A borrower’s survival guide: CML, Citizens Advice and Shelter

Household finances have been badly stretched in the past year as the cost of energy has increased by 17% and the cost of food by 12%*. And the credit crunch means that the cost of new mortgages has increased, there are fewer mortgages available to choose from, and they are more difficult to obtain.

A borrower’s survival guide: CML, Citizens Advice and Shelter - 15 Aug 08

This is making life harder for the 1.4 million borrowers coming off cheaper, fixed-rate mortgages in 2008. But there are ways to help yourself and organisations to help you cope if you are struggling, according to the Council of Mortgage Lenders, Citizens Advice and Shelter.

No matter the size of your financial problems there are steps you can take to tackle them, and the CML, Citizens Advice and Shelter have worked together to come up with ten tips to help struggling households get through the tough times.

1. Get talking

If you are worried about your finances your first move should be to start talking: talk to your lender, talk to your partner, and talk to a free, independent debt adviser. The earlier you tell your lender, the more options available to solve the problem. Options that your lender may consider include: extending the term of the mortgage, changing the type of mortgage, deferring interest payments for a short period, and treating the arrears as part of the original debt.

Continue reading A borrower’s survival guide: CML, Citizens Advice and Shelter…

Law Commission - A new era for the private rented sector

As the third and final part in its series on housing law reform, the Law Commission today announces its proposals for better regulation of the private rented sector.

The report, Housing: Encouraging Responsible Letting, follows wide consultation with both landlords and tenants. It focuses on improving the overall coherence and stability of the current private rental framework in a cost-effective way.

Based on the principles of smart regulation, the Commission recommends a programme of staged reforms designed to promote self-regulation and enhance voluntary initiatives already in place in England and Wales. The proposals include

Creating a housing standards monitor (for each of England and Wales) for the private rented sector

Establishing an associated stakeholder board to which representatives of all sides of the private residential rented property sector are appointed

Developing a single code of housing management practice for landlords

Launching a pilot programme for home condition certificates

Continue reading Law Commission - A new era for the private rented sector…

Law Commission Proposed Changes in Private Renting Sector

Encouraging Responsible Letting

Recommendations:

On 14 August 2008 we published our final proposals on better regulation of the private rented sector in the report Housing: Encouraging Responsible Letting. A press release is also available.

The project, which arises out of our previous work on housing law reform and tribunals, aims to identify and address regulatory challenges in the private rented sector. This is the first project undertaken jointly with the Welsh Assembly Government (housing is a policy area devolved to the National Assembly for Wales).

This project is not proposing major changes to the law. Rather, it examines ways in which the current law can be made more effective. There is a great deal of law that applies to the sector, but much of it does not work as Parliament intended. As a result, the standards set by the law are often not met, particularly in relation to the physical condition of housing. In turn, these failures contribute to the sector suffering from a poor reputation which, arguably, gets in the way of it playing as full a part as it should in providing housing.

The report recommends a programme of staged reforms based on principles of smart regulation. Following responses to our consultation paper, we propose a system of self-regulation designed to enhance voluntary initiatives already in place, leaving open the option of future reform to create a compulsory system. It is intended that implementation of our proposals would harmonise and simplify of the current system in an affordable way, with benefits to both landlords and tenants.

Find more details here

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