ROOF Blog

Squatters have taken over the home of married Labour MPs Ann and Alan Keen, who have recently come under fire for claiming hundreds of thousands of pounds in expenses on a second home located a few miles away. The squatters said they moved in after a neighbour said the house had been empty for more than a year, and say they have the support of local residents. The BBC say they have obtained a letter from the local council telling the couple that ‘urgent action’ is required from them to explain why their main house is unoccupied.

MPs representing seats in outer London will be stopped from claiming the full £24,000 second home allowance from next year and all claims, no matter how small, will have to be supported by receipts, MPs voted in a Commons debate last night. Parliamentarians will also have to declare details of their earnings from second jobs and how much time they work on these jobs, and will no longer be responsible for employing staff directly. The changes are interim reforms pending a report from the chairman of the committee on standards in public life, Sir Christopher Kelly.

The saga of MPs’ expenses rolls on – Scotland’s first minister Alex Salmond says that Westminster should use the Scottish parliament allowance scheme as a model to reform the system in the Commons. In Scotland members’ expenses are published every three months and the practice where some MSPs can claim interest on mortgages for second homes is being brought to an end. Meanwhile, Nick Clegg, Lib-Dem leader, has offered his suggestion – replacing the allowance with expenses for basic utility bills, council tax, and either rent of mortgage interest, with MPs prevented from making financial gains from any part of a mortgage paid for by the taxpayer. Gordon Brown has dismissed suggestions that dropping one of the key proposals for reform – replacing the second home allowance for a flat payment had been damaging.

As many as 20 per cent of homeowners with a second property could be forced to sell their homes after Mr Darling abolished tax breaks on furnished holiday lets, accountants warn. Changes to the rules come into effect in April 2010 and will stop owners of properties offsetting the costs of renting out their second home against other income, reducing their overall tax bill. Up to 10,000 properties worth around £200,000 each could be affected, with the owners losing on average £10,000.

Plans to overhaul MPs’ expenses have broken down after the opposition parties decided they would not back the alternative – daily payments of £150 for turning up to Westminster. The decision has left hopes of a cross party deal in tatters, although Downing Street said a vote would still go ahead. The Tories wants MPs to claim for rent utility bills, council tax and mortgage interest payments and the Lib-Dems wants to see MPs forced to sell their second homes and return a share of the proceeds to the taxpayer. An independent inquiry by the committee on standards in public life is also starting today.

The government has today set out proposals for helping rural communities. It says it will relax planning restrictions to allow for more affordable housing, but the government has rejected calls to restrict the growth of second homes in rural areas. Liberal Democrat MP Matthew Taylor on whose report the government’s proposals are based, broadly welcomed the response, but warned that ‘dozens’ of villages will die unless the wealthy are stopped from buying holiday homes in ‘desirable areas’.

People are to be asked questions about their citizenship, national identity and understanding of English for the first time as part of the national census. In an effort to gain more comprehensive information on immigration, people will also be asked when they entered the UK and their intended length of stay. Other changes include questions about civil partnerships and second residences. The next census is scheduled for 2011.

The National Housing and Planning Unit has waded into the credit crisis saying that even if house prices fall by 15 per cent in the next two years, first-time buyers will not find it easier to get on the property ladder. ‘With affordability stretched many potential buyers will be locked out of owner-occupation,’ said the chairman of the unit. A survey conducted by NHPAU also found that 65 per cent of people in England believe that the government’s aim to build 240,000 new homes a year is ‘about right’ or ‘not enough’.

Yesterday chancellor Alistair Darling announced an increase of £15,000 to £50,000 to guarantee customers’ deposits should another bank go under in the wake of the failure by Northern Rock. But he stopped short of calling on the banks to fund the Financial Services Compensation Scheme after they complained that the move would divert funds needed to deal with the impact of the credit crunch. Instead taxpayers money will be used.

In the South West, estate agents have rejected calls to stop marketing properties to holiday home buyers. The South West Regional Assembly, which controls planning, says the practice of selling family properties as holiday homes was out of hand and prices across the area were ‘at least heavily influenced, if not dictated, by second home purchasers’.

Meanwhile Britain’s biggest builder Taylor Wimpey failed to raise around £500 million in an emergency cash injection and saw its shares halve this morning. The company has been forced to announce plans to close a third of its offices and cut around 900 jobs. The company said it had underestimated the scale of the downturn facing the industry.

Lord Rogers has questioned the ‘authority and objectivity’ of English Heritage after it rejected calls seeking heritage status for Robin Hood Gardens, an estate in east London. A number of eminent architects had claimed the estate, designed by Peter and Alison Smithson, was a modern masterpiece and compared its layout to Bath’s Georgian crescents. However English Heritage disagreed and said the estate was ‘not fit for purpose’ and it now faces demolition.

And finally, the cost of happiness for single people is £13,400 a year and for a couple with two children it is £26,800 a year before tax, according to a survey by the Joseph Rowntree Foundation. That is the amount they would need to earn to pay for essentials such as food and heating, and the odd treat of a cinema ticket or meal out, on top of rent for a modest council house. The survey found that, once the rent or mortgage is paid, singles would need £158 a week, and couples with two children £370 a week for a standard of living adequate enough to make them happy. The figures show that most people below the official poverty line of 60 per cent of median income do not receive enough to achieve an ‘adequate’ standard of living.

Nationwide building society has joined Abbey National in raising the price of its fixed-price mortgages. Increasing two- and three-year fixed rate deals by 0.3 per cent, while demanding a minimum of at least a 10 per cent deposit, Nationwide blamed the rising cost of inter-bank lending for the rises. However, Halifax announced that it would cut an average of 0.3 per cent from its fixed rate deals.

Meanwhile, fall out from yesterday’s announcement from Bradford & Bingley that it was selling a 23 per cent stake to TPG, and asking existing stakeholders to provide up to £258 million of new capital, continued. Its shares fell after recording an £8 million pre-tax loss for the first third of 2008 with B&B blaming problems on buy-to-let mortgages that ‘people were struggling to repay’. Chancellor Alistair Darling stressed that depositors’ money was safe and applauded their actions saying they are doing exactly what the Bank of England was encouraging them to do – ‘restructuring and strengthening their position to go forward’.

Yesterday however B&B, the UK’s largest buy-to-let lender representing 20 per cent of the market, also revealed that it had faced a 52 per cent jump in arrears of three or more months, on its mortgages during the first four months of this year. Those with arrears of three plus months now make up more than 1.5 per cent of B&B’s total buy-to-let customer base.

But it’s not the buy-to-let sector that may topple the housing market, according to research by Capital Economics which suggest that the second home market will be the culprit. As prices continue to drop, up to a quarter of second homeowners are expected to try and sell up immediately, but facing a lack of buyers, the increase of the number of homes on the market will cause a further drop in prices. Commentators believe that the sell 0ff will be exacerbated by the recent changes to capital gains tax which has reduced the tax rate to 18 per cent from 24 per cent.

And if you think staying put and renovating will solve all your problems, think again. The cost of building work has risen 20 per cent during the past two years due to the lack of skilled tradesmen and the rising cost of building materials. According to the Royal Institute of Chartered Surveyors the number of builders and decorators leaving the UK to return to eastern and central Europe has led to an increase in competition for qualified workers, leading to a rise on average of 26 per cent for roofers, 22 per cent for plumbers and 17 per cent for painters; while the cost of raw materials has increased due to high old prices and strong demand from other countries.

The downturn in property sales is having a positive affect on buy to let according to a survey of residential lettings by the Royal Institution of Surveyors (RICS). It appears that weaker demand to buy houses has forced would-be sellers back to the rental market where yields are rising. RICS is reporting a rise of 29 per cent for the quarter to April, in instructions to let property. This compares to a 2 per cent fall three months before. A spokesperson from RICS said: ‘Many are taking advantage of rising rental yields while they wait for the credit crisis to abate’.

This has been confirmed by Paragon, the UK’s third largest buy-to-let mortgage provider, which yesterday reported a 39 per cent fall in first-half profits. The company has effectively been closed to new lending because of the credit crisis, receiving just £988 million in the first half of the year compared with £2.12 billion for the same period in 2007, however it stressed that its £11 billion mortgage book was ‘high quality’ with an average loan-to-value of 66 per cent. Paragon chief executive added that professional buy-to-let investors may even see this as ‘an opportunity to buy properties at attractive prices’.

Meanwhile the value of mortgages agreed by the Nationwide Building Society last year fell 40 per cent as credit conditions led it to scale back lending. The building society said it does not expect the worst of the credit crisis to be over until the first quarter of 2009 at the earliest. It’s pre-tax profit rose 5.2 per cent for the year to 4 April.

The director of the Institute for Fiscal Studies has warned the government’s abolition of the 10p income tax rate would hit homeowners heavily. Pumping so much money into the economy would send inflation higher which would mean that the Bank of England would need to keep interest rates on hold or push them higher, putting pressure on the mortgage market.

The chairman of the Home Builders Federation said yesterday that sales of newly built houses have ‘fallen off a cliff’ in the past few weeks. And problems are escalating rapidly despite intervention from the Bank of England: ‘The slowdown last autumn was miniscule compared to what we are seeing now… The implications for the economy are dire. Tens of thousand of jobs are at risk, possibly even more…’

And finally, although one of its towns is on the shortlist, Harborough District Council in Leicestershire has officially aligned itself with a protest group set up against proposals for eco-towns. Councillor Steve Charlish said the government’s process of consultation was unsatisfactory and needed to happen in public view. ‘Even now the community hasn’t really got an idea of what’s going on… There is a lot of fear from the community about the whole process’.