Lunchtime news Friday 29 February 2024

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.