Chris Kearney, Oxford Mail - 17 July 2008

An increase in the number of landlords prosecuted by the city council in the past year for renting out unfit properties has led to the urgent creation of the list.

Details of the scheme - which should be operating within months - are released for the first time today and landlords are being urged to sign up.

The idea is prevent tenants living in shabby conditions and to provide people with an at-a-glance guide to renting safe properties and the safeguards landlords have put in place.

Oxford City Council’s chief environmental health officer Ian Wright said: “There are approximately 11,000 rented properties and 5,000 homes in multiple occupation and about 1,000 landlords in the city.

“We’re making more prosecutions now than we have ever made before and I think the scheme would work very well in Oxford - full article

At over GBP500 billion, the value of the Private Rented Sector now outstrips the total of all privately-owned commercial property, including offices, shops, hotels, factories, warehouses and leisure facilities.

In a report for the Association of Residential Letting Agents, ARLA, published today, Monday 14 July, the Private Rented Sector is forecast to continue outstripping other types of investment property and rents will rise significantly in the short term. House prices will almost certainly increase faster than commercial real estate over the longer term, as housing supply is less responsive to demand than commercial property but consumers demand more housing as living standards rise.

The report, Part I of “The Modern UK Housing Market - Origins and Prospects” by Professor Michael Ball, Professor of Urban and Property Economics at Reading University, forms part of a wider study into residential housing commissioned by the National Federation of Property Professionals, to be published in the Autumn. This will cover the market sectors of both its residential housing divisions, ARLA and the NAEA.

Professor Ball forecasts rents to rise by 10% to 15% in both 2008 and 2009. Despite this, he says that the modern Private Rented Sector is helping to stabilise housing because it accommodates those who, by this stage in the housing cycle, would be over-stretched borrowers with rising negative equity. A re-run of the 1990s, when negative equity prolonged the housing market recession and blighted the lives of many is less likely to occur in this downswing as a result.

Commented Ian Potter, ARLA’s Head of Operations, “It was as a result of the appalling effects on young owner occupiers last time that ARLA took the initiative and launched Buy to Let to re-build and re-finance the Private Rented Sector and to mitigate the dreadful social consequences of housing boom and bust. It has proved to be remarkably successful.”

The report points out that it is now feasible for younger households to rent decent accommodation on a scale impossible for older generations. This has helped delay the age at which people buy their own homes.

Affordability problems are likely to continue even if the housing supply increases. The current 56% of 30-34 year olds who are able to afford a purpose build flat will fall to 45% by 2016 and only 34% by 2026.

The fundamental cause of so many of the UK’s housing problems is that rising affluence is being crushed against static housing supply as standards of living double every 25 years, provoking more demands for space and privacy, the report claims.

Meanwhile, tenant mobility in the Private Rented Sector has increased, while it has fallen for home-owners with a mortgage. A typical rental property is a terraced house in an outer or inner town or city suburb. The property will rarely be new, only 13% are post 1985 and about two thirds are pre-1945 but recently modernised.

This type of housing matches the preferences for accommodation, location and affordability of the majority wanting to rent.

Rents have been outstripped by house price rises for much of the past 15 years, although they have risen faster than general price inflation. Landlords’ yields have not been particularly high because the rise in house prices has eroded the uplift in rental income.

The report comments that the DCLG Rent Index suggests rents have risen by almost 40% since 2000 and ARLA’s own research shows that rents rose by around a fifth between 2003 and 2007.

However, averages are driven by London and surrounding areas and there are significant regional variations especially when taking Scotland and the North into account. There are also variations in property types and rents achieved.

Investment in residential property is driven by capital gains, which, the report suggests, partly explains the low rental yields. Capital appreciation has been good over the long term. Real house prices rose by 4.2% a year on average between 1981 and 2003, while capital values for commercial property fell by 1.2% by the same measure.

A steady growth in the number of private tenancies of about 3% a year is expected. At this rate, renting will sustain its current overall share of housing provision. The share of private renting is likely to grow faster in the economically strongest parts of the country, especially London and surrounding areas. This means that the overall value of the Private Rented Sector is likely to grow at a faster rate than the UK housing stock as a whole as it will be concentrated in the most expensive, price-dynamic parts of the country, the report states.

Download the full 12 page report .pdf here - The Modern UK Housing Market – Origins and Prospects: Part 1: Private Rented Housing

Kate Ahira and Chloë Stothart, Building Magazine - 16 July 2008

Housing minister Caroline Flint will today announce a series of measures to support the ailing housing market in an attempt to keep government housebuilding targets on track.

Detailed in “Facing the Housing Challenge - Action Today, Innovation for Tomorrow”, the measures include a scheme to help first-time buyers into homeownership and the creation of the first four PPP local housing companies.

Flint said: “The package being announced today will both help people facing difficulties right now, and lay the foundations to help meet the long-term housing needs of the country.

“We are determined to continue to do everything possible to promote long-term stability and fairness in the housing market… the long-term need to provide more homes has not gone away. We have a growing and ageing population and will only see worsening affordability unless we increase housing supply.” full article

Clearly feeling the squeeze, caused by rising energy costs, 9% of respondents have already taken action into their own hands and decided to go as far as to change properties to find somewhere more energy efficient to rent.

When tenants were asked about the perceived value of Energy Performance Certificates (EPC), nearly nine out of ten (88%) said that the EPC would be useful when looking for somewhere to rent and nearly a third (32%) said it would be very useful. Nine out of every ten private tenants said the EPC could have an impact on their choice of property. A quarter would actually use it in the first instance to narrow down properties whilst a further quarter would narrow down properties on other factors but then use the EPC to help make their final decision, (the remaining 40% would use it to decide between two properties that had equal appeal to them based on other attributes).

Mark Brown, Partnership Director of EEPH comments on the rising importance of energy efficiency within the private rented sector:

“With the upcoming introduction of mandatory EPCs for all rented properties this October, it was important for us to investigate the current attitudes of private sector tenants in England and Wales. We all know that utility bills are increasing but this research shows the real impact this is now having on this sector, people are actually making decisions based on the need to reduce their outgoings and energy efficiency is clearly a significant factor.”

Underlining the growing importance of energy efficiency in the tenant’s search for a property, the research showed that when it came to choosing a rental property, estimated energy bills were considered a major factor, rated just behind key aspects such as location, rental cost and type of property.

As a member of the Energy Efficiency Partnership for Homes Group, the National Approved Letting Scheme (NALS) is keen to help tenants improve their efficiency.

Caroline Pickering, Chair of NALS believes EPCs will help both landlords and tenants in the long term: “As this research shows – the certificate could prove to be incredibly useful in the decision making process as an EPC provides the tenant with a clear indication of the energy efficiency of their accommodation which can only be a selling point for prospective tenants. It is a “win-win” situation for tenants, landlords and lettings agents.”

“To help people reduce the amount of energy they use we have developed a free leaflet which details some simple yet effective tips on ways to reduce your energy consumption it includes measures such as replacing boilers over 15 years old to increase efficiency, and increasing heat retention by fitting a hot water tank jacket and installing double glazing.”

For information on EPCs: www.energysavingtrust.org.uk and www.communities.gov.uk/epbd

Energy Performance Certificate Helpline on 0845 365 2468

CML Press Release - 15 July 2008

But speed is of the essence. The CML was disappointed by speculation this week that the Crosby review of housing finance was unlikely to offer policy recommendations in its interim report. The CML firmly believes that with quick and decisive implementation of the mortgage market funding proposal, the Government could mitigate the difficulties that households and the housing market will otherwise face, as well as helping to restore greater confidence to the financial system as a whole.

The suggested action plan is outlined in detail in section 5 of the attached document and is represented visually in the attached diagram. It is essentially a way of kick-starting the markets for UK residential mortgage-backed securities (RMBS) and covered bonds (CBs) back into life. These are parts of the market that have been dysfunctional since investor appetite disappeared in the wake of the credit crunch.

Their loss has been the main cause of the contraction in the size of the mortgage market, and hence the lack of mortgage availability for many borrowers and higher mortgage costs. Mortgage lending is set to halve this year, with many borrowers who could afford new mortgages nevertheless being unable to access funds.

The plan would involve the Bank of England offering a repo facility (essentially a form of secured lending), using as collateral new UK residential mortgage backed securities (RMBS) or covered bonds (CBs). To qualify, the RMBS or CBs would first have to be sold to investors in a public issue.

This is of crucial importance, as it would ensure that the market itself is essentially delivering the solution, with the repo facility simply acting as a catalyst to restore market confidence. The investors would take the credit risk in the usual way. But the repo facility would give them confidence, and so help to break the current vicious circle.

This differs significantly from the Bank of England’s special liquidity scheme (SLS) and other BoE facilities in two ways. First, it is specifically targeted at new RMBS and CBs (which are excluded from the SLS if they contain mortgages originated after December 2007), and hence allows the likelihood of a greater flow of funds directly back to support new mortgage lending.

Second, and more importantly, it specifically galvanises investors back into the market in a way that the SLS does not. This is important as a step back towards self-sufficiency in the mortgage securities markets.

CML Director General Michael Coogan said:

“If they act quickly, there is a window of opportunity here for the Government and the Bank of England to break the logjam in the housing and mortgage markets and underpin confidence in the financial system. The single biggest issue in the housing market that the authorities need to address is the lack of available funding to support new mortgage lending.

“This proposal has the virtue of being delivered through the market itself. Unlike a government guarantee, the investor keeps the credit risk. But it specifically incentivises investors, which the special liquidity scheme does not.

And it can be implemented quickly, in an environment where speed is of the essence. A year into the credit crunch, there is no merit at all in waiting until the autumn before taking steps that will help the housing market to remain more resilient, and so help the overall health and stability of the UK economy.”

Simon Atkinson, Business reporter, BBC News - 14 July 2008

When UK lender Northern Rock hit difficulties last year, the queues forming outside its branches across the UK provided a very visual image of the problems that it faced.

A few months later the beleaguered bank was taken into government hands after it was nationalised, with loans worth £100bn on its balance sheet.

It was doubtless a disaster for shareholders, the Rock and the government - but is perhaps put into perspective by the troubles faced by Freddie Mac and Fannie Mae.

Together, the two firms own or guarantee about $5.3 trillion (£2.7 trillion) worth of home loans - about half the outstanding mortgages in the US.

That is about 25 times as big as the Rock’s obligations, and twice the size of the UK economy - full article

Gary Duncan, Economics Editor, The Times OnLine - 14 July 2008

The Bank of England must guard against keeping interest rates too high for too long and from tipping Britain’s economy into a slump as it fights to curb inflation, one of its most influential officials says today.

The warning that the Bank must strive to avoid interest-rate overkill, from Kate Barker, the longest-serving external member of its Monetary Policy Committee (MPC), will dampen City speculation that rates will be raised soon to combat rising inflation.

Britain should escape a severe recession, such as those suffered in the early 1980s and early 1990s, Ms Barker told The Times, after a barrage of grim economic news in the past two weeks. However, she emphasised that the stakes were quite high over risks that the Bank could make a grave error as it tried to steer a course between the conflicting pressures of rapidly weakening growth and fierce inflationary pressures - full article

Roger Bootle, The Times OnLine - 14 July 2008

Over the past three months prices have fallen by almost 6pc - which translates into an annualised rate of decline of over 20pc. That is the fastest on record. But how large will the total drop in prices be?

The place to start is with an analysis of why this is happening. The essential reason is that houses had become ludicrously over-priced, to the point where, in order to be able to afford one, you either had to own one already, to mortgage yourself up to the eyeballs or to win the lottery.

Many British people seem to believe that it is somehow inevitable that house prices rise by 10pc, 15pc or 20pc every year, thereby squirting money around for all who have been lucky or canny enough to position themselves under the shower - full article

Tom Bawden in New York and Gerard Baker in Washington, TimesOnLine - 14 July 2008

In a late-night announcement designed to calm increasing panic on Wall Street before today’s market opening, the US Treasury Department and the Federal Reserve issued a joint statement in which they pledged to spend billions of dollars of taxpayers’ money to bail out the two American mortgage giants that collectively underpin the entire housing market “if needed”.

The Fed said it would offer cheap financing to the giants, Freddie Mac and Fannie Mae, through its so-called discount window. The Treasury separately said that it would propose to Congress that lines of credit to the two should be extended temporarily. Furthermore, Henry Paulson, the US Treasury Secretary, said that the Treasury would purchase equity in both organisations if needed - full article

Gráinne Gilmore and Judith Heywood, Times Online - 11 July 2008

Forget slashing the asking price, offer a free car instead. This is the approach that a developer in Newquay is hoping will help him to beat the sales slump as he tries to sell 65 flats.

Another developer is simply threatening to sue buyers who pull out of purchasing luxury flats in a £25 million development in Plymouth.

The increasingly desperate measures being employed by housebuilders to sell their properties reflect the dire state of the housing market.

Barratt Developments became the latest to announce job losses, saying yesterday that it was cutting 1,200 posts, a fifth of its workforce. Other leading homebuilders, including Taylor Wimpey and Redrow, have already said that they are slashing thousands of positions. Mark Clare, chief executive of Barratt, gave warning that job cuts across the industry could reach 60,000 out of 300,000 - full article