ROOF Blog

Shelter has published a report promoting different ways to increase the development of affordable housing. A range of contributors cover a number of subjects including how to attract development finance to the industry, flexible tenure and the private rented sector.

City regulator the Financial Services Authority announced a sharp increase in penalties to come in from February 2010. Under the new rules individuals will face a minimum fine of £100,000 while companies will be hit with penalties worth up to £50 million. An insider said that the FSA had to increase its fines because ‘insufficient account’ had been taken in some cases of previous enforcement action, often as the companies stood to earn much more in profit flouting the rules than they stood to lose from a fine.

Meanwhile mortgage fraud has topped £97 million in the first six months of the year, research by accountancy firm BDO Stoy Hayward has found. Twenty-one mortgage fraud cases have already been heard this year, and the Financial Services Authority has warned that it is causing instability in the lending market.

The number of mortgage products on the market has dropped to its lowest level on record, with homeowners having a choice of just 2,282 deals. First-time buyers have even less choice with 1,195 products available according to moneysupermarket.com, compared with the height of the property boom in August 2007 when more than 30,000 mortgage deals were available, and almost 20,000 for first-time buyers alone.

The number of tenants struggling to pay their rent is rising, according to the Association of Residential Lettings Agents (ARLA). Around 65 per cent of agents have seen an increase in renters falling behind on their rent during the past six months, while 93 per cent said they had seen a rise in the number of tenants haggling with landlords about the level of rent. ARLA said the increases were not just about tenants experiencing financial problems, but were also likely to be due to people cashing in on falling rents.

A report commissioned by the Howard League for Penal Reform has called for a reduction in the number of prisoners and the closing of some jails. The report said that prison and probation funding should be diverted to tackling the causes of crime, and suggested that short-term prison sentences be replaced with community-based responses. The report said that overcrowding threatened to ‘bring the penal system to its knees’ with the prison population doubling in the past two decades to an all time high of around 84,000.

John Healey has revealed that the government plans to withdraw backing for the open market homebuy scheme, saying he wants to concentrate on new build home ownership schemes instead. The homebuy scheme has so far helped more than 14,000 people onto the property ladder and plans to close it have angered housing associations who administer the schemes.

Homeowners paid a record amount off their mortgages in the first three months of 2009 according to statistics from the Bank of England. An estimated £8.1 billion was repaid – the highest sum repaid since records began in 1970 – taking the total for the year to the end of March to £76 billion. From 2000 to 2008 homeowners had borrowed more than £300 billion against the raising value of their properties.

The number of people defaulting on loans has risen and are expected to increase in the coming months, a Bank of England survey has uncovered. A poll of banks and building societies found more people unable to repay mortgages and other debts because of rising unemployment. However, financial institutions expect the availability of credit to rise in the next three months, and households are likely to be offered and demand more secured credit. A rapid return to the pre-credit crunch lending levels remains extremely unlikely.

Housing associations could face higher loan repayments and reduced access to funds as a result of tougher banking rules, housing experts fear. The Financial Services Authority wants lenders to hold higher levels of capital and liquid assets in reserve, and this may push up interest payments across social housing as loan agreements allow lenders to pass the costs of additional regulation to their customers, and with ‘virtually all’ of the sector’s loans having the clause, costs for associations are likely to be impacted.