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Displaying ROOF Blog articles from February 2008

Lunchtime news Friday 29 February 2024


Posted by:
AJ Williamson

Repossessions in 2008 are set to rise by 50 per cent according to the Royal Institution of Chartered Surveyor (RICS). Properties sold at auction numbered 7,732 last year, a rise of 15 per cent, while the number of repossessed properties rose by around 20 per cent. This is close to historically high levels and a sign of distress in the housing market. Fewer properties were reaching the reserve price too. In the last quarter of 2007, only 57 percent of properties were sold successfully, compared to 69 percent in the same period in 2006.

A Treasury Select Committee has attacked banks for ignoring risks in the run up to last summer’s credit crunch and for not acting sooner to head off the growing financial turmoil. Chairman John McFall said that in future institutions such as the Financial Services Authority and the Bank of England should the boards of companies in danger to demand what action they proposed to avert a crisis. Credit rating agencies were also singled out for criticism by the committee. A ‘root and branch reform’ to tackle conflicts of interest and correct errors in the way credit ratings are arrived at should be carried out or stricter regulation will have to be introduced.

Rural Britain has been making the news this weekend. According to a report from Rural Services Network, action is needed to stop more villages becoming nothing more than a collection of houses with little community provision. Shops, post offices, school, pubs and even churches have been sold off and converted into housing to feed the second home market. Key workers are forced out because of a lack of affordable housing. This results in ageing and poor rural communities. There are an estimated 980,000 households living below the official poverty line of £16,492 in rural Britain.

The government announced over the weekend that it intends to curb second home ownership in sought-after rural locations, where up to half of all properties in the most popular villages belong to a second homeowner. An inquiry conducted by Lib Dem MP, Matthew Taylor, will recommend local authorities be given powers to prevent outsiders from buying properties except as a main residence. Outsiders may also be stopped from purchasing newly built homes in such areas, and anyone interested in buying second homes will need to win planning permission to change the house from fully occupied to a second home. The proposals are aimed at reducing the supply of houses as second homes in popular areas such as Cornwall, Devon, Norfolk, and in national parks in Yorkshire and the Lake District.

However, cuts in capital gains tax next month from 40 per cent to 18 per cent will increase prices in ‘honeypot’ areas claims the Government’s rural advocate, Dr Stuart Burgess. Potentially two million second homeowners could benefit from this rate reduction paid on the profit on sale. This will increase property speculation unless measures are taken to make second home ownership less attractive. Dr Burgess wants local authorities to use the council tax on second homes to build affordable housing.

Finally, the government is to launch a £12 million pathfinder project that will offer free basic financial advice for all – covering issues such as credit, retirement planning, mortgages and savings.

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Lunchtime news Thursday 28 February 2024


Posted by:
AJ Williamson

The London Child Poverty Commission (LCPC) found that four out of 10 children in London live below the poverty line. More than a third of youngsters live in social housing, while 61 per cent of children in London belong to an ethnic minority. The report also called on the government and employers to raise salaries and increase employment in the capital, while increasing child tax credit. Of the 650,000 children living in poverty in London – 41 per cent are living in a household with an income of less than 60 per cent of the national median.

Council tax increases of £52 on average are likely to send household bills soaring to more than £3,000 for the first time. Council tax will rise by 3.9 per cent in April, the eleventh successive rise above inflation, meaning that the tax has doubled since Labour came to power in 1997. Figures show that council tax, energy costs and water bills now account for 7.8 per cent of average earnings, up from 6.9 per cent in 1997. A survey has found that all but 19 of the 250 councils, have managed to keep council tax increases to below 5 per cent, but many say that they done so by reducing services for the elderly or mentally ill.

Bad news perhaps then from the head of the Financial Services Authority (FSA), who said yesterday that he believes the era of cheap credit is over, and only those with a perfect credit record would be eligible for the best deals in future. Mr Sants added that the credit crunch would force banks to return to ‘traditional banking practices’, and criticised bank bosses over their bonus structure, claiming that they encourage undue risk.

Housing minister, Caroline Flint, has said that only eco-towns with the highest ecological standards will be chosen for construction. Ms Flint said that most of the 60 proposals that have come in to tender for sustainable developments, will be rejected. Outlining her plans for the eco-towns, which Communities and Local Government (CLG) expect to house between 2,000 and 20,000 residents across five locations by 2016, Ms Flint said the towns will be expected to meet strict criteria including GP surgeries, schools and shops within a 10-minute walk of houses; at least one acre of parkland for every 100 homes; and a dramatically reduced reliance on cars. The government will provide funding as well as help meeting the local planning requirements of successful applications.

And finally, Barratt Developments, Britain’s second-largest housebuilder, has said that the government is in danger of missing its much-publicised target for the building of three million new homes. The company announced a 15 per cent fall in the number of new homes sold in December from a year earlier, and said that if the present slowdown in the housing market continued throughout 2008, the rate of housebuilding would start to increase only after 2011.

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Lunchtime news Wednesday 27 February 2024


Posted by:
AJ Williamson

The buy-to-let property market is still bouyant according to the Council of Mortgage Lenders (CML). The number of buy-to-let loans rose by 23 per cent last year, and accounted for 10.3 per cent of all outstanding mortgages. Lending to such landlords is a lower risk than to homebuyers generally, the CML indicated, as buy-to-let landlords have a lower level of arrears and repossessions.

A new initiative is to be launched next month for key workers and first-time buyers to help them realise homeownership. The new scheme will replace the existing ‘Open Market Homebuy’ scheme which was launched in October 2006. The scheme was criticised for being too costly to attract first-time buyers, who had to obtain a mortgage for 67.5 per cent of the property’s value. The new scheme will allow buyers to take out a mortgage for half of the property’s cost, with the remainder financed by top-up loans funded in part by the government.

The House of Commons has been ordered to provide a detailed breakdown of MPs’ second home expenses under a Freedom of Information request. Following on from the public uproar when it was revealed that MPs can claim an allowance of up to £23,000 a year towards running a second home even if eligible for a grace-and-favour home, the Information Tribunal said yesterday that the laxity and lack of clarity in the rules compared badly with the commercial sphere or most other public sector organisations. The Commons Members Estimate Committee also announced yesterday that its review of MPs’ expenses will be completed several months earlier than planned.

More than 50 per cent of parents were seeing their savings used by their cash-strapped children who are struggling to cope with student debts, the high cost of living, and high property prices. Last year the figure was only 39 per cent being loaned or given money, but this year the figure has increased to 55 per cent, or an average £12,610 each. Paying off debt was the main reason for helping children or grandchildren, with help to buy a house second.

And finally, the free newspapers found all over the tube, train and bus network in London are finally being put to good use. Volunteers from ’Project Freesheet’ plan to gather 10,000 copies of the papers to build a house made entirely from the papers in order to stimulate debate about recycling and encourage people to keep their ‘house’ (city) clean, attractive and liveable.

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Lunchtime news Tuesday 26 February 2024


Posted by:
AJ Williamson

Britain’s largest housebuilder, Persimmon, announced record profits for 2007, but says that it is cautious about prospects for the housing market this year. The average selling price for a property rose 1 per cent last year, but the number of sales fell 4.8 per cent.

Mortgage lending in January continued to be subdued according to figures by the British Banker’s Association (BBA). Its members approved 44,000 new mortgages for house purchases in January, which is up slightly from December, but 31 per cent lower than a year ago. However, remortgaging amounted to 49 per cent of all new lending by the banks last month, and competition for mortgage business remained strong.

Sales in the US homes fell by less than expected in January, suggesting the two-year housing market slump may be coming to an end. Home sales were down just 0.4 per cent last month, less than the 1.8 per cent decline predicted, and less than the 2.2 per cent fall in December. However resales have hit their lowest point since records began in 1999, and it was the sixth month in a row that sales fell.

The Home Builders Federation has come out strongly against government plans to introduce ’lifetime homes’ standards for all new homes by 2013, cautioning that a ‘one-size fits all’ solution to meeting the needs of older people would not work. The increased costs of implementing the standard would increase the costs to housebuilders, and would affect affordability for all, but especially first-time buyers.

And finally, former minister, David Blunkett, is hosting a new reality television programme that locks up juvenile delinquents. Ten ‘tearaways’ will be jailed for two weeks in a former prison and lectured by former criminals on the need to go straight, before going before the ‘parole board’, of which Mr Blunkett will be head, to show their rehabilitation. Mr Blunkett said that forewarning young people of what prison is like and encouraging them to take an alternative path in life ‘has to make sense’.

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Lunchtime news Monday 25 February 2024


Posted by:
AJ Williamson

House prices fell for a fifth month in succession, according to the latest house price index by Hometrack. In February the average property price was down 0.2 per cent, bringing the annual rate of growth to 1.4 per cent, the lowest level since April 2006. The largest falls were in the East Midlands and South West. Despite this, there was a 7.9 per cent increase in the number of new buyers…

Under plans announced by the government, every new home built in England will have to be designed to suit an ageing population. Ministers want new homes to include 16 features such as stairs wide enough for stairlifts, downstairs bathrooms, and room for wheelchairs to turn. The standards should be adopted from April, and become compulsory by 2013, while the government also wants to work with councils and planners to make entire neighbourhoods suitable for elderly people. Welcomed by Help the Aged, housebuilders warned that the plans were costly.

The Prince of Wales who is set to open an affordable rural housing development today, built on land owned by the Duchy of Cornwall. The affordable rural housing initiative by the Prince was launched in 2003 with the aim of using the private sector in delivery of affordable rural housing, and consist of 12 units – a mixture of flats and houses; eight for rent and four intended to be sold an a shared ownership basis.

In America a new plan has been announced to assist homeowners hit by tumbling prices. Director of the ‘Office of Thrift Supervision’ wants to create certificates whereby borrowers with negative equity would take out new home loans guaranteed by the Federal Housing Association, and use these to repay part of their original mortgage. The balance would be converted to ‘negative equity interest’ in the home – similar to a second mortgage, without interest payments. If homes are then sold for more than the market value, the mortgage lender would recoup the balance owed. Approximately 10 per cent of the all US homeowners face negative equity in their homes.

Over this side of the pond, Nationwide will now be telling homebuyers that unless they have a deposit of 25 per cent or more, they will face higher interest rates. Until today, those with a deposit of 10 per cent of more were able to get Nationwide’s best mortgage deals, however after today, the cost will rise by 0.2 per cent, effectively erasing the Bank of England’s recent drop in interest rates. Recently, a growing number of banks and building societies have added to buyers’ woes by scrapping 100 per cent plus mortgages.

Nearly 400,000 households have been overcharged £750 million in council tax, or an average of £1,900, as a result of a blunder by the government dating back at least 10 years. The problem emerged in 2005, after the decision was made to postpone the revaluation of homes in England. It was revealed that many properties were in the wrong council tax band, but the government allegedly did nothing to reassess the charges.

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Lunchtime news Friday 22 February 2024


Posted by:
AJ Williamson

Hundreds of buy-to-let investors are being questioned about undeclared income, in a probe launched by Revenue and Customs (HMRC) this week. Five hundred letters have been sent out in the first phase of the campaign to target property owners who may have failed to declare their investment over the past six years. If it finds any evidence of fraud, HMRC can demand tax, interest and penalties going back 20 years. Accountancy firm, Wilkins Kennedy, says that HMRC has been gathering lists of landlords from lettings agencies.

Nationalisation of Northern Rock was passed by parliament last night despite anger at the undue haste and the lack of information and transparency about the true state of its mortgage books. Although the Lords defeated the government three times to try to force amendments requiring Northern Rock to answer questions under the Freedom of Information Act, the government flatly opposed the amendments. The peers did, however, force a concession – an annual audit of Northern Rock’s accounts by the Office of Fair Trading, and a ministerial promise that the bank would behave ‘prudently’ in offering new mortgages.

Other mortgage lenders may find their credit ratings downgraded making borrowing on the money markets more expensive, warned Fitch credit ratings agency yesterday. Fitch expects the trend of lower housing prices in Britain to continue, though it is not expecting a collapse in UK house prices. A spokesperson said, ‘A weakening housing market may place pressure on some UK mortgage lenders, although a rebalancing of the market is likely to offer opportunities to those with the best access to funding’.

Fire fighters in London have been banned from pre-arranged ‘home fire safety visits’ unless residents stub out cigarettes an hour before the visit and open windows. London fire brigade chiefs have decided that private homes are a firefighter’s workplace for the duration of visits and so should comply with the workplace smoking ban. If they feel that the home in question is just too smoky to enter, they will provide the advice at the door of the home. Officials stress that the new rules would only apply to the safety visits and not to emergencies where homes were actually burning down.

A London borough has been granted permission to challenge a legal decision forcing councils to push estranged parents who have agreed to share a residence, up the waiting list for a family home. Richmond-upon-Thames council can contest the decision where a parent claimed priority need because he and his former partner agreed to a shared residence order for their three children. The council argued that although the gent was eligible for council housing, he should not be given priority as such cases created obligation on local authorities, putting pressure on tight resources and lead to split parents exploiting the system to get a large family home.

And finally, a dilapidated wooden shed in Abersoch, North Wales, is up for sale for £150,000. It measures 18 feet by 15 feet, has no scenic views and a damaged roof. Estate agent Beresford Adams claims it offers ‘tremendous re-development potential.’

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Lunchtime News Thursday 21 February 2024


Posted by:
Bill Rashl

Modern apartments being built in major cities across England will not sell due to low demand, says house building analyst Alistair Stewart. Stewart believes that these blocks of town centre apartments for young affluent urbanites do not offer the right image of high life living. As a result their prices will fall drastically. Stewart continues that the housing market is a ‘house of cards’ set to implode following ‘reckless mortgage lending, chronic oversupply of new flats and widespread fraud.’

The Daily Telegraph reports that a small terrace house in County Durham is set to become the first home to be effectively repossessed by the Government following the nationalisation of Northern Rock. However, in the same story the proprieties wife is quoted as stating ‘It’s got nothing to do with Northern Rock and the takeover.’ Never let the facts get in the way of a good story.

House buyers have paid £31.5 billion in stamp duty in the past 10 years. Since Labour came to power, the percentage paid in stamp duty has increased by 675 percent, from £830 million in 1997-98 to last year an incredible £6.5billion.

Retired couple, Joe and Patricia Gilling, have had their £700,000 house bulldozed by the local council as it apparently breached planning permission. The retired couple had sought permission to convert the barn into a house and build holiday homes on the surrounding land. However, council officers ruled that the barn breached its planning permission as the changes were so drastic that they constituted a new building.

Senior citizen, Mr Fitzmaurice, has been jailed for refusing to pay his council tax. He owed £I,359 in council tax and £209 in bailiff and court costs, but refused to pay in protest about pensioners being unable to keep up with increasing council tax and food and fuel costs. This is not the first time that he has refused to pay. In 2006 he went to prison for 32 days, this time he received a 34-day sentence and will serve it in a category-B Bedford prison alongside murderers and rapists.

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Tags: news

Lunchtime news Wednesday 20 February 2024


Posted by:
AJ Williamson

Fire chiefs have warned that the growing number of immigrants living in dangerously overcrowded housing are at risk of a major fire disaster. Peter Holland, chief officer of Lancashire fire brigade has ‘serious concerns’ particularly over houses in multiple occupation (HMOs), which are often unlicensed and overcrowded. HMO occupants are likely to die in a fire six times more than average.

Kate Barker, one of the members of the Bank of England’s monetary policy committee, has said that the downward spiral of house prices and a drop in mortgage lending are the biggest short-term economic threats to the UK: ‘The risk… of most concern is around the interplay between the property market and financial sector resulting from the credit turmoil… The consequent adverse impact… could prove difficult to turn around quickly’. She noted however, that even if house prices fell 15 per cent, only 5 per cent of mortgage holders – 2 per cent of all households – would find they were in negative equity.

Three mortgage lenders yesterday withdrew their 125 per cent mortgage deals, following criticism that it had encouraged irresponsible borrowing. Alliance & Leicester, Coventry Building Society and Abbey National are the latest institutions to scrap the mortgages. Only one in ten mortgage lenders now offer 100 per cent or more mortgages, down from a third before Christmas.

Work and Pensions secretary, James Purnell, is expected to announce that unemployed people who have claimed benefits for more than a year will be forced to take on placements or volunteer work. From October 2009, theNew Deal programme will have placements lasting four weeks. The long-term unemployed may be forced to work for free in return for benefits until they find paid work.

Home Secretary Jacqui Smith will announce today that immigrants will be expected to pay an entry ‘tax’ and learn English before they can earn a British passport. The tax will be used to provide extra funding for public services. Migrants will also have to carry out civic work to be eligible for citizenship, although it is unclear how many hours they will need to work or what tasks they will undertake.

And finally, a homeless chef who lived in Gatwick Airport for more than three years has been jailed. Anthony Delaney who ate, showered and slept at the airport and only left to collect his jobseeker’s allowance, had been banned from the airport several times, and was eventually given an Asbo which he breached. He told his lawyer that he was happier staying in the airport because he was ‘clean, dry and warm’.

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Lunchtime news Tuesday 19 February 2024


Posted by:
AJ Williamson

A study by Saga, which specialises in financial services for the over-50s, shows that the baby boomer generation is facing a massive increase in the cost of being looked after in their old age. The cost for an average four-year stay in a care home will double from £112,000 to £223,000 during the next 20 years. Research has found that those on a household income of less than £23,000 are the most under threat because they are too well off to qualify for free state care, but can’t cope with the costs. About 40,000 people annually end up having to sell their family home to over the cost of their care needs.

And it can only get worse as the Pensions Regulator yesterday warned that increased life expectancy had left many final salary pension schemes with huge shortfalls. The regulator said that every two years of increased life expectancy adds about five per cent additional cost to a company’s scheme. The national shortfall is currently estimated to be around £75 billion.

Lie detectors are being used by local authorities to catch benefit cheats. Harrow Council, which trialled the ‘voice risk analysis’, saved more than £336,000 in council tax benefit and housing benefit during the pilot scheme. Anecdotal evidence also suggests that lie detector tests act as a deterrent to would-be fraudsters.

The papers continue to be dominated by the nationalisation of Northern Rock. Here is a round-up of what they’ve been saying.

Analysis of Land Registry data by a property website, has thrown up the 20 most expensive streets in England and Wales. Property here will set you back an average of £4.7 million to £6.8 million. Unsurprisingly, London and the South East account for the majority of streets with the most expensive housing – top prices in these areas were more than double the value of the most expensive streets in other regions. Last year’s highest average price was more than £5.5 million for a home in the most expensive street in Kensington. This has been topped by this year’s most expensive street in Highgate, where the average home costs £6.8 million.

And finally, welcome to the world’s most expensive flat. At an estimated cost £100 million, its not yet finished, although other flats in the development have already sold for a record price of £6,000 per square foot. Designed by the Candy brothers and overlooking Hyde Park in London, the penthouse will feature bullet proof windows, purified air systms and panic rooms, along with access to an underground passage that leads to the nearby Mandarin Oriental hotel.

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Teatime news February 18


Posted by:
Bill Rashl

Prime minister Gordon Brown has defended Chancellor Alistair Darling over plans to nationalise Northern Rock. The move has infuriated shareholders and the two private bidders hoping to take over the stricken mortgage lender. Industry analysts expect a ‘significant shrinking’ of the bank’s sales force and high street presence when new bank boss Ron Sandler unveils a plan to restructure the company. Mr Brown said the Government would have been failing in its duty if it had rejected the private takeover proposals without considering them fully, and he denied suggestions that he received official advice to nationalise the bank in the autumn. Parliament will begin debating emergency legislation to nationalise the bank today.

The asking price for houses increased last month but property is takinglonger to sell, according to new figures out today. Homes are lingering on the market for 93 days, 15 days longer than last year, and agents have an average of 64 properties on their books, up from 54 last February, according to Rightmove, the property website. The company’s latest survey for the month to February 9 shows that asking prices rose 3.2 per cent to £237,856. The rise, averaging £7,428, pushed the annual rate of growth up to 5.8 per cent, from 3.4 per cent in January. However, Miles Shipside, commercial director of Rightmove, said: ‘It’s not the start of another price boom, but the interest rate cuts have no doubt given some sellers headier hopes.’

Britain’s biggest mortgage-lenders were accused of profiteering yesterday for putting up tracker mortgage rates despite two recent interest rate cuts. Halifax, Britain’s biggest mortgage lender, has raised its tracker rates on 22 products for new customers by 0.2 per cent. Cheltenham & Gloucester is to raise its rates on new two-year trackers by up to 0.2 per cent. Rates on comparable products at Lloyds TSB are also expected to rise by the same amounts. Experts believe more lenders will follow suit, despite pleas by Gordon Brown and the Chancellor, for them to pass on interest rate cuts by the Bank of England in an attempt to stop the economy stalling. Eddie Weatherill, chairman of the campaign group Independent Banking Advisory Service, said the banks were greedily trying to retain their profit margins. ‘But it’s now impacting on customers in a very, very serious way,’ he added.

Building standards must be improved if they are to meet the government’s zero carbon target by 2016 concludes a report by Leeds Metropolitan University and University College, London. A seven-year study funded by the Department for Communities and Local Government and the National Trust tested 700 ‘eco-homes’ being built at Stamford Brook, once part of the National Trust’s Dunham Massey estate near Altrincham, Cheshire. It found that even when homes used 60 per cent less energy than the average, heat still escaped around windows and across insulated cavity walls.

Professor Philip James, chairman of the International Obesity Task Force, has called on urban planners to redesign towns and cities to combat obesity by encouraging more public transport and less car use.Planners had created an ‘obesogenic environment’ by designing public spaces around the car, he said. Professor James cited Oslo in Norway as an example of a ‘slim city’, where the built environment is structured to discourage car use and encourage walking and cycling.

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Tags: news

Lunchtime news Friday 15 February 2024


Posted by:
AJ Williamson

The government’s housebuilding targets are under threat after a shock fall in the number of homes built last year. The official target is to build 240,000 homes a year by 2016, and three million more homes in England by 2020, but the department for Communities and Local Government’s (CLG) own figures show that during the final quarter of 2007, construction work started on around 40,700 new homes, down 11 per cent from the same period in 2006. The 12-month rate of new home starts totalled 166,800 at the end of December 2007, a decline of 6 per cent from December 2006. Housebuilding peaked in 1968 when more than 350,000 homes were built, of which around 200,000 were for private sale and the rest for social housing.

Those complaining about the Tesco-ification of the country may be pleased to know the Competition Commission is set to force supermarkets to sell land to allow rivals to open in areas where there is not enough competition. The commission has found that certain retailers hold on to land, just to prevent others from setting up near by, and are expected to release a report today limiting the length of time supermarkets can keep undeveloped land, and even force those companies to sell stores or land in areas where they are already too powerful.

Estate agents are expecting a steady stream of City professionals with bonus cash to spend to help reignite the housing market, despite rising inflation and warnings from the governor of the Bank of England that interest rates are unlikely to be cut dramatically in the near future. Recent figures indicate that 71 per cent of those employed in financial services expect a bonus as high or higher than last year, totalling around £7 billion. Unsurprisingly, notable absences from the viewings have been employees from Citibank, UBS and Credit Suisse, which have all suffered seriously with losses in the sub-prime housing market.

Almost one in ten of England’s most ’marginal homeowners’ are spending more than three-quarters of their income on mortgage repayments according the CLG figures. More than 19,000 households with a disposable income of less than £1,000 a month are using all their income or more in paying off their mortgage; nearly 40,000 are spending 75 per cent on payments; and a further 146,500 households are paying more than 50 per cent to mortgage companies. New housing spokesperson for the Liberal Democrats, Lembit Opik, said that low-income families are being ‘enslaved’ by their repayments.

And finally, for the price $22 million, you could buy one of the most famous landmarks in the US – the Hollywood sign in Los Angeles. A Chicago investment group owns the 56-hectare plot the sign sits on, much to the surprise of many in LA who thought it was owned by the city, but they have failed to agree a sale price with the City of Los Angeles authorities to purchase it. The City of Los Angeles has been trying to buy the land for years, but has so far been only able to raise around $5 million.

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Lunchtime news Thursday 14 February 2024


Posted by:
AJ Williamson

Homeownership in England fell for the second year in a row last year, to its lowest level since 1998. The number of owner-occupiers dropped by 83,000 to 14.54 million, bringing the rate of owner-occupation down to 69.8 per cent, from 70.3 per cent. The main reason for the drop was put down to high prices driving buyers out of the market. Whilst the number of people owning their own homes outright rose by 1.3 per cent, this was outweighed by a rise in the number of people buying a home with a mortgage.

The Association of British Insurers (ABI) has warned that hundreds of thousands of homes could be uninsurable and uninhabitable unless stricter planning controls are introduced. They estimate that a third of the three million new homes the government wants to build by 2020 will be located on flood plains. Already 13 major developments have been passed despite the Environment Agency providing advice showing a flood risk. ABI have said that where a local authority plans to ignore flood risk advice, the government should step in and review the proposals and be ‘compelled to publish its decision’. Since the 2007 floods in Yorkshire, Gloucestershire and Worcestershire, insurers have paid out £1 billion in claims, and expect it will cost then more than £3 billion overall.

The Financial Services Authority (FSA) has announced it will clamp down on nearly 70 mortgage brokers after suspecting them of fraudulent mortgage applications. The FSA’s head of fraud said the problem was bigger and more widespread than previously thought, and said it was particularly rife among new-build property developments. Around half the 70 cases involve organised rings of professional fraudsters including solicitors and surveyors, with the rest made up of brokers who had fiddled figures to secure bigger loans for their clients.

This news comes on the heels of warnings from the Council for Mortgage Lenders (CML) that new-build property developers are over inflating the price of properties aimed at first-time buyers, but offering discounts and other incentives to get them to sign up. CML and Royal Institution of Chartered Surveyors are planning to work together to make disclosure of incentives and discounts compulsory.

Bradford & Bingley, one of the biggest lenders in the country, announced huge losses yesterday when its profits were almost halved to £126 million as a result in the worldwide credit crunch and a dramatic rise of 74 per cent in repossessions since 2006. The news sent their share price tumbling 23 per cent to its lowest ever level. Management said they have introduced measures to make sure the bank don’t run out of money like Northern Rock.

The department for Communities and Local Government (CLG) is in a spot of bother after confusing Newcastle-under-Lyme with Newcastle-upon-Tyne. Over the past two years the Staffordshire market town with a population of 74,000 has received government regeneration handouts worth £2.7 million, that was meant for the Tyne town and its population of more than a quarter of a million. Since spotting the error, CLG has asked for the money back, which Newcastle-under-Lyme is refusing to return. Council leaders said they have already earmarked the money for regeneration projects and thought the amount was in recognition of the excellent work they have already done.

Yesterday, governor of the Bank of England, Mervyn King, forecast inflation to rise to above three per cent in coming months as a result of increases in the cost of food, fuel and household energy bills. Mr King has recently been hinting that if inflation climbed higher than the bank’s two per cent target, aggressive interest rate cuts would be off the agenda, even if it meant a sharp downturn in the economy. Mr King said it was the outlook for inflation in the medium term in which the Bank’s monetary policy committee would remain focused on.

And finally, from the Daily Mail’s Ideal Home Show of 1956, comes the house of the future. Thankfully though, not all the fixtures and fittings took off. Designed by radical architects of the time, Alison and Peter Smithson, we had to look forward to a future of nylon clothing and nylon bedsheets; showers that would wash and blow dry users; having no need for a refrigerator as gamma rays would blast meat and fish free of germs; and soft furnishings that were for wimps, as we relaxed on polyester reinforced glass chairs. Not all predictions were so off the mark – remote controls, microwave ovens, entry phones, dimmer switches and heated flooring was also suggested as being essential to our future lives.

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Lunchtime news Wednesday 13 February 2024


Posted by:
AJ Williamson

The Royal Institution of Surveyors (RICS) reported that the number of UK surveyors recording house price falls grew for the sixth consecutive month in January, while the stock of unsold property on surveyors’ books increased by more than 10 per cent. The RICS says this trend has not been seen since the housing recession of the early 1990s. The only part of the UK where prices continued to rise was Scotland. A RICS spokesperson said, ‘If mortgage lenders filter the recent interest rate cuts into the market, demand should begin to increase’.

Findings by the Council of Mortgage Lenders (CML) released yesterday, show that interest on mortgage repayments is taking up more than a fifth of the average disposable income of new homeowners. The proportion of income that a first-time buyer spends on mortgage interest was 20.7 per cent in December, compared with 17.9 per cent a year ago. The size of the average home loan has also increased from December 2006 by 3.34 times an average first-time buyer’s salary, to 3.38 times by December 2007. CML also called on the chancellor to raise the stamp duty threshold, after it found that only 40 per cent of first-time buyers were currently exempt.

A man who paid nothing towards his mortgage for more than 15 years, has had the debt wiped out in court. The court decided that the gentleman had acquired squatter’s rights on his £250,000 home after his dispute with his mortgage lender, NatWest, dragged on for 15 years. Initially the bank issued a formal demand in 1992, but did not start repossession proceedings immediately. After negotiations, Mr Babai made a payment of £40 the following year, but then declared himself bankrupt and made no further instalments. The debt spiralled to £165,000 by 2006 and he faced losing the house. The judgment has sparked fears that lenders might now be more likely to issue possession proceedings to ‘protect their security’ and that this may lead to an increase in vulnerable mortgage holders being made homeless.

In another court case, Birmingham city council’s housing policy from January 2005 to January 2007 has been ruled against the law. Judges said that the council had the same duty to rehouse tenants living in unsuitable conditions (dubbed ’homeless at home’) as to those who are literally homeless. Five of the six families who appealed against years of living in overcrowded or unsanitary council houses have since been rehoused. The council says the judgment has thrown their housing policy into chaos and will mean that 400 families regarded as ‘homeless at home’ will need to be rehoused. The council has called on the government to review homeless legislation.

One in five British children (or 2.2 million) are growing up in a family dependent on benefits – the highest proportion of children anywhere in Europe, says the Conservative Party, who used parliamentary questions to gather the figures. The worst area is Manchester Central, where 49.2 per cent of children have parents claiming benefits, followed by Liverpool Riverside at 47.6 per cent, and Poplar and Canning Town, East London, with 46.8 per cent. Research has shown that such children are much more likely to become benefit-dependent themselves as adults.

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Lunchtime news Tuesday 12 February 2024


Posted by:
AJ Williamson

David Orr, chief executive of the National Housing Federation has provided details of how his organisation plans to meet the prime minister’s target of 3 million new homes to be built by 2020. He believes that housing associations will need to deliver about one million homes, delivering after 2012 an annual number of 45,000 homes for rent, 25,000 homes for shared ownership, and 10,000 homes for market sale.

In America, ’Project Lifeline’ is expected to be announced today to help borrowers who are in danger of defaulting on loans from losing their homes. Analysts predict that the number of homeowners defaulting on their mortgage will be up 166 per cent this year, to 1.6 million. Six major lenders are offering a 30-day freeze on foreclosures to help those who are three months or more in arrears to refinance their loans, and banks have pledged to freeze sub-prime interest rates for the next five years.

Fears of a global slowdown triggered by the US housing market crash caused stock markets to lose £2.7 trillion in value in January. According to ratings firm, Standard & Poor’s, 50 of 52 share indexes ended last month lower, with just under half of the major markets losing more than 10 per cent of their value.

A shock rise on ‘factory gate inflation’ – the price industry pays for goods and services – and an increase in the consumer price index, has put hopes of a further cut in interest rates in jeopardy. Economists believe that Mervyn King, governor of the Bank of England, will admit that he will miss the 2 per cent inflation target set by the government, pushing another cut in rates back to at least May.

And finally, when a family kept hearing banging coming from the attic of their council house in Peterlee, County Durham, they called the police. But when the police found no sign of a break-in, the council did what any self respecting council would do (wouldn’t they?) – they helped pay for an exorcist. A spokesperson for the council said that it agreed to pay half the exorcism cost because the family were ‘extremely distressed’ and the alternative was £40-a-night emergency accommodation. The council added that they are committed to preventing homelessness through a number of measures, although this was ‘unusual’.

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Lunchtime news Monday 11 February 2024


Posted by:
AJ Williamson

A government adviser on affordable housing for regional government has called Gordon Brown’s approach to achieving his three million new homes target ‘Stalinist’. Steve Nickell says that government should provide financial incentives for local authorities to grant planning permission for new residential developments, rather than imposing targets, and advocates a ‘tariff’ based on the size of the development, to be paid by builders directly to local authorities. He says: ‘My feeling is that to get houses built, local authorities have to be enthusiastic about housebuilding…. To make them enthusiastic you have to give them strong incentives.’

A charity, Foundation for Credit Counselling, has urged Alistair Darling to ensure that under a new owner Northern Rock would be sympathetic to borrowers struggling to meet their home loan repayments. The charity is particularly concerned about a mortgage package allowing customers to borrow up to 125 per cent on the value of their homes.

The Wildlife Trusts has spoken out against controversial plans to build a string of eco-towns, which could destroy wildlife. In two weeks, housing minister, Caroline Flint, will announce the location of 10 towns chosen for the first green communities, some up to 20,000 houses strong. The government has so far kept the locations secret, even though planners have submitted their plans. Local communities are saying they have been kept in the dark about the proposals and that once the government has given its seal of approval, it will be harder for local authorities to justify the expense of objecting.

And an eco-home stamp duty rebate launched in last year’s budget has been taken up by just six households, prompting accusations that the measure is a ‘green tax con’. The concession on eco-homes was meant to ‘kick start the market for zero-carbon homes’, and is worth £15 million in total, but campaigners have complained that the Treasury rules for claiming the rebate conflict with planning guidance issued by the department of Communities and Local Government. A spokesperson from the Treasury said the initial take up had been slow because the stamp duty exemption could only be claimed on homes once they were sold, and predicted that numbers would rise sharply in the months ahead. The chancellor, Mr Darling is considering extending the relief to flats and maisonettes.

Communities and Local Government has released a house price index for December, which again shows UK house price inflation down to 9.1 per cent from 9.7 per cent in November. Prices fell in five of the English regions, and rose in the other four regions – the highest being London at 13.5 per cent and the South East at 11 per cent.

And finally, an inquiry is underway after the body of a dead man remained on his sofa in a warden-controlled council flat for at least eight years, while an elderly tenant continued to live there. The remaining occupant who was the official tenant of the property, didn’t report the death due to severe mental health issues. Bristol city council, which runs the flats, has launched an internal inquiry and will look into the work of the wardens who visited the flats.

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Lunchtime news Friday 8 February 2024


Posted by:
AJ Williamson

The Council of Mortgage Lenders (CML), which forecast that repossessions in 2007 would reach at least 30,000, has reported the figure was 10 per cent lower than expected. However, the figure still represents an eight-year high. The CML believes that the ‘payment shock’ is likely to have less impact than expected as a result of yesterday’s fall in interest rates. But Shelter warned of difficulties ahead and again called on the government and mortgage lenders to set up a free, confidential advice service for those facing arrears and repossessions.

But no such problems in Scotland, where the housing market is ‘thriving’. The Royal Institution of Chartered Surveyors (RICS) said on Thursday that the Scottish property market was growing with surveyors reporting a widening gap in performance between Scotland and other parts of the UK, including London.

Following yesterday’s cut in interest rates by the Bank of England (BoE), and repeated warnings from the Financial Services Authority, mortgage lenders moved quickly to pass on the rate cut to borrowers. However, analysts said that it will have little impact as 55 per cent of borrowers are on a fixed rate mortgage and they do not believe that the big lenders will cut their tracker mortgages by the same margin. Nor do they think that there is likely to be much respite in the near future as the Bank warned that inflationary pressures may push the government’s inflation target above 2 per cent. ‘The Bank is likely to continue to cut interest rates gradually as it carries out a difficult balancing act of trying to support growth while containing underlying inflation pressure. We forecast rates to fall to 4.5 per cent by the end of 2008,’ said the chief economist at Global Insight.

In its annual review of local authority performance for the year, the Audit Commission has revealed that poor housing management is holding English councils back from improving their scores. As more local authorities were reaching their highest ever rankings, four councils – Herefordshire, Liverpool, Rutland and Slough – were given the lowest possible score on housing, up from three councils a year earlier. Just under three-quarters of councils achieved scores of three or four in housing (out of five), but 3 per cent performed below minimum requirements, greater than in any other service area.

And finally, be thankful that British screenwriters haven’t gone out on strike like their US counterparts or the housing crisis could be worse. The writers’ strike has caused a housing market crisis in Hollywood, as house sales have fallen 48 per cent since the strike began, and stars are being forced to slash prices 11 per cent on average.

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Lunchtime news Thursday 7 February 2024


Posted by:
AJ Williamson

The Bank of England’s monetary policy committee met this morning and cut interest rates by 0.25 per cent from 5.5 per cent to 5.25 per cent, in an attempt to stimulate the economy. Shelter chief executive, Adam Sampson, has urged lenders to make sure cash-strapped homeowners benefit. ‘It will mean nothing if mortgage lenders fail to pass on this saving to their customers, as some did when rates were last cut.’ profiteering by raising millions of their customers’ mortgage bills, ahead of the cut in interest rates by the Bank of England. In the past few weeks, 10 mortgage lenders, including the Royal Bank of Scotland, Alliance & Leicester and Nationwide, have increased some of their rates, despite a fall in the Bank rate in December.

The UK is not heading for a housing slump according to Chancellor Alistair Darling, but that didn’t stop him yesterday of promising a raft of measures to bring investors back to the credit markets. As mortgage lenders have found it increasingly difficult to access capital and therefore offer competitive rates to borrowers, Mr Darling announced government plans to introduce a new ratings system, a ‘gold standard’ on bonds and mortgage-backed securities to reassure investors that UK securities are good quality. Mr Darling also wants 25-year affordable, fixed home loans to become commonplace, giving more security to homeowners, while reducing the penalties that borrowers face if they want to get out of their mortgage early. Latest figures show that 65 per cent of mortgages taken out are at fixed rates, but usually lasting a few years. He is expected to reveal detailed plans in his first budget next month.

One of Britain’s largest accountancy firms, KPGM, has forecast that 10 million people may default on mortgage repayments, credit cards or personal loans by the end of the year. Twenty-two per cent of adults with debts – 6.6 million – are already finding it difficult to meet their repayments, and 35 per cent (10.6 million) are worried that they will have even more trouble this year. Consumer debt has trebled in the past decade, with each British household now owing £51,730 on average, the highest in Europe, and totalling £1.345 trillion.

Amendments to the new Planning Bill slipped quietly through parliament on Tuesday would, according to the Daily Mail, ‘strip voters of the power to protect green belt land near their homes’. Under new plans, regional assemblies would lose planning powers to regional development agencies, made up of unelected board members responsible to community minister, Hazel Blears. Later this month, ministers will launch a consultation on how regional development agencies could be subjected to local scrutiny.

A boom in buy-to-let investing has had only a moderate impact on rising house prices, new research from the National Housing and Planning Advice Unit has found. The rush to enter the buy-to-let market has pushed up prices an additional 7 per cent, the report found; with interest rates, the rising number of households, and constrained supply being a greater contributor to house price inflation. Since the mid-1990s the average price of a house had increased in real terms by 150 per cent, without investment in buy-to-let properties, the average price of a home over the same period would still have risen by 130 per cent.

And finally, ’boomerang kids’, adults who return to their parents’ homes and remain there into their 20s or 30s, are putting enormous strain on family relations. Money worries and a clash of lifestyles have led to cases where physical and verbal aggression, fuelled by alcohol abuse and drug taking, have taken its toll on the family unit. The report urges the government to find ways of supporting parents of young adults to influence their work and personal choices, as well as providing parents with more information on issues like housing benefit, grants and training.

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Lunchtime news Tuesday 5 February 2024


Posted by:
AJ Williamson

Housing crisis, what crisis? It appears that Britons are sitting on nearly £2 trillion worth of equity in their homes. One in four households own their homes outright, amounting to £1.4 trillion, and a further one in three is paying off a home loan but still sitting on £580 billion in equity. Overall households have an average of £127,455 invested in bricks and mortar.

Housing minister, Caroline Flint, is expected today to announce that council tenants who do not work should seek employment or face losing their homes. In an interview with the Guardian Ms Flint indicated that new applicants for social housing would have to sign ‘commitment contracts’ that will eventually be extended to existing tenants. She said also that tenants who moved to take a job would be given priority in finding a home. Shadow housing minister Grant Shapps said Ms Flint was trying to ‘grab the headlines’ with proposals that could not be legally enforced.

Halifax has released its house price index for January, showing that prices were unchanged from the previous month, and the three-month trend was down 1 per cent. The annual rate of house price inflation is at 4.5 per cent, keeping the average price for a house just under £200,000. The bank says that it expects the Bank of England’s monetary policy committee, meeting later this week, to cut interest rates in support of the housing market, as Halifax sticks with a forecast of flat house prices nationally this year.

Moore Blatch, a law firm specialising in repossession proceedings has found that four out of five lenders believe home repossessions will soar this year, as heavily indebted first-time buyers and buy-to-let investors struggle to meet higher costs. The group found that 40 per cent of lenders believe repossessions will rise by between 10 and 15 per cent this year, while 8 per cent anticipate sharper rises. Almost 70 per cent of lenders thought first-time buyers would face the worst difficulties and half thought buy-to-let borrowers would run into problems.

And finally, a young couple in America were handed a blank cheque by a stranger in a cafe and told to fill it in for as much money as they needed. Assuming the gentleman was joking, they filled it in for $100,000. He demanded conditions – that neither their last names nor his were identified, and they were to use the money to buy a house – and then signed the cheque, saying, ‘I’m good for it’. The couple have since cashed it for the full amount.

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Lunchtime news Monday 4 February 2024


Posted by:
AJ Williamson

Halifax’s annual county house price survey revealed over the weekend that all the UK’s 104 counties and authorities have recorded at least a doubling in their average house prices during the past decade. Five of the 10 counties to have delivered the biggest house price rises were in Northern Ireland, which has become the second most expensive area after the South East. The least expensive areas were in Scotland, where eight of the 10 counties with lowest average house price growth were recorded. Much of the upward pressure on house prices came from second home owners, resulting in Cornwall having the biggest gap between average house prices and average salaries (with house prices 12 times average earnings).

A Treasury adviser on the mortgage market, David Miles, says that UK mortgages could become more expensive and harder to obtain unless there is further help for credit markets. He believes that banks need to refinance £250 billion worth of loans, or issuing new mortgages will have to be curtailed, and will have to charge higher rates. Morgan Stanley estimate that 28 per cent of mortgages in the UK are financed by banks who sell them on to other investors, and around one third of these mortgages will need to be refinanced this year.

The Financial Services Authority (FSA) repeated fears that banks and individuals face a tough year due to a worsening economy and market turmoil. Its Financial Risk Outlook published last Friday identifies 150,000 risky mortgages where homeowners have borrowed large amounts of money they may not be able to afford to repay, and argues that consumers may lose confidence in financial institutions and the authorities’ ability to safeguard the financial system.

A report, released today from the Centre for Policy Studies, shows that the average family has seen their annual income after tax and housing costs drop by £1,300 during the past four years. The rising tax burden and higher mortgage costs and council tax have left Britain’s middle earners vulnerable to economic downturn, according to the report. Calculations show that Labour’s second period in office (2002 until now) average earnings after tax and household costs fell by 6 per cent, whereas they rose 28 per cent between 1997 and 2002.

Estate agents are seeing a booming demand for rental properties. Agents, particularly in London and the South East, are seeing up to 25 per cent more activity in their lettings business compared to a year ago, while managing to secure ‘significant’ rental increases. A spokesperson from Winkworth estate agents suggests that tenants renewing their agreements are paying 5-10 per cent more, while new occupants were going to pay as much as 20 per cent more than they would have done a year earlier.

And one in five first-time buyers is now aged over 35 years old, according to property website, Rightmove, with 51 per cent aged between 25 and 34. Of first-time buyers, 36 per cent were still living with their parents as they tried saving for a deposit, while 49 per cent were renting. However, 43 per cent of first time buyers claimed that they would still buy their own place even if property prices increased.

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Housing Care and Support conference