News that mortgage lending went up 15% in June has failed to spread even a glimmer of happiness.

The Council of Mortgage Lenders said gross mortgage lending last month was £13.1bn, up from £11.4bn in May and a 7% increase from £12.2bn in June last year.

James Moss, director of Curzon Investment Property, said the figures were a sign that the housing market is going nowhere, whilst Brian Murphy, of the Mortgage Advice Bureau warned that mortgage lending levels this year will be worse than those of last.
 
Even the CML was not impressed. Its economist, Paul Samter, said: “It represents a seasonal pick-up and is higher than June last year, but is still indicative of low levels of activity.

“There are signs of house prices stabilising and more properties coming on to the market following the abolition of Home Information Packs. This may improve liquidity in the market, but transaction levels are subdued and likely to remain so while access to credit remains constrained.

“The FSA has outlined a clear direction of travel as part of its mortgage market review. The consultation paper on responsible lending increases the regulatory burden on lenders and could make it harder for borrowers to access credit.”

Jonathan Samuels, chief executive of Drawbridge Finance, also sounded gloomy. He said: “Mortgage lending may be up slightly, primarily due to seasonal factors, but in the short term, both the mortgage and property markets remain delicately poised.

“Ever-increasing supply and falling demand, driven largely by difficulties securing mortgage finance, could place downward pressure on prices in the months ahead. There is a considerable financing shortfall that is unlikely to be made up for some time yet.

“People who can secure mortgage finance will be calling all the shots.”

Brian Murphy, head of lending at the Mortgage Advice Bureau, also failed to raise a smile. He said: “Although the June figures show a healthy rise on the previous month, we can largely put this increase down to a normal seasonal uplift in housing market activity. More revealing is the levels of lending in the first half of 2010, which are roughly the same as 2009, but whereas in the second half of 2009 the market had a boost with the end of the Stamp Duty holiday incentivising people to jump in and buy, there is no such incentive for buyers in the second half of 2010.

“On the contrary, with looming public sector cuts, taxation rises, a freeze on wage increases and inflationary pressures, we are likely to see lending tail off during the second half of 2010, with buyers likely to take a wait-and-see approach. There’s every chance that mortgage lending this year will be below the level of lending in 2009.”

David Newnes, estate agency managing director of LSL, said: “We are still some way from being able to declare an improvement in the lending market. The level of lending in the second quarter of 2010 was just half the level of two years ago. The wider economic conditions are still challenging, and the impact of the recent austerity measures may well dampen mortgage lending in the short term.
 
“The long-term sustainable recovery of the housing market is dependent on lenders offering wannabe first-time buyers more attractive – and achievable – mortgage products.”
 
James Moss, of Curzon, said: “The overall vibe is one of subdued acceptance that the housing market is going nowhere fast. While lending is slowly improving, the full impact of the cuts won’t be felt for a while.

“This will have a double-pronged effect of putting thousands of jobless home owners at risk of losing their homes, but also offer the possibility that these homes may then be sold on at cheaper rates by banks.
 
“The real issue for housing is that giving councils veto rights on developments and scrapping targets is already leading to chaos, with thousands of homes cancelled by Nimby local authorities. If the supply remains constricted, homes will remain unaffordable, and with student debt rising, the next generation will have no hope of owning a house.”

The property market was both a winner and a loser in yesterday’s Budget, with most estate agents breathing a sigh of relief that it could have been worse.

The existing Stamp Duty regime remains in place, with the Chancellor impervious to calls for its reform. However, the £250,000 Stamp Duty break for first-time buyers escaped unscathed and the tax clampdown on furnished rental holiday homes will not go ahead. The capping of housing benefit could affect the supply of private rental accommodation in this sector.

However, most focus was on the rise in Capital Gains Tax, from 18% to 28% for higher-rate taxpayers, and its effect on the buy-to-let market.

This was despite the fact that at 28% CGT is still considerably lower than the rates of three years ago, of up to 40%, before Labour introduced the flat 18% rate.

One unexpected complication will be who is caught by the rise.

Tony Bernstein, tax partner at financial group HW Fisher, warned: “On the surface, it appears that the 28% rate will only affect higher earners whereas in reality, people on lower incomes could also easily be caught by it. The 18% CGT rate for people on basic rate tax will increase to 28% if the gain, when added to their income, pushes them over the threshold into the higher rates of tax.”

The Chancellor had been subject to intense lobbying from landlord and property groups, including ARLA, who argued that buy-to-let landlords should be exempt from any CGT rises for fear it would damage the lettings market.

Yesterday, a disappointed Ian Potter, operations manager of ARLA, said: “The planned rise of CGT may not be as extreme as many had anticipated, but it still comes with little consideration for the needs of landlords. Because of this, the Chancellor risks driving those landlords paying the higher rate of tax from an already very fragile housing market, at a time when they should be actively encouraged to stay and, ideally, further invest.

“In particular, neglecting to include rollover relief is a big gamble, as many landlords will now be penalised by CGT – and hit by Stamp Duty – when they sell one rental property and purchase another. This may further disincentivise some landlords from remaining in the Private Rented Sector (PRS) and negatively impact the overall supply of rental property.

“The PRS represents an extremely important part of the housing market, providing much-needed flexible and affordable housing to the UK. With this rise in CGT, the Government is taking a huge risk in destabilising the future supply of homes to the UK.”

But Louise Somerset, tax director at RBC Wealth Management, said: “There was some talk before the Budget that landlords should not suffer from the increase in CGT rates, but this was always wishful thinking. There is no good reason why an investor in property should be taxed differently to an investor in quoted shares, and the Chancellor clearly recognised this. 

“Of course, this is going to leave a lot of buy-to-let investors who were relying on making a profit on the sale of their properties with a big headache when it comes to paying off interest-only mortgages in the future.”

However, David Whittaker, managing director of Mortgages For Business, said the rise in CGT was a major blow: “By increasing CGT, the Government is taking money out of the economy,” he said.

“In the property market the liquidity pool is still relatively parched. A healthy property market tends to mean a healthy economy. But by taking more cash out of the pockets of these investors, the Government is threatening to stunt the growth we expected to see in 2011.

“The rise in CGT combined with the income tax that landlords already pay on rent means a double blow for these investors. They’ll be left asking what they did to deserve such punishment. Professional property investors will now have to work much more efficiently in order to maximise the amount of money they are able to take home from their portfolios.”

However, many estate and letting agents were delighted that the CGT hike was not as bad as it could have been – 40% or even 50% had been mooted – and were pleased the change was implemented so quickly.

David Smith, senior partner at estate agents Carter Jonas, said: “The rise in CGT is unlikely to have a detrimental effect on a property market that is still in the early stages of a recovery.

“Although tax rises are never good news, what the Government has achieved by announcing an increase in CGT immediately, has avoided panic-selling by landlords and people with second homes, which could have seen the market flooded with properties as investors desperately tried to sell before the higher rate tax kicked in.”

Peter Rollings, managing director of estate agent Marsh & Parsons, said: “The market now knows where it stands and I don’t believe it will curtail the investment decisions of those wanting to invest in the London property market.

“In London, there is incredibly strong demand for rented accommodation, particularly from young professionals and international workers who prefer the flexibility of renting. In May, almost one in five purchases (19%) were made by investors in central London and we must avoid unfavourable conditions that discourage investment.”

Unhappiest at the Budget was the construction industry, which felt it would suffer a knock-on effect from the tax and VAT hikes.

Phil Westerman, head of construction at tax firm Grant Thornton, said: “As consumers now face an increase to their tax bill and a rise in VAT, this will undoubtedly lead to a fall in the confidence they need to make larger-scale purchases. Many will question if now is the right time to buy, if they have the funds to do so and if their jobs are secure.”

James Watson

director

Albert Hall Estates

94 Wandsworth Bridge Rd

London SW6 2TF

Tel: 020 7731 0220

Fax: 020 7731 0028                    

Letting agents are warned that plans to increase the rent threshold of ASTs are definitely going ahead, the Government confirmed yesterday.

It moved to quell rumours that the move has been abandoned.

It will mean that compulsory tenancy deposit protection will be extended to properties with an annual rent of up to £100,000.

The Statutory Instrument raising the threshold, ‘The Assured Tenancies (Amendment) (England) Order 2010 - SI 2010 No. 908’, will come into effect on October 1.

This will apply to all existing and new tenancies, said CLG.

Home Information Packs have been suspended with immediate effect pending primary legislation for a permanent abolition.

CLG Secretary of State Eric Pickles said: “HIPs are history. This action will encourage sellers back into the market and help the market as a whole and the economy recover."

Housing minister Grant Shapps said: “This is a great example of how this new Government is getting straight down to work by cutting pointless red tape.”

Many jobs – up to 10,000 has been estimated – will now be at immediate risk and specialist HIP providers will fold, unless they are able to diversify.

However, there is no doubt that most estate agents will greet the suspension with relief.

For AHIPP, there was a surprising acceptance, although it made it clear there are still battles ahead.

Director general Mike Ockenden said: “We want to work with the Government and we want the consultation we have been promised. We are not suggesting that HIPs should be retained. AHIPP has accepted that they will be scrapped.

“However, we have been proposing for months that a legal pack – or exchange ready HIP – be instructed at the start of the sales process. We think it would be crazy to throw the baby out with the bathwater and remove at a stroke all the good things that have come about with HIPs, and the lessons we have learnt.

“If we do this, then the opportunity for reform will have been lost for a generation.”

Nick Salmon, tireless campaigner and founder of SPLINTA, was absolutely delighted.

He said: “The ending of HIPs is a victory for the consumer, the estate agency industry and the SPLINTA campaign. We applaud the swift and decisive action of the coalition government and the contribution of the housing minister, Grant Shapps, who has always been clear about HIPs in his words and deeds.

“The chequered history of this flawed piece of legislation stands as a shameful monument to the ineptitude and arrogance of a succession of Labour housing ministers who failed to heed the warnings of those who actually know how the property market works.”

Concern is mounting over the Government’s plans to hike Capital Gains Tax to the same levels as income tax – effectively, a 22% rise for many.

There are fears that there could be a fire sale among buy-to-let landlords rushing to dispose of properties before the new rate kicks in.

Caroline Kavanagh, pictured, group lettings director for Badger Holdings, parent company of Townends and Regents estate agents, said: “Have they gone mad?
 
“The buy-to-let market has kept many businesses going through what has been and continues to be a difficult financial climate.

“With demand already outstripping supply, the industry is in need of more investors coming to the table, not the complete opposite.”

Mike Goddard, chief executive of Belvoir, called for clarity and said landlords should adopt a wait-and-see policy.

He said: “Until we have the full details of the Government’s proposals, we will not know if there are any plans to offset an increase in CGT. There may, for example, be plans to include taper relief.”

Tax specialists Moore Blatch warned against a fire sale of properties, saying that if house prices carried on rising at the current annual rate of 7.5%, then it would pay to hang on.

David Charlesworth, head of wealth management at the firm, said that an investor selling a £200,000 property now with a capital gain of £50,000 would be liable for £7,182 CGT at 18%. The net worth of the property would therefore be £192,818.

Great uncertainty faces agents if Labour lose the Election, London agent Eric Walker has warned.

Walker, managing director of Bushells, said that if Labour does lose, then HIPs will be abolished: “Both the Lib Dems and Conservatives have promised to get rid of HIPs. We know that Grant Shapps has said it may take up to 180 days. So on May 7, what happens? Will vendors pay for something that the new Government says will be abolished?

“Will Trading Standards still police and prosecute agents who fail to comply, knowing that by the time they get to court, the law will have changed? Will some agents generate new instructions by telling vendors not to bother, thus saving money and disadvantage those of us who comply with laws, however stupid?

“Joe Bloggs Estates will say, ‘Don’t go to Bushells, they will make you spend £300 on a HIP – we aren’t worried – they are being abolished anyway’?

“And will a new Government prevent this by simply suspending HIPs in readiness for legislative change. If they don’t – what will happen after four or five months? Who will shell out money for the few weeks that HIPs could still be mandatory?”

The Tories yesterday made the abolition of HIPs a manifesto promise. It is the only mention of HIPs so far in any of the political party campaigns.

The Conservatives have also promised to make permanent the £250,000 threshold for Stamp  Duty.

The Labour manifesto clarifies that the Stamp Duty exemption for first-time buyers is for two years only.

In full, with thanks to analysis by the British Property Federation, this is what the two main parties are promising:

Labour

 
Planning

Infrastructure Planning Commission – committed to the IPC with an intention to extend the public interest test so that it is applied to potential takeovers of infrastructure and utility companies.

Green belt – link together new protected areas of habitat; maintain the Green Belt; increase forest and woodland areas.

Use class changes – councils now have to ensure that the importance of local

services to the community is taken into account before granting planning permission to change their use, and we will strengthen this to protect viable shops, pubs and community facilities.

 
Sustainability

Overall reductions in carbon emissions of 80% by 2050.

Green Investment Bank – to invest in low-carbon infrastructure and seek to match private sector funding of £1bn.

Landfill reduction – move towards a ‘zero waste’ Britain, banning recyclable and biodegradable materials from landfill.

All new homes zero carbon by 2016.

Strengthening of Europe’s 20:20:20 renewables target from 20 to 30 per cent.

Seek a second Kyoto commitment for Europe.

Insulation – free loft and cavity wall insulation for homes where practical by 2015. 

Smart meter in every home by 2020. 

Eco-upgrade for 7m homes.  

Legislation to introduce ‘pay as you save’ financing schemes for energy efficiency improvements.

Separated public bins for recycling on the street and in shopping centres.

Maintain 60% of new development should be on brownfield land.

 
Residential

New affordable housing model – we will work with Housing Associations to develop a new form of affordable housing targeted at working families on modest incomes who struggle in the private sector and rarely qualify for social housing. This will focus on enabling working people to rent an affordable home at below market rates while they build up an equity stake.

Written tenancy guarantee – we will guarantee the three million households who rent from a private landlord the right to a written tenancy agreement.

Landlord register – we will establish a new National Landlord Register.

Advice for tenants – we will guarantee access to free and impartial advice.

Insulation – make greener living easier and fairer through ‘pay as you save’ home energy insulation, energy-bill discounts for pensioners and requiring landlords to properly insulate rented homes.

Stamp duty – exemption for first-time buyers on properties under £250k.

Widening access to home ownership.

All new homes zero carbon by 2016.

Housing benefit – will reform housing benefit to ensure that those in PRS are not subsidised (removing most expensive houses from BRMAs).

 
Regeneration

Funding – we will make savings in regeneration funding and focus on tackling worklessness, transforming the prospects of those areas most disconnected from the wider economy.

Modernise infrastructure – High Speed Rail.

 
Finance/Tax

UK Finance for Growth Fund – to bring together a total of £4 billion of public funds and combine it with private money to channel equity to businesses looking to develop and grow. Within this, the Growth Capital Fund will focus on SMEs which need capital injections of between £2 and £10 million, while the Innovation Investment Fund will focus on the needs of high-tech firms.

 
Public sector

City regions – we will also extend the powers available to our major city regions, which will be able to gain additional powers to improve transport, skills and economic development, acquire greater borrowing flexibility and hold a referendum to have a city Mayor.

Regional government – enhanced role for region ministers.

Government estate – cut back on property running costs.

Conservatives

 
Planning

Reduce regional government – we will abolish the entire bureaucratic and undemocratic tier of regional planning, including the Regional Spatial Strategies and building targets.

Tariff – developers will have to pay a tariff to the local authority to compensate the community for loss of amenity and costs of additional infrastructure.

Neighbour approval for planning permission – faster approvals process for planning applications where neighbours raise no objections.

‘Use Class Order’ – amend the ‘Use Classes Order’ so that people can use buildings for any purpose allowed in the local plan.

Appeals – limit appeals against local planning decisions to cases that involve abuse of process or failure to apply the local plan.

Infrastructure planning – encourage county councils and unitary authorities to compile infrastructure plans.

Local collaboration instead of regional government – give local planning authorities and other public authorities a duty to co-operate with one another.

Funding – ending ring-fencing so that funding can be spent on local priorities.

Targets – scrapping the hundreds of process targets Labour have imposed on councils.

Inspections – ending the bureaucratic inspection regime that stops councils focusing on residents’ main concerns.

Predetermination rules – ending the ‘predetermination rules’ that prevent councillors speaking up about issues that they have campaigned on.

 
Sustainability

Will honour commitment to 80% reduction in overall emissions by 2050.

10% cut in central Government emissions within 12 months by working with local authorities and others to deliver emissions reductions (Labour committed at Budget 2010 to reduce overall emissions from estate by 30% by 2020).

Emissions performance standard to limit the levels of greenhouse gases our power stations produce.

Decarbonisation of the electricity grid:

Permitting nuclear power stations, so long as they receive no public subsidy.

Four carbon capture and storage plants (unclear how whether these are  additional to the ones the Labour Government has committed to already).

Delivery of an offshore electricity grid.

Giving local authorities the power to establish new district heating networks  which use biogas and other low carbon fuels.

Allowing communities that host renewable energy projects to keep the  additional business rates they generate for six years.

Giving incentives for smaller-scale energy generation, including capturing  heat that is currently wasted (commitment to continue Labour Government’s  Renewable Heat Incentive/Feed-in Tariffs?).

Annual Energy Statement to Parliament to set a clear direction for energy  policy, accompanied by restructuring of Ofgem’s remit (unclear what will  become of the  Labour Government’s review of the energy market mentioned at Pre-Budget 2009  and the promised consultation on mechanisms to support carbon pricing in long- term roll-out of renewables).  Consumer protection powers of Ofgem to be transferred to Office of Fair Trading. 

 A ‘Green Deal’ giving every home up to £6,500 worth of energy improvement  measures, with more for hard-to-treat homes.  Paid for out of savings on fuel bills  over 25 years (not markedly different to the Labour Government’s ‘Pay as You Save’  proposals for housing).

EPCs – keep Energy Performance Certificates to help people improve the environmental rating of their property.

 
Residential

Stamp Duty – permanently raise the Stamp Duty threshold to £250,000 for first-time buyers.

Council tax retention – will match pound-for-pound the council tax receipts that local authorities receive from new homes to encourage sensitive local development.

Local housing trusts – will create new local housing trusts to allow communities to grant planning permission for new housing within villages and towns.

HIPs – abolish Home Information Packs.

On Tuesday, the news we have all been waiting for finally came: Britain is officially out of recession.

And while things aren't going to improve overnight, I can't help but feel optimistic about the year ahead.

Experts predicted the property market would slump in January, following a rush of home buyers in November and December trying to take advantage of the stamp duty holiday before it ended. However, so far there is no sign or easing just yet. That being said, Albert Hall Estates is based in Fulham and has seen a micro market of its own as a shortage of stock has led to premium houses, three and four bedroom properties selling beyond expectations. I attended a lecture hosted by Lloyds Bank yesterday and I listened to Trevor Williams, Lloyds chief analyst discuss a number of key economic issues, the Dollar, the Euro and crucially, what happening to interest rate. The good news is that his prediction for 2010 and going in to 2011, interest rates should remain static; being on the shadow MPC committee, he should know  

Lettings enquiries are up and prices and firm. Stock issues are always an issue, and competition is fierce as ever. A good start to 2010.

James Watson

Director - Albert Hall Estates

We are pleased to announce that over the Christmas break we moved into our new office. Although we are experiencing some minor telephone issues we are still fully operational.

Our new address is:

Albert Hall Estates

94 Wandsworth Bridge Road

Fulham

SW6 2TF

Our new number is 020 7731 0220.

We look forward to hearing from you!!

The British Bankers' Association (BBA) reports that new mortgage lending and house purchase approvals increased slightly in October as mortgage lending continued to grow from the low levels at the end of 2008. In contrast, consumer credit continued to be weak and lending to non-financial corporates fell.

BBA statistics director, David Dooks, said of the latest data: "The longer it takes to emerge from recession, the longer we will see households and businesses continue to borrow with caution. The banks' mortgage lending, still growing by more than 4% a year, shows one aspect of consumer behaviour but unsecured borrowing is subdued and people are building up deposits.

"A mixture of lower business demand, alternative corporate funding and tighter lending conditions, all giving rise to the on-going contraction in lending to non-financial companies, is a reflection of current market conditions."

http://www.bba.org.uk

Source: http://www.millerhomes.co.uk

Despite Government efforts to encourage them into the housing market with shared equity schemes which require little or no deposit, two thirds of first time buyers believe that a lack of sufficient mortgage deposit is preventing them from owning their own home. A survey of 3,000 potential first time buyers by Miller Homes found that 28% of buyers still believe that they will need to save for at least five years before finally getting the keys to their own home.

The study also revealed that the average first-time buyer has spent a year-and-a-half saving £3,863 towards their deposit, but think they need nearer £13,490 before they will be able to buy a home.

One in ten respondents have been saving for five years or more and still do not have enough deposit, whilst more than 30% have no savings to put towards a deposit at all. More than 20% felt they would need more than £10,000 for a deposit whilst a quarter of all respondents said they would ask for help from a relative in order to raise the cash.

Sue Warwick of Miller Homes commented: "These results show that deposit concerns continue to keep many first time buyers out of the housing market, despite Government and house-builder shared equity schemes which aim to help people onto the housing ladder with little or no deposit. Whilst many first time buyers have been helped by these schemes, it is clear that the message is not getting through to all."

The survey also found that 48% of first time buyers were concerned about reports of lenders becoming more stringent in their lending requirements. However, 70% also responded that they have not given up on the dream of owning their own home and a further 70% refuse to resort to desperate lending or credit to finance their mortgage deposit.

Sue Warwick commented: "It is heartening to see that first time buyers are not giving up the dream of owning their own home and are not willing to resort to credit to finance a deposit. Whilst loan to values have become much tighter, the reality is that there has never been a better time for first time buyers to get onto the housing ladder. Prices are significantly lower and there is help out there in the form of shared equity deals which offer first time buyers 100% ownership of their home from day one. These measures mean that homes are more affordable to first time buyers than they have been in a long time."

The survey results suggest that the shared equity concept is gaining support amongst first time buyers with 49% saying they understood and approved of the concept. 29% of respondents preferred a Government-run scheme, such as Home Buy Direct, compared to 17% preferring a housebuilder scheme; 53% expressed no preference. When asked if they would consider a shared equity to help get them onto the property ladder, 41% said they would consider such a scheme.

Sue Warwick commented: "These results demonstrate that the shared equity concept has gained momentum amongst first time buyers. I would urge potential first time buyers to look into the options of shared equity while there is still time. There are real opportunities for people to get a foothold on the property ladder but time is running out. The number of properties eligible for the Government's Home Buy Direct funding are in short supply and all purchases must be completed by the end of March 2010."

The weak pound has led to huge discounts for foreign buyers looking for property in central London.

CB Richard Ellis says that since August 2007, prices in Kensington and Chelsea have fallen 8% for those buying in Sterling, but reductions of 29% for Euro purchasers, and 40% discounts for those buying in Japanese Yen.

Jennet Siebrits, head of residential research at CB Richard Ellis, said: “We are also expecting the return of ‘bonus buyers’ and high-net worth individuals to the prime central London market.”

She also said that despite demand, very few properties are on the market, with transactions down 55% in Kensington and Chelsea, and down 60% in Westminster compared with pre-crunch levels.

She added: “Currently only 45 units are under construction in Kensington and Chelsea, which is indicative of the extent of the problem.”

The RICS agrees with CB Richard Ellis. Yesterday it reported the most widespread surge in house prices since 2006. It believes the rally will continue until next year but says that transactions are still dragging along at half of what they were before the crash. 

According to the RICS, the most marked price increases have been in London, and the most expensive houses are selling well.

Benson Beard, surveyor at west London agents Bective Leslie Marsh, said: “The continued lack of property on the market has created an over-heated market which will inevitably cool as purchasers realise prices are fast reaching 2007 levels.”

Robert Green, of John D Wood in Chelsea, said: “The recovery started with the lower value properties in the area, but has worked its way up to the £5m level.”