Currently viewing the tag: "Con-Dem"
Funding For Lending Scheme Targeted

Funding For Lending Scheme Targeted

Some of the Con-Dem Government flagship schemes to get the UK housing market moving again such as Funding for Lending (FLS), NewBuy and FirstBuy have been targeted by a succession of property professionals at a buy-to-let event in Westminster, last week.

John Heron, managing director of specialist mortgage lender Paragon said: “Politicians are tinkering around at the edges and seeking headlines. They are being schizophrenic. On the one hand, they are doing everything they can to drive lenders away from high-risk lending, On the other hand, they are coming up with initiatives encouraging 95% mortgages on new-builds to first-time buyers.”

At the inaugural “Great Buy to Let Debate”, organised by the Wriglesworth consultancy, both he and other speakers called for a root and branch review of all government policies.

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Landlords want to avoid LHA tenants

UK Landlords Want To Avoid Tenants Claiming Benefits

UK landlords could soon be forced out of the Local Housing Allowance (LHA) market by the Government cap on housing benefit payments.

77% of UK landlords who currently accept tenants claiming benefits are already planning to, or are actively taking steps to reduce their involvement with DSS/LHA tenancies because they are physically unable to afford to continue letting their properties on lower rates of LHA.

A survey by the National Landlords Association (NLA) found that over a quarter of landlords who responded said they were already actively reducing the number of tenants who are currently receiving housing benefit payments, half of all other respondents also said that they were planning to reduce the number of DSS tenants.

UK households currently claiming Local Housing Allowance number nearly 1.3 Million. This could have a devastating effect for many UK landlords as the LHA is now subject to a cap on its upper limits including a maximum 4 bedroom rate.

David Salusbury, Chairman of the National Landlords Association said “The capping of housing benefit payments will lead to more people struggling to pay their rent at a time when a shortage of housing is increasing pressure on the private rented property sector. The NLA urge the Government to monitor the impact of rolling out LHA caps to ensure vulnerable tenants are not placed at risk and landlords can continue to provide this accommodation”.

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UK property Valuation Data

Is The UK Property Market Really In Decline?

Economists are claiming that UK property prices are expected to fall further in 2102 as UK banks keep a tight rein on mortgage lending amid the Con-Dem Government’s austerity measures.

Some financial experts predict that property values will plunge by a total of between 5 to 10 % for 2011 following a period of declining prices since the summer, despite the fact that 90% mortgage products are now returning to the market.

The number of property deals requiring just a 10% deposit have more than doubled in the last two years and there are 253 mortgage products at 90% loan-to-value (LTV) currently on the market – up from 206 a year ago and up from 101 in 2009.

The doom & gloom headlines in the media about property do very little for the UK economy and such reports are dreadfully inaccurate, the severity of the impending property collapse depends on which data source is used to produce statistical information.

Below is a table of information sources used by the media to give an insight into the true state of the UK housing market, the only problem is that NONE of the data matches with any other source…

UK Property Valuation Statistics

Info Source

Website

Period covered

Average
House Price

% Monthly change

% Annual change

Peak avg
House Price

% Change since peak

Official

Press Releases

Communities and Local Government House Price Index

Aug 11

£208,476

N/A

1.30

£221,758
(Jan 08)

5.99

11/10/2011

FT House Price Index (Acadametrics)

Sep 11

£218,650

0.30

2.30

£231,595
(Feb 08)

5.59

14/10/2011

(PDF)

Halifax House Price Index

Sep 11

£161,132

0.50

2.30

£199,770
(Aug 07)

19.34

06/10/2011

(PDF)

Home.co.uk (England and Wales)

Oct 11

N/A

0.30

0.50

N/A

N/A

12/10/2011

(PDF)

Hometrack – Monthly National Survey

Oct 11

N/A

0.20

2.80

N/A

N/A

31/10/2011

Land Registry Monthly Report

Sep 11

£162,109

0.30

2.60

£186,045
(Jan 08)

12.87

28/10/2011

(PDF)

Nationwide House Price Index

Oct 11

£165,650

0.40

0.80

£186,044
(Oct 07)

10.96

01/11/2011

(PDF)

Rightmove House Price Index

Oct 11

£239,672

2.80

1.20

£242,500
(May 08)

1.17

17/10/2011

(PDF)

 

No regulation for UK letting agents

UK Gov Refuse To Regulate Letting Agents

The UK Government has said it does not believe that all letting agents should be made to have client money protection insurance and belong to an Ombudsman scheme, despite being warned of a spate of crooked letting agents.

In response to a letter written by Peter Bolton King, the Chief Executive of the Association of Residential Letting Agents, (ARLA), the Con-Dem Government confirmed its stance in a reply from the Department of Communities and Local Government.

Mr Bolton King had written to the UK Housing Minister, Grant Shapps, pointing out some of the recent cases involvinging a number of letting agents who went out of business taking money belonging to landlords and tenants with them.

Many property professionals have called for a suitable Ombudsman scheme, even though the Government has repeatedly said it does not want to regulate letting agents, despite some ongoing and notorious cases of theft and fraud.

The Government response said:

“As you are aware, the lettings industry is not subject to statutory regulation; however, it is in the interests of the industry to maintain consumer confidence in the services provided and we look to organisations such as NFoPP [National Federation of Property Professionals, of which ARLA is a part] to take a lead in that work. As part of this, the Department continues to explore with its industry partners how best to counter poor practice by letting and managing agents without resorting to regulation. As you will also be aware, between a third and a half of agents belong to voluntary schemes which ensure that members have the right protections for consumers in place. We always suggest that anyone considering using a letting agent checks to see that they belong to a trade body or accreditation scheme such as the Association of Residential Letting Agents, (ARLA), the National Association of Estate Agents, (NAEA) the National Approved Letting Scheme, (NALS) or the Royal Institution of Chartered Surveyors, (RICS). In view of the existence of well developed voluntary regulation in the sector, Ministers do not believe that regulation is the answer at present. But they are keeping a watching brief, and information about poor practice is always useful in that context.”

Mr Bolton King said: “While I am pleased that they continue to understand the benefits of using one of our members, they are clearly not yet swayed by the argument that all lettings agents should have Client Money Protection insurance and belong to a redress scheme.”

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The UK’s unemployed numbers increased in the three months to June, whilst the number claiming jobless benefit rose at the fastest monthly rate since May 2009.

According to the Office of National Statistics, the UK unemployment rate rose to 7.9% in the three months to the end of June, from 7.8% in the January to March period.

A total of 2.49 Million people were out of work during the above time period, with the number of those claiming Jobseekers Allowance rising to more than the 200,000 expected.

With the reform of Local Housing Allowance (LHA) payments, by the Con-Dem Government, landlords face an uncertain future.

Rental demand is at an all time high, but with such high levels of unemployment, who will pay the rent?

Previously PRS landlords could rely on payments from local authorities to house those unable to afford the rent, now that is changing. Government reforms mean a cap on housing allowances and subsequent rental payments. All this does is transfer the financial worry from the Government to landlord, increasing the financial burden on the landlord

Home Owners who cannot find work and who cannot meet their bills, risk losing their homes and having to move into rental property. This will increase rental demand but landlords will not be able to reap any financial benefit due to the government LHA rate cap.

With the UK in such a sorry state will Private Rental Sector landlords even have a future?

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Landlords may avoid LHA tenants in future

Benefit Cuts To Make 40,000 Homeless

It has been revealed that the welfare reforms by the UK Con-Dem Government are a serious worry for everyone, even the ministers involved.

The UK Government has been warned in a letter to Prime Minister David Cameron from the office of Eric Pickles, the communities’ secretary, that welfare policies risk making 40,000 families homeless. Exposing deep splits at the heart of the Con-Dem Government over plans to cap benefit at £500 a week per family.

The leaked letter reveals Eric Pickles’s belief that the cap will increase the burden on taxpayers, because thousands of families will be unable to pay their rent and will have to seek local government help.

The letter shows the disparity between the truth and the government’s public insistence that a limit on benefit payments will have little impact on homelessness and child poverty.

No thought or considerations have been given to Private Sector (PRS) Landlords who house LHA tenants, as they face a reduction in benefit payments for housing costs. Many landlords have voiced their concerns through Landlord Associations and lobbying groups but with little effect.

Over two pages, the fears of the Department for Communities and Local Government (DCLG) are spelled out over “some very serious practical issues for DCLG priorities”.

The letter says: “Our modelling indicates that we could see an additional 20,000 homelessness acceptances as a result of the total benefit cap. This on top of the 20,000 additional acceptances already anticipated as a result of other changes to the housing benefit. We are already seeing increased pressures on the homelessness services. We are concerned that the savings from this measure, currently estimated at £270m [per year] from 2014-2015, does not take account of the additional costs to local authorities (through homelessness and temporary accommodation). In fact we think it is likely that the policy as it stands will generate a net cost.”

The letter then claims that with the reduction in the benefit families can claim, developers will not be able to recoup anything close to a market rent and so will not have an incentive to build homes. “Initial analysis suggests that of the 56,000 new affordable rent units up to 23,000 could be lost. And reductions would disproportionately affect family homes rather than small flats.”

Of a proposed policy that families would be required to divert part of the general benefits, such as child benefit, to cover housing costs, it adds: “It is important not to underestimate the level of controversy that this would generate.”

Written by Nico Heslop, Pickles’s private secretary, at the clear instigation of the minister, the letter lays bare fears of mass homelessness “disproportionately impacting on families”. It says:

•  40,000 families will be made homeless by the welfare reforms, putting further strain on services already “seeing increased pressures”.
• An estimated £270m saving from the benefits cap will be wiped out by the need to divert resources to help the newly homeless and is likely to “generate a net cost”.
• Half of the 56,000 affordable homes the government expects to be constructed by 2015 will not be built because developers will realise they will not be able to recoup even 80% of market rates from tenants.

The leak is the first time that disagreements over welfare cuts have surfaced within the Conservative high command.

Liam Byrne, the shadow work and pensions secretary, said the letter suggested ministers had not come clean over the effects of their policy. “We were assured by ministers that costs wouldn’t rise. Now top-level leaks reveal the truth. Iain Duncan Smith has promised the House of Commons he will not U-turn on the benefits cap. Perhaps now David Cameron will order him to think again.”

Jenny Willott, the Liberal Democrat welfare spokeswoman who has already warned that a rigid cap would increase child poverty, said she remained “very worried” about the proposals, which are due to come into effect in 2013.
Last month, employment minister Chris Grayling rebuffed an attempt by Labour to protect those facing homelessness from the benefit cap. Dismissing a Labour amendment to the welfare reform bill, he said: “It is not yet clear to what extent they would be affected by the overall benefit cap.”

The bill has since passed to the Lords, although the revelations will only fuel existing concerns among Liberal Democrat and Labour peers.

Labour MP Karen Buck, who sits on the Commons committee, said Pickles’s letter proved there was confusion and division at the centre of government. “The housing department and the benefits department are pursuing policies which don’t just cut across, but actively undermine, each other,” she said.

Campbell Robb, chief executive of Shelter, the charity for the homeless, said: “With 21% of people struggling to meet housing costs, it’s naive to think you can cut support without putting some people at risk of losing their home.

The coalition government should stop bulldozing through badly thought-through policies while ignoring independent evidence, its own expert panel and the views of those who will deal with the very real impact on people.”
Enver Solomon, policy director at the Children’s Society, said: “The social costs of the cap are huge and would have disastrous consequences for many children.”

The leaking of the letter will be a source of considerable embarrassment to the government.
A spokesman for Mr Pickles said: “We are fully supportive of all the government’s policies on benefits. Clearly action is needed to tackle the housing benefit bill which has spiralled to £21bn a year under Labour.”
 

Mike

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