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A leading group of property workers has called on the Government to kick start the housing market, as new figures showed that people selling their houses are being forced to cut almost 10 per cent off the asking price to secure a sale.

The Royal Institution of Chartered Surveyors (RICS), said that the Government’s attempts to drag the housing market out of the doldrums have been “limited”, and has made a number of suggestions to kick start activity.

The Government is tomorrow expected to announce a series of new measures to help struggling homeowners and first-time buyers.

Proposals are forecast to include improved support for people facing repossession and shared equity schemes for those trying to get on the property ladder.

Read more at Times Construction news

Labels: falling house prices, House market, House prices survey, Housing Minister, property prices, property trends, RCIS, uk housing

UK farmland prices surged at the fastest pace in the RICS’ rural market survey’s history during the first half of 2008 but lifestyle buyers retreated as the credit crunch deepened.

The farmland market jumped forward, with the average price rising by 24 percent (the fastest pace in the survey’s history) from £10,439 to £12,965 in the first half of 2008 and by 47 percent year on year. Arable land rose by 32 percent to £14,453 from £10,439 and pasture land rose by 16 percent to £11477 from £9929. Sharp increases in commodity prices continue to encourage farm investors to expand production or enter the market as purchasers.

The net balance of Chartered Surveyors reporting an increase in demand for residential farmland fell for the first time since 2005 from 50 percent to -3 percent while demand for non-residential farmland remained buoyant at 65 percent. The net balance of surveyors expecting price rises in residential farmland fell from 30 percent to -25 percent. There is an expectation that lifestyle buyers will continue to retreat while the challenging financial climate persists.

Read more at the RCIS newsroom

Labels: credit crunch, House market, RCIS, rural property, uk farmland prices, uk land prices

The UK Government must overhaul stamp duty land tax radically to create a fairer system for consumers, says RICS (Royal Institution of Chartered Surveyors). Proposing a system that would benefit 99 percent of home buyers, RICS called on the Government to find a way of implementing the policy, which will provide a boost to the economy and the faltering housing market.

RICS proposes the abolition of the existing slab tax system*, replacing it with a two tier marginal tax system. No one will pay stamp duty on the first £150,000 of a house price. Above this value a 2.5 percent marginal rate would be charged on every pound up to £250,000, with a 5 percent marginal rate applying to every pound thereafter.

Everyone purchasing a home under £1 million will pay less stamp duty, benefiting 99 percent of all prospective homeowners. Currently, a buyer looking to purchase a £270,000 property will pay £8,100 in stamp duty. Under the RICS proposal they will now pay only £3,500, a saving of £4,600 making the property market more accessible, especially for those first time buyers struggling to pull together the funds needed to get on the property ladder.

With transaction levels plummeting first time buyers have been hardest hit seeing their home ownership dreams evaporate. With long-term house price rises outstripping wage inflation, food and fuel bills rising, and tighter lending criteria being applied by mortgage companies, the residential property market is becoming more inaccessible.

RICS Director of External Affairs, Gillian Charlesworth said:

“After having mortgages pulled from beneath their feet from lenders facing the full brunt of the credit crunch, consumers are looking to the Government for help. HM Treasury needs to find a way to implement this policy or, if they can’t do this imminently, to introduce a stamp duty holiday that will get the market moving.”


Initially the RICS proposal will reduce Government revenue by up to 24 percent, but given the 40 percent rise in stamp duty revenue in recent years (up from £4.6 billion in 2005/06 to £6.45 billion in 2006/07) there is room for the Government to manoeuvre.

The RICS proposal for Stamp duty land tax

• Slab tax system reformed to a two tier marginal tax system that reduces barriers to vast majority of homebuyers moving onto or through the market
• No-one pays SDLT on first £150,000 of home purchase
• 2.5 percent marginal rate on the value of homes between £150,000 and £250,000
• 5 percent marginal rate on the value of homes over £250,000
• The thresholds for stamp duty rates should then be annually indexed, reflecting house price growth and inflation
• Everyone purchasing a home up to £1million would pay less stamp duty
• Purchasers of the most expensive homes would pay more stamp duty. However, the increases are relatively minimal – the SDLT bill on a £1.5m home would only be 8% higher in total (£5,000 extra).
• Government would initially lose up to 24 percent of revenue.

Read more at the RICS newsroom

Labels: House market, land tax, property analysis, RCIS, Stamp duty changes, uk housing

The Carsberg Review of Residential Property should be the basis for major reform of the residential property sector, says RICS (Royal Institution of Chartered Surveyors).

In particular RICS endorses the view that consumers should be central to any reform, with emphasis placed on providing better information and basic protections for any person buying, selling or letting property.

Sir Bryan’s review highlights three key issues that should be the foundations for reform:

1. The property transaction process and the provision of information for consumers need revision – Home Information Packs (HIPs), introduced in England and Wales, have not improved the process as intended.
2. Regulation and redress schemes need to be consistent with universal participation - the current regime of voluntary regulation and redress is insufficient.
3. Consumer interests need to be at the heart of all policy making

Citing research from Which?, the OFT and ComRes* - all of which confirm that significant levels of dissatisfaction exist amongst buyers and sellers of residential property - Sir Bryan concludes that the current transaction process is unsatisfactory for those who use it.

He also states that those who offer estate and letting agency services to the public, must be qualified and properly regulated.

Lack of knowledge of the systems and frustration with processes are driving dissatisfaction, says Sir Bryan, and both are areas RICS is keen to see addressed.

Speaking at the launch of the independent report, Gillian Charlesworth RICS Director of External Affairs emphasised the value of taking steps now.

"Sir Bryan’s review highlights a number of key areas where the current approach is clearly failing.

"The processes for regulation and redress do not go far enough to protect the consumer and we agree that participation in regulatory and redress schemes needs to be both consistent and universal.

"They should include all estate agents, letting agents, managing agents and landlords.

"The Industry itself is already coming together to tackle these issues, through the creation of the Industry Standards board, however there are limitations as to what this voluntary approach can achieve.

“It is important that we all take steps now to make the necessary improvements.

"We need action not words. Government needs to acknowledge this, deliver its support for Industry action and do more to protect the public."

RICS will now undertake an in-depth consultation with the aim of developing a formal response to Sir Bryan’s recommendations.

"We remain committed to building a coalition that can deliver property policy reform", concluded Charlesworth.

For more info visit RCIS

Labels: RCIS, Residential property, Sir Bryan

The stock market value of British housebuilders has plunged by £11.34 billion in just 12 months and is set to fall further after two investment banks warned today the housing market downturn will descend to levels last seen in the early 1990s.

Barratt Developments emerged as the sector's hardest hit company for the second day, after its share slumped by 26 per cent.

Barratt, which is now worth just £300 million but has debts of £1.7 billion after its acquistion of Wilson Bowden last year, is expected to seek emergency funding, possibly through a debt-for-equity swap.

Barratt is now worth less than a tenth of its peak stock market value.
Taylor Wimpey, the UK's third largest builder by volume and the result of the combination of Taylor Woodrow and George Wimpey, also plummeted by 20 per cent.

The losses compounded heavy share price falls yesterday, which wiped £400 million of the market value of the builders. Since last June, the housebuilding sector, then worth £15 billion, has seen its shares plunge by 76 per cent.

Shares in Persimmon, the last remaining housebuilder in the FTSE 100, were also down 9 per cent in early trading to 353p, their lowest point for five years. Persimmon faces ejection from the FTSE later today.

Berkeley Group shares also slid 9 per cent to 666p after Goldman Sachs reduced its recommendation on the UK housebuilder to "sell" from "neutral" and dramatically slashed its target price from 819.9p to 582.3p.

Analysts at Merrill Lynch said: "The early 1990s housing market has increasing relevance as a comparator."

They added: "There is growing evidence of consumers how behaving in a manner similar to that seen in the early 1990s, in that concerns over job security and falling house prices are leading to a reluctance to make a house purchase."

Merrill Lynch downgraded six housebuilders in the sector - cutting Barratt Developments, Bellway, Berkeley, Galliford Try and Redrow from "neutral" to "underperform", while Persimmon was moved to "neutral" from "buy", traders said.

There are fears that many housebuilders will be forced to make dramatic writedowns. In the early 1990s, housebuilders wrote down 30 per cent of their value - about £1.3 billion - and many of them needed more than one writedown before their net asset value stabilised.

The sector has been squeezed by banks tightening up on mortgage lending following the credit crunch, hitting the housing market. Many builders have put projects on hold, as willing buyers have dried up, and are laying off staff, while concerns are mounting in the City that many will have to ask shareholders for cash to strengthen their finances.

Housebuilders have also become a target for “short-sellers” who hope to profit from falling share prices. According toresearch from Data Explorers, which monitors short positions in the market, more than 23 per cent of Bovis shares are on loan with “short” investors, followed by 19 per cent for Persimmon and almost 18 per cent for Redrow.

Latest figures from the Royal Institution of Chartered Surveyors, out yesterday, said agents sold an average of just 17.4 properties each during the three months to the end of May, the lowest figure since it began collecting data in 1978.

Merrill Lynch has turned its focus on unemployment levels saying that they will be critical to determining consumer confidence and housing transaction levels, as was the case in the early 1990s recession. The broker suspects that rising unemployment will put additional pressure on housing transaction volumes.

It believes that there will be 10 per cent fewer house sales than last year and that prices will fall by 10 per cent.

"We believe we have gone beyond the tipping point and are now clearly seeing a UK housing market being squeezed on opposing fronts - by a lack both of willing lenders, as well as willing purchasers," the bank wrote.

It suggests that housebuilders are entering a prolonged period of underperformance, with a downturn likely to persist over the next three years.

"We are inclined to believe that if 1988-89 corresponds to 2007-08, than 1990-91 would correspond to 2009-10," Merrill Lynch said.

After the early 1990s recession, house prices did not start to recover until 1994.

Original Story from Times Business Online.

Labels: Barratt Developments, Berkeley Group, House market, Housebuilders, Merill Lynch, Persimmon, property development, RCIS, Redrow, Taylor Wimpey, uk housing, Wilson Bowden