ROOF Blog archive

The number of repossessions jumped by 70 per cent in the past year. According to figures from the Financial Services Authority, some 11,054 homes in Britain were repossessed in the second quarter of the year, up from just under 6,500 during the same period last year, and 9,172 in the first three months of 2008.The number of repossessions is expected to continue rising, with the FSA figures also revealing an increase in the number of homeowners who are in arrears on their mortgage. By the end of June this year, some 312,000 families were behind on their mortgage payments, up 16 per cent compared to the same period in 2007.

Meanwhile, homeowners in some of central London’s wealthiest areas are also beginning to feel the pinch, according to data published by the Land Registry yesterday. In September, house prices in Kensington and Chelsea – which had been steadily rising at an annualised rate of 33.5 per cent a year ago – fell by 2 per cent, having fallen by 1.1 per cent the previous month. House prices in Islington fell by 1 per cent in September from August, and in Westminster, which includes Mayfair, the area favoured by hedge fund managers, it fell by a more modest 0.8 per cent. Many of the areas now showing declines are those that have been home to high-flying financiers whose careers may be in doubt as leading financial firms cut back on staff. Overall, prices of homes in England and Wales have fallen by 8 per cent year on year, losing 2.2 per cent in value in September alone.

But mortgage approvals for house purchases rose in September for the first time in more than a year, but remained near record lows, new figures from the Bank of England show. The Bank said mortgage approvals for new house purchases rose to 33,000 last month from a record low of 32,000 in August, the first rise since June 2007, but at the second lowest level recorded since the series began in 1993. The level is also more than 67 per cent lower than the 101,000 mortgages approved in September last year.

Gordon Brown has called for a cut in interest rates to stimulate the economy. The Prime Minister said inflation was coming down – allowing the Bank of England to respond with further cuts to bring down the cost of borrowing to families and businesses. And in a speech today, he will pledge to crack down on the jobless – despite fears that unemployment may rise to three million. ‘The very moment in an economic downturn when we need to invest in human capital is no time to slow down welfare reform,’ he will say. The speech is to mark the day incapacity benefit is replaced by the new employment and support allowance.

Thousands of homes are being seized by banks using a legal loophole. Some with debts of as little as £1,000 have been served with charging orders, which allow creditors to demand the sale of a property. It comes a week after Yvette Cooper, the chief secretary to the Treasury, told banks to cut repossessions following predictions that two million householders would fall into negative equity by 2010. The Ministry of Justice said that 97,026 charging orders were granted by courts in England and Wales last year, a 10-fold increase since 2000.

And the Prime Minister’s flagship plan for a string of eco-towns across Britain has been dealt a critical blow, with only two of the 10 sites promised now expected to be built. The plans are now in jeopardy thanks to a combination of the credit crunch, a collapsing construction industry and fierce local opposition. Officials at the Department for Communities and Local Government have concluded only ‘one or two’ of the 15 shortlisted projects are genuinely viable, according to a source close to the discussions. The final decision on how many should go forward is yet to be taken by Margaret Beckett, the new housing minister. But she failed to mention either eco-towns or the government’s wider target to build three million new homes by 2020 – which housing experts are also now openly questioning – when she made her first speech to the Home Builders Federation’s annual conference last week.

House prices are expected to tumble by an average of £40,000 by the end of next year. A study shows a peak-to-trough fall in house prices of up to 20 per cent by December 2009, taking the figure back to 2004 levels. The figures come from the Centre for Economics and Business Research, which predicts the market will not show any signs of stability until 2010. However, the organisation believes prices and sales will see a new boom in 2011 and 2012. The CEBR puts the average house price peak at £196,000 in 2007 with a predicted figure of £57,000 by next Christmas. Some 1.5million properties were bought in 2007. That is expected to plummet to 916,000 this year and 900,000 in 2009.

The Rugg review – published yesterday – has set out a swathe of proposals designed to tighten up regulation in the private rented sector and protect tenants in the event of their landlord defaulting on the mortgage. The report proposed a series of recommendations that would turn letting property into a business. Under the proposals, landlords would require a ‘licence to let’ and would have to use a business plan in order to take out a mortgage. The report also proposed tax incentives that could include changes to stamp duty and capital gains tax for professional landlords to encourage them to buy more property. Landlords who fail to measure up would have points deducted or lose their licence altogether and be banned from letting property.

A third of the £200 million set aside by the government to buy unsellable private homes has been allocated to housing associations. More than 2,000 homes built by developers have been bought by associations in the past three months, with the largest deal so far coming this week when Sanctuary Housing Group bought 335 homes from Bloor Homes. Communities and Local Government said ‘many more deals’ were in the pipeline.

Analysts at Capital Economics warned today that house prices could fall by a further 25 per cent from today’s prices by late 2009 – even if interest rates are cut to 2.5 per cent. It also dismissed the government’s recent bank bail-out as a short term fillip, claiming it is failing to shore up the property market.

Meanwhile the number of mortgages approved for house purchases rose in September, but was 57 per cent lower than a year ago, according to figures from the British Bankers’ Association. Between August and September there was a 10 per cent increase in loans. But the BBA said it was no surprise that lending levels remained low despite the government’s move to kickstart the housing market by raising the stamp duty threshold, and before money was ploughed into the financial system. The BBA also added that the mortgage market had become more concentrated, with the high street banks now providing more than two-thirds of all new lending.

In America, foreclosure rates increased 71 per cent in the third quarter, leaving more than 750,000 homeowners in danger of eviction. A million foreclosures are expected by the end of the year, amounting to a third of all properties for sale. Previously booming states, including California, Arizona and Florida, are now feeling the brunt of the downturn.

Household bills are starting to go unpaid as the credit crunch hits. According to information from Moneyexpert.com the number of electricity bills that have gone unpaid in the past six months has increased from 1.31 million to 1.96 million, and around 1.6 million households have missed a gas bill compared with 1.16 million in the final six months of 2007. In total more than 5 million people have missed a household bill of some sort in the past six months.

But under a new campaign launched this week, low-income householders will receive help from specially trained workers from Citizens Advice, housing associations and credit unions to find the best energy deals. Research from Ofgem found that many vulnerable customers needed more guidance about tariff and payment options, accessing grants to install insulation and central heating, and managing bills. Pensioners, the unemployed and low-income earners are switching suppliers in the lowest numbers.

Gordon Brown announced yesterday that new guidance will be issued to judges in England and Wales in an attempt to ease the repossession rates. In the pre-action protocol plans for mortgage arrears, mortgage lenders will have to prove that they tried to help struggling homeowners before they can repossess a house – this help may come in the form of agreeing a full or partial repayment holiday until the borrower can resume full repayments, and changing the type of mortgage or extending the terms of repayment. The government also announced that it planned to bring firms offering mortgage rescue schemes under the regulation of the Financial Services Authority.

However the new proposals will not apply in Scotland and opposition parties are calling for Scottish homeowners to receive the same protection from repossession as householders in England and Wales. The Scottish government said it had already put measures in place to help people experiencing difficulties with mortgage repayments, including a support fund which aims to allow homeowners in trouble to retain ownership of their house and it is also planning a publicity campaign urging people to seek help through Citizens Advice and Debtline.

The number of people renting a property in the UK has increased by 50 per cent in the past 12 month. It is estimated that 1.6 million 20- to 39-year-olds are renting because they cannot afford to buy a place, and even a 20 per cent fall in property prices would still only open the housing market up to 600,000 buyers.

London mayor Boris Johnson is expected to move today to abolish the 50 per cent affordable homes target in London. He believes the ‘one size fits all’ target is out of place and wants to allow borough councils greater flexibility in setting the number of affordable homes they can deliver.

The South East Regional Assembly has objected to the government’s plans to build a minimum of 33,000 homes a year in the region. The assembly said there is a clear mismatch between the government’s figures and their lack of commitment to invest in roads, transport, schools, and health services. It also said it was unrealistic to increase the annual house building target in the current economic climate.

Child poverty costs Britain at least £25 billion a year, a new report from the Joseph Rowntree Foundation has found, if measured in terms of poor health, education failure, crime and subsequent lack of employment of children affected. A spokesperson for JRF said that tackling child poverty ‘would bring a double benefit – for the families… and for society’.

A national points system for the care of elderly and disabled people has been recommended by the head of the social care inspectorate in England. The present system was described as ‘so flawed and heavily criticised that immediate changes are needed’. Eligibility requirements show big variations between councils, and help to millions of vulnerable people is being denied by those that apply the measure of incapacity too strictly.

The House of Lords has ruled that a rough sleeper with mental health problems and in receipt of income support was justifiably discriminated against when the government denied him an additional disability premium because it is not paid to a person who is ‘without accommodation’. The defendant argued that this breached his human rights and he was discriminated against due to his status as a rough sleeper. While the House of Lords agreed he was discriminated against, it said the government was entitled to have a policy that encouraged disabled people to seek shelter before paying money that is unlikely to be put towards the additional household expenses faced by a disabled person.

In a joint letter to housing associations the Housing Corporation and Local Government Association have called on them to continue to work closely with local authorities to help boost affordable housing supply. The letter says that while housing delivery targets for 2008/09 remains on track ‘more than ever we will need to work together to adapt to the current environment and be willing to flex current models to ensure continued delivery’.

Banks and mortgage lenders have been accused of not passing on interest rate cuts by consumer group Which? It has called for ‘quid pro quo’ between banks and consumers, as a Moneyfacts survey recently found that the interest rate cuts have been passed on by just 25 per cent of lenders. A spokesperson for Which? said that with the worsening economic times, in the current circumstances the ‘consumer deserves a break’. This comes as Nationwide, the UK’s biggest building society, raised its rates on all of its tracker loans.

Meanwhile Barclays is to become the first lender to use the government’s £250 billion bank debt guarantee. It plans to raise up to £1 billion through the sale of three-year notes. Ray Boulger of John Charcol said the key to success in kickstarting the mortgage market would depend on the government not charging the banks too high a fee.

The Audit Commission is to extend short notice inspections to council housing services and arms length management associations. They are expected to vary in scope and duration – from looking at single service areas such as tenancy management, to cover the whole of the landlord service for tenants and leaseholders. Councils and ALMOs are invited to volunteer for the pilot scheme expected to start in the new year.

The High Court has warned magistrates’ courts not to make antisocial behaviour orders (Asbo) against individuals whose mental state made them ‘truly incapable’ of compliance. The High Court said that such orders would not protect the public and would be wrong in law to make them, after two senior judges were asked to clarify the law in the case of a homeless drug addict banned from Nottingham town centre. While the High Court declined to intervene in the case, it did issue guidelines for treatment in the future, when lawyers for the man said that the Asbo against him ‘criminalised his mental health problems’ and this prevented him from understanding and complying with the Asbo.

Londoners suffer the worst housing conditions in the country, after more than 750,000 were found to be living in overcrowded homes and more than one in 10 people living in the capital are on a social housing waiting list. Research from the National Housing Federation says the number of people waiting for social housing has increased by nearly 50 per cent in the past five years, and overall London needs at least an extra 11,000 new homes a year to meet demand. House prices cost more than 14 times the average Londoner’s income and private rents are more than twice expensive as social rents.

The gap between rich and poor in the UK has decreased ‘remarkably’ since 2000, a survey by the Organisation for Economic Cooperation and Development (OECD) has found. However, while ‘the poor have been getting richer more rapidly than the rich’ the UK still had one of the highest levels of income inequality in the developed world. The main reason that fewer people were living in poverty, the report said, was higher employment rather than the redistribution of wealth.

However, the number of children living in poverty has risen for a second time this year. The amount of children in poverty rose by 100,000 in 2006/07 to 2.9 million before housing costs, while the level of pensioner poverty increased for the first time since 1998, rising by 300,000 to a total of 2.5 million. These numbers increase once costs such as rent and mortgages are taken into account; with the number of children living in poverty up by 100,000 to 3.9 million. The increase may threaten the government’s target of halving child poverty by 2010.

Work and pensions secretary James Purnell has ordered an enquiry into a local housing allowance loophole that pays local councils to house people in properties ‘they would not be able to afford if they were in work’. Mr Purnell said new rules for claiming housing allowance should include a cap in rent for houses with five bedrooms or more by next April; and he wants council leaders to be given the power to move a family after a year if a cheaper home becomes available. Mr Purnell also ordered that the council finds a cheaper home for an Afghan family of eight, living in a house costing the council more than £12,000 a month in rent.

In London, two of the main venues at the Olympic Park may have to be nationalised if they are to continue being built. The £1 billion athletes’ living accommodation and the £400 million media centre are both facing funding shortages due to a lack of investment and the government is resisting allocating more money. So far, no money has been guaranteed from the private sector or housing associations who were expected to fund up to £850-£900 million needed to complete the Olympic village.

Meanwhile some of Britain’s biggest companies have deferred paying business taxes, creating a £2.5 billion ‘black hole’ in council budgets. Many businesses are rescheduling their payments, but around 8,000 businesses have closed since January, resulting in a cashflow problem for councils that may cause higher council tax bills or cuts in services for residents. Local authorities receive more than £17.5 billion from businesses.

Analysts fear that more money will be taken out of the housing market than is put in by the end of the year. Figures from the Council of Mortgage Lenders showed a 10 per cent decline from August, and a year on year drop of 42 per cent in gross mortgage lending.

First-time buyers are being warned that private sector shared equity schemes do not offer the same level of protection as government funded schemes. Notting Hill Housing, a housing association, said that private schemes are designed to lure in the most vulnerable sector of the market, and can leave buyers severely out of pocket once the initial deals have run their course.

Collapsing house prices are plunging 60,000 homeowners a month into negative equity, making the figures worse than the housing crash of the 1990s. At the current rate, by the end of this month 335,000 homes will be worth less than their mortgages, a rise of 260,000 in four months. If the trend continues two million households will enter negative equity by 2010, outstripping the 1.8 million affected in the last slump.

The news comes as chief secretary for the Treasury Yvette Cooper has said banks will face new curbs on their powers to repossess homes. In an interview with the Observer newspaper Ms Cooper said that the government would act to prevent a rise in evictions during the expected recession, and lenders would have to prove that homeowners could not pay off their mortgages under alterative payment schemes. Lenders applied to repossess 80,000 homes during the first six months of this year, a figure that equates to the property crash on the early 1990s, with more than 19,000 properties already seized, a 40 per cent increase on the previous six months.

Banks and courts, however, are resisting pressure to show leniency towards homeowners struggling to save their homes. Drafts of the first pre-action protocol for mortgage arrears, which set out the guidelines for settling disputes before the matter is taken to court, have not ruled on the right of borrowers to request a ‘reasonable’ extension to their loan and repayment of arrears.

Labour MPs have been urging the government to nationalise parts of the house building industry, saving thousands of jobs and solving the shortage of social housing at a relatively low cost. Jon Cruddas, who recently declined the post of housing minister, said that with builders’ share prices ‘disintegrating’ and the price of land falling it was time to consider radical policies.

Chancellor Alistair Darling has already said he plans to bring forward billions of pounds of public money in an emergency boost to the UK economy, and is expected to announce details in next month’s pre-budget report. He has warned cabinet colleagues to live within spending limits, but has told aides he wants to ‘reprioritise’ spending in key areas.

Half of all first time buyers and key workers have either never heard of shared equity schemes or are confused by them, while a further 13 per cent were convinced they would not qualify for help in buying a property, according to a survey. However, information from website propertyfinder.com found that 97 per cent of first-time buyers would qualify for the schemes.

Meanwhile if further proof was needed, the latest figure from the Council of Mortgage Lenders (CML) has shown the slump in mortgage lending continued in September. Total lending was £17.7 billion for the month, down 10 per cent from August, and 42 per cent lower than a year earlier. The CML predicted that new lending for the year would be only 37 per cent of the level during 2007.

But an affordability index undertaken for the Daily Telegraph indicates that houses have become ‘significantly’ less overvalued in recent months. The index, which takes into account the costs of mortgages as well as householders’ disposable income, shows that prices were unlikely to fall much more than 20 per cent, and should stop falling mid to late next year. However it warns that housholds should not expect prices to bounce back as fast as they did in the past.

But property website Rightmove has warned that the property market is unlikely to ever be the same again, even though its figures show a rise of 1 per cent in the asking price of homes in the past month. An annual drop of 4.9 per cent is the largest year on year fall recorded. The small monthly increase is thought to be due to sellers hoping for higher prices in the run up to christmas; and according to Righmove many people are simply falling to price their homes realistically.

The Tenant Services Authority, the new social housing regulator will consult with councils and arms-length management organisation (ALMO) tenants and landlords, bringing them under its remit, alongside housing associations and other for-profit providers, as recommended by the Cave report. The TSA goes live in December and will spend its first eight months in informal consultation with tenants and providers before opening its register to local authorities and ALMOs in 2010.

The housing ombudsman has published its annual report, and revealed that the number of complaints considered by the service has increased by more than 10 per cent since last year. The largest number of complaints was about disrepair, accounting for 32 per cent of the total. The ombudsman said that tenants in social housing will soon have a single regulator, access to the service, and a forum for their voices. In contrast he slammed the rights of private sector tenants, calling their treatment as that of second class citizens.

A third of homeowners think the value of their property has not been affected by the housing market downturn according to research by a property valuation site. Around 32 per cent of people said they thought their home was worth the same or more than it was 12 months ago, even though the research showed that 97.3 per cent of UK house prices had fallen in this time. A further 38 per cent of homeowners expect their property to hold its value or increase in the coming months, prompting a spokesperson to comment that there was a significant gap between perception and reality.

A Bill allowing councils to impose higher energy efficiency standards on new homes is set to become law today. The Bill allows councils in England and Wales to require that a proportion of energy used in developments should come from renewable sources, and they may also be allowed to set higher efficiency targets than under the current rules.

Shelter is again under fire for its support for the proposed eco-town in Middle Quinton, from local MP Peter Luff. Mr Luff said that the Shelter report into the eco-town, which called for ‘much needed social housing’ in the area, was influenced by Communities and Local Government. In a letter to Shelter he agreed that while there was a need for more social and affordable housing in his constituency, he argued that there was no such need existing at the preferred site of the town.

Meanwhile in Wales, Shelter Cymru has claimed that as many as 24,500 empty homes could be used to house thousands of families on council waiting lists. It wants councils to use their legislative and financial resources to use the homes, all of which Shelter claims have been empty for six months of longer, for more than 80,000 households currently on the waiting list. A Shelter spokesperson said: ‘People are unable to find suitable homes in their communities and allowing properties to remain empty has both social and economic costs.’

The Gambling Commission has postponed a raffle in which a £1 million property was the prize. The draw was due today, and 46,000 tickets have been sold, each costing £25 each. But the commission, which has recently warned homeowners who were considering selling their houses in this way that they could be breaching the law, has said that lotteries are the ‘preserve of good causes and cannot be operated for private gain’. There have been several similar schemes of late as homeowners have tried to the beat the credit crunch. The owners of the house said they were in discussions with the Gambling Commission to resolve the issue as soon as possible.

Northern Rock admitted it is repossessing more than 11 homes a week, but its chairman insisted that it was not taking a tougher line than its rivals. The bank, which was nationalised in February, had 1.18 per cent of its mortgage customers in arrears by the end of June, and this figure has now increased to 1.87 per cent. Three-quarters of those repossessed were customers who had borrowed 125 per cent of a home’s value under the ‘Together’ mortgage. One in every 150 households across Britain is now three months or more in arrears. But one in every 108 Northern Rock customers has had their home taken from them compared with a national average of one in every 250.

And it could all get worse as the number of people out of work rose at its fastest rate since the recession of the early 1990s. In the three months to August unemployment rose 164,000 to just under 1.8 million people. David Blanchflower, member of the Bank of England’s monetary policy committee, called the number truly horrendous and much worse that feared. He added that his prediction that unemployment would reach two million by Christmas now looked conservative.

However homelessness minister Iain Wright is today launching a new initiative in Birmingham, that gives young people aged 16 to 25 the opportunity to get involved in home ownership. The scheme allows for a proportion of the weekly rent to be placed into a savings account. The rent and charge payments would be kept low enough to reduce benefit dependency and maintain sustainable employment. After three years the account can be used as a deposit for a property. The scheme is different to other initiatives which are time limited and geographically tied.

Shelter has released a new report criticising housing conditions for immigrants and calling on government to improve the regulation of housing in the private rented sector, while offering more effective safety nets for both migrants and non-migrants. A spokesperson from Communities and Local Government, said that an independent review has been set up to tackle the problems faced by tenants and landlords, and to look at how the sector can be improved.

Financial reports from several housing associations have revealed falling profits and huge write-downs of assets. Analysts believe that several of the country’s 1,555 housing associations may have to be bailed out or merged in the coming months. Many associations have also started to urge ministers to rethink the model of home ownership as the tenure of choice for and to adopt a more flexible model, which would allow people to move between tenures as their circumstances change.

And finally a mile long system of vertical and horizontal tunnels and shafts built under the streets of High Holborn in London are up for sale today. Originally built as air-raid shelters in 1940, the rooms have since been used a ‘reserve war room’, public records library and telephone exchange. The site is fully equipped with electricity, water and ventilation. The sellers are looking for a purchaser to return the tunnels to productive use.

House building targets to build three million new homes by 2020 are ‘under threat’ or ‘very, very challenging’ because of the credit crunch according to the director of housing and planning at Communities and Local Government; while new housing minister Margaret Beckett has rejected calls in parliament for the government to embark on a new programme of council house building. Ms Beckett said the extra accommodation needed did not have to be provided in the form of council houses, although ‘we will be happy to see a greater expansion and provision by councils’. She also refused to remove the right to right to buy.

Sale and rent back schemes, first criticised in ROOF November/December 2007, need to be more tightly regulated to protect homeowners, the Office of Fair Trading (OFT) reported yesterday. The report, the culmination of a five-month inquiry, called on the Financial Services Authority to improve transparency in a market. Around 1,000 companies who complete a total of 50,000 sales worth an estimated £2.5 billion are now involved in the industry. Only a tenth of the companies are members of a trade organisation. The National Landlords Association said there was a place for the ethical use of the schemes, however Shelter has called for the prosecution of rogue companies.

Town hall officials will meet with ministers today to discuss the help available for 116 councils affected by the collapse of the Icelandic banking system. The Local Government Association (LGA) confirmed yesterday that the 116 councils had invested more than £850 million in the banks, leading to fears of an increase in council tax, service cuts and missed wage payments. The government has set up a unit to help any local authorities in severe difficulty, however, it says that none of the affected councils appeared to be facing ‘serious imminent liquidity problems’. The LGA is demanding an enquiry into why credit ratings agencies continued to rate Icelandic banks highly just days before they collapsed.

Gordon Brown’s claim, reported yesterday in ROOF that the UK would not suffer a housing market crash as bad as that in the US or Spain because it had not overbuilt, came under attack from the Royal Institution of Chartered Surveyors, who said there had been huge amounts of overdevelopment in parts of the country and pointed to the flood of empty flats in most city centres. Some experts agreed that planning controls had been tighter in the UK than many other countries, and pointed out that there is an undersupply of houses in London and the South East, but said this did not mean there would not be a crash.

House prices will fall by a further 10 per cent before the market begins to stabilise, a Treasury select committee was told yesterday. People’s expectations of what house prices would do, was now a dominant factor in the market, probably even more important that the availability of mortgage finance. The report expects house sales to pick up again ‘quite sharply’ once the market has bottomed out.

This is better news than that of another academic, who says the average price of a house in the UK will not return to its 2007 peak until 2023. Using figures based on the Halifax house price index the report calculated that in 2010 the average will be 40 per cent lower than the peak of prices in August 2007 and would not recover for a further 13 years. It was ‘very bad news’ for anyone who had bought a property in the past year and predicted that negative equity would be a big feature of the economic landscape for years to come. However, properties would become more affordability as prices fall.

House sales have dropped to their lowest level since records began 30 years ago, the latest Royal Institution of Chartered Surveyors housing market survey has shown. Estate agents sold an average of 11.5 properties in the three months to the end of September, less than one property a week. A year earlier agents were selling more than double that amount, and at the market’s peak – more than five. London was the worst hit will only 8.3 properties sold on average, 0.63 properties a week. Some sellers are now choosing to let their properties rather than accept a lower price.

Gordon Brown has said that the UK property market is likely to bounce back before other countries because ‘we failed’ to build enough houses, compared to the US and Spain which had ‘overbuilt’ homes during the years of rising prices. The UK problem was not a shortage of demand for homes at the right prices, but a shortage of mortgages ‘at the right prices for people to buy’, he said.

The Council of Mortgage Lenders (CML) has said that the government’s plan for banks to return to lending levels of 2007 after the injection yesterday of £37 billion into the markets, are ‘not prudent or desirable’, given the state of current financial markets. CML later welcomed the ‘aspirational view’ of the market where only credit-worthy borrowers have access to a good spread of mortgage products. But it wanted clarification of exactly what was meant by the conditions the government attached to the bail-out of Royal Bank of Scotland, Lloyds and HBOS.

The CML also released data regarding the number and value of home loans for August this morning. The number of loans granted for house purchases is 59 per cent lower than a year ago, while the value of the loans had dropped 63 per cent from August 2007 figures. This is the lowest since the monthly records began in January 2002. The typical deposit a first-time buyer has put down stood at 16 per cent of the value in a property, the highest proportion since 1980.

On the up-side, today’s economic crisis provides an ideal opportunity to identify new and better procurement methods, essential for restarting the house market, according to the research paper: Beyond eco-towns, applying the lessons from Europe. The paper analyses how some European eco-towns have successfully delivered high quality and sustainable housing. Without a rapid rethink of how procurement works the house building industry in the UK will not recover, it says.

In London, mayor Boris Johnson has been told that plans to create 50,000 new affordable homes by 2011 are ‘extremely challenging’ at best and impossible at worst, due to the current economic turmoil. The target would only be possible if housing associations were given more flexibility and public land was released for building.

A new report from the Joseph Rowntree Foundation investigates the effect geography has on children and young people. Co-author of the report, Keith Kintrea who also writes in the November/December edition of ROOF, believes that territoriality limits social mobility and reinforces poverty in some of the UK’s most deprived areas, while increasing the risk of violent assault and criminalisation. However, it does have its positive influence: respect, recognition, personal protection and entertainment were also identified as key drivers of behaviour.

More than half the home owners who bought a house between 2005 and 2007 will fall into negative equity by the end of next year, according to research by a firm of stockbrokers. The research predicts that prices will fall by 30 per cent from their peak in February 2007 and could leave 170,000 with mortgages worth more than the value of their house. The organisation said that more than 6 per cent of the workforce is already unemployed and it believes this will increase to 8 per cent by next year.

Robert Napier, chair of English Partnerships and incoming chair of the Homes and Communities Agency, has called on the government to provide a cash injection so the public sector can take advantage of the dire economic conditions and snap up land for future development. He said it was ridiculous that they hadn’t got the funds to do so when there were projects around the country that needed to be driven forward. He also wants the government to consider expanding its financial support for housing associations to equity investment, and asked for more private investment in affordable housing through models such as joint venture vehicles.

Germany, France, Italy and 12 other European countries unveiled a ‘comprehensive’ plan for salvaging their banking systems last night. The 15 Euro-using countries are to adopt the rescue plan Gordon Brown launched for the UK market last week. The nations are now looking for a coordinated approach to survive the turbulence in the world’s financial systems.

However global initiatives have ‘not yet achieved the goal of stabilising markets and bolstering confidence’, the head of the International Monetary Fund (IMF) warned over the weekend. The IMF’s chief economist said that shares could slump by a further 20 per cent before stabilising.

Meanwhile a report by the Green Building Council says the government must urgently begin improvements to make Britain’s 25 million homes more energy efficient if it is to reduce the UK’s carbon footprint by 80 per cent by 2050. The report said that some homes are so environmentally harmful that they may have to be demolished. One of the report’s key ideas is a ‘pay as you save’ system where the homeowner or landlord borrows the cost of improvements such as windows or insulation, and pays the money back over a number of years.

Housing associations and house builders are facing huge VAT bills because they are having to rent out their property, rather than sell it, as they can’t find buyers. Revenue and Customs is sympathetic to the current position and has proposed a meeting with interested parties to see if a solution can be achieved.

A contemporary housing estate has won the Stirling Prize for architecture for the first time. Accordia, one of six developments shortlisted for the Royal Institute of British Architecture (RIBA) prize, was built on a brownfield site by a consortium of architectural firms and was described by the judges as ‘high-density housing at its very best’. The housing is made up of a combination of council homes, homes for private sale and those available under shared-equity schemes.

The number of people seeking help after falling behind on their mortgages has increased by 5o per cent in the past year. In the three months to the end of September Citizens Advice saw a steep increase in the number of inquiries about mortgage arrears. There was also a 10 per cent increase in the number of people unable to keep up with their fuel payments. Most lenders started repossession action when people were on average four months in arrears, and almost half those seeking help were couples with children, including one in five who are single parents.

Meanwhile house repossession poses the biggest threat to people’s mental health, according to research by a mental health charity. Forty-six per cent of those questioned rate repossession as the event that would most damage their mental health. Even those who could hang on to their home would end up suffering the stress and worry of arrears building up which, according to Rethink, can trigger mental illness or make people who are already vulnerable, worse.

These figures are not deterring cash investors into the property market however. As investors run from the banking system, those with cash for a large deposit and looking for a ‘long term’ investment are hoping for bargains. Buyers have been negotiating reductions of as much as 20 per cent on asking prices if they have the cash. With the market downturn reducing house prices by 15 to 20 per cent on last year’s values, the average income from rents has moved up to around 8 per cent, according to research by estate agents Knight Frank.

The National Housing and Planning Advice Unit has warned regional planning authorities they must acknowledge the impact of second home ownership on the housing market, and should factor it in to regional spatial strategies. If they don’t, they risk creating further undersupply of homes. NPHAU suggests that, as the existing population gets richer and working patterns change, the demand for second homes will continue and is likely to grow.

A survey by a property website has found that city centre flats have seen the largest annual falls in price, with Birmingham Canal apartments topping the list after a 17.3 per cent drop in value. The price falls have not ‘discriminated’ according to how much a property cost in the first place or how desirable an area is. However, it is buy-to-let investors who are hardest hit.

And finally, a property developer is offering his £220,000 one-bedroom flat for sale, asking for a deposit of only 3 per cent. Brian Hughes is offering a rent now, buy later lease option, with the buyer and seller agreeing a price and a future purchase date. The buyer pays rent and additional monthly instalments and the initial deposit and cash built up from the instalments is then used as a deposit to buy the home with a mortgage, on a pre-agreed date. However, experts warn that the instalments are non-recoverable, and the terms of the contract are complicated requiring legal advice.

The UK’s housing system is ‘fundamentally broken’ requiring wide-scale reform if it is to deliver fair and affordable housing in the future, said the Chartered Institute of Housing in a response to plans that could form the basis for the Green Paper into housing reform to be published later this year. CIH wants house buying to become simpler, with greater choice and more flexibility in tenure – and social housing should no longer be ‘populated by a majority of people unable to progress in their housing and wider aspirations’, it says.

The government has announced details of its £500 billion rescue package for the banking system. Making the capital available to eight of the UK’s largest banks and building societies in return for getting preference shares, the government is hoping to get the banks loaning to one another and kickstart the money markets again. Key points of the plan include making available £200 billion in short-term loans from the Bank of England, providing up to £250 billion in loan guarantees at commercial rates to get the banks loaning to one another, and having banks sign up to a Financial Services Authority agreement on executive pay and dividends.

But a number of analysts do not believe that the package will have much affect on the mortgage market. They fear that the extra money will only benefit those with a decent deposit of 25 per cent or more as the interbank loan rate – the Libor rate – is not tied to the base interest rate. First-time buyers and those with dodgy credit records will continue to struggle to find funding, or will have to pay significantly more for it. Even the anticipated cut in interest rates when the Bank of England’s monetary policy committee meet tomorrow is unlikely to be passed on to borrowers.

Falling house prices have caused a decline in the belief that property was the best way of saving for retirement. A survey by the National Association of Pension Funds found that one in five favoured property investments, down from one in four in February.

For the first time a housing association will include non-residents alongside existing customers in a decision-making body – giving them powers to shape the delivery of services. Midland Heart Housing, one of the largest housing associations in the Midlands wants members of local communities to have a say in helping shape the association’s policy and services.

And finally, an estate agent in Merseyside is naming and shaming tenants who miss their rent payments, by putting up signs reading ‘Rent dodger lives here’. The agency hopes the signs will embarrass tenants into meeting their rent, but promises not to target genuine cases of hardship. The legality of the signs has been questioned.

The South West has become a ‘hotbed’ of repossession according to the latest figures from the Ministry of Justice. The number of repossession claims issued in Devon and Cornwall were up by 41 per cent this spring compared with a year ago, as hundreds of people are being forced out of their homes and into temporary accommodation, including caravan parks, each month. One court in Penzance saw 50 repossession cases in a morning. Citizens Advice said the problem is that there are lower than average wages and higher than average house prices in the South West - in some areas house prices are 23 times the average wage. Experts think the numbers will get worse in autumn.

More and more mortgage deals are disappearing – according to Moneyfacts there are now only 60 deals available for borrowers with a 5 per cent deposit, down from 384 at the start of April and from 860 a year ago. Even if borrowers can find a 95 per cent home loan they are being asked to pay interest rates of 7 per cent or more, ‘noticeably higher’ than mortgages with a larger deposit which are at around 6 per cent or less, or charged with higher up-front ‘higher lending charges’. Mortgages for 100 per cent or more of a property’s value disappeared at the start of the year.

The National Landlords Association (NLA) has however, dismissed claims that buy-to-let is dead. Since the nationalisation of Bradford & Bingley analysts have feared the market had ‘come off the rails’. But the NLA has said that this is fundamentally not the case, and that only 25 to 30 per cent of landlords use buy-to-let mortgages, meaning that the majority were untouched by the situation at Bradford & Bingley. A spokesperson from the NLA said it was simply not true that the nation’s landlords are ‘now facing some sort of crisis’.

Meanwhile a number of leading registered social landlords (RSLs) including the Guinness Partnership, William Sutton Homes and Genesis Homes have joined together to create a new property marketing service for shared ownership properties. It aims to provide a more professional and cost-effective solution to the nationwide marketing of affordable housing. Guinness partnership said that RSLs spend millions annually marketing their properties through companies like Rightmove and Primelocation, so it made sense to do what ‘estate agents did years ago when they worked together to set up the likes of Rightmove…’

In response to the regulator’s initial report on the energy market, the National Housing Federation (NHF) has slammed Ofgem saying it failed some of the poorest customers in the country and should be scrapped. Ofgem demanded that big energy companies should stop charging poor people on prepayment meters a higher rate for gas and electricity, but favoured a voluntary scheme to tackle the problem.

Westminster City Council has counted its lowest number of rough sleepers ever. The number of rough sleepers has decreased by more than 20 per cent – from 89 to 69 since March this year, and is the fourth count in a row to show a decline. Three years ago Westminster became the first council in the country to move the core part of its outreach services for homeless people from the street and into buildings allowing for extended and rapid assessment, and last year the council said it helped 750 people off the street and into accommodation.

New private house starts are at a 50-year low after orders in the three months to August 2008 fell 33 per cent compared with the previous three months, and 48 per cent year-on-year, according to figures from the Office for National Statistics. Public housing and housing association orders in the three months to August 2008 rose by 13 per cent compared with the previous three months, and increased 10 per cent in year-on-year figures.

The Local Government Association has warned that councils face having to cut jobs and services over the next few months as they try to recoup some of a £1 billion deficit caused by inflation and increasing food and fuel prices. Councils were given three-year budgets last April, but they were based on inflation running at 2.7 per cent, rather than the 4.7 per cent it is currently. This has lead to a £500 million shortfall in each of the next three years. Councils have already had to spend an additional £374 million in fuel costs and £80 million more on school food.

Local authorities in Wales are taking on average 149 days to meet legal requirements over homeless households, up from an average of 113 days in 2006/07. However the research showed that there was a 31 per cent reduction in the number of homeless households living in B&B accommodation, and a 44 per cent fall in the number of homeless households with children in B&Bs. The number of affordable homes created across Wales also fell to seven per cent of new homes, down from nine per cent from the previous year.

Nationwide said that house prices fell for the eleventh consecutive month, down 1.7 per cent last month, the biggest annual drop since their records began. Prices are now 12.4 per cent lower than a year ago, with the average house having lost £23,000 from its value. House prices will continue to fall in the short term, but longer term prospects are ‘more sound’ it said.

According to the Bank of England (BoE) Britain’s banks and building societies are set to make even more cutbacks in their lending, and should expect more defaults from customers on their loans. The BoE also released its housing equity withdrawal figures for the second quarter of the year. Compared with the £5.2 billion worth of equity withdrawn in the first quarter of the year, the second quarter showed that homeowners actually injected £2.8 billion into their housing. This is the largest net injection of equity since records began in 1970.

More than 3.5 million households faced fuel poverty in 2006, one million more than in 2005, and the energy watchdog Consumer Focus says the number currently in fuel poverty could have climbed as high as 5.5 million this year. Defined as households who spend more than 10 per cent of their income on fuel, there are also 2.75 million households in England classed as vulnerable – containing a child, elderly person or someone with a long-term illness – who are in fuel poverty.