CML responds to Crosby interim report

Responding to today’s release by the Treasury of Sir James Crosby’s interim review of the mortgage finance markets, the Council of Mortgage Lenders welcomes the analysis and the recognition that a shortage of mortgage funding will persist for years without intervention.

CML Press Release - 29 July 2008

The CML now urges the Treasury to work with urgency on measures to address the mortgage funding gap, whether through the industry’s suggestion of a market-led solution to incentivise investors via a repo facility, or through other mechanisms as outlined in the report. If proposals are implemented in the autumn, it will be more than a year after the first effects of the credit crunch took hold: more than enough time to recognise that the markets are not showing signs of self-correcting over a reasonable time horizon.

CML director general Michael Coogan commented:

“As the Bank of England lending figures today show, the mortgage market remains severely constrained. In aggregate, lenders are unable to meet the consumer demand for mortgages because there is not enough funding available to them. Without action, the situation in the housing market will be worse than it needs to be. The housing correction will overshoot, and the knock-on effects on the wider economy will be significant.

“Today’s analysis at last sets down an independent welcome marker that intervention to address the mortgage funding gap is both appropriate and necessary. It creates a clear expectation of measures at the time of the pre-Budget report. We now look forward to working urgently with the Treasury over the summer on proposed solutions.”  Read the full Report

CML Funding Proposals

Darling looks at new mortgage plan

Alistair Darling, the chancellor, is looking to revive the housing market this autumn by helping to fund new home loans, as part of a package of measures to help householders hit by the economic squeeze.

George Parker, FT.com - 27 July 2008

Mr Darling is considering extending the Bank of England scheme whereby high quality mortgage-backed securities are exchanged for government bonds, in an attempt to inject funds into the moribund housing market.

The current swap scheme applies only to old mortgage assets held at the end of 2007. Mr Darling is considering extending it to new mortgage lending.

Sir James Crosby, former HBOS chairman, is expected to moot the idea on Tuesday when he produces an interim report on financing the mortgage market.

His report will stop short of making final recommendations, and Mr Darling’s aides stress that the Treasury is working through the details of the possible scheme to make sure it could work - full article

See also: Crosby’s Report - Interim Analysis

Expert’s five top tips for better tenant management

A top property investor who specialises in helping landlords get the most from their investment has supplied a series of tips to help better manage tenants.

Amer Siddiq founded property management software firm Property Portfolio Software (PPS).

Its software products are specifically designed to handle the issues faced by Landlords.

Amer said: “People in the property business should realise that their tenants are the most important people they deal with, as they are their customers. Looking after tenants correctly determines the cash flow landlords generate from their properties.”

He added: “Failure to manage tenants correctly will most likely result in the landlord losing money, so it’s vital to remember some essential rules to ensure tenants are paying full market rent every time.”

Continue reading Expert’s five top tips for better tenant management…

Our best chance of staying out of recession may be to back the Treasury against the Bank

Housing crashes are always worse than expected. A mood in which people believe that property prices only ever go up is usually a reliable leading indicator of a crash. The psychological factor in housing booms (and busts) is too little noticed, presumably because it is difficult to pin any kind of numbers on a zeitgeist. Still, it matters greatly.

Sean O’Grady, The Independent - Sunday, 27 July 2008

An only mildly muted state of irrational exuberance was, roughly, where we stood at the start of this year. The consensus among observers – City economists, the CBI, the mortgage banks and the academics – was that property prices over the next 12 months would be “broadly flat”.

The team at the Halifax, for example, put out a press release in the following confident terms: “The UK economy is in sound shape. Strong market fundamentals, a structural housing supply shortage and pent-up demand from a large number of potential first-time buyers will support house prices, preventing a sustained and significant fall.” Even allowing for a vested interest, that was a truly brave face - full article

LandlordZONE Newsletter - July 2008 - Problem Tenants

Welcome to the July 2008 edition of the LandlordZONE Newsletter.

Problem Tenants - July 2008 Issue 31

Download the Full Newsletter

With the downturn in both residential and commercial property appearing to be getting worse, there’s now a serious risk that the UK economy could enter recession territory.

Amid growing concerns from one report after another, even the Chancellor has had to admin that things are worse than the government predicted, that growth targets will have to be scaled back and that we are in for a tough couple of years at least.

Faced with the non-availability of credit, last week’s rise in inflation to 3.8% (everyone knows it’s probably more than double this official figure) and rising commodity and fuel prices, the unemployment figures we’ve already seen are likely to increase substantially.

Pressure on the retail sector will put thousands of vacant shops back in the hands of their landlords, just at a time when the government is imposing 100% vacant business rates on owners.
The general consensus appears to be: things will get worse before they get better. The big question for landlords is—how much worse can it get?

Continue reading LandlordZONE Newsletter - July 2008 - Problem Tenants…

It won’t end till housing hits bottom

The financial crisis won’t be over until U.S. house prices stop falling, which in short means it won’t be over any time soon.

James Saft, LONDON (Reuters) - 23 July 2008

Despite a long fall that has brought down several major financial institutions and taken the economy as a whole to the brink of recession, housing in the United States is still too expensive relative to incomes, rent and the availability of mortgage money with which to buy it.

And that’s before you factor in rising unemployment or oil price inflation that is crimping budgets and making long commutes, and the houses built at the end of those commutes, no longer affordable.

The implications are pretty dire; rising levels of writedowns at banks, more failures of financial firms and lousy economic growth, if any, until six months or so after a base is found - full article

The shopping fix is over, warns economics expert

SHOPPING sprees will become a thing of the past amid an economic downturn that could see house prices fall by up to 20% in the next year, a leading economist predicted yesterday.

Robin Turner, Western Mail - 23 July 2008

Mark Berrisford-Smith, a senior economist with HSBC bank, told an invited audience at the Royal Welsh Show that Britain’s 15-year economic renaissance fuelled by a “borrow and spend” credit card-backed shopping spree was now firmly over.

“We need to find something else to replace shopping,” he told a business breakfast on the Llanelwedd showground

“If you are under 38 years old you are facing the toughest time since you started work,” said Mr Berrisford-Smith.

“If we escape a recession it will be a close-run thing and this is going to go on possibly into 2010.”

Full article

House prices ‘could fall a further 30%’

House prices could plunge a further 30% in the property market crisis, a key member of the Bank of England has warned.

Becky Barrow, Daily Mail - 22 July 2008

The assessment from David Blanchflower, a member of the Bank’s interest rate- setting committee, would mean about £55,000 being wiped from the value of the average home, currently £180,350.

At this level, house prices would return to the levels of 2003, a disaster for many who have bought in the last few years. House prices have already fallen 8.6% since January, cutting the price of the average home by nearly £17,000 - full article

Market downturn intensifies as economy slows

Tenant demand for commercial property declined at the fastest pace in the survey’s history (since 1998) in the second quarter, as did enquiries to occupy commercial premises.

RICS Commercial Property Survey 12 July 2008

Demand and enquiries were weakest in the retail sector and fell back to a lesser degree in the industrial and office markets, as the economic slowdown reduced business expansion.

Surveyors continued to report a rise in the amount of available floor space in Q2 across all sectors, although growth in availability did not accelerate any further, having hit a ten-year high in Q1. see survey

One in two estate agents at risk from data theft through the web

Nearly one in two estate agency staff in the UK are thought to be at risk from data theft at work, because they are using an out of date web browser.

New research has revealed 45 per cent of all internet users don’t keep their browser – such as Internet Explorer or Firefox – correctly up-to-date.

And national computer support company Ulysses IT is warning that leaves estate agencies’ computers vulnerable to malicious programs.

Technical director Peter Turner said the risk comes from surfing the web.

He said: “If you don’t keep your computer up-to-date it is easier for a piece of malicious software, known as malware, to install itself and transfer data from your computer over the web. For estate agents and their staff that is a very worrying prospect.”

Continue reading One in two estate agents at risk from data theft through the web…