News
A property news summary
Interest Rates held
The decision by the Bank of England to leave interest rates at five per cent (against two per cent in US and 4 per cent in the European Union) came as a surprise and disappointment to the housing industry.
Economists had predicted the freeze but said a cut was possible next month. The bank now faces a delicate balancing act between controlling inflation and maintaining economic growth.
Michael Coogan, Council of Mortgage Lenders (CML) director general, said: "We understand the conflict between slowing economic growth and rising inflationary pressures, and the uncertainty over some of the data reflected in the split views of MPC members last month.
“However, the Monetary Policy Committee (MPC) had an opportunity to act to anticipate the worsening economic environment today, and it is disappointing that there has been no change.
“Mortgage and housing market conditions will remain challenging for the rest of this year, but the majority of existing borrowers are coping well.
“Anyone who is in financial difficulty, or thinks they may have a problem in the future, should contact their lender or a debt adviser. The earlier you make contact, preferably before you have any arrears, the more options may be available to resolve the financial problem,” Mr Coogan added.
Strengthening Support For Home Owners
A new £10 million package of measures to support home owners who may be facing difficulties with their mortgage, has been announced by Chancellor of the Exchequer Alistair Darling and Housing Minister Caroline Flint.
This package includes measures to ensure that financial advice and support is available for borrowers who may need it and includes an additional £9 million extra funding for face-to-face debt advice provided by third sector partners including Citizens Advice Bureau (CAB).
Today’s announcement will also ensure expanded access to free legal representation at county courts throughout England for households at risk of repossession, strengthened National Housing Advice Service to provide a new comprehensive debt advice service and more specialist training for CAB staff and local authorities on debt advice to help families get their finances back on track.
This builds on the services already in place, backed by £560 million Government investment, such as face-to-face debt and financial advice, a national debt helpline, homelessness prevention work by every council, legal aid, and financial support for low-income households who may face short-term difficulties in repaying their mortgage.
Treasury and housing ministers will meet consumer and debt advice groups next week to discuss what more can be done to help people who are experiencing difficulties with their debt repayments, including what further financial support the industry could provide.
The mortgage industry is currently working on further improvements to its support for borrowers in difficulty including those seeking to refinance fixed rate deals, so they receive early advice and support on available options.
The government wants to see best practice guidance that will ensure that people on fixed rate mortgages are given sufficient warning before their repayments change; banks and building societies will engage with customers early to see if they can help people who are experiencing short-term difficulties by rescheduling repayments; banks and building societies will provide advice to individuals on how they can access independent debt advice at the earliest possible stage; and that repossession will only be used as a last resort.
Housing Minister Caroline Flint said: “We know that some borrowers are concerned about their mortgages in the current market conditions. Some lenders are now passing on interest rate cuts and we want to see the rest follow as soon as possible.
“But for the minority of owners who may need support and advice now, we want to ensure it is there for them in the right place and at the right time,” Ms Flint added.
Green Buildings Challenge
The first parliamentary inquiry into greening existing offices, shops and warehouses took place earlier this week.
The All Party Urban Development Group is conducting a hearing into what ministers, city leaders and property owners and occupiers need to do to reduce the environmental impact of commercial property.
Much has already been said about building zero carbon homes by 2016, but half of the buildings we currently have will still be with us in fifty years, so tackling the commercial buildings we already have will be an opportunity to make the biggest impact in reducing emissions.
Commercial property contributes around a fifth of the country’s carbon emissions.
There are concerns about the lack of clear guidance over standards and information on costs and benefits of particular schemes and how the industry can bear those costs amid the current downturn.
Business leaders have been calling for evidence on the financial impact of various green measures. Tax incentives to encourage property owners and occupiers to refurbish their buildings will also be high on the agenda.
Dr David Vincent, director of policy at the Carbon Trust said: “UK buildings are responsible for around 45 per cent of the UK’s total carbon footprint.
“Notwithstanding the welcome attention being paid to reducing emissions from new buildings going forward, the real challenge is how to make substantial reductions of carbon emissions associated with existing buildings.
“Estimates vary but 60 per cent of the carbon emissions in 2050 could come from buildings already here today. Action to reduce emissions associated with the existing stock is therefore vital,” Mr Vincent added.
Home Information Packs
The government has announced a package of measures to help ensure consumers are seeing the vital information in Home Information Packs (HIPs) and are receiving a higher standard of service in the home buying and selling process.
The new measures include developing a new set of standards with industry on what consumers should expect from property professionals in the home buying and selling process; further building on the quality of information in the packs; working with industry to ensure that consumers are fully seeing and benefiting from the HIP, including the Energy Performance certificate (EPC), early in the process; extending until the end of the year the provisions enabling consumers to market their home as long as they have ordered and committed to pay for a HIP, and the provision requiring the lease to be included in the HIP for leasehold properties.
More than 700,000 homes now have energy ratings as a result of HIPs. Greater competition in the property searches market is also leading to reductions in costs with some local authorities reducing their search fees by up to £120.
Housing Minister Caroline Flint said: “Home Information Packs are already bringing benefits to consumers. Property search costs are falling and new information on energy efficiency can help cut carbon emissions and enable prospective purchasers to get a better idea of the likely costs of energy bills.
“But we want to do more to improve the HIP and the home buying and selling process for consumers. Developing a new set of standards for industry is an important next step in further ensuring all consumers get the highest quality of service when buying or selling a home. We also want to ensure all consumers are seeing the vital information in a HIP early in the process so they can fully benefit,” Ms Flint added.
Peter Bolton King, chief executive of the National Association of Estate Agents (NAEA), said: “Whilst we are disappointed about the decision on first day marketing we welcome the Minister's decision to work with property professionals like the NAEA to take another look at the content of HIPs.
“We have always maintained that in their present state, they are of little use to either seller or buyer and therefore we embrace the opportunity to come up with a package that includes real benefits to the customer and will actually assist the buying and selling process - after all, that was the original intention of this legislation.
“If this cannot be achieved we continue to maintain that HIPs should be scrapped,” Mr Bolton King went on to say.
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