Lunchtime news Friday 24 October 2023

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.