Blanchard Consultancy – the independent construction consultant

‘Cowboys’ undermine quality of energy performance certificates
Some energy performance certificates are being prepared so cheaply that the results cannot be relied upon, says David Strong, chairman of the Directive Implementation Advisory Group.
The cross-industry group was formed to advise the government on the energy performance of buildings directive, which created energy performance certificates (right). The certificates carry a rating from A to F and have been mandatory since October for commercial buildings of more than 50 sq m, whenever the building is sold or relet.
Strong, who is also managing director of environmental consultant Inbuilt, says there is anecdotal evidence of firms offering to provide certificates for large property portfolios for as little as £200 each. This would make detailed inspections impossible, says Strong.
‘There is no way you could do it reliably and robustly [for that amount],’ he adds. ‘There are clear signs that cowboys are moving into the market. While some landlords are taking the certificates seriously and are managing their stock better to improve their scores, others just want them done at the lowest possible cost.’
Strong’s claims are supported by John Reyers, partner in building consultancy at Knight Frank, who has set up an online forum for RICS-accredited energy assessors.
‘From this, concerns are emerging about the quality of energy certificates produced by non-RICS assessors, about the thoroughness of some training courses and about fees being quoted that could not possibly support the amount of work needed to do an assessment properly,’ he says.
Strong says 14 different companies are accredited to train assessors. He believes Communities and Local Government should monitor training standards more closely.
‘It is very clear that different companies are applying different accreditation standards,’ he says. ‘There are serious flaws in the quality assurance framework for energy assessors, leading to some very questionable results.’
A spokesman for Communities and Local Government denied the claims: ‘Robust quality assurance measures have been incorporated into the design and production of energy performance certificates, and government-approved accreditation schemes monitor the assessments themselves as well as the quality of energy assessors.’

The proportion of first-time buyers entering the housing market increased for the third month in a row in November, figures showed today.

The National Association of Estate Agents (NAEA) said 10.4% of all properties sold during the month were bought by first-time buyers, up from just 8.3% in August.

It said the improvement offered a "glimmer of hope" among otherwise gloomy statistics as the property market suffered from its traditional seasonal downturn.

House prices continued to fall during November, while there was also a dip in the number of sales agreed and the number of house hunters in the market.

The NAEA said the Christmas slowdown meant the full impact of recent interest rate cuts and government announcements to help the housing market would not be felt until the new year.

Read more at Guardian online

Labels: credit crunch, first time buyers, House market

BRITAIN’s biggest housebuilder will strike a compromise deal with banks this week to buy it breathing space to renegotiate its £1.9 billion debt mountain.

Bankers for Taylor Wimpey are expected to postpone a crucial covenant test on its loans to give the builder more time to restructure its finances.

The embattled company was due to breach an end-of-year covenant test on its loans following a savage downturn in the housing market.

It is expected that Taylor Wimpey will be forced to update the London Stock Exchange this week on the progress of the negotiations.

Article continues at Times online

Labels: credit crunch, Taylor Wimpey

The government's zero carbon homes initiative is in danger of being "devalued" say campaigners who have previously lauded the scheme as pioneering. They say the definition of zero carbon risks being diluted in the face of the worst economic conditions for housebuilding since the 1920s.

However, launching a government consultation on the definition of zero carbon today the housing minister Margaret Beckett said despite the economic crisis she was "absolutely committed to our 2016 target".

The government has pledged that by 2016 all new homes have to be zero carbon, through energy efficiency and renewable power. It estimates that 25% of the UK's CO2 emissions come from housing - reducing demand for household heating using fossil fuels is key to achieving the government's target of an 80% reduction in emissions by 2050.

"Climate change is one of the biggest challenges facing the world, and introducing zero carbon homes is an important part of our plans to tackle this." said Beckett.

She added: "With the consultation process we are launching today, we are confident we will be able to achieve our ambitions while giving the industry flexibility for how they get there."

Read more at Guardian online

Labels: financial crisis, zero carbon housing

Alistair Darling's plan to assist the construction industry by bringing forward £3bn of infrastructure work was overshadowed last night when it emerged that the Treasury has ordered a review of its huge overhaul of the English schools estate.

Although the chancellor yesterday announced the fast-tracking of £800m worth of primary school construction and refurbished secondaries, a rethink of the £45bn plan for new schools and for an improvement in the education workforce would be a severe blow to the building sector.

The schools programme is thought to be worth more to construction firms than the Olympics and the proposed expansion of Heathrow airport put together.

The pre-budget report identifies a series of areas to be targeted under the public value programme for additional savings.

Read more at Guardian online

Labels: Alistair Darling, Construction, Housebuilders, pre-budget report

Homebuilding in Britain has fallen to a 84-year low as falling house prices and dwindling numbers of buyers hit construction firms, a new report shows.

Some 135,000 private houses were started this year, down from 203,500 last year, figures from the Construction Products Association and Ernst & Young show.

It is the lowest number of housing starts during peace time since 1924, when housebuilders started work on 87,000 properties.

There are fears that housebuilding could grind to a virtual halt in the new year as more housebuilders stop work. Several large construction groups have postponed starting new projects as they try to drum up buyers for existing completed homes.

Article continues at Times Online

Labels: Construction, Housebuilders, uk housing

One of Britain’s most powerful bankers gave a grim economic forecast last night that the country was only midway through the housing slump and that unemployment was set to soar.

John Varley, group chief executive of Barclays, painted a bleak outlook, saying that property prices could fall by a total of 30 per cent from their peak to the end of 2009 while unemployment could rise to 7.5 per cent of the working population. The previous lending policies’ of banks, in which 100 per cent mortgages and beyond were approved, were “madness”, he said, admitting that banks were partly to blame for the current recession.

It was time they showed “humility”, and said “sorry” to customers for their role in the sharp economic downturn and they needed “to take their share of responsibility”.

Mr Varley said, in an interview to be broadcast on Sky News tonight that there was still more pain coming for homeowners: “Our view was that from the top to the bottom, you would see a fall of something like 25 to 30 per cent. I suspect we’re about halfway through that at the moment. I mean that slow-down, the negative house price inflation started in 2007, it’s accelerated in 2008.

Read the full article at Times Online

Labels: Barclays, falling house prices, House market

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

The value of UK commercial property will have more than halved by the end of the decade as rental demand continues to wane, according to a report out today.

The Royal Institution of Chartered Surveyors (RICS) predicts that the commercial property market will see a fall of at least 16% in capital values in 2009 and up to 10% in 2010. Capital values have already fallen 25% since the onset of the credit crunch in June 2007. This would mean steeper falls than in the recessions of the 1970s and early 1990s.

Oliver Gilmartin, senior economist at RICS, said: "We are only halfway through the price correction in the commercial property market, with values set to fall through 2009 and 2010 as rental declines gather pace. Transaction activity is set to rise, however, as more sellers become willing to accept lower bid prices."

The report says that rising defaults will prevent a near-term recovery, and the investment market will be sluggish for some time to come.

Article continues at Guardian online

Labels: commercial mortgages, commercial property prices, RICS

Homeowners will have to wait a decade before property prices return to 2007 levels, a leading estate agent said yesterday.

Average house prices are tumbling at a rate of £78 a day and are set to fall in total by 16 per cent this year and 11 per cent by the end of 2009, according to a forecast from Savills. This will bring the average value down from £182,080 in December 2007 to £136,123.

The London-based agent does not expect the market to show signs of recovery for another two years, with a full rebound to 2007 levels not likely until at least 2018.

It cautioned that only buyers with adequate cash will be able to take advantage of cheaper prices in the meantime, because of the lack of availability of mortgage deals.

Read more at Times online

Labels: Housing market, property prices, UK recession, uk repossesions

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

Land Securities, the UK’s largest property company, has reported a pre-tax loss of £1.74bn as the deepening decline in the property market forced the group to cut the value of its assets.

The company, which made a profit of £365.2m in the same six months last year, suffered writedowns of £1.74bn amid an “unprecedented period of financial instability”.

The plan to demerge Land Securities will be stopped because of the economic conditions, the group said, although it is still working on the sale of outsourcing arm Trillium.

Halting the demerger plan was widely expected among analysts because of the downturn and the departure of chairman Paul Myners to become the Government’s city minister. Land
Securities announced today that Mr Myners will be replaced by Alison Carnwath, the present chairman of MF Global.

Read more at Telegraph online

Labels: House market, Land Securities, property prices

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 UK's largest building society today said it expected house prices to continue to fall next year as it announced it had cut lending by more than two-thirds.

Nationwide Building Society's chief executive Graham Beale said house prices would continue to fall by 1% to 1.5% a month for the rest of the year and there would be further price drops in 2009-10.

Last month, the society said prices were down 14.6% year on year, with the average price of a home now almost £30,000 less than a year ago.

Beale said interest rate cuts, which Nationwide has so far passed on to customers in full, would help the market.

"Rate cuts will help to minimise payment difficulties and alleviate payment shock as borrowers reach the end of their existing deals.

"Reducing prices will improve affordability, which should bring about a recovery in the first-time buyers' market."

Releasing its interim results for the six months to September 30, Nationwide said it had advanced £1bn worth of mortgages, when repayments and redemptions were taken into account.

Read the full article at Guardian online

Labels: credit crunch, House market, Mortgage rates, Nationwide

Which banks have passed on the base rate cut and which haven't?

Heroes

HBOS, owner of Halifax, the UK's biggest lender

Market share: 20.1%; Gross mortgage lending in 2007: £73.1bn

HBOS bowed to immense pressure and passed on Thursday's 1.5 per cent cut to its SVR across all four of its mortgage brands — Halifax, Bank of Scotland, Birmingham Midshires and Intelligent Finance. It was also one of the first to pass on last month's half-point cut in full to borrowers on a variable rate. HBOS is one of the three banks accepting taxpayers cash as part of the Government's £37 billion bail-out of the banking industry.

Lloyds TSB, owner of Chelthenham & Gloucester and Scottish Widows

Market share: 8.1%; Gross mortgage lending in 2007: £29.5bn

The first to pass on Thursday's 1.5 per cent, Lloyds TSB is reducing its standard variable rate (SVR) by the full amount to 5 per cent from December 1. The move will reduce monthly repayments by £187 on a £150,000 interest-only mortgage. Scottish Widows, the mortgage lender which is part of the Lloyds TSB group, also said it was reducing its SVR today by 1.5 percentage points to 4.99 per cent.

Abbey

Market share: 9.8%; Gross mortgage lending in 2007: £35.6bn

The bank, which is owned by Spain's Santander and is the UK's second biggest lender, was the second to cut its SVR on Thursday by the full 1.5 per cent, reducing it from 6.94 per cent to 5.44 per cent from December 1.

Bradford & Bingley

Market share: 3.9%; Gross mortgage lending in 2007: £14bn

The nationalised lender cut its product variable rate (PVR) by 1.5 per cent on Friday morning. However, as its PVR is pegged to the base rate, Bradford & Bingley had no choice but to pass it on to borrowers. Around 15 per cent of Bradford & Bingley's mortgages are on the PVR. The lender also passed the full 1.5 per cent cut to a small number of borrowers on its standard variable rate .

Nationwide

Market share: 9.3%; Gross mortgage lending in 2007: £33.9bn

Britain's biggest building society and third biggest lender was the first to cut its base rate by the full amount following a meeting with the Chancellor attended by Nationwide and the major high street banks on Friday morning. Its SVR will fall from from 6.19% to 4.69% to December 1.

Royal Bank of Scotland (RBS) and its sister NatWest

Market share: 6.2%; Gross mortgage lending in 2007: £22.6bn

RBS announced it was cutting the SVR by the full 1.5 percentage points from December 1. RBS was under particular pressure to cut its rates as it is set to take the biggest share of taxpayers cash in the Government's £37 billion bail out of the UK's banking industry. It's SVR has fallen from 6.69 per cent to 5.19 per cent.

Read the full article at Times online

Labels: credit crunch, HBOS, HSBC, LLoyds, RBS, UK Interest rates

The balance of surveyors reporting demand for commercial property in Q3 has fallen at the fastest pace in a decade, says RICS’ Commercial Property Survey published today (3 November 2008).

52% more Chartered Surveyors reported a fall than a rise in demand compared to 50% in Q2 2008.

All sectors remain firmly in negative territory for the fourth consecutive quarter with the industrial and office sectors dropping to the lowest balance in the survey’s history.

The worst hit area continues to be the retail sector with 59% more Chartered Surveyors reporting a fall than a rise in retail demand, a slight improvement from 63% in Q1.

The continuing financial turmoil and a slowing housing market is clearly weighing upon both retailer and consumer confidence.

The net balance of surveyors reporting new occupier enquiries in Q3 declined at the fastest pace in the survey’s history.

Read more at the RICS newsroom

Labels: commercial mortgages, credit crunch, property prices, RICS

Taylor Wimpey, the crisis-hit housebuilder, will issue a grim trading statement this week, revealing an alarming drop in sales at a time when it needs all the cash it can muster to survive.

The firm, struggling under the weight of a £2bn debt mountain, will say that increased incentives to persuade buyers to commit to one of its homes have significantly reduced margins at a time when sale volumes have plunged.

Sales and house prices have weakened further since the company, led by chief executive Peter Redfearn, last gave the City an update in August.

Taylor Wimpey was worth £4.3bn midway through last year but it is now valued at just £142m. The firm is willing to sell off large chunks of its land bank as it struggles to meet its onerous bank obligations.

Taylor Wimpey's statement comes as analysts at Panmure Gordon expect write-downs at the firm to total £1.2bn, with £690m already accounted for. The company is expected to say that it has failed to reach agreement on a refinancing with banks and bondholders, which are now involved in talks to ensure the firm keeps on trading. Lenders are considering basic terms for restructuring the company's finances that would give it breathing space to trade through the crisis until 2012.

Article continues at Guardian online

Labels: credit crunch, Housebuilders, Taylor Wimpey

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

Bemused by the banking crisis and the stock market madness of recent weeks? The Independent's Business Editor Margareta Pagano answers the key questions

Is the worst of the worldwide crisis in banking now over?

Governments have committed a total of $2 trillion to be injected into the banking system. Here in the UK, for example, the Government is pumping £39bn into three of the our biggest banks – Royal Bank of Scotland, Lloyds TSB and HBOS – by buying shares in them to provide new capital.

The aim is to strengthen the banks' balance sheets so that they can start lending to each other again, and to their customers. But the most important objective is restoring confidence in the financial markets. It's too early to tell whether this has been achieved. But the way the world's leaders took such committed action last weekend to put together this co-ordinated action appears to have gone far to prevent a systemic collapse. Don't take too much notice of the volatile reaction of the stock markets last week after the news was announced. The markets are now looking forward to the next crises – the unwinding of the derivatives market and recession.

Who is to blame?

We all are, to some extent. Over the past decade the US and UK governments allowed people and companies to borrow too much and too cheaply. In the US, mortgage companies were offering "teaser" mortgages at only 1 per cent, so when interest rates were raised, many could not afford to meet the new mortgage payments – leading to the so-called sub-prime market. In the UK, banks were lending money to people to buy mortgages at 100 per cent. They were also encouraged to take on more credit. With house prices rising, everyone felt wealthy and so they replaced equity in their house for debt to fund the next holiday. Savings ratios crashed. But then last year Northern Rock collapsed, sending shivers through the financial system because it could not raise enough money to meet the demands of its depositors. So you could say governments were to blame for allowing the debt mountain to grow, the financial regulators for not keeping a tighter control over the banks who lent beyond their means too, and the public for indulging in their debt addiction.

Article continues at the Independent online

Labels: credit crunch, explanation, faq, financial crisis

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

Across the UK, houses are selling at an average of nine percent below the asking price with sellers in some regions being forced to accept as much as 12.5 percent discount off their advertised price, says RICS research published today.

As economic fundamentals continue to worsen, the gap between selling and asking prices is widening. In the North vendors are accepting the lowest offers – averaging 12.5 percent below the marketed price.

Vendors in the North West, East Midlands, West Midlands and Wales are accepting offers averaging approximately 10 percent below but in London the figure stands at 8.5 percent.

London has remained firmer than most as its diverse economy and large job market offers sellers more room for optimism.

Read the full article at the RICS newsroom

Labels: House market, property prices, RICS

More than 75 per cent of UK estate agents are threatening to remove properties currently listed on the UK's biggest property website, according to an online poll.

The survey, by estateagenttoday.co.uk, found that more than three quarters of estate agents will not be renewing their annual subscription to the site because its fees, which can be as high as £500 a month per estate agent, are considered too expensive.

Should the planned defection go ahead, it would leave Rightmove, which boasts around 20,000 agents and developers, a less reliable source of information for homebuyers wanting to compare properties on the market.

The company, founded by Halifax, Countrywide & Connells estate agencies in 2001, saw estate agency membership fall by 3 per cent in the first six months of this year to 11,984. Its retention rate among estate agents was down to 84 per cent in the same period, which Rightmove attributed to the large number of estate agency businesses leaving the industry.

Article continues at Times Online

Labels: Halifax, National association of estate agents, Rightmove

Sharif Shafei, PR supremo for a leading Dubai-based developer, can certainly talk the talk. Words like brand, vision, iconic and ambition trip easily off his tongue – all to convince you that it's business as usual in the world's hottest real estate market.

Shafei, an engaging Egyptian-Canadian, works for a company behind huge construction projects in neighbouring Saudi Arabia, Qatar and Morocco, all cashing in on an oil-driven boom and Dubai's reputation for cutting-edge architecture, boundless imagination and high returns.

"I am telling people to continue to invest in real estate," he insisted. "There is no bubble that's going to burst."

In a week that saw panicky stock markets, falling oil prices and credit growth outstripping deposits, the brashest economy in the Middle East barely paused for breath. And with annual growth of nearly 18% since 2001, it's easy to see why. Indeed, across the Gulf, the overall real estate market has been valued at a whopping $1.3tr (£750bn).

Read the full article at Guardian online

Labels: Construction, middle east construction