31/01/2008 by Dave.

The introduction of Home Information Packs (Hips) has helped to reduce speculative marketing, it has been claimed.

According to AA Legal Services, the mind of the seller is already focused before they put the property on the market meaning only genuine sellers enter the process.

James Molloy, product manager for AA Legal Services, said: “We hope that now only those who have a genuine, considered desire to sell their property enter the market at the front end, and Hips have undoubtedly reduced speculative marketing.”

Mr Molloy said that despite the view that speculative marketing keeps the market fluid, he felt a lack of commitment could be dangerous.

“Such lack of commitment has contributed to, in my view, an unacceptable level of aborted transactions in the pre-Hips era,” he explained.

“My view is that where we see a reduction in broken chains, a large contributing factor is the introduction of Hips,” said Mr Molloy.

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29/01/2008 by Dave.

House prices could fall by ten per cent during 2008, according to a UK fund manager.

Neil Woodford of Invesco Perpetual believes that prices are too high and the average price of a home will have to drop.

If his predictions are correct it would mean homes losing £50 of value a day totalling £18,500 by the end of the year.

“Although my forecast is for house prices across the UK to fall eight to ten per cent in 2008, the decline may be much worse in certain areas,” he told the Daily Mail.

But Mr Woodford was not alone in his predictions as Roger Bootle, economic adviser to Deloitte, warned that a sharp fall in house prices was on the way.

Speaking to the Daily Telegraph, Mr Bootle said the decade of prosperity for UK houses prices was over and the market could be in line to experience a significant fall.

He predicted a period of “prolonged” economic downturn of more than a year that may force job losses as well as falls in the price of property.

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25/01/2008 by Dave.

First-time buyers can look forward to a better 2008 after the National Association of Estate Agents (NAEA) reported that first-time buyers had improved their market share.

The share of the market taken up by first-time buyers increased from 10.1 per cent in November to 13 per cent during December, the highest figure recorded since November 2006.

As more one and two bedroom properties came onto the market before the deadline for Home Information Packs (Hips) came in, first-time buyers had a fruitful period.

Stewart Lilly, president of the NAEA, said: “They have been able to take advantage of lower prices in some areas and the influx of one and two bedroom properties specifically prior to the Hips roll out.

“We hope this positive trend will continue into 2008. Another interest rate drop would be a very positive move for the struggling first time buyer group - and indeed for consumer confidence as a whole,” he added.

The research also found that the number of buyers on estate agents’ books decreased from an average of 290 registered per agent in November to 248 in December.

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23/01/2008 by Dave.

 A rising number of older people are using equity release to raise cash to pay off their debts rather than to provide themselves with a retirement nest-egg.

A major survey of the UK equity release market shows the average age of equity release customers is falling as more people sign up for drawdown schemes that enable them to take cash in smaller amounts to clear debt or pay regular bills.

Some of these schemes are open to people as young as 55.

The report, by financial adviser Key Retirement Solutions, reveals the average age of equity release customers fell from 69 in 2006 to 68 in 2007.

Rising demand pushed up the overall amount released by almost a quarter to £1.4bn and more than £500m of this was used by around 12,000 home owners to pay household bills or tackle debt.

Dean Mirfin, business development director at Key Retirement Solutions, said the falling age profile ‘confirms our prediction last year that, as an increasing number of retirees do not have sufficient funds to live comfortably in retirement. More and more are turning to the assets tied up in their homes to supplement their income.

‘There are now some five providers offering products from age 55 onwards. We expect to see some of the new entrant providers during 2008 also offering plans to this age group.’

Demand from impoverished retired people is likely to grow as a ‘pension gap’ develops between their income and the cost of living. Analysis by financial services provider MetLife Europe shows the average pensioner couple’s income from private pensions is £7,696.

Ideally, says MetLife, a pensioner couple would have a combination of occupational and personal pensions delivering two-thirds of the national average wage, or £16,201.

Aside from the problem of debt, the biggest change in the equity release market during 2007 was the shift away from lifetime mortgages to drawdown schemes, which now account for more than half of all business.

The standard lifetime mortgage, which pays a cash lump sum at the start with no monthly payments to meet, declined from 69% to 43% year on year, as drawdown – where consumers have greater control and draws the cash when it is needed - more than doubled from 23% in 2006 to 51%.

Demand for home reversion plans - selling part or all of your home to a reversion plan company in exchange for a lump sum – dropped to 6% of all policies from 7% in 2006, following the introduction of FSA regulation in April 2007.

Mirfin said: ‘If in 2008 we do enter a period of zero growth in property prices, or even a fall for some, then reversion plans will become more appealing and we can expect to see a rise in take up as consumer confidence grows.’

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21/01/2008 by Dave.

The asking price of a typical home has plunged more than £11,000 since October, research reveals today. Prices are dropping around £120 a day with experts warning that the year ahead looks bleak.

The report, by Britain’s biggest property website Rightmove, reveals that prices have fallen for the third consecutive month. They have dropped by a total of nearly 5% since October, including a 0.8% decrease this month. It is a cruel blow for anybody who recently stretched themselves to the limit to buy a home.

The asking price of an ‘average’ home was £241,642 in October - but it has since dropped to only £230,428, a loss of £11,214. Overall, Rightmove said house prices have risen by 3.4% over the last year, the lowest annual increase for two years.

This is below the rate of inflation, currently 4%, for the first time for more than two years.

Asking prices have fallen by up to 40% on some properties in recent months, according to the cult website Property Snake, which gives details of asking prices which have been slashed. One of the most dramatic examples is a two-bedroom house in Marlow, Buckinghamshire, which has dropped from £375,000 to £235,000 since July.

The asking price of another house in the Gloucestershire village of Swindon has fallen from £299,995 to £194,950 over the same period. Price reductions are increasingly common on Rightmove, which advertises around 90% of all homes for sale in England and Wales.

The price falls are hitting some parts of England more than others, with prices still rising in London and the North. The biggest loser is the East Midlands with prices dropping 6.1% in January to an average of £167,235. The warning follows evidence of major problems in the property market, which had been enjoying a decade-long boom. In a red alert, the Royal Institution of Chartered Surveyors said last week that prices are falling at a level not seen since the last property crash.

One estate agent, from Salisbury, Wiltshire, said December had been ‘maybe the worst month we have had in 17 years’. The percentage of estate agents saying prices have fallen has soared to its highest level since 1992. After years of soaring house prices, experts are united in their pessimism for the year ahead.

Rightmove and other property experts predict prices will tread water at 0% this year. Other predictions are more gloomy, with Capital Economics expecting prices to fall by 5% this year and 8% in 2009.

Miles Shipside, Rightmove’s commercial director, said: ‘Some properties have had their prices dropped by 10% or more.’ As a result, many homes are now in the ‘affordability zone’ for homebuyers who used to be frozen out of the market. He said: ‘Enough sellers seem to have dropped their prices to encourage potential buyers to look in larger numbers, suggesting we might see a more active market at this lower price level.’

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18/01/2008 by Dave.

More than five million credit-card holders have put their credit rating at risk in the past year by missing payments, according to research by price comparison website Moneysupermarket. It said that at least 13 per cent of cardholders skipped a payment last year, paying a total of over £35m in late penalty fees. ‘Missing the occasional payment will affect your credit rating as lenders assess your overall ability to repay on a regular basis,’ says Steve Willey, head of credit cards at Moneysupermarket. ‘It’s vital consumers do everything they can to protect their credit rating, and this means keeping payments up to date. A poor credit score stays with you for a long time and can mean being rejected
for credit or being offered a product at a worse rate.’

In the wake of the credit crunch, many lenders are only offering credit to customers with a spotless rating . Willey says: ‘It is much better to pay that minimum monthly balance than not pay anything at all. Then at least you take the first step to ensuring your credit profile is protected.’

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17/01/2008 by Dave.

The introduction of Home information packs (Hips) has raised awareness of the benefits of insulation, according to the National Insulation Association (NIA).

Hips come with a compulsory Energy Performance Certificate (EPC), allowing buyers to see how much it would cost to heat the property and according to the NIA, buyers are more likely to choose an energy efficient home that will cost less to heat.

“If you are faced with a choice of two properties and one is more energy efficient than the other, you are more likely to choose the one that is going to cost you less to heat and maintain,” said Neil Marshall, chief executive of the NIA.

The comments follow the news that npower, the UK’s fourth largest energy supplier, has increased both its gas and electricity prices.

According to the Energy Saving Trust, homes without loft insulation could lose as much as 15 per cent of their heating through the roof.

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16/01/2008 by Dave.

Two-thirds of people want the government to do more to tackle the problem of empty homes, according to new research.

Halifax has researched the situation and found that one in four people has lived on the same street as an empty home causing a reduction in property prices and fewer potential buyers.

Following a survey to gauge public opinion, 64 per cent of respondents want the government to do more to tackle the issue while 25 per cent believe that existing tax benefits should only apply if the owner makes the property their primary residence or sells within 12 months.

Halifax has campaigned for VAT and council tax benefits to apply for 12 months for people who take on an empty home and made it their primary residence or sold it within this time.

A total of 69 per cent of people believe the council tax discount should be up to 50 per cent to encourage the re-introduction of empty homes into the market.

Head of mortgages at Halifax, Jaedon Green, said it was great to see the public supporting the campaign.

“Halifax calls on the government to extend existing VAT and council tax discounts to encourage the renovation of empty houses, thus making them homes,” he said.

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14/01/2008 by Dave.

Homeowners need to batten down the hatches and make sure their borrowing is properly protected in 2008 to weather the financial fallout of rising fuel costs and stalling retail figures, says independent payment protection provider Paymentcare.

“Whilst it wasn’t a complete surprise that the Bank of England decided against a rate cut last week, there will have been a collective groan of disappointment from the nation’s homeowners,” says Paymentcare MD Shane Craig.

With no immediate relief for those who have overspent on Christmas and the unavoidable drain on their budget from soaring gas and electricity costs, some borrowers could be looking down the barrel of a loaded gun this year.

Although a bet on whether the MPC will cut rates or not costs nothing, taking a gamble on the chances of losing their income through illness, accident or unemployment can cost homeowners their home if they have no form of protection.

“If you haven’t got a plan for how to keep up mortgage, personal loan or credit card repayments if you lose your income you could find yourself in real trouble, it’s that black and white,” says Craig.

“Payment protection insurance from an independent provider is an affordable way to insulate yourself from the knocks that may affect you in the current financial climate.”

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11/01/2008 by Dave.

A record number of people will be declared insolvent next year, as high levels of debt and the impact of the credit crunch take their toll on overstretched borrowers, it was predicted today.

Accountancy firm KPMG said it expected more than 130,000 people to be declared bankrupt or enter into an individual voluntary arrangement (IVA) with their creditors, up from 109,615 this year.

IVAs allow borrowers to restructure their debts so they can make affordable monthly payments for a fixed period of time and have their remaining debts written off at the end of that period.

This year, the average debtor entering an IVA owed £50,300, although more than 2,500 people are thought to have had debts exceeding £100,000.

The average proposed repayment was 38% of debts - £19,100 for the average debtor - KPMG said. As a result, £1.3bn was written off by creditors.

Mark Sands, director of personal insolvency at KPMG, said: “This high average level of debt clearly indicates that too many people have borrowings that they have no realistic hope of repaying.

“Any excessive spending over Christmas and at the New Year sales, especially where goods are paid for on credit, risks tipping even more consumers over the edge.”

Sands said the credit crunch would also have an impact, as lenders became more wary about who they accepted for credit cards and secured loans.

He warned: “Those in difficulty will find that their options are becoming limited – formal insolvency will for many be the only way out.”

The number of personal insolvencies has more than doubled since 2004, when 46,650 people were declared bankrupt or entered an IVA.

The growth has been driven by a surge in the number of IVAs, following heavy marketing by debt management companies.

However, lenders have been cracking down on the plans, with some refusing to accept them and others raising the hurdle rate – the amount they are willing to accept as repayment – to 40p in the £1.

KPMG said its research showed 17% of people had had an application for an IVA turned down this year, compared with 15% in 2006.

A new code introduced in February will oblige a lender who rejects an IVA to give a specific reason for doing so.

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