ROOF Blog

Britain’s estate agents have reported the most widespread surge in house prices since the pre-crash days of late 2006, with cheap money and a shortage of properties creating boom conditions in parts of the country.

In its monthly snapshot of the market, the Royal Institution of Chartered Surveyors (RICS) recorded evidence of gazumping and sales of £5m homes, and predicted that the pick-up in selling prices would continue over the coming months.

Although sales of homes remain around half the levels seen before the crash, a separate report also out today from the British Retail Consortium found that shops selling household goods and furniture were benefiting from a rising property market.

RICS spokesman Jeremy Leaf said: ‘Although the supply of property is beginning to pick up, it is still insufficient to keep pace with the increase in demand, which points to further price gains in the near term.’

The government is expected to announce modest rent reductions for around two million housing association tenants, despite a survey of tenants showing that most are against a rent cut.

The associations – the main providers of social housing – fear that such cuts will lead to a sharp fall in the level of affordable house building because they will be unable to raise the necessary loans for new building.

But ministers are determined to press ahead with the first ever rents cut, despite an opinion poll by the National Housing Federation (NHF), which represents the associations, showing that almost 70 per cent of tenants do not want a reduction.

The NHF says that even a small cut will reduce their income, already well down as a result of the recession, by millions of pounds.

NHF chairman, David Orr, said: ‘Faced with such a shortfall, associations could be forced into cutting back dramatically on the key services tenants really value, such as anti-social behaviour programmes, job training schemes and education initiatives.’

In a speech to the Royal Institute of British Architects (RIBA), Environment, Food and Rural Affairs Secretary Hilary Benn is expected to call for a greater focus on adapting, or ‘retrofitting’ houses.

The Government has set a target for all new homes to be carbon neutral by 2020, in a bid to cut down on households’ carbon emissions. However, of the 25 million houses in the UK‚ new builds account for less than one per cent of the housing stock.

By 2050, the vast majority of the housing stock is expected to be buildings that have already been constructed.

Mr Benn, ahead of the speech, said: ‘Architecture must take account of carbon and adaptation to create climate resilient buildings, infrastructure and places’.

So-called retrofitting is considered by architects to be a far more ecologically friendly way to improve the quality of the housing stock, rather than rip down poor-quality buildings and replace them with carbon-neutral new builds.

However, a report published this week said that it could cost an average of £10,000 per home to fit the necessary insulation and other energy efficiency measures.

Borrowers have been warned of soaring mortgage fees after the Financial Services Authority (FSA) called for lenders to assess income and spending in greater detail before approving loans.

Lenders are already under fire for introducing application charges of up to £1,000, which you lose if you back out or the loan offer is withdrawn – a problem not uncommon in today’s mortgage market.

Brokers say that plans by the Financial Services Authority (FSA) to make all borrowers pass an ‘affordability test’ that scrutinises their spending habits mean that fees could go even higher.

Savills Private Finance broker Melanie Bien said: ‘Any step-up in regulation means more cost, and higher costs tend to be passed on to consumers.

‘Lenders are likely to favour higher charges over the alternative option of increasing interest rates as it is a less visible way of raising costs.

‘This will be unhelpful, especially for first-time buyers, for whom every penny counts.’

Tenants who receive local housing allowance (LHA) will be able to choose to have their rent money paid directly to their landlord if the Conservatives win next year’s general election. Grant Shapps, shadow housing minister, will announce today at the Crisis national conference in Birmingham that a Conservative government will revert to the way housing benefits were handled before last year’s government reforms, which are due to be reviewed before April 2010. Shapps is expected to say that the current system is deterring landlords from renting property to tenants receiving LHA: ‘Fearful that rent money may never be paid, some landlords routinely include the words ‘No HB’ in their ads, further restricting the supply of housing for affordable rent.’

A student denied her degree because of alleged rent arrears has won her fight to be allowed to graduate. In an out-of-court settlement, the university has agreed that she can graduate and waived the £3,540 fees in back rent they said she owed. Maria Lavelle joined the University of Winchester as a 25-year-old mature student in 2008. She moved into student accommodation but asked if, as a mature student, she could not be housed with freshers as she thought the atmosphere would be too noisy. When she found she had been, she gave notice that she would be moving out and into private lodgings. However, the university said she had signed a contract to stay the whole year in student accommodation and argued she should pay back £3,540 in arrears. The National Union of Students described her case as an ‘extremely significant test case’, adding: ‘This is common practice among universities and it’s something we’ve been concerned about for a while.’

The City watchdog’s proposals for the mortgage market received a cautious welcome from the industry today. But trade bodies expressed concerns about how some of the Financial Services Authority’s (FSA) measures would be implemented, as well as the impact a ban on self-certification mortgages would have on certain borrowers. Paul Broadhead, head of mortgage policy at the Building Societies Association, said: ‘We need a sensible balance between appropriate regulation and allowing people to buy their own home when they can afford to do so.’ The Council of Mortgage Lenders said the FSA seemed to believe that regulation could not rely on borrowers behaving in their own interests, but that consumers instead needed measures to be introduced to protect them from themselves. However, Shelter, the housing and homelessness charity, called on the FSA to implement the changes it was proposing urgently to ensure the ‘dark days of reckless lending never return.’