ROOF Blog

The government has unveiled its vision of hi-tech homes with ‘smart’ meters acting as a cornerstone of a more efficient, greener electricity grid system.

British Gas and other power suppliers have been given responsibility for installing meters in each of Britain’s 26m homes by 2020, enabling them to read consumption levels remotely and end the use of estimated bills.

The gadgets would also allow homeowners to monitor their own gas and electricity usage – and production if they have solar panels or wind turbines.

However, a row over the £8.5bn outlay for smart meters threatened to overshadow the announcement with critics warning that the energy companies might pocket the benefits.

The Department of Energy and Climate Change (DECC) said the cost of the scheme would be dwarfed by the £14.5bn of expected savings as power companies reduce administrative costs and consumers benefit from lower bills.

Banks were today accused of profiteering from homeowners during the recession, as it emerged that the average interest charged on variable-rate mortgages is 4.2 per cent higher than the Bank of England’s base rate.

The average Standard Variable Rate mortgage now charges interest rates of 4.7 per cent, down only one per cent over the past year – when the base rate fell by 2.5 per cent. Vera Cottrell from consumer watchdog Which? said the variable rate market was ‘raising serious concerns’.

She said: ‘Lenders are getting away with charging very high mortgage rates right now, many have an incredibly high margin between base rate and the interest being charged. That’s offering consumers a poor deal.’

The Government’s stamp-duty holiday on properties sold for less than £175,000 has not helped nearly as many homeowners as first predicted.

Figures obtained by property website zoopla.co.uk show that in the first 12 months of the holiday until 1 September, buyers saved just £173m compared with the £600m predicted by the Government.

A combination of factors lies behind the disparity. First-time buyers – the most likely to benefit from the holiday – have found it hard to get mortgages due to tight lending criteria. Transaction levels have also been lower than normal across the whole market with a shortage of properties to buy.

More help was offered to struggling homeowners as the government officially named 34 repossession ‘hotspots’ across the country – including Sedgefield, Tony Blair’s old constituency, and four areas of London.

John Healey, the housing minister, warned that the risk of repossession would ‘stay high throughout next year’, prompting his department to announce it was stepping up support for homeowners in financial difficulty by extending a campaign offering impartial free advice, and tightening rules to make sure repossession is always the ‘last resort’.

More than 300,000 families have already benefited from the advice and support the government has put in place during the recession, the communities and local government department said.

Healey said he was extending the local drive to encourage people to seek mortgage help and advice into 34 areas considered at greater risk due to high levels of unemployment and numbers of court orders for repossessions.

Shelter is calling for greater tax breaks for householders who rent a room to lodgers, because the tax threshold – the amount a person can receive in income before paying tax – is so low it puts people off from offering a room to potential renters.

The present threshold of £4,250 hasn’t changed since it was set in 1997, despite rent rises of more than 110 per cent since then.

But Shelter believes many more homeowners, especially those struggling with mortgage costs, would rent out a room if they didn’t have to worry about tax repercussions.

Shelter director of policy and campaigns Kay Boycott said:

‘In the current economic climate, many homeowners are battling to meet their mortgage payments and many are looking for options to maximise their income.

‘If the rent-a-room threshold was higher and the scheme better publicised, it could prove a real incentive for people to take in a lodger, and the take up of rent-a-room opportunities could increase.’

Shelter is calling for the threshold to be raised to £9,000 a year to reflect rising rents, which would cost the Treasury around £5 million per annum, plus a publicity drive to ensure greater take up of the scheme.

Struggling buy-to-let landlords are eating humble pie when it comes to finding tenants.

Checks and references traditionally carried out on tenants to assess their reliability in paying up are now being reversed as renters seek assurances the owner of their new home is legitimate and not on the verge of being repossessed.

David Underwood, a lettings consultant at Darwoods in St Albans, Herts, has noticed a ‘marked shift’ in emphasis:

‘Tenants have been far more interested in landlords’ backgrounds and are asking more questions about where their deposit is being held,’ he says.

It would seem that tenants’ concerns are well founded. When the Council of Mortgage Lenders (CML) started compiling buy-to-let data in the second half of 2005, only 200 investment properties were in mortgage arrears of three months or more.

By the first half of this year, this had soared to 5,400. Repossessions of investment homes also climbed, from 400 to 2,800, during the same period.