New flats ‘lose quarter of value on resale’

The price of a new-build flat drops on average by more than one-quarter when resold, according to data from auction houses that also confirm the rise in socalled “distressed” sales. Financial Times (Saturday)

Property Week, 31 March 2008

According to data analysing sales over the past three years, the average price drop between official Land Registry figures and subsequent sales at auction was 26%.

The figures underline the crisis in the new home market and will exacerbate the fears of thousands of firsttime buyers who have bought flats off-plan - full article

Why the tax man may be knocking on your front door

Buy-to-let landlords and freelances are facing a clampdown.

Amateur landlords and taxpayers with small amounts of freelance earnings could find themselves hit with hefty penalties under powers in a new parliamentary bill.

Neasa MacErlean The Observer, Sunday March 30 2008

Under the proposals - included in last week’s Finance Bill - tax inspectors could have the right to appear unannounced at the homes of those who own buy-to-let property or who work from home to hand out fines worth up to 30 per cent of any tax due if they are late in declaring income. The changes are due to come into force from 1 April 2009.

At the moment, the tax authorities have extensive powers to obtain information and levy penalties, but they also have a lot of discretion to waive these rights in individual cases.

Tax experts believe that with those powers being spelt out under the new regime, much of that discretion will be removed and taxpayers could end up paying more and being harassed to provide information - full article

LandlordZONE Newsletter - March 2008

Newsletter - The UK Landlord & The Economy - March 2008 Issue 28

Welcome to the March 2008 edition of the LandlordZONE® Newsletter.

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With the continuing turmoil in the financial markets as I write the question now is not if there will be problems with the economy in general and property markets in particular, but just how bad will it get?

Whichever way you look at it the collapse of the US bank Bear Sterns (the US equivalent of Northern Rock) and it’s subsequent takeover by JP Morgan Chase it’s a significant event, in some respects the like of which has not been seen since the 1930s.

Had Bear Stearns not owned its headquarters building, the sale price of $240 million or $2 a share (under review but down from $160), would not have been possible. At $1,000 a sq. foot the building is worth $1.2 - $1.3 billion, so the actual value of Bear Stearns less their headquarters at 385 Madison Avenue would be minus $1 billion.

This all makes the message that dropped on my mat the other day inviting me to a seminar on property investing all the more ironic. “How You Could Give Up Work and be a Property Millionaire Instead”

Well it’s always good to be optimistic and there’s always a danger in talking ourselves into a recession, but the organisation putting these out is off the scale of what I would term responsible investment advice.

They do themselves and the industry few favours and I feel the main effect will be to “come back and bite”, not just themselves, but a lot of others in the industry as well.
Looks like we’re in for a rough ride.

Tom Entwistle, Editor.

This issue is wholly sponsored by Coverlet one of the leading providers of insurance for the rental property market.

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Property industry makes last ditch attempt to halt empty rates legislation

The British Property Federation has made a last ditch attempt to halt the introduction of empty rates legislation and warned Chancellor Alistair Darling it was the ‘most significant threat to the property industry in recent times’.

Deirdre Hipwell, Property Week - 27 March 2008

BPF’s chief executive Liz Peace, who also spoke on the Today Programme and Five Live’s Wake up to Money about the issue this morning dubbing the government’s plans as a £3bn tax raid, said the government was making a ‘disastrous move’ and should reconsider its plans - full article

Government promises to protect high street

Planning minister Iain Wright has promised to protect high street retailers with changes to planning laws that will ‘promote competition and improve consumer choice’.

Mark Jansen, Property Week - 27 March 2008

Speaking in the House of Commons yesterday, Wright said the government will soon publish a revised version of PPS6, the planning policy for town centres. ‘Small independent retailers remain at the heart of our vision for town centres,’ he said.

The new PPS6 will replace the existing need and impact tests with a new impact test for retail developments which Wright claimed will ‘enable local authorities to assess more effectively the impact of out-of-town development proposals on town centres’ - full article

Buy to let industry slaughtered by credit crunch

The specialist BTL broker Mortgages For Business is reporting that the new criteria changes amongst the UK’s BTL lenders will affect funding for newly renovated properties and the deposit size now required…

First Rung - 28 March 2008

New builds; flats or houses built or converted in the last twelve months, have been a particular cause of anxiety for buy to let lenders. It is now common for lenders to refuse to lend on this type of property. Capital Home Loans are the latest organisation to decline to lend on new builds including newly converted properties.

Jonathan Moore, head of marketing at Mortgages for Business, comments:

“New builds is the one area of concern in the sector, particularly in some city centres where supply is currently outstripping demand. It is essential however not to judge the whole buy to let investment proposition on the performance of new builds. Established properties and particularly HMOs and flats above commercial properties provide good long term yields. The fact that renovated flats and houses in the last twelve months are classed as a new build may be of surprise to many investors.” - full article

Stagnant property prices hit shops

High street spending remained subdued this month as the housing slowdown tightened its grip on consumer confidence, a survey indicated.

Channel 4 News - 28 March 2008

Sales of “big ticket” household goods such as washing machines and fridges were sharply lower, although the CBI’s latest distributive trades survey still showed that a balance of 1% of firms achieved a rise in year-on-year sales volumes.

This was up from the minus 3% balance reported last month - the first negative figure for more than a year - but well down on the long term average of plus 17%. And the underlying trend weakened, with a balance of plus 1% of retailers reporting sales up year-on-year during the three months to March.

The CBI survey has recently been gloomier than the official measure of retail sales, which last week showed a 1% hike in retail sales during February.

However, economist Vicky Redwood of Capital Economics said the CBI survey pointed to “very sluggish high street spending growth” - full article

Further slowdown in house prices

The Nationwide now predicts prices will fall this year.

Annual house price inflation has fallen to its lowest rate for 12 years, according to the latest survey from the Nationwide building society.

It said prices fell by 0.6% in March, taking the average UK house price down to £179,110.

That meant that the annual rate of increase fell to just 1.1%, the lowest rate since March 1996.

BBC.co.uk - 28 March 2008

The Nationwide said house prices had now fallen for five months in a row and predicted prices would fall further.

Nationwide chief economist Fionnuala Earley admitted that this was a change to its earlier forecast that there would be no overall change in prices by the end of this year.

“A clear change in sentiment since the late summer has led to the sharp slowing in house price growth, prices are now 1.5% lower than three months ago,” she said - full article

Chances of full-blown UK recession risk rising

A full-blown recession on these shores is now a 35pc probability as the credit crunch engulfs Britain’s housing market and broader economy, warns an authoritative report.

Edmund Conway, Economics Editor, The Telegraph - 28 March 2008

The Bank of England may be forced copy the Federal Reserve’s lead and make dramatic interest rate cuts as Britain falls victim to a US-style slump, say experts at Lehman Brothers.

The Bank of England cut its own forecast for growth this year and next, and refused to rule out the possibility of a recession

Downward Spiral, a lengthy report on the UK economy by the investment bank, said the prospects look particularly bleak for the next two years - and perhaps beyond. It also cautions that house prices will fall by 8pc over the next two years.

The warning, which coincides with signs the credit crunch in the financial markets is having a marked impact on families’ finances, is the most bearish yet from a major UK forecaster - full article

Third of licence refusals down to failure to provide decent accommodation

A significant number of gangmasters supplying workers are not getting their licences because of the poor housing they offer.

Inside Housing - 27 March 2008

Gangmasters Licensing Authority figures provided to Inside Housing show that 30 out of 87 refused and revocation cases failed its workers’ accommodation rule.

The rule ensures that homes provided to migrant workers comply with houses in multiple occupation laws and are supplied with appropriate facilities.

So far the authority has revoked the licences of 49 gangmasters, 15 of whom provided substandard accommodation.

The GLA was established after the deaths of 23 Chinese cockle pickers in Morecambe Bay in 2004.

GLA head of projects Neil Court said safety and overcrowding were among the most common issues dealt with. ‘Most gangmasters take out a business lease on properties and place migrant workers in there. Local authorities need to be aware of these kinds of business lets, especially larger houses being let to large amounts of migrant workers, because some of these are subject to HMO legislation.’ - full article