September 13, 2007

The Association of Residential Letting Agents said that the results this quarter are consistent with the traditional cycle of softening house prices leading to increased rental demand.

Achievable rent levels are reported to have risen in all areas. This continues the trend that began at the beginning of 2007 and rent levels are now reported as being at an all time high - full article

Should you become a landlord?

Judging by some of the chat on our discussion boards, I reckon a decent number of Fools have made small fortunes from buy-to-let property investment in recent years.

Jane Baker, Sky News - September 11, 2007

But is it too late to join the buy-to-let party? Well, perhaps surprisingly, a couple of surveys have come out this week which suggest that the outlook for buy-to-let may not be as bad as some people think.

So let’s take a closer look…

We’ll start with the latest quarterly lettings survey from the Royal Institute of Chartered Surveyors (RICS). It suggests that demand from tenants is rising fast thanks to the dual effects of a slowdown in the housing market and uncertainty over where interest rates will head next - full article

Fears of retail bloodbath as interest rates hit home

Next’s chief has given warning that higher interest rates could hit consumer spending over the key Christmas sales period.

Steve Hawkes, The Times - 12 Sept 2007

Fears of a bloodbath on the high street emerged yesterday as Next, the clothing retailer, gave warning that higher interest rates are yet to hit consumer spending.

Simon Wolfson, the chief executive of Next, said that despite a tough summer for retailers, he was “acutely aware” that millions of homeowners had still to feel the full impact of the higher cost of borrowing - full article