After Northern Rock collapsed it was obvious that something needed to be done to stabilize things. New powers were granted to the Bank of England on a temporary basis.

Since then things have gotten worse in the financial world and now these laws have been made permanent in an attempt to help manage the state of flux we are in.

According to an article on the BBC website the new legislation has received mixed reactions. On the face it seems to be a very good thing for the majority of us. If nothing else it allows for savers to receive compensation within one week if a bank is to go bust.

I know that would be a huge relief to many savers, some of whom ended up in the frightening position of not having enough funds to cover their outgoings while they waited for previous disasters to be addressed.

The major objective though is to try to make things a little more stable and to therefore increase confidence.

Peter Thal-Larsen, banking editor of the Financial Times, told the BBC’s Working Lunch programme “The idea is that, if there is a bank that gets into trouble, to insulate it and make the wider impact of that less”. Continue reading →

It is clear that repossessions are on the rise at the moment and that is, unfortunately, to be expected in the present climate.

Buy to Let mortgages are at the forefront of this rise. The number of buy-to-let landlords unable to keep up payments on their mortgages more than doubled during the second half of last year, hitting record highs for almost 27,000.

People are being urged not to panic if they do get into difficulty.

The government has recently introduced new laws that put pressure on lenders to take it easy on borrowers that fall behind and to resort to repossession only as a last measure.

This is actually believed to be having a positive effect.

The Liberal Democrats are, however, not satisfied with these measures and have urged the government to do even more.

Lib Dem leader Nick Clegg has been quoted as saying “If the Government was serious about stemming the tide of repossessions, it would give courts the power to ensure repossession is the absolute last resort and remove the barriers to allow councils to invest in social housing.”
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The Council Of Mortgage Lenders (CML) has stated that the number of homes repossessed in the UK rose 54% last year to a figure of 40,000 according to a report by the BBC. As dire as that sounds it is not as high as they had predicted.

The lower than expected figure is a credit to the strenuous efforts being made by lenders to make sure repossessions were the last thing on their agenda according to the CML.

They do, however, expect this figure to continue to rise with a predicted 75,000 repossessions this year. They urge homeowners to investigate the possibilities before they take the drastic step of handing in their keys.

“We strongly urge borrowers to contact their lender and work with them before taking this step, as there may be other solutions,” said the CML’s director general Michael Coogan.
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The Council of Mortgage Lenders has indicated that new buy-to let mortgages have fallen to a five year low.

Figures just out show that 37,000 buy to let loans were taken out in the fourth quarter of last year, worth a combined total of 3.9bn pounds, this represents a drop of nearly one fifth in value while volume was down twelve percent.

It is believed that this has occurred at least in part because of a rise in the excess supply of rental properties.

This is also believed to be the cause of the rising number of payment problems with some landlords faced with long periods where their properties are without tenants. The number of properties that are more than three months in arrears has risen from 1.88 percent to 2.3 in the last quarter.
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You will remember that last week I wrote a blog on the fact that the OFT had decided to take a much closer look at the practices of sale and rent back companies.

This was an area that I believe has been cause for concern for quite some time and it appears the OFT agrees. They made three recommendations to the government regarding these companies:

–    Compulsory Regulation.

–    Increased consumer awareness through education.

–    Improved information about housing benefits.

From there the government has launched an extensive consultation period but so worried is the OFT about the actions of some of these companies that they also recommended that something needed to be done in the interim.
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As the effects of the credit crunch are felt people are really looking closely at the state of their businesses and investments and one of the side effects is that an amazing amount of fraud is coming to light.

Jeff Salway wrote an interesting article in the Scotsman last week quoting experts as saying so widespread was the fraud that it is possible it caused the property meltdown. Mr Salway writes

“In December the Professional Negligence Lawyers Association claimed there was “no doubt” that large-scale, organised mortgage fraud at least contributed to or may even had caused the property market meltdown”

Frightening stuff really and perhaps even more scary are the claims that the full extent of the fraud that has been taking place since the credit crunch began will not even yet be known for some time.

Hitesh Patel, fraud investigation partner at KPMG Forensic, said: “As the global economic downturn takes hold and organisations look ever more closely at their operations, it is very likely that more fraud will come to light so that the real impact of the credit crunch on fraud is yet to be fully felt.” Continue reading →

It is good to see that UK landlords are taking an increasingly pragmatic view of things as the recession continues.

ARLA (Association of Residential Letting Agents) reports that most landlords expect to hold on to their investment properties for the next twenty years and they are not being scared out of their position by dropping house prices. If anything the opposite.

Their report shows that the proportion of landlords who do not expect to sell anytime in the next 12 months has risen from 77% to 88%

ARLA credits these residential landlords for maintaining core growth in the private rented sector and also for providing the housing that is so desperately needed in these difficult times.

Ian Potter, Head of Operations for ARLA, said: “Again and again, these independent surveys show that Buy to Let landlords are helping to guarantee the growth of the private rented sector and these are the people who provide the housing solutions for those hit by the current recession and in to the future.
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Further on EPA’s, there is no need to remind you that they are now a legal requirement in this country as I blogged on the topic last week, but it may be timely to mention the government scheme that is designed to help landlords shoulder the cost of having heating upgraded if it is necessary.

Paragon EPA is advising landlords to make sure they are aware of what they are entitled to under the government LESA  (The Landlord Energy Saving Allowance) scheme. This allowance enables landlords to claim the cost of buying and installing energy efficient measures against their income or corporation tax. This is up to the value of 1,500 pounds per property. Which would obviously come in very handy.

John Heron Paragon’s managing director is outspoken on the subject of heating efficiency being of primary concern to a tenant these days. It does make sense if you think about it. The tenant knows that if the property they are renting is certified energy efficient then that is less money they will be paying out in heating bills.

So, not to mention the legal issues, you could actually be losing out on clients if you delay in getting your property up to scratch in this regard.
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The Opinion on HIP’s is Still Very DividedRecently the Independent had an interesting article on HIP’s (Home Information Packs) and how the new legislation involving them has been greeted by the industry.

For those of you who are unaware. HIP’s became compulsory for all homes being sold in England and Wales in December 2007. Reaction to the current legislation appears to be very mixed and the fact that the rules regarding these things are soon set to get even tighter just makes the situation even more interesting.

Essentially these HIP’s were introduced to try to make the sometimes tricky transaction of selling your home a bit simpler. They currently contain key information about the property such as the local authority, utility searches, copies of titles and Energy Performance Certificates. In a short time they will also contain information buyers often enquire about such as risk of flooding.

It is easy to see, at least theoretically, that these things should be useful but a lot of people in the industry have branded them a monumental waste of time. “They are good in theory but the execution has been so bad – frankly, they are a bit of red tape,” says Alan Thompson from conveyance specialist Act Legal. Continue reading →