Nationwide to merge with Derbyshire and Cheshire

Stamp duty axed below £175,000

Homebuyers will not have to pay stamp duty on properties costing £175,000 or less for the next 12 months.

The current £125,000 threshold will be raised as part of a package of measures aimed at boosting the housing market.

Someone buying a home for £175,000 will save £1,750 under the scheme, which is likely to cost the Treasury £600m.

The government estimates half of all property transactions will now be exempt from stamp duty - up from one third when the threshold was £125,000.

‘Do all we can’

Prime Minister Gordon Brown said the package of measures - including help for first-time buyers and families facing repossession - showed the government was taking action to help people through difficult times.

“Home owners need to know that we will do everything we can to keep the housing market moving,” he told BBC News.

They are not going to help the vast majority of families facing a rising cost of living and falling house prices George Osborne, Conservatives Policies target repossessions Home buyers give their views

But the Conservatives - who say they would scrap stamp duty for first-time buyers on properties worth £250,000 or less - said the measures were a short-term survival plan to keep Mr Brown in a job.

The government has not said how it will pay for the £600m estimated cost of the stamp duty move.

Chancellor Alistair Darling said he would reveal more details in his Autumn Pre-Budget Report.

He said the government was also considering ways of increasing the availability of mortgage finance.

But - in an echo of his weekend interview with The Guardian in which he said the economic downturn could be worse than previously thought - he said other factors would be crucial to the housing market’s recovery.

“We face a unique set of circumstances that we have not seen in generations, where you have a credit crunch and where you have high oil and food prices.

“But I remain optimistic, as I have said on many occasions before, that we can get through it.

“We will get through it and today’s measures, helping the housing market, are one example of how the government can help people.”

Other housing moves announced by the government include:

• “Free” five year loans of up to 30% of a property’s value for first time buyers of new homes in England
• Extension of powers for councils and housing associations to be able to pay off debt for homeowners who can no longer afford mortgage payments and then charge rent.
• Shortening from 39 weeks to 13 weeks the period before Income Support for Mortgage Interest is paid
• Bringing forward spending from future years to encourage more social housing to be built

The funding for these measures, which unlike the stamp duty move will only apply in England, has been previously allocated and brought forward, the Treasury said.

Under the new loans system, called HomeBuy Direct, households in England earning less than £60,000 will be offered loans free of charge for five years on new properties, co-funded by the state and developers.

‘Difficult conditions’

Once the five-year “free” period is up, homebuyers will be asked to pay a fee, the Department for Communities and Local Government said - although no more detail of this was provided.

In a statement, the DCLG said: “Not only will this [HomeBuy Direct] help first-time buyers… it will help the housebuilding industry weather difficult conditions.”

This looks like a hotchpotch of measures thrown together to save Gordon Brown’s political skin Nick Clegg, Lib Dems Send us your comments

The prime minister has faced a difficult few months, with Labour losing two parliamentary seats in by-elections, the London mayoralty and many councillors in May’s local elections.

On Monday, he said the UK faced “unique circumstances”, including oil prices trebling and the global credit crunch.

But Mr Brown said the government was “resilient in… dealing with these problems”.

He earlier denied a rift with Mr Darling, who had said the country was facing its worst economic crisis in 60 years.

The Organisation for Economic Cooperation and Development (OECD) has said the UK economy is likely to fall into recession this year - the gloomiest forecast yet from an official organisation.

The Conservatives said the measures announced to help the housing market were “too little, too late”.

Shadow chancellor George Osborne said: “We will look at the details of these measures and we will support those that will work.

“But let’s be clear, they are not going to help the vast majority of families facing a rising cost of living and falling house prices.

“Nor do they amount to the first instalment of the economic recovery plan we were promised.

“I suspect that what we will see in the coming weeks is a desperate and short-term survival plan for the prime minister rather that the long-term economic plan the country needs.”

Liberal Democrat leader Nick Clegg said: “This looks like a hotchpotch of measures thrown together to save Gordon Brown’s political skin.

“The social housing stock could be increased far more easily by allowing local authorities to buy up unsold properties and use them for new social housing.

“Yet again the government is desperately scrabbling around for a way to fix problems of its own making.”

Scotland’s first minister, Alex Salmond, welcomed an end to the uncertainty which he said was causing people to delay house purchases.

The Westminster government was now catching up with what the Scottish government had already done to help the housing market, he added.

Two weeks ago, Mr Salmond announced he was bringing forward £100m worth of housing expenditure to this year rather than in 2010.

Momentum for passage picked up mightily after President Bush earlier Wednesday dropped his opposition to the bill just hours before a scheduled vote in the House. That put the legislation on track toward enactment as early as the end of the week. Bush’s decision to sign the election-year bill came despite his strong resistance to including $3.9 billion in the measure for neighborhoods hit hardest by foreclosures.

The administration and lawmakers in both parties teamed to negotiate the election-year measure, which pairs Democrats’ top priorities - federal help for homeowners facing foreclosure and $3.9 billion for devastated neighborhoods - with Republicans’ goal of reining in mortgage giants Fannie Mae and Freddie Mac while reassuring financial markets of their stability.

In a policy statement on the bill, the White House said that parts of it “are too important to the stability of our nation’s housing market, financial system, and the broader economy not to be enacted immediately.”

Bush had objected to the neighborhood grants, which would be for buying and fixing up foreclosed properties, saying that they would help bankers and lenders, not homeowners who are in trouble; but Dana Perino, the White House press secretary, told reporters in a conference call that a showdown with Congress over the funds would be ill-timed. It was a striking split for Bush and congressional Republicans, many of whom are angrily opposed to the housing legislation, which they call a handout for irresponsible homeowners and unscrupulous lenders.

At a closed-door meeting Wednesday morning, House Republicans denounced the plan, although it’s clear they don’t have enough votes to prevent it from becoming law.

Rep. John Boehner, R-Ohio, the minority leader, said he was “deeply disappointed” at Bush’s decision to sign the bill.

“We must take responsible steps to ensure our financial and housing markets are sound, but the Democrats’ bill represents a multibillion dollar bailout for scam artists and speculative lenders at the expense of American taxpayers,” he said in a statement.

The measure hands the Treasury Department the power to extend the government-sponsored mortgage companies an unlimited line of credit and buy an unspecified amount of their stock, if necessary, to prop up Fannie Mae and Freddie Mac, two companies chartered by Congress. The firms back or own $5 trillion in U.S. mortgages - nearly half the nation’s total.

With Congress just 10 days away from leaving Washington for a five-week summer break, said Perino, the possibility of waiting until mid-September for the housing measure “is not a risk worth taking in the current environment.”

Key senators said they were ready to swiftly approve the measure without any changes.

“We’ll be anxious to move this product along,” said Sen. Christopher J. Dodd, D-Connecticut, the Senate Banking Committee chairman.

Sen. Richard C. Shelby of Alabama, the senior Banking Republican who was his party’s lead negotiator on the measure, said Bush’s turnabout reflected political reality.

“They looked at the Hill, they counted some votes and they see there’s pretty broad support for this,” said Shelby.

At the Treasury Department, Paulson told reporters that he urged Bush to sign the bill despite its inclusion of the “wasteful” $3.9 billion in grants. He said its enactment would be “a strong message that we are sending to investors” that would play a key role in “helping us turn the corner” on the housing crisis.

Congressional analysts estimate that the mortgage giant rescue could cost $25 billion, but predict there’s a better than even chance it won’t be needed at all.

The bill would let hundreds of thousands of homeowners trapped in mortgages they can’t afford on homes that have plummeted in value escape foreclosure by refinancing into more affordable, fixed-rate loans backed by the Federal Housing Administration. Lenders would have to agree to take a substantial loss on the existing loans, and in return, they would walk away with at least some payoff and avoid the often-costly foreclosure process.

The plan also creates a new regulator with tighter controls for Fannie Mae and Freddie Mac and modernizes the FHA.

It includes about $15 billion in housing tax breaks, including a credit of up to $7,500 for first-time home buyers for people who bought homes between April 9, 2008, and July 1, 2009. It also allows people who don’t itemize their taxes to claim a $500-$1,000 deduction on their 2008 property taxes. That chiefly benefits homeowners who have paid off their homes and can’t claim a deduction for mortgage interest.

And it increases the statutory limit on the national debt by $800 billion, to $10.6 trillion.

The White House, which initially denounced the FHA rescue as too burdensome on the government and risky for taxpayers, dropped most of its objections to the measure in recent weeks in search of a swift deal. The urgent request by Paulson to throw Fannie Mae and Freddie Mac a federal lifeline acted as a powerful locomotive for a deal.

The bill sets a cap of $625,000 on the loans that Fannie Mae and Freddie Mac may buy and the FHA may insure. It lets them buy and back mortgages up to 15 percent above the median home price in certain areas.

Lawmakers abandoned efforts to place conditions on any Fannie and Freddie rescue, but the bill hands the new regulator approval power over the pay packages of executives at the companies regardless of whether the government moves to financially reinforce them.

It also counts any federal infusion for the mortgage giants under the debt limit, essentially capping how much the government could spend to stabilize the companies without further approval from Congress. As of Tuesday, the national debt that counts toward the limit stood at about $9.5 trillion, roughly $360 billion below the statutory ceiling.

Associated Press article, filed from Washington, D.C., in context here:
www.latimes.com/business/la-na-housing24-2008jul24,0,1072669.story ]]> http://www.property-mole.co.uk/?feed=rss2&p=55 http://www.property-mole.co.uk/?p=54 http://www.property-mole.co.uk/?p=54#comments Sat, 12 Jul 2008 09:14:15 +0000 Editor http://www.property-mole.co.uk/?p=54 Following discussions with the major construction companies, the CBI has agreed to set up a Construction Council chaired by John McDonough, chief executive of Carillion plc and vice chairman of the CBI’s Public Services Strategy Board.

The CBI has said that it will be enhancing the role it undertakes on behalf of the construction industry.
The Council, which will represent contractors, house builders, civil engineers, component and product manufacturers, designers and support services, will begin its work in September.

The CBI’s director-general, Richard Lambert said: “The UK construction industry consists of over 250,000 firms, employing 2.1 million people in a wide variety of roles, and accounts for almost 9 per cent of GDP.

“Until now, this important industry has not had the single unified voice it deserves.

“The Construction Council will work closely with the major trade bodies to strengthen their efforts to represent the construction industry and ensure its concerns are clearly heard.”

John McDonough, who will lead the work of the new Council, added: “These are challenging times for the construction industry. While many companies continue to enjoy good markets in the UK and overseas, others, particularly those with exposure to the UK residential market, are facing challenging times.

“Setting up the new Construction Council is, therefore, particularly timely. The Council’s new strategic role at the heart of the CBI will enable the whole sector to benefit from the CBI’s unrivaled access at the highest levels in Whitehall, Westminster and Brussels.”

The Construction Council will be considering a broad range of issues including the economy, energy, land use planning, procurement, climate change and skills.

Slowdown ‘risks housing targets’

Concerns have been raised that the credit crunch could prevent government affordable housing targets being met.

The Chartered Institute of Housing (CIH) called for “imaginative” measures to build 35,000 homes a year by 2015.

It said the Scottish Government should work with housing associations or councils to use homes or land started by private firms which are lying empty.

The communities minister said he was open to working with others to buy unsold privately built homes.

The CIH’s director in Scotland, Alan Ferguson, said the current financial climate made it harder for those building affordable homes to borrow the money needed for their developments.

He said this must lead to concerns that targets would not be met for affordable housing.

The housing association sector is in a very strong position to weather the credit crunch Scottish Government spokesman

“As the credit crunch bites, we may also expect to see more people in need of an affordable solution as access to mortgages continue to dry up,” he said.

“At the same time we are seeing private housing developers struggling, leading to job losses and severely reduced building programmes.

“We believe it is time for the Scottish Government to promote some more imaginative solutions that will help deliver more affordable houses, assist first-time buyers and assist struggling private builders.”

Ministers have set a goal of increasing the rate of house building to 35,000 new homes a year by the middle of the next decade.

A Scottish Government spokesman said: “We welcome the CIH’s support for our efforts to improve the supply of affordable housing.

“The changes we have made to our subsidies to housing associations are essential if we are to achieve that objective at a time of great pressure on public expenditure.

“The housing association sector is in a very strong position to weather the credit crunch and the Scottish Government will continue to work with them in the meantime.”

Earlier, Deputy First Minister Nicola Sturgeon announced a £25m package to build new council homes.

Mr Maxwell said action was already being taken to increase social housing

Last month, she also revealed details of a range of housing measures, including a £250m boost for shared equity schemes that allow people to own part of a property.

The government also plans to launch a Homeowners Support Fund, providing £25m over the next two years to help those at risk of repossession.

Communities Minister Stewart Maxwell said the measures announced by the government showed it was taking action.

He stressed the importance of dealing with the underlying problem - the “under-supply” of housing - and said he would consider working with others agencies to buy unsold privately built homes.

The minister said: “I’m open to that suggestion.

“I think the issue here is housing associations and house builders have to get together and find out what is the most appropriate way forward bring forward projects which provide houses of the right type in the right place and at the right price.

“When that’s done we’ll certainly look at them and see whether that’s affordable and that’s the right thing to do.”

Link to original article

Time will tell if it really does deliver it’s bold claims.

The HPR combines an AVM valuation, local housing market data, pre-approved home insurance and defect warranties together with environmental reporting such as flood and subsidence data at individual property level. The new venture from Hometrack and Si Reports will bring together names including Norwich Union, Experian and the British Geological Society to provide the “unique” selection of data.

The two firms claim that the HPR should provide the seller with a marketing advantage, giving confidence to the estate agent and a potential buyer. It enables a property to be marketed as ‘mortgage ready’ and is relevant at the very beginning of the selling process, as opposed to the current system, where the focus of buying and selling is at the moment of completion, when legals, insurance and mortgages are all approved.

For a lender it could replace the current mortgage valuation report, according to Hometrack.

The report can be delivered online through lenders, HIP providers, estate agents brokers and insurers.

Graeme Winser, director of New Market Strategies at Hometrack, said: “Quite simply the HPR has the potential to revolutionise the buying and selling process for both the consumer and the industry.

“The home buying and selling process has always lacked an objective and automated ‘mortgage ready’ report. With the advent of the HPR, we will finally have the ultimate document which will assist transactions by providing information on all of the key issues that impact both the buyers’ and sellers’ decisions.”

Michael Lawson, chief executive of Si Reports, said: “We expect the HPR to obtain substantial buy-in from the property, mortgage and insurance industries. For the first time, these professionals have a tool to generate a connection with the property itself and improve the homebuying process, which will ultimately help attract and retain their customers.”

Second home owners could also consider letting their homes to holiday makers rather than selling up. This is the view of specialist independent mortgage brokers Mortgages for Business.

There are an estimated 240,000 English households with second homes that are not rented out on a holiday let basis and there is speculation in the market that there could be an increase in the number of people looking to sell or rent out their properties on a long term basis.

Jonathan Moore, head of marketing at Mortgages for Business, said: “Turning your holiday property into a holiday home for others to enjoy could provide you with a good return on your investment while still enabling you to still enjoy the property. There may be many second home owners who are tempted to sell up in case house prices fall, however they could also consider letting.”

A property used as a holiday let would tend to be financed with a commercial mortgage which has different requirements for the deposit, length of mortgage and mortgage pricing which tends to start at base +1.5% to 3%. Rates will depend on factors such as occupancy and demand in an area. According to Mortgages for Business, there are a small number of niche lenders who offer holiday buy-to-let mortgages (such as Scarborough building society), and they therefore work on a rent to interest basis.

Moore added: “The credit crunch may encourage more people to holiday in the UK over the next couple of years rather than overseas so good quality properties will remain in demand for holiday homes. The typical rent provided by investing in a holiday property will be higher than that for a normal buy-to-let property although demand for the property will obviously be seasonal. Investment in property should always be a long term strategy so if you still get to enjoy your property and can make it contribute towards its running costs then this is an interesting opportunity to consider.”

Now one year later, following the Northern Rock fiasco, market madness hits Bradford and Bingley share values and the scare stories start to emerge about Buy to Let.

It didn’t take long for the knockers of Buy to Let to surface and start spreading doom and gloom!
What a difference twelve months make…

Lets be quite clear about Buy to Let… Growing populations need housing full stop - so it is logical to assume that we are not going to see millions of people leaving the UK for other countries, in fact quite the reverse, with Eastern Europeans, and other International migrants, in real terms, still pouring into good old Great Britain. So time to stop talking the market down and time to think sensibly for once.

In general, Buy to Let investors are very sensible people and understandably do their sums before putting their cash into bricks mortar. They know that over the long term they are unlikely to lose their shirts compared with the roller coaster potential ride of the stock market, where to be blunt, it is so easy to get market calculations so horribly wrong with trading conditions being dictated by very wealthy International traders who can make or break a company at will.

Yes, over the last few months, we have heard a few stories of some Buy to Let investors getting burnt, but in most cases, they have fallen into the trap set by the purveyors of property investor seminars, who have made millions from selling get rich quick property seminars, with Inside Track springing immediately to mind.

We have heard story after story of people paying £thousands to attend such seminars and falling over themselves to buy “selected” obviously over priced properties provided by major builders without even going to see them.. What did those individuals expect? Arm chair investors deserve to suffer the consequences of expecting other people to make them fortunes. The golden rules in property are research, research and more research, not forgetting location, location, location!

We have singled out two articles for our readers to reflect on. One from Motley Fool featuring the current Bradford and Bingly problems issued this week and an article written in May 2007 which details hard information about the shortage of “affordable” housing.

So please lets get matters into perspective!
Editor

************************

By Cliff D’Arcy | 2 June 2008

| 3 Comments

It’s been a day to forget for shareholders of struggling building-society-turned-bank Bradford & Bingley (LSE: BB.) . B&B’s shares were suspended from trading at 7.52am, only to be reinstated at 8.10am after the lender issued a profit warning. In a stock-market announcement, the UK’s eighth-largest bank revealed five shockers:

1. US private-equity firm Texas Pacific Group is buying a 23% stake in the bank at 55p a share, for a total of £179 million.

2. B&B’s recently announced rights issue has been scrapped and replaced by a restructured issue of £258 million. The original rights issue, announced last month, offered new shares to existing shareholders at 82p. As the market price is now below this level, shareholders can buy B&B shares more cheaply in the stock market. Hence, the previous rights issue was cancelled. The new deal offers shareholders 19 new shares at 55p for every 25 shares held.

3. B&B made an £8 million pre-tax loss for January to April, versus a £108 million profit in the same period of 2007. B&B had expected to make £150 million in the first four months of 2008.

4. The lender warned of tough times to come for the UK housing market, as write-offs, bad debts and arrears rise in buy-to-let lending.

5. B&B’s chief executive, Steven Crawshaw, is suffering from a heart condition and has stepped down. We wish him a speedy return to health.

There may be trouble ahead…

Naturally, B&B’s share price plunged, with other banks’ shares following suit. Having closed at 88.25p on Friday, Bradford & Bingley’s share price dived as low as 60p (down 32%), before recovering to 66p (down 22%) as I write.

Bradford & Bingley is particularly exposed to specialist mortgage lending, including buy to let (where it is the market leader), self-certification (alias ‘liar loans’) and negative-equity and 100%+ loans.

The big worry for Bradford & Bingley (and other mortgage lenders and property investors) is that its buy-to-let business model has never been stress-tested in a housing downturn. B&B is the UK’s largest lender in the buy-to-let sector, with a share of a fifth (20%) of this £120 billion market.

Buy to let really thrived during the twelve-year housing boom which began in the mid-Nineties. But will buy-to-let investors hold their nerve if house prices fall between 20% and 30%? Homeowners will do almost anything to keep the roof over their head, but will amateur landlords be tempted to walk away when times get tough?

Anyway, what lies ahead for Bradford & Bingley stakeholders? Let’s take a look:

Shareholders

No one knows how buy to let will play out if house prices fall for a sustained period. It may even be the case that the buy-to-let bubble has burst and this model has broken down. When times get tough, homeowners will be a better bet than property investors, so the future looks grim for B&B.

You’d have to be a very brave investor to buy shares in Bradford & Bingley at present. The long-awaited housing-market downturn has only just begun, and the UK economy has yet to go into recession. Nevertheless, B&B is already showing signs of financial strain, even though the worst is still yet to come.

Therefore, things look pretty nasty for B&B’s owners. TPG Capital is paying 55p a share for almost a quarter of Bradford & Bingley, with the replacement rights issue at the same price. Therefore, there is no reason why existing shareholders should value their shares at much above this level. What’s more, the dividend will definitely be cut later in the year.

In short, if I were a shareholder in B&B, I would head for the exit by selling my shares.

Borrowers

Bradford & Bingley’s net interest margin (the difference between its borrowing rates and savings rates) is in decline. To stop the rot, B&B must increase interest rates on lending. Therefore, mortgages and other loans are set to become more expensive for new and existing borrowers. Hence, it may make sense for B&B borrowers to look into remortgaging in order to lock in a lower rate.

Savers

Savers with Bradford & Bingley should not panic. The company is not bust and might just hit its profit target of £150 million in 2008. B&B is not poised to ‘do a Northern Rock’, so your savings are safe. Furthermore, the first £35,000 of your savings is protected by the Financial Services Compensation Scheme (FSCS). Thus, there’s no need to start queuing up at your local B&B branch!

Then again, B&B needs to make some tough decisions in order to restore its profitability. It may be forced to cut savings rates in order to restore its interest margin. Indeed, B&B has yet to cut its rates in response to recent reductions in the Bank of England’s base rate. Accordingly, now would be a good to shop around for a Best Buy savings account, in order to earn a table-topping rate of interest.

Customers

The former building society has more than three million customers. Alas, given that the group is in turmoil, it seems probable that customer service will suffer in the short term. In order to ‘turn the tanker around’, Bradford and Bingley will have to take a knife to its cost base. Possibly, these cuts may well include staff reductions and increased use of call centres and offshore facilities. Hence, customers should brace themselves for a decline in standards.

Staff

I feel particularly sad for Bradford & Bingley employees. As well as receiving free shares at 248p in the flotation in December 2000, many will have bought extra shares via employee savings schemes such as Sharesave and Share Incentive Plans. The value of these shares has plunged by almost nine-tenths (88%) since the share price peaked at 536p on 20 March 2006.

Alas, B&B workers have suffered a huge hit to their nest egg. Even worse, Bradford & Bingley is sure to follow in Northern Rock’s footsteps by downsizing its workforce. Thus, jobs may well be lost at head office and across its entire branch network. So, let’s hope that redundant B&B employees find new jobs as soon as possible.

Finally, my Foolish colleague Maynard Paton warned that B&B was a risky investment more than four years ago in Why Some Banks Look Cheap. In addition, I’ve been banging on about the twin dangers of rising house prices and personal debt since I joined Fool.co.uk in 2003. Nevertheless, in the words of Scooby Doo: “Yikes!”

More: Find marvellous mortgages and super savings accounts | Bad News For Banks And Borrowers | Super Savings Accounts That Slaughter Inflation

Comments

The opinions expressed here are those of the individual writers and are not representative of The Motley Fool.

Cliff,

I know you have been hawkish about house prices for some time and no doubt some prices are heading south for a while, but I don’t understand your hostility to Buy to Let. Why should BTL be particularly vulnerable at the moment? People have to live somewhere and there are reports of rents rising significantly now that FTBs are struggling to get mortgages.

As an ex Buy-to-Let er (I didn’t enjoy it, though I did make money) I really can’t see the problem. As long as you have done the maths and can easily cover to mortgage it still seems like a solid and traditional investment.

If you didn’t get the sums right and borrowed too much, the problem isn’t BTL or even Self Certification mortgages. The problem is stupidity!

Without having done any research at all, my feeling is that B&B’s troubles have a great deal to do with US sub-prime and the cost/difficulty of refinancing and little to do with the ‘Dangers’ of the BTL market per se.

Ends.

*********************

Tuesday 22 May 2007

Features

Gordon Brown has no solution to housing shortage

by Kelly Hilditch

Gordon Brown, who is currently touring the country in the run-up to his anointment as Labour leader, last week outlined his “vision” for housing.

He talked about putting more money into social housing – giving many people hope that a Brown premiership might actually do something to tackle the chronic housing crisis in Britain.

But it is important to look at the detail. Brown said he wanted a “home-owning, asset-owning, wealth-owning democracy… the aim is affordable housing”.

This suggests that Brown’s housing policy will be aimed primarily at encouraging more ownership rather than on providing cheap public housing for rent.

This fixation on ownership is part of the problem, not part of the solution. Britain has home ownership rates of 69 percent – the highest in Europe. In Switzerland, in contrast, only 37 percent of people own their homes.

The current housing crisis has been caused by decades of government policy that pushed home ownership and ran down council housing – fuelling an unsustainable boom in house prices.

This started in 1980 under Margaret Thatcher’s Tory government. She passed legislation that gave tenants the right to buy their council homes at a discount.

In the first two years alone, some 400,000 families bought their council property. Today it is estimated that around 1.5 million council homes have been sold off under the “right to buy”.

The predictable result has been a massive shortage in affordable housing. In November 2005, the Scottish Executive decided to suspended all council house sales for five years to tackle the shortage.

Tenants

Several councils in England have also introduced strict regulations to prevent former council tenants from reselling their properties too quickly.

But even though council house sales have gone down, since 1997 New Labour has been doing its best to make local authority owned housing a thing of the past.

Blair’s policy on housing was centred around privatisation. Councils are pressured into handing over housing stock to private “social landlords”.

The government’s “decent homes” rules mean that council housing has to reach a certain standard by 2010. But the money needed for repairs is not available to local authorities – they can only get the money if they transfer housing stock to private hands.

Between 1990 and 2003 some £13 billion was taken out of council housing and put into central government. This sum is almost two thirds of the amount needed to bring all council homes up to standard.

And the government continues to prevent councils from using the money they raise in rents to fund repairs – some £1.55 billion was withheld last year.

According to a Joseph Rowntree Foundation report last year, “receipts from right-to-buy sales have yielded around £45 billion” while “only a quarter has been recycled into improving public housing”.

Myth

The relentless promotion of stock transfer means that the number of council homes has been falling rapidly – as has spending on new homes. In 1980 councils spent £5,600 million on new homes. By 2002 this had fallen to £200 million.

There’s a common myth that housing problems are concentrated in big cities – especially places with large immigrant populations. But this is not the case.

Social housing is now seriously lacking in rural areas – only 5 percent of houses in villages are social housing compared to a national average of 23 percent.

Under New Labour the gap between rich and poor has widened – and this is abundantly clear in many rural areas. By 2004 there were 93,000 second homes in the country, predominantly located in rural districts in England.

According to the government there are a growing number of villages where up to half the properties are second homes.

This increases the cost of housing – as well as reducing the money available for services, since the council tax paid on second homes is up to 50 percent less than normal.

So council owned rented accommodation is disappearing and the costs of buying a house are spiralling. That means more and more people are dependent on private rented accommodation.

This again benefits the rich. The fastest growing sector of the housing market is “buy-to-let” mortgages – properties bought by private landlords and rented to tenants. These made up 11 percent of mortgages in 2006 – so far this year they make up 21 percent.

The result is that many people are paying higher rent to private landlords, instead of low cost rents to the council. In many cases, tenants are living in former council owned property that is now in the hands of a private landlord.

We want to keep up the pressure to make sure that the affordable housing Brown speaks off helps the 1.6 million people on council housing waiting lists get into decent homes.

That means putting money into building new council owned homes, rather than chasing the dream of a “property owning democracy ”.

» email article | » printable version

© Copyright Socialist Worker (unless otherwise stated). You may republish if you include an active link to the original and leave this notice in place.

Source - Best Advice - A service we have subscribed to and used since 2000
Editor

Since 2000, BestAdvice.net has been delivering a high quality news service, free of charge, to the trade on a daily basis.

Now the site is constantly updated throughout the day by the editorial team who are based in London. The web site is designed to support professional intermediaries who provide their clients with mortgage advice and products. This site is not designed for members of the public.

BestAdvice.net is best known for its “Breakfast Briefing”. The Breakfast Briefing is our daily news bulletin which is sent out every weekday morning to our 27,000 subscribers and has established itself as the most popular and regular email news bulletin aimed at mortgage professionals. If you would like to subscribe to this free email click here.  Our latest free service, News 1500 is an addition to the Breakfast Briefing and is sent out at 3pm every weekday.

Our editorial team update news stories during the course of the working day and these are posted on the BestAdvice.net home page (www.bestadvice.net). If you would like to be notified when these news stories are updated, please click here to activate our RSS feed.

It is possible to advertise on the web site and on our emails.  It is also possible for us to send out an exclusive email on your behalf to our 27,000 subscribers to promote your products and services.  If you wish to know more about this, please call 020 7828 4794 and ask for one of the sales team.

If you would like to submit Press Releases or contact our editorial team please email newsdesk@bestadvice.net.

If you have any suggestions for the web site, such as areas we should cover or information sections that should be added, please email kevin@bestadvice.net

BestAdvice.net has an Editorial Code. To download it please click here.

By Jane Baker

Getting on the property ladder seems harder than ever for first-time buyers. Not only are mortgage rates rising, but lenders are demanding even higher deposits. And — as if that wasn’t bad enough — rip-off mortgage fees are really rubbing salt in the wounds.

Gone are the days when cash-strapped wannabe homeowners could go for 100% or 100%-plus mortgages. These days it’s pretty much a given that you’ll need a 5% deposit to stand any hope of getting a mortgage loan. But, worse still, the costs of getting a decent deal are also on the up.

You’ll usually have to stump up for a product fee. These days this can often run to several hundreds of pounds, if not more. But on top of that, if you only have a small deposit, you may well get clobbered with a higher lending charge too.

What Is A Higher Lending Charge?

A higher lending charge (HLC) protects the lender if you default on your mortgage. As you’re only putting down a small deposit, you’re considered a greater risk. To balance this extra risk out, you may be charged an HLC. The HLC is sometimes used to buy an insurance policy, which safeguards the lender from financial loss if you fall into arrears.

You don’t necessarily need to pay the HLC upfront. You’ll usually have the option of adding it onto your mortgage loan. Don’t forget, by doing that you could end up paying interest on the charge over your entire mortgage term.

But this is what’s really unfair: As well as paying an HLC, you’ll also be stuck with a higher mortgage rate because the lender will see you as a ‘risky’ borrower.

Hang on a minute — isn’t the HLC supposed to protect lenders from ‘risky’ borrowers? This begs the question: Why do you need to pay a higher interest rate, when you’re already paying an extra fee?

Not only will your monthly repayments be higher, but you’ll also have to fork out more to pay the fees on your home loan. That means you’ll be stung twice, all because you haven’t been able to amass a larger deposit.

I first talked about HLCs in Buy Your First Home For Less. At that time, I revealed a minority of lenders — roughly a third — applied this charge if you wanted to borrow 95% of the property value. But since then the situation appears to have got worse.

To qualify for the lowest interest rates, you’ll almost certainly encounter an HLC. Take a look at these top deals which are currently available to new borrowers with a 5% deposit:

Top Mortgage Deals At 95% Loan To Value

Source: Moneyfacts - as at 20 May 2008. Figures based on a mortgage loan of £156,750 - 95% of £165,000 property value, repayable over 25 years. *Excluding valuation fees, legal fees, stamp duty and any other applicable charges.

The Post Office is the only lender in this selection not to charge an HLC. But to qualify for the other deals shown, you must be prepared to pay an HLC of around £2,000 to £3,000, adding a significant chunk to your total mortgage fees.

Naturally, first-time buyers are going to find these lower rate mortgages attractive. After all — according to the Council of Mortgage Lenders — the average rate on a two-year fixed rate mortgage has crept up from 6.3% to 7% since last summer. But the HLC can be a heavy price to pay for the top rates.

Remortgaging

First-time buyers aren’t the only borrowers to fall into the HLC trap. The charge may also come into play if you want to remortgage but you only have 5% equity in your home. If your loan to value (LTV) — which is your mortgage loan as a percentage of the value of your home — is just 95%, then an HLC could be an unavoidable hurdle for you too when you want to move to a new mortgage deal.

Can You Avoid The HLC?

Not all lenders charge an HLC. Check out all the costs before committing yourself. To help you compare deals, speak to a broker at The Motley Fool’s award winning mortgage service.

Usually, the HLC will disappear if you manage to build up a deposit of 10% or more. True, that’s a lot to ask of struggling first-time buyers, but if it’s at all possible, you could enjoy a double whammy of lower fees and a lower mortgage rate too.

More: Why Rate Doesn’t Rule For Mortgages | More Relief For Mortgage Payment Shock

Although welcoming the Select Committee report into the supply of rented housing, published today, ARLA, the Association of Residential Letting Agents, believes that it could have said more to help consolidate and build on the successes of the Private Rented Sector over the past decade.

Commented Ian Potter, Head of Operations for ARLA, “Many of the recommendations to Government are aspects that ARLA has long proposed. The Association looks forward to contributing meaningful suggestions to Government, particularly in support of the Select Committee’s suggestion that the Private Rented Sector requires financial incentives for private landlords.”

“As the lead professional body for the sector, ARLA has been pressing for the implementation of the Law Commission proposals for long term tenancies since they were published two years ago. For many years before that, the Association called on successive governments to help change the perception that private renting is only for the short term. ARLA proposed a longhold tenancy as early as 1995.

“Well before Buy to Let was launched to boost private sector renting, we believed that the sector could, and should, offer much more long term stability for family tenure. Since then, the rented housing stock to do this has been provided by long term private investors. They, too, would welcome implementation of the Law Commission’s Proposals,” Ian Potter pointed out.

In calling for the accreditation of letting agents, the Select Committee has gone part way to meeting the ARLA proposals for full licensing of all letting agents. ARLA believes that this is the quickest and most effective method to eliminate unprofessional, unqualified and unethical agents from the rental market.

To accomplish a practical licensing regime, the Association has long established the blueprint for the regulation and compliance that would be required for a proper and practical system of licensing.

ARLA, who first initiated the concept of Buy to Let, are pleased that the Select Committee noted the contribution Buy to Let investors have made in providing stability in rents and an improvement in the housing stock.

The Committee noted that Buy to Let investors have been steadily replacing institutional investors in the rental market. “It is they who have been largely responsible for growth in the Private Rented Sector, for the stable rent levels and for renting becoming socially acceptable once again,”

Ian Potter noted. “We have to hope that the credit crunch will not damage this process. The Private Rented Sector needs more investment.”

Both the Select Committee and ARLA recognise that there are a relatively small number of bad landlords operating in the sector. ARLA believes that tighter regulation is also needed to cover landlords, although 80% of all tenants in the private sector report satisfaction with their landlords.

The Association was disappointed that the Select Committee report failed to tackle the problems with licensing of Houses in Multiple Occupation.

“The inconsistencies in the requirements and the variation in licensing costs between local authorities have left an unsatisfactory situation for landlords operating in this section of the rental market. However, all are agreed that effective licensing of HMOs is very necessary,” said Ian Potter.

Visit the House of Commons web site:
Communities and Local Government Committee Reports section

Download the The Supply of Rented Housing Report directly from the House of Commons web site.

95.1% more Chartered Surveyors reported a fall than a rise in house prices, an increase from 79.4% in March.

The regional picture is even more depressed with surveyors in East Anglia, the North and North West unanimous that house prices are falling.

The net balance in Scotland turned negative where previously it was the only UK region where the majority of surveyors were reporting house price increases.

However, the scale of house price falls remains relatively small at this stage compared to past downturns.

The lack of new instructions to sell property continues to provide a crutch to the market.

Large numbers of distress sales (either repossessions or sales from those attempting to avoid the repossession process) have not yet appeared in the market place and, while mortgage arrears remain low and the employment situation remains strong, the lack of supply will continue to prevent large declines.

Demand continued to weaken as new buyers’ enquiries fell further. 68% more Chartered Surveyors reported a fall than a rise in new buyer enquiries, up from 51% in January.

Many would-be-buyers are either struggling to raise the necessary finance or are exercising caution in the light of current economic uncertainty.

With the official interest rate cuts not being fully passed on to the high street, lenders continue to pull back on the range of mortgage products and further scale down loan to value ratios, there is little expectation that demand will improve in the near term.

As a result of this lack of supply, the average number of unsold stock on surveyors’ books edges down.

The ratio of completed sales compared to the stock of unsold property on the market fell to 21.1%, down from 24.6%.

Looking forward, the net balance of surveyors expecting prices to rise is at -80%, compared to -74% in March.

Commenting, RICS spokesperson Ian Perry said:

“Although most surveyors are now seeing price declines, the extent of the fall, is at this stage, quite modest.

The real issue is the collapse in the number of housing transactions.

This has very real implications, not just for the property industry but also the high street and the wider economy.

“Sellers of white goods are likely to suffer if this low level of turnover persists for much longer.

This is a key reason why the Bank of England should act at its next meeting by cutting the base rate.”

View a historical index of the RICS Housing Market Survey at www.rics.org/hms.