News Archive - July 2009

This is our news archive for articles published on the website and sent to our Leeds Property Networking newsletter subscribers. To get the most up-to-date property-related news, before it appears on the website, enter you details in the box on the right.

Week-Ending
24th July 2009

News Summary

Economic recovery: The 10 signs to look for...
So how will we recognise the green shoots of recovery when we see them? The Guardian have helpfully listed the 10 signs that the economy may be on the up.
To read this story in full, follow this link >>>

...unfortunately, number 1 on the list is still in decline...

UK GDP shrinks at fastest rate for 60 years
Britain’s economy contracted again in the second quarter, marking a full year of decline sharper than any since the 1930s barring that of second world war and its aftermath. Economic output fell by 0.8 per cent quarter-on-quarter in the three months to June, after a 2.4 per cent decline in the first quarter, according to the Office for National Statistics’ “flash” first estimate of gross domestic product on Friday. Don't be surprised if the Bank of England's Quantitative Easing programme is extended following August's MPC meeting.
To read this story in full, follow this link >>>

Scene set for UK home rental boost
The UK is set to experience a boom in American-style mass-produced rental homes as part of proposals by a consortium that meet a government call for greater institutional investment in the residential market. Aviva insurance group, is to launch an investment fund with as much as £1bn to buy and rent out swaths of new-build residential property in partnership with CB Richard Ellis property consultancy and a big US residential manager. Some may see this a threat, although it would be wise to look beneath the surface of this as Aviva have essentially done our research for us...high-quality rented accommodation, delivered in a standardised manner is what we should all be looking to achieve!
To read this story in full, follow this link >>>

Outlook brightens for UK commercial property
Confidence is slowly returning to the commercial property market on the back of reports from surveyors that the fall in tenant demand for offices and shops has started to slow. Demand for commercial property still fell in the second quarter of 2009, according to a report from the Royal Institution of Chartered Surveyors on Monday, but the pace of decline slowed markedly. The net balances for new inquiries from tenants and confidence were the least negative since the downturn began late in 2007.
To read this story in full, follow this link >>>

...and news from the banking sector...

Banking costs 'put up mortgages'
The British Bankers Association has defended the rise in the cost of borrowing - despite the base rate remaining at a record low. Financial website Moneyfacts claimed mortgage profits had increased nearly fourfold in recent months, with typical fixed-rate deals also going up.

But banks are facing "substantially" higher costs, the association's chief executive, Angela Knight, insisted. And they had been "instructed" to put far more money in reserve, she said. In a related story, the BBC also stated that: Mortgage rates have seen the sharpest rise. Three months ago, the price of a typical two-year fixed mortgage was 4.65%. Now it's 5.17%.
To read this story in full, follow this link >>>
To read this related story in full, follow this link >>>

...which is one of the reasons why...

Darling to press banks on lending
The UK's banks have insisted that lending to small firms is continuing to rise, as they prepare to meet the chancellor later today to discuss the issue. In its latest figures, the British Bankers' Association (BBA) said total lending to small companies rose £366m in June, up from May's £133m increase. Although the main concern stems from the Banks need to charge significantly more that the rate at which they are borrowing from the markets...thank goodness us lowly property investors can take advantage of tracker and variable-rate products!
To read this story in full, follow this link >>>

Equity release advice found to be poor
A mystery shopping excercise by a consumer watchdog has found evidence of worrying flaws in the advice given for equity release loans, which are considered to be higher risk than standard mortgages. Equity release, or lifetime mortgages as they are also known, are typically taken out by pre-retirees and pensioners who need extra cash to pay debts, boost retirement income, or fund long term care. Until recently property investors like you and I could offer home-owners a "Sale-and-rent-back" arrangement similar to equity release, but this has now all but disappeared to all but the larger companies due to recent legislation and regulation under the FSA.
To read this story in full, follow this link >>>

Tories reveal bank reform plans
The Conservatives would give the Bank of England greater regulatory powers to try to prevent future financial crises, shadow chancellor George Osborne says. Reforms are needed that match the "scale of the hardship inflicted on the British people", the Tories said. So, if you are for this reform, then sharpen your pencils for next years election!
To read this story in full, follow this link >>>

...and for all those offering debt-management or credit cancellation services...

Debt management industry under review
The fee-charging debt management sector has more than tripled in the last ten years, according to an independent review of the fee charging debt management industry published on Thursday by the Money Advice Trust. The research found that while there were fewer than 40 companies providing debt management services to individuals in 1999 today there are over 150 such companies in the UK.
To read this story in full, follow this link >>>

Week-Ending
17th July 2009

News Summary

Report urges UK banking transparency
Banks must brace themselves for a rash of board-level bureaucracy, if the proposals of the Walker Review on financial sector corporate governance are accepted. A range of measures are being proposed and these will cut across 5 key areas: board size and composition; the functioning of the board and evaluation of performance; the role of institutional shareholders; governance of risk; and remuneration. Read the full FT article here >>>

Mortgage rate rises defy calls for fairer lending
Banks are refusing to cut mortgage costs for borrowers, and some are still pushing rates up, in spite of sharp falls in their own funding costs in recent weeks. It may be now time to look at tracker rates (see article below) as the Swap Rates have now stabilised in recent weeks, and Banks are not passing on these savings in their fixed deals. Read the full FT article here >>>

Tracker mortgages may offer lowest rates
Borrowers looking to take out a new mortgage may be better off opting for a tracker rate, which will rise and fall in line with the Bank of England base rate, rather than a fixed rate even though interest rates are at a historically low level.Ray Boulger at John Charcol, said five-year fixed rates were typically at least 2 percentage points higher than a comparative initial tracker rate. This means the base rate would have to rise by more than that amount to make it worth paying for the fixed rate.Boulger went on to say that there was now a stronger feeling that interest rates would remain low - although not necessarily as low as the current 0.5 per cent - for at least two to three years.
Read the full FT article here >>>

High demand for property hotspots lifts house prices
An acute shortage of properties for sale, coupled with a strong resurgence of buyers, has brought fierce competition back to parts of the housing market and in turn is lifting prices in some areas. Don't be fooled by this being a recovery...there will need to be a significanr increase in the number of transactions for this to be sustainable on any level...given the earlier article on the cost of lending, I cannot see this having any major uplift in the overall number of transactions. To reinforce this, Hamptons confirmed that only 22% of London postcodes have experienced an increase in asking price. Read the ful FT article here >>>

'Upturn signs' in housing market
The housing market is showing the first signs of an upturn since 2006, the Home Builders Federation (HBF) has said. The body's survey of Britain's major home builders found 60% of those asked had seen an increase in sales compared to the same time last year. Anecdotal evidence also points to higher numbers of visitors to developments - the main hurdle being the availability of mortgages. Read the full BBC News articel here >>>

Property showing signs for optimism
European commercial property prices are showing signs of stabilising, particularly in the UK, France and Germany, accroding to a mid-year report from LaSalle Investment Management. Foreign investors are being attracted to Europe, especially the UK due to the weakened sterling.
Read the full FT articel here >>>

Land Secs sees reasons to be optimistic
The UK's largest property company gets ready to re-enter investment and development markets as it signals the next stage in its recovery strategy. So a sign of confidence or of a company looking to "make hay" whilst prices are still depressed? Read the full FT article here >>>

...coupled with...

Fall in demand for office space slows
Confidence is slowly returning to the commercial property market on the back of reports from surveyors that the fall in tenant demand for offices and shops has started to slow. However, this should not be confused with a recovery as the demand is still falling, just not at as an alarming rate.
Read the full FT article here >>>

Week-Ending
10th July 2009

News Summary

Doubts grow over quantitative easing
There are questions about how well the programme is working as government bond yields have remained stubbornly stuck around the same levels as the day QE was launched.
Read the full FT article here >>>

...and the following day...

Bank keeps interest rates on hold & Quantitative Easing Programme maintained at current levels
The Bank of England kept the cost of borrowing unchanged at 0.5% for the fourth month in a row. It added it was not planning to extend its quantitative easing scheme under which it creates money to buy bonds in order to stimulate the economy. It will continue with its current plan to spend £125bn. Some had expected it would increase that amount.
Read the full BBC article here >>>

Worst of the recession 'is over'
According to the British Chambers of Commerce (BCC) business group, but talk of a recovery is premature. Its report, based on a survey of 5,600 companies, found there had been "welcome progress" in confidence levels between April and June. Although there is still an expectation that unemployment will hit 3.2m in 2010.
Read the full BBC article here >>>
Read the full FT article here >>>

City house prices 'stabilising' in Scotland [BBC]
House prices in Glasgow and across the west of Scotland are showing signs of stabilising, according to new data from a leading home seller. Glasgow Solicitors Property Centre (GSPC) said the pace at which prices were falling had begun to tail off.
Read the full BBC News article here >>>

House price index shows small decline
A closely watched house price index registered a small decline in June, contradicting other indices that show house prices rising or stable and implying that the road to house price stability is likely to be a bumpy one. This highlights once again the erratic levels of house prices due to the unusually low levels of property transactions, caused by the lack of mortgage credit available. Until we reach a higher and stable level of property transactions we will not see price stability.
Read the full FT articel here >>>

...which is compounded by...

Mortgage product market squeezed
The number of mortgage products available to consumers has dropped to its lowest level on record, according to price comparison website Moneysupermarket.com. Borrowers now have just 2,282 deals to choose from - less than half the number of products available one year ago and more than 90 per cent below the numbers at the height of the property boom in August 2007. For first-time buyers it is even worse!
Read the full FT article here >>>

...however, help may be at hand for those suffering "negative equity"...

Nationwide offers 125% mortgage
The Nationwide Building Society has introduced a mortgage allowing borrowers to take loans worth 125% of the value of the home they are buying. It will only be available to existing customers in negative equity who want to move house. There are some strict criteria for this product, not least the "stress test" being imposed along with affordability assessments should interest rates to 9 or 10% at the end of the fixed-rate term.
Read the full BBC News article here >>>

Crown Estate sees £1bn wiped off value of assets
The sovereign's hereditary estate, which owns huge swathes of the UK's land and property, has written off more than £1bn from the value of its assets following the wider slump in the property market. Bizarrly, Crown Estates own great swathes of the UK's coastline up to 12-miles out to sea...and with the off-shore developments of windfarms, this could be a possible area of future growth.
Read the full FT article here >>>

London flats fund plans £50m float
Former bosses of house builders Redrow and Centex UK team up with Steve Norris, twice mayoral candidate, to create an investment vehicle targeting discounted assets in the capital. The group hopes to raise £50m through an initial public offering later this year for its investment vehicle, London Residential Opportunities, building to a total fund of £110m over the next two years. So, a little more competition for those seeking complete and near-complete falts in London and the SE.
Read the full FT article here >>>

Housing 'not favouring migrants'
There is no evidence that new arrivals in the UK are able to jump council housing queues, an Equality and Human Rights Commission report says. Once they settle and are entitled to help, it adds, the same proportion live in social housing as UK-born residents.
Read the full BBC News article here >>>

...and finally, maybe some good news for those who could care less about Foxtons...

Foxtons loses legal battle over landlord fees
Foxtons, the estate agency, on Friday lost a High Court case when a judge ruled that some of the terms and conditions it imposes on landlords are unclear and unfair. The Office of Fair Trading (OFT) took the property company to court over terms that force landlords to continue paying commission even if Foxtons is no longer involved in letting or managing a property.
Read the full Times Online article here >>>

Week-Ending
3rd July 2009

News Summary

UK economy shrinks most in 50 years
The UK economy shrank by 2.4 per cent and the most in more than half a century in the first quarter, according to revised figures which were much weaker than originally estimated.

The decline in gross domestic product was sharper than the 1.9 per cent initially calculated, the Office for National Statistics reported. About half the revision was due to the introduction of new construction sector data and the rest due to more complete services sector figures showing a sharper decline.
Read more of this article here >>>

...maybe the "Green Shoots" are coming...?

OECD sees strongest outlook since 2007
The Organisation for Economic Cooperation and Development has revised its World Economic Outlook upwards for the first time in two years, as its latest review concludes that the global economic slide is nearing a bottom.

In its report the OECD revised its growth forecast for 2009 to a decline of 4.1 per cent, down from a contraction of 4.3 per cent. It said that in 2010, it expects very modest growth where earlier it expected none.
Read more of this article here >>>

...alas not...

UK lending suffers setback
Lending to consumers and businesses suffered a setback in May, highlighting the threat to nascent green shoots from weak levels of credit. There was only minimal growth in lending secured against homes in May and Business lending was down in May. The first 3 months of the Bank of England's Quantitative Easing programme shows little sign of significantly increased lending.
Read more of this article here >>>

...but slightly better? news for those struggling financially...

CML slashes repossession forecasts
The Council of Mortgage Lenders expects fewer homes to be repossessed in the UK this year than first thought. The CML lowered its forecast for property repossessions in 2009 to 65,000 from its previous estimate of 75,000. But the estimated number is still higher than the 40,000 repossessions seen in 2008 - the highest in more than a decade. So is this good news or bad news...well there are still an unprecedented number of potential repossessions for the intrepid Property investor to "help", however, the new Sale & Rent Back legislation will limit the amount of help that can be offered. The figures, overall, still look daunting!
Read more of this article here >>>

House price dip ends growth run
The variability of the housing market was underlined in June when a slight dip in prices ended a four-month run in which new sellers increased the amount they asked. There are still many factors which point to a continued slump - a shortage of mortgage funding; fist-time buyers unable to raise sufficient deposits;
Read more of this article here >>>

...but prices may be stabilising...?

UK house prices hold steady
UK house prices recorded their third rise in four months, according to a closely watched index, suggesting that the troubled housing market has stabilised. However, as I have commented previously the low volume of house sales (see "UK lending suffers setback", above) is insufficient to drive a stable or growing housing market...more turbulence to come I believe.
Read more of this article here >>>

See how the land lies
Land prices across the country have fallen even more sharply than house prices thanks to the economic slump. Caused mainly by a combination of a lack of demand for new build houses and the more stringent lending requirements for these types of property (65% LTV), plus the inability for developers to secure debt funding to take these projects forward.
Read more of this article here >>>

...but once you have your land...

House planning incentives queried
Financial incentives given to councils in England to speed up housing planning applications may have had "perverse" consequences, MPs have said. The Public Accounts Committee accepted that cash incentives for councils to reach judgements within 13 weeks had speeded up decision-making. But is there a perverse sting in the tail...?
Read more of this article here >>>

ECB pumps record €442.2bn into banking system
The European Central Bank has pumped a record €442.2bn into the eurozone banking system in a first-ever offer of unlimited one-year funds as it battles continental Europe’s severe recession. The cash is being lent to more than 1,100 banks at its current benchmark interest rate of 1 per cent for 12 months.
Read more of this article here >>>

...and the US Federal Bank...

...opts for no change
The Federal Reserve said that it would leave interest rates unchanged, and stated that economic activity would remain weak for “some time” before growth resumes. Concluding its two-day policy meeting, the Fed was widely expected to keep rates steady at a range between zero and 0.25 per cent as it maintains what has been the most aggressive easing cycle in monetary policy history.
Read more of this article here >>>

...and finally for our London-based landlords...

Landlords see London yields fall below 4%
Landlords with rental properties in prime central London have seen their return slip below 4 per cent for the first time in nearly two years, according to the latest data from Knight Frank, the estate agent. Caused in part by falling rentals, but the main force has been the oversupply of housing stock...driven by homeowners unable to sell but willing to rent their properties out to at least cover their costs. It will be interesting to see how much of this oversupply will disappear once the market starts to pick-up and sales stock becomes in short supply...?
Read more of this article here >>>