UK business hangs on despite stormy times ahead

UK business is managing to keep its head above water, showing surprising resilience in the face of a multitude of global economic pressures such as the rise in oil prices and the credit crunch, according to the latest report from accountants and business advisors, BDO Stoy Hayward.

BDO Stoy Hayward LLP, Press Release - 28/11/2007

The BDO Business Trends report, which pulls together all of the main business surveys from the last month, shows that business confidence in the short and medium term remains robust. Although both the reports’ indices of business confidence have decreased this month, they remain above the 100 mark. This indicates that, over the next six months, the UK’s business people still expect economic growth to continue above its long term 2.5 per cent – 2.75 per cent trend rate.

Business confidence dented but not shattered

Despite its resilience, there are signs that UK business is feeling the pressure. The BDO Output Index, which predicts business confidence one quarter ahead, fell from 100.8 in October to 100.4 in November, the lowest level for eighteen months. Similarly, the BDO Optimism Index, which measures business confidence two quarters ahead, has hit a two year low, falling from 100.9 in Oct to 100.5 in Nov - full article

CGT changes ‘worse than Northern Rock crisis’

Changing CGT could be a bigger disaster for the UK financial services industry than the Northern Rock scandal, Premier Wealth Management warns. Managing director Adrian Shandley says if the CGT changes go ahead, he can envisage a mass exodus from insurance bonds.

Hysni Kaso, IFAonline.co.uk - 29 November 2007

Shandley noted insurance companies heavily rely on these bonds and could even “go to the wall” if there are huge consumer outflows.

“The CGT changes could destabilise the whole life and insurance bond market,” he says.

“The simple fact is if there is a more tax efficient alternative out there, why would anyone stay in insurance bonds.

“The ultimate conclusion is that if you find an insurer or a couple of smaller insurers who depend on this bond business in trouble, it will solely be the Government’s fault.

“Unlike Northern Rock which was out of his control; this will be all Alistair Darling’s own making.” - full article

Landlords require energy use certificates next year

From 1 October next year landlords will be obliged to provide an energy performance certificate to prospective tenants – much as home sellers already have to provide an EPC when they put their home on the market.

Lorna Bourke, Money Columnist, Citywire.co.uk - 29 November 2007

In neither case is it likely to affect whether a person buys the property or whether a tenant signs the lease – unless there are two identical properties and one has a better EPC than the other.

But it is worthwhile landlords getting ready for this new requirement and seeking out an inspector well in advance of the deadline as they are in short supply in some areas. There are also a number of grants and other incentives currently available from local authorities and energy companies - full article

HSBC predicts property slump next year

House prices in Britain are overvalued by about 30 per cent, HSBC said yesterday, sounding the alarm that the property market could suffer a similar slump next year to that experienced in the United States.

Gabriel Rozenberg, The Times - 29 November 2007

The alarming report from the bank’s chief UK economist, which gave warning that the coming property downturn would cause the pound to plummet and force the Bank of England to cut interest rates aggressively, came as official data revealed the fastest fall in London house prices for more than two years.

HSBC tried to model the fair value of housing based on expected future rental growth. Karen Ward, the report’s author, said: “There is around 30 per cent of the current house price level that cannot be explained.”

The findings echo those of the International Monetary Fund, which last month calculated that homes in Britain were overpriced by up to 40 per cent - full article

BUY-TO-LET TO SURGE by 2016 as brits crave flexible living

Buy-to-let to grow by over 40% within next ten years, Market growth leads to the increase of ‘professional landlords’

Positive attitudes towards renting and a desire to be ‘footloose and fancy free’ have sparked a surge in the buy-to-let market – which is predicted to grow by over 40 per cent (41%) by 2016, according to a report by Alliance & Leicester Mortgages.

Alliance & Leicester’s ‘Changing UK Household Market’ report, undertaken in conjunction with the think tank Centre of Future Studies, shows that the buy-to-let market, fuelled by the growth in private rental, will play a pivotal role in the future of the UK housing market.

The three key drivers for buy-to-let growth will be:

* A rise in the traditional rental market, especially among students and single people
* Younger generations preferring to rent as it becomes more socially accepted not to own a home
* Increased use of rented property by people seeking flexibility and mobility

Current trends will also continue to contribute to the success of the buy-to-let market. For example, the rise of ‘professional landlords’ – those with rental income equivalent to the national average wage. This group now accounts for a fifth (21%) of all landlords - full article

City bets on 7% fall in house prices

The City is betting on UK house prices falling by 7 per cent next year in new tradeable derivatives contracts, which some bankers say is the best indicator of the market’s direction as millions of pounds are riding on the outcome.

David Oakley and Chris Giles, FT - 25 November 2007

These future housing contracts, which were published for the first time this year and have seen a surge in trading volumes in the past few months, are predicting much bigger falls in property values than other non-tradeable forecasts.

The derivatives contracts are also pricing much bigger falls next year than they were a month ago, when they were predicting a 2 per cent decline.

Peter Sceats, a derivatives broker at TFS Property, said: “Bankers, hedge funds and property companies are putting their money where their mouth is and that makes these prices more reliable than economic forecasts in many respects - full article

NALS ‘GOES GREEN…..’!

NALS (National Approved Lettings Scheme) has launched a new campaign that is expected to be warmly welcomed by its 1,505 - strong member agencies.

The “NALS GOES GREEN” initiative will support members in providing both tenants and landlords across the UK with useful and relevant information that will help them become more environmentally conscious and socially aware. And, it could even be good for business through the opportunity to pass on to landlords tips to save money – and tenants to receive lower energy bills….! Landlords will inevitably reap the benefits of going green as the environment becomes a more compelling argument in the coming years.

Two top tips leaflets are now available through NALS’ firms – one for tenants and one for landlords. Both offer easy, helpful hints and tips on how to take a few easy steps when it comes to letting – or renting – property.

NALS Chair, Caroline Pickering says:

“Issues surrounding energy and the environment are close to us all. We do have a social responsibility to “think green” on both a corporate and individual footing and NALS wants to play its part in supporting future generations – however small that contribution may be in the broader global picture. What we want to do with our Green initiative is give our accredited firms the forum to take to their customers whether landlords or tenants in order to provide help, advice and support best practice in the lettings market”.

Advice to landlord includes effective roof insulation – approximately 25% of heat is lost through the roof - along with lagging of water tanks and pipes and the fitting of energy efficient light bulbs in their property. For tenants, by simply turning their thermostat down 1 degree – can save up to £100 a year on electricity! Other suggestions include installing automatic timers on electrical appliances, ONLY boiling the water you need at any one time and not using standby on your television overnight.

“In some instances, there is an up-front investment” says Pickering. “But the £’s that can be saved over a relatively short period of time can be significant and it will make a notable difference. Equally, there are some very basic elements that are perhaps less well known – such as light walls and large mirrors reflect more light and reduce need for energy use”.

When old ‘white’ good appliances come to the natural end of their life – NALS recommends replacing these with A Grade and water efficient models. And – it suggests that’s always worth taking ten minutes to establish what local re-cycling initiatives are available and provide appropriate bins.

NALS is working with the Energy Savings Trust (www.energysavingtrust.org.uk) which also indicates any financial help that may be available to improve a property. For FREE advice, call 0800 512012. In addition, NALS member agents are aware of the benefits of energy efficient and environmentally friendly properties and can give more information to landlords and tenants as required.

See Also: Energy Efficiency & Energy Performance Certificates

Energy Efficiency & Energy Performance Certificates

Energy Efficiency

Energy efficiency improvements cost less than you think. Central heating, insulation, and double glazing can increase the long-term value of your properties and make them more attractive to renters. What’s more there are many grants available and they can reduce your income tax bills.

Here are some simple things you could do to improve the energy efficiency of your properties:

- Top up your loft insulation and insulate your walls. Your energy supplier is offering big discounts on prices for insulation right now – make the most of them!
- Update your heating system with a high-efficiency condensing boiler and effective heating controls
- Take advantage of significant discounts and buy a new, more energy efficient washing machine, fridge or freezer

Continue reading Energy Efficiency & Energy Performance Certificates…

Prospect of negative equity looks distant

The date was Tuesday, March 15 1988. Nigel Lawson was enjoying delivering his fifth Budget, one that would see the then chancellor eliminate public borrowing, cut the basic rate of tax from 27p in the pound to 25p and abolish all higher income tax rates above 40p in the pound.

Chris Giles, Economics Editor, FT - 24 November 2007

As he commended his Budget to the House of Commons in traditional fashion, he little knew another measure would help to stymie the Conservatives’ reputation for economic competence five or so years later.

Under the present system, he told MPs, an unmarried couple could get twice as much mortgage interest relief as a husband and wife. With a characteristic flourish, he declared: “This has attracted increasing, and justified, criticism. I propose to put a stop to it as from August this year.”

Lending surged as cohabiting couples, friends and even near-strangers rushed to climb on to the housing ladder quickly before the valuable tax break disappeared - full article

Pressure grows for buy-to-let regulations

BUY-to-let, once regarded by some investors as a sure-fire way to make money, has seen its fortunes suffer in recent times.

Rosemary Gallagher, The Scotsman - 24 November 2007

Only this week, Paragon, the UK’s third-biggest buy-to-let mortgage firm, admitted it was facing funding uncertainties as a result of its costs spiralling on the back of the credit crunch sparked by the US subprime crisis. This concession alarmed investors and its share price fell by more than a third on Wednesday.

At the same time, landlords are struggling to make a decent income, with rental increases failing to keep pace with recent interest rate rises.

The uncertainty in the market has led some commentators to call for buy-to-let to be regulated by the Financial Services Market which oversees the residential mortgage market - full article