Trackers are best say Charcol

With economic data suggesting that rates are going to come down sharply next year, those who don’t need to fix should opt for a tracker, according to Charcol.

Mortgage Introducer - 14 August, 2008

“To say the mortgage market has been an enigma of late would be an understatement of epic proportions. With news, most of it negative, emanating on a daily basis, borrowers could be forgiven for not knowing whether to fix, track, cap or offset,” said Drew Wotherspoon of Charcol.co.uk.

“However, with news from the Bank of England on inflation revealing a marked increase, and indeed an expectation of an equally marked decrease to come, it now seems highly probable that bank rate will fall sharply in 2009. As such, any borrower who does not require the absolute security of a fixed rate mortgage would simply be crackers not to take a tracker at the moment. Full Article

Business leaders slam Boris’s shops plan

BRC and BPF dubious over London mayor’s pledge to support small shops

Business leaders last week questioned London mayor Boris Johnson’s pledge to support independent and small shops.

Laura Chesters, Property Week - 8 August 2008

Property and retail bodies were reacting to Johnson honouring his election pledge to support London’s small businesses and outlined measures to ensure that more affordable small shops were provided in retail developments.

Last month he launched ‘Planning for a Better London’, which set out his proposed changes to the London Plan and included a commitment to ensure a ‘diverse and dynamic retail sector across the capital’.

Under his new measures, developers will enter into legally binding agreements to provide an agreed number of affordable small shop units when significant retail schemes are proposed. Work has already started on developing the details, which are set to be brought forward as alterations to the London Plan in the next eight months or so.

The mayor said: ‘Our small shops add real character and diversity to the capital’s high streets but they are finding themselves squeezed out by competition from supermarkets and rising unsustainable rents.’ Full Article

Empty properties tax will stifle economic recovery

A controversial tax on empty properties will hit businesses, halt development and see a wave of existing buildings demolished in the face of huge tax bills, said the BPF today.

Deirdre Hipwell, Property Week - 11 August 2008

It warned today that businesses occupying commercial premises are being hit hard and taking at least 50% of the tax burden through leases on property they no longer need.

The changes in empty rates relief came into force on 1 April. Owners of empty properties now face 100% rates bills after six months of vacancy for industrial property, and three months for all other commercial property.

The BPF said that while landlords can take the decision to demolish a building occupiers cannot simply demolish unwanted space and have no choice but to continue to pay full rates even on empty property. It said many face bankruptcy as a result which will stifle the UK’s economic recovery.

Businesses holding warehouse or factory space, which previously were subject to 100% relief, have been particularly hit by the withdrawal of relief. Full Article

British Property Federation - Empty Rates Hotline

King opposes Treasury’s liquidity plans

Tensions between the Treasury and the Bank of England mounted yesterday as Mervyn King, the Bank’s Governor, abruptly dismissed measures being considered by Alistair Darling to end the mortgage drought.

Gary Duncan, Economics Editor, The Times - 14 August 2008

Mr King signalled his strong opposition to a move being examined by the Chancellor to expand the Bank’s emergency financing programme for lenders, the Special Liquidity Scheme.

The Governor also poured scorn on a second, more controversial measure, whereby the Treasury would temporarily guarantee high-quality mortgage-backed bonds to help struggling lenders to boost the funds available for mortgage lending.

Mr King’s move to dig in his heels against the plans comes after The Times revealed that the drastic steps to revive the near-dormant mortgage market are under active consideration by Mr Darling. The Governor’s opposition threatens to inflame again the Bank’s tense relationship with the Treasury, which saw the institutions at loggerheads during the Northern Rock crisis. Full Article

Bank of England slashes UK growth forecasts

Bank of England Governor Mervyn King has warned that next year will be a ‘painful’ one for Britain as the slowdown in the housing market deepens and the cost of living rises further.

Angela Monaghan, The Telegraph - 13 August 2008

Its long-awaited quarterly Inflation Report provided gloomy reading with the Bank now expecting the economy to virtually ground to a halt in the first three months of next year as the surge in petrol and utility bills eat away at consumers’ spending power.

The Bank expects the economy to grow just 0.1pc in the first quarter, down from a projection of just 1pc made at its last report in May.

The downward revisions will be embarrassing for Chancellor Alistair Darling, who is still forecasting that the flagging economy will muster growth of 2pc this year and 2.5pc in 2009 - Full Article

See Also - Bank of England Inflation Report - August 2008

One in ten in rent arrears

More than one in ten buy-to-let tenants are in rent arrears due to rising costs of living.
According to research by AXA, the number of private renters slipping into arrears because of rising rent is increasing. 13 per cent of renters have gone into arrears in the past 12 months, with over half of these doing so in the past three months alone.

Lee Jones, MoneyMarketing.co.uk - 11-Aug-2008

The research also found that over 50 per cent of tenants are increasingly concerned about being able to afford their rent going forward.

AXA says this will potentially add further misery to the mortgage market as buy-to-let owners are left financially strapped through tenants failing to pay the rent.

The insurer also found that 95% of those in privately rented accommodation have no kind of income protection to help out if their financial situation was to alter through losing their job - Full Article

Rent rules hitting landlords

LANDLORDS claim they are missing out on cash because of changes to the way housing benefit is paid.
New national rules mean that benefit payments are made to tenants, rather than directly to landlords.

Mirfield Reporter - Money 11 August 2008

Malcolm Harrison, who rents out 12 properties in the area, said he has had trouble with people not paying rent and is owed over £600 by one tenant.

He said: “It will get to the stage where there’ll be nowhere for them to live because landlords will stop taking tenants who are on benefits.

“It wasn’t a problem before because we knew that if the money was being paid directly to us we’d always get our rent. Now we’ve got the situation where some tenants are getting their cheque in the post and cashing it to spend on something else.”

Nazir Daud, who rents out properties in Dewsbury and Batley has experienced similar problems.

He said: “Some tenants are just not passing the money on.” Full Article

Relocation, relocation

House prices are of little interest to a generation of mobile workers with no desire to put down roots
All comments (9)

Peter Preston, The Guardian - Monday 11th August 2008

The best-selling action hero of the 21st century - Lee Child’s ex-military cop Jack Reacher - has no home and no baggage. He roams the US via a succession of cheap motels, wearing the Primarky clothes he bought last week and will throw away next week. He couldn’t care less about house prices. Houses just slow him down.

Much the same, perhaps, might be said for the chief spokesman of Poles in Britain who, having caught the Daily Mail on the back foot, used its columns last week to note that as Poland’s currency almost doubles against the pound there is suddenly “more concern over departures than arrivals”.

Mobility of labour is top of many wish lists. The single market in manpower that Brussels helped invent has become reality and feeds on itself. Bulgaria’s labour minister recently announced visa quotas for Moldovan and Vietnamese workers brought in to do the sundry dirty jobs at home that 1.7 million Bulgarians have gone to Italy, Spain and the rest to do these past few years. Mobility is a global tide that never turns. So what on earth is this howl of house price angst about? Full Article

Good news for UK buy-to-let landlords as numbers of tenants rise sharply

A sharp increase in demand for rented accommodation in the UK is good news for buy-to-let investors as it appears to be an upward trend.

But tenants are also coming under financial pressure, facing higher energy bills and worried about being able to pay their rent, new research shows.

According to estate agency Your Move there was a 38% increase in lease commencements over the year to June as would be homeowners shun the property market as prices fall. This comes on top of a 3% increase between May and June.

Landlords are seeing the strongest demand for tenants for decades thanks to the credit crunch, tighter lending and the inability of first time buyers to get on the property ladder.

It is young buyers in particular who have been driven out of the market and into renting by the disappearance of 100% and 95% mortgages, according to Your Move.

‘The credit crunch has buried any chances most first time buyers might have had of getting on the property ladder,’ said managing director of Your Move estate agents, David Newnes.

‘Mortgage finance hasn’t been this hard to come by for 15 years. For landlords this is a cloud with a gold-plated lining,’ he added - Full Article

House price predictions

Each month several house price surveys are published which draw together data from recent sales and show which way the market has been moving. Off the back of these, housing market commentators make predictions about where house prices will move next. This page brings together their latest forecasts.

The Guardian.co.uk - 8 August 2008

HBOS: House prices to fall by 18% by February 2010.

Nationwide Building Society: On the record as predicting single digit falls for 2008, but says double-digit falls are “not inconceivable.”

Council of Mortgage Lenders: House prices to fall 7% this year.

Howard Archer, chief economist at Global Insight: Fall of 15% in 2008, and then 12% in 2009.

Centre for Economic and Business Research: Prices should rise by 30% between late 2009 and 2012, “partly driven by the shortfall in housing supply that the reduction in completions will inevitably precipitate.”

National Housing Federation: Prices to rise by 25% by 2011.

Capital Economics: 35% drop in prices from the peak in 2007.