Blanchard Consultancy – the independent construction consultant

The OFT has proposed "comprehensive look" at the estate agent market, including:

* Competition on price and quality between service providers;

* The prospects for new entry by, in particular, internet property retailers;

* The extent to which consumer interests are protected by the existing regulatory framework.

The group, which will begin the study in 2009, plans to talk to businesses, Government and consumer groups about the industry.

Estates agents across the country are facing a tough time amid the economic downturn with many selling just one property a week as the value of houses tumble.

Rightmove, the leading property website, last month revealed that up to 300 estate agents are quitting the property website every month as the slump in the UK housing market worsens.

John Fingleton, the OFT chief executive, said: "Buying or selling a home is something most people do only a few times in their life, but it is usually the biggest transaction they will make. We want to ensure that consumers are served well when buying or selling a home and are supported by an effective, competitive and innovative market.

Read more at Telegraph Online

Labels: National association of estate agents, OFT, uk mortgage market

Banks are seeing an increase in the numbers of homeowners deciding voluntarily to hand back their properties because they cannot afford to keep up mortgage payments.

Voluntary repossessions involve the bank selling the property at auction but this will not show up in official figures as a repossession because there has been no court order.

The phenomenon is widespread in the US, where it has been nicknamed jingle mail because homeowners often post their keys to lenders if they cannot make the payments and no longer have any equity in their homes. It was also common in the UK recession of the early 1990s when homeowners were in negative equity.

Article continues at Financial Times Online

Labels: credit crunch, uk mortgage market, uk repossesions

Confidence and credit have deserted the housing market. The Monetary Policy Committee will be hoping that the lowest borrowing rates for 53 years will help residential property prices to recover from one of their steepest challenges since the Second World War.

However, according to estate agents and consultants out in the field across the UK, the depths of the slump in parts of the market is worse than the research from the various lenders and property websites suggests.

At an auction organised by Allsop last Monday, a flat in an upmarket area of Leeds that was bought for £400,000 in July 2007 sold for just £159,000. A reduction of 60pc. At the same auction a flat in the city centre of nearby Wakefield, bought for £189,000 on October 31 2007, sold for just £69,000. They were not the only bargains on offer. The auction was originally planned to run for two days but was extended to four because of the number of repossessions.

Article continues at Telegraph online

Labels: House prices survey, uk mortgage market

Despite the growing clamour for stricter rules-based regulation, Mr Flint urged policymakers to stand by – and increase – principles-based oversight when they eventually turn their attention to banking reform.

"Supervision is about having more principles," he said. "We have moved towards regulation and away from supervision and now we need to move back. The challenge will be to resource it, as it's more expensive to supervise the banks."

He added that regulators were more likely to demand greater "standardisation" of banking products, curtailing profitable but often ill-conceived "bespoke" creations, and end the shadow banking market of over-the-counter derivatives, where the vast majority of "toxic" assets have proliferated.

Stuart Gulliver, head of global banking and markets, said moving such derivatives on to an exchange – operating much like the traditional stock market – would be "incredibly welcome".

Read more at Telegraph online

Labels: FCC, HSBC, uk mortgage market

The Office of Fair Trading (OFT) is to demand a crackdown on sale-and-rent-back deals in which hard-up home owners sell their property to specialist firms at a discount in return for tenancy rights. It wants the Financial Services Authority to regulate the fast-growing practice.

There are estimated to be more than 1,000 sale-and-rent-back firms, ranging from national organisations to one-person outfits, which advertise their services to homebuyers in financial problems through a mix of local newspaper adverts, flyers and door-to-door canvassing. They typically offer 20% to 30% less than the market price, promising to turn buyers or owners who have debts or other problems into tenants.

About 50,000 properties have been sold, but demand is expected to increase as the credit crisis and rising joblessness combine to put pressure on homebuyers. Buy-to-let investors often move into sale-and-rent-back as an investment in an unregulated source of property at below market value.

Read the full report at Guardian Property

Labels: credit crunch, Office of fair trading, sale and rent back deals, uk mortgage market

A debt charity yesterday called on the Treasury to put pressure on Northern Rock to change its approach to repossessing properties.

Credit Action said that the nationalised bank was twice as likely as other lenders to repossess a home if borrowers fell behind with their mortgage repayments. Chris Tapp, director of the charity, said its eagerness to repay the government meant it was treating struggling customers harshly.

More than 19,000 homes were repossessed in the first half of this year, 4,000 of which were seized by Northern Rock.

The bank's chairman, Ron Sandler, said: "I would deny strenuously that we have been overly aggressive."

Since it was nationalised in February, Northern Rock has cut 1,500 jobs and reduced its lending to help repay the government. In the nine months to September 30 it had repaid £15.4bn of the £26bn it owes. However, the bank's mortgage arrears figures jumped by nearly 60% in the past three months.

Read more at Guardian Online

Labels: northern rock, uk mortgage market, uk repossesions

The number of houses sold in Britain last month fell to its lowest since 1959 as the government's delayed announcement on changes to stamp duty deterred first-time buyers. HM Revenue & Customs said 62,000 houses were sold in August, less than half the figure for a year ago.

The news came as the British Banker's Association revealed mortgage approvals dived 64% in the year to August.

David Dooks, BBA statistics director, said: "The low number of mortgage approvals in previous months predicted lower gross lending in August and, together with remortgaging, a much weaker net lending figure than of late resulted.

"Falling property prices, economic pressures on households, tighter lending criteria and anticipation of the government's announcement on stamp duty all suppressed or delayed demand in August and will continue having an impact."

Mortgage approvals for house purchases tumbled to 21,086 - the lowest since the series started in 1997 and down from 58,564 in August 2007, when mortgage lending had started to slow.

Article continues at Guardian Property

Labels: House market, property prices, uk mortgage market

Mortgage rates have fallen back to the level they were before the credit crisis sent the price of home loans soaring last year.

The average interest rate on a two-year fixed-rate mortgage - the most popular deal taken out by home owners - has dropped from a peak of 7.08 per cent at the beginning of July to 6.39 per cent, according to Moneyfacts.co.uk, the financial website.

Two-year rates have not been this low since July 2007, before Northern Rock was forced to borrow £26 billion from the Bank of England and the phrase "credit crunch" entered everyday use.

The figures confirm that while the economy and the housing market continue to slide downwards, the worst seems to be over in the mortgage market.

It follows two months of steady rate-cutting from the UK's leading banks.

Read more at Telegraph Online

Labels: Bank of England, credit crunch, Mortgage lending, Mortgage rates, property prices, uk housing, uk mortgage market

Britain is on course for a re-run of the negative equity crisis of the early 1990s, with one in seven UK homeowners facing the prospect of having a property worth less than their mortgage, the ratings agency Standard & Poor's said today.

The company predicted that house prices would tumble by a further 17% over the next year, prompting a rise from 70,000 to 1.7m households in negative equity - the same as at the depth of the housing-market meltdown of the early 1990s.

Andrew South, a credit analyst at S&P, said: "The downward trend in UK house prices now seems well established, and we expect prices to continue falling in the near term".

House prices have been falling at their fastest rate on record in recent months, but the previous boom in property values means that only a fraction of Britain's home-owners - 0.6% - are currently in negative equity. The average UK mortgage is for 54% of the value of the home.

S&P warned, however, that for every further percentage point fall in house prices, a further 0.5%-1.5% of borrowers (between 60,000 and 180,000) could enter negative equity. Noting that the trough in the cycle would not be reached until 2009, S&P said: "At this point, we expect 1.7 million borrowers - around 14% - would be in negative equity."

The company said borrowers in the buy-to-let and sub-prime sectors were most at risk from negative equity. "A further 17% decline in house prices could put around 24% of noncomforming borrowers into negative equity, compared with only 13% of prime borrowers."

Read the full article at Guardian Property news

Labels: Mortgage rates, negative equity crisis, property prices, S and P, Standard and Poor, sub prime borrowing, uk housing, uk mortgage market

The housing market could define Gordon Brown's leadership more than any other area of policy. Tony Blair promised education would be his priority; Mr Brown's slogan was not quite "housing, housing, housing" (he preferred some clever-clever guff about "passions" and "priorities") but at the outset he promised 3m new homes by 2020, that environmentally friendly eco-towns would be built, and that the planning system would be streamlined so all this could happen. No doubt about it: he would be the housing prime minister.

All those hopes are now so much dust, thanks to the credit crunch. Housebuilders are either going bust or downing tools, while mortgage lenders are barely lending. Mortgage approvals are down 70% from this time a year ago, according to a report yesterday - which will surely be reflected in sliding house prices over the next few months.

This is bad news for the housing prime minister; but it is terrible for the economy, whose strength he has boasted about so much. That the home-owning British feel wealthier when their houses go up in value may be regrettable, but it is also true. The housing downturn can already be felt on the high street - as it worsens it will keep sending shockwaves through the UK's lopsided economy. A drop in house prices and a calmer mortgage market are vital, as even ministers agree; but a headlong fall in prices and a near-shutdown of the mortgage supply naturally worries policymakers.

The government's interim report on the mortgage industry, published yesterday, is part of Mr Brown's attempt to thaw out the housing market. No other party has tried to tackle the problems in the mortgage market head on. The Lib Dems' Vince Cable is the patron saint of financial re-regulation, but even his policies are a bit thin here. Yet on any list of pressing problems that politicians need to think about, the mortgage drought must rank very high.

Article continues at Guardian Comment is Free

Labels: Gordon Brown, Housing Minister, housing policies, property analysis, property prices, property trends, uk housing, uk mortgage market, US house prices, Vince Cable