Nationwide to merge with Derbyshire and Cheshire |
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The Derbyshire and Cheshire Building Societies are to merge with the Nationwide Building Society.
Nationwide is 25 times the size of Derbyshire, the ninth largest society, and 36 times the size of Cheshire, the eleventh largest. Nationwide has assets totalling £179 billion, compared with £7 billion at the Derbyshire and £5 billion at the Cheshire. Both societies reported losses for the first half of 2008 Adrian Coles, director-general of the Building Societies Association, “There have always been mergers between building societies and it is no surprise to see mergers announced in the current difficult market conditions. Today’s announcement represents a prudent reaction by two building societies to the particular positions in which they find themselves, and the continuation of a long tradition in which building societies solve any potential problems emerging within the sector. “Overall, the building society sector is coping well with the current difficult conditions in the housing market. “Building societies have always seen maintaining the safety of their investors’ funds as their paramount duty. No member of a building society has lost any of their investment since at least 1945, and probably for a long time before that. I am very confident that building societies will maintain this record for many years into the future.” |
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Stamp duty axed below £175,000
Chancellor Alistair Darling believes the Government is “taking the right actions”.
Homebuyers will not have to pay stamp duty on properties costing £175,000 or less for the next 12 months.
The current £125,000 threshold will be raised as part of a package of measures aimed at boosting the housing market.
Someone buying a home for £175,000 will save £1,750 under the scheme, which is likely to cost the Treasury £600m.
The government estimates half of all property transactions will now be exempt from stamp duty - up from one third when the threshold was £125,000.
‘Do all we can’
Prime Minister Gordon Brown said the package of measures - including help for first-time buyers and families facing repossession - showed the government was taking action to help people through difficult times.
“Home owners need to know that we will do everything we can to keep the housing market moving,” he told BBC News.
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 They are not going to help the vast majority of families facing a rising cost of living and falling house prices  George Osborne, Conservatives
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But the Conservatives - who say they would scrap stamp duty for first-time buyers on properties worth £250,000 or less - said the measures were a short-term survival plan to keep Mr Brown in a job.
The government has not said how it will pay for the £600m estimated cost of the stamp duty move.
Chancellor Alistair Darling said he would reveal more details in his Autumn Pre-Budget Report.
He said the government was also considering ways of increasing the availability of mortgage finance.
But - in an echo of his weekend interview with The Guardian in which he said the economic downturn could be worse than previously thought - he said other factors would be crucial to the housing market’s recovery.
Gordon Brown on the housing measures
“We face a unique set of circumstances that we have not seen in generations, where you have a credit crunch and where you have high oil and food prices.
“But I remain optimistic, as I have said on many occasions before, that we can get through it.
“We will get through it and today’s measures, helping the housing market, are one example of how the government can help people.”
Other housing moves announced by the government include:
- “Free” five year loans of up to 30% of a property’s value for first time buyers of new homes in England
- Extension of powers for councils and housing associations to be able to pay off debt for homeowners who can no longer afford mortgage payments and then charge rent.
- Shortening from 39 weeks to 13 weeks the period before Income Support for Mortgage Interest is paid
- Bringing forward spending from future years to encourage more social housing to be built
The funding for these measures, which unlike the stamp duty move will only apply in England, has been previously allocated and brought forward, the Treasury said.
Under the new loans system, called HomeBuy Direct, households in England earning less than £60,000 will be offered loans free of charge for five years on new properties, co-funded by the state and developers.
‘Difficult conditions’
Once the five-year “free” period is up, homebuyers will be asked to pay a fee, the Department for Communities and Local Government said - although no more detail of this was provided.
In a statement, the DCLG said: “Not only will this [HomeBuy Direct] help first-time buyers… it will help the housebuilding industry weather difficult conditions.”
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This looks like a hotchpotch of measures thrown together to save Gordon Brown’s political skin Nick Clegg, Lib Dems
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The prime minister has faced a difficult few months, with Labour losing two parliamentary seats in by-elections, the London mayoralty and many councillors in May’s local elections.
On Monday, he said the UK faced “unique circumstances”, including oil prices trebling and the global credit crunch.
But Mr Brown said the government was “resilient in… dealing with these problems”.
He earlier denied a rift with Mr Darling, who had said the country was facing its worst economic crisis in 60 years.
The Organisation for Economic Cooperation and Development (OECD) has said the UK economy is likely to fall into recession this year - the gloomiest forecast yet from an official organisation.
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The Conservatives said the measures announced to help the housing market were “too little, too late”.
Shadow chancellor George Osborne said: “We will look at the details of these measures and we will support those that will work.
“But let’s be clear, they are not going to help the vast majority of families facing a rising cost of living and falling house prices.
“Nor do they amount to the first instalment of the economic recovery plan we were promised.
“I suspect that what we will see in the coming weeks is a desperate and short-term survival plan for the prime minister rather that the long-term economic plan the country needs.”
Liberal Democrat leader Nick Clegg said: “This looks like a hotchpotch of measures thrown together to save Gordon Brown’s political skin.
“The social housing stock could be increased far more easily by allowing local authorities to buy up unsold properties and use them for new social housing.
“Yet again the government is desperately scrabbling around for a way to fix problems of its own making.”
Scotland’s first minister, Alex Salmond, welcomed an end to the uncertainty which he said was causing people to delay house purchases.
The Westminster government was now catching up with what the Scottish government had already done to help the housing market, he added.
Two weeks ago, Mr Salmond announced he was bringing forward £100m worth of housing expenditure to this year rather than in 2010.
| Congress is moving quickly to pass a housing package that aims to help 400,000 strapped homeowners avoid foreclosures and prevent Fannie Mae and Freddie Mac from collapsing.
Momentum for passage picked up mightily after President Bush earlier Wednesday dropped his opposition to the bill just hours before a scheduled vote in the House. That put the legislation on track toward enactment as early as the end of the week. Bush’s decision to sign the election-year bill came despite his strong resistance to including $3.9 billion in the measure for neighborhoods hit hardest by foreclosures. The administration and lawmakers in both parties teamed to negotiate the election-year measure, which pairs Democrats’ top priorities - federal help for homeowners facing foreclosure and $3.9 billion for devastated neighborhoods - with Republicans’ goal of reining in mortgage giants Fannie Mae and Freddie Mac while reassuring financial markets of their stability. In a policy statement on the bill, the White House said that parts of it “are too important to the stability of our nation’s housing market, financial system, and the broader economy not to be enacted immediately.” Bush had objected to the neighborhood grants, which would be for buying and fixing up foreclosed properties, saying that they would help bankers and lenders, not homeowners who are in trouble; but Dana Perino, the White House press secretary, told reporters in a conference call that a showdown with Congress over the funds would be ill-timed. |
| It was a striking split for Bush and congressional Republicans, many of whom are angrily opposed to the housing legislation, which they call a handout for irresponsible homeowners and unscrupulous lenders.
At a closed-door meeting Wednesday morning, House Republicans denounced the plan, although it’s clear they don’t have enough votes to prevent it from becoming law. Rep. John Boehner, R-Ohio, the minority leader, said he was “deeply disappointed” at Bush’s decision to sign the bill. “We must take responsible steps to ensure our financial and housing markets are sound, but the Democrats’ bill represents a multibillion dollar bailout for scam artists and speculative lenders at the expense of American taxpayers,” he said in a statement. The measure hands the Treasury Department the power to extend the government-sponsored mortgage companies an unlimited line of credit and buy an unspecified amount of their stock, if necessary, to prop up Fannie Mae and Freddie Mac, two companies chartered by Congress. The firms back or own $5 trillion in U.S. mortgages - nearly half the nation’s total. With Congress just 10 days away from leaving Washington for a five-week summer break, said Perino, the possibility of waiting until mid-September for the housing measure “is not a risk worth taking in the current environment.” Key senators said they were ready to swiftly approve the measure without any changes. “We’ll be anxious to move this product along,” said Sen. Christopher J. Dodd, D-Connecticut, the Senate Banking Committee chairman. Sen. Richard C. Shelby of Alabama, the senior Banking Republican who was his party’s lead negotiator on the measure, said Bush’s turnabout reflected political reality. “They looked at the Hill, they counted some votes and they see there’s pretty broad support for this,” said Shelby. At the Treasury Department, Paulson told reporters that he urged Bush to sign the bill despite its inclusion of the “wasteful” $3.9 billion in grants. He said its enactment would be “a strong message that we are sending to investors” that would play a key role in “helping us turn the corner” on the housing crisis. Congressional analysts estimate that the mortgage giant rescue could cost $25 billion, but predict there’s a better than even chance it won’t be needed at all. The bill would let hundreds of thousands of homeowners trapped in mortgages they can’t afford on homes that have plummeted in value escape foreclosure by refinancing into more affordable, fixed-rate loans backed by the Federal Housing Administration. Lenders would have to agree to take a substantial loss on the existing loans, and in return, they would walk away with at least some payoff and avoid the often-costly foreclosure process. The plan also creates a new regulator with tighter controls for Fannie Mae and Freddie Mac and modernizes the FHA. It includes about $15 billion in housing tax breaks, including a credit of up to $7,500 for first-time home buyers for people who bought homes between April 9, 2008, and July 1, 2009. It also allows people who don’t itemize their taxes to claim a $500-$1,000 deduction on their 2008 property taxes. That chiefly benefits homeowners who have paid off their homes and can’t claim a deduction for mortgage interest. And it increases the statutory limit on the national debt by $800 billion, to $10.6 trillion. The White House, which initially denounced the FHA rescue as too burdensome on the government and risky for taxpayers, dropped most of its objections to the measure in recent weeks in search of a swift deal. The urgent request by Paulson to throw Fannie Mae and Freddie Mac a federal lifeline acted as a powerful locomotive for a deal. The bill sets a cap of $625,000 on the loans that Fannie Mae and Freddie Mac may buy and the FHA may insure. It lets them buy and back mortgages up to 15 percent above the median home price in certain areas. Lawmakers abandoned efforts to place conditions on any Fannie and Freddie rescue, but the bill hands the new regulator approval power over the pay packages of executives at the companies regardless of whether the government moves to financially reinforce them. It also counts any federal infusion for the mortgage giants under the debt limit, essentially capping how much the government could spend to stabilize the companies without further approval from Congress. As of Tuesday, the national debt that counts toward the limit stood at about $9.5 trillion, roughly $360 billion below the statutory ceiling. Associated Press article, filed from Washington, D.C., in context here: |
Following discussions with the major construction companies, the CBI has agreed to set up a Construction Council chaired by John McDonough, chief executive of Carillion plc and vice chairman of the CBI’s Public Services Strategy Board.
The CBI has said that it will be enhancing the role it undertakes on behalf of the construction industry.
The Council, which will represent contractors, house builders, civil engineers, component and product manufacturers, designers and support services, will begin its work in September.
The CBI’s director-general, Richard Lambert said: “The UK construction industry consists of over 250,000 firms, employing 2.1 million people in a wide variety of roles, and accounts for almost 9 per cent of GDP.
“Until now, this important industry has not had the single unified voice it deserves.
“The Construction Council will work closely with the major trade bodies to strengthen their efforts to represent the construction industry and ensure its concerns are clearly heard.”
John McDonough, who will lead the work of the new Council, added: “These are challenging times for the construction industry. While many companies continue to enjoy good markets in the UK and overseas, others, particularly those with exposure to the UK residential market, are facing challenging times.
“Setting up the new Construction Council is, therefore, particularly timely. The Council’s new strategic role at the heart of the CBI will enable the whole sector to benefit from the CBI’s unrivaled access at the highest levels in Whitehall, Westminster and Brussels.”
The Construction Council will be considering a broad range of issues including the economy, energy, land use planning, procurement, climate change and skills.
Slowdown ‘risks housing targets’
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Concerns have been raised that the credit crunch could prevent government affordable housing targets being met.
The Chartered Institute of Housing (CIH) called for “imaginative” measures to build 35,000 homes a year by 2015.
It said the Scottish Government should work with housing associations or councils to use homes or land started by private firms which are lying empty.
The communities minister said he was open to working with others to buy unsold privately built homes.
The CIH’s director in Scotland, Alan Ferguson, said the current financial climate made it harder for those building affordable homes to borrow the money needed for their developments.
He said this must lead to concerns that targets would not be met for affordable housing.
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The housing association sector is in a very strong position to weather the credit crunch Scottish Government spokesman
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“As the credit crunch bites, we may also expect to see more people in need of an affordable solution as access to mortgages continue to dry up,” he said.
“At the same time we are seeing private housing developers struggling, leading to job losses and severely reduced building programmes.
“We believe it is time for the Scottish Government to promote some more imaginative solutions that will help deliver more affordable houses, assist first-time buyers and assist struggling private builders.”
Ministers have set a goal of increasing the rate of house building to 35,000 new homes a year by the middle of the next decade.
A Scottish Government spokesman said: “We welcome the CIH’s support for our efforts to improve the supply of affordable housing.
“The changes we have made to our subsidies to housing associations are essential if we are to achieve that objective at a time of great pressure on public expenditure.
“The housing association sector is in a very strong position to weather the credit crunch and the Scottish Government will continue to work with them in the meantime.”
Earlier, Deputy First Minister Nicola Sturgeon announced a £25m package to build new council homes.
Mr Maxwell said action was already being taken to increase social housing
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Last month, she also revealed details of a range of housing measures, including a £250m boost for shared equity schemes that allow people to own part of a property.
The government also plans to launch a Homeowners Support Fund, providing £25m over the next two years to help those at risk of repossession.
Communities Minister Stewart Maxwell said the measures announced by the government showed it was taking action.
He stressed the importance of dealing with the underlying problem - the “under-supply” of housing - and said he would consider working with others agencies to buy unsold privately built homes.
The minister said: “I’m open to that suggestion.
“I think the issue here is housing associations and house builders have to get together and find out what is the most appropriate way forward bring forward projects which provide houses of the right type in the right place and at the right price.
“When that’s done we’ll certainly look at them and see whether that’s affordable and that’s the right thing to do.”
Rising repossions forecast as property market hardens.
Solicitors are likely to face a rise in claims against their professional indemnity (PI) cover as repossessions continue to rise warns titlesolv, a provider of legal indemnities.
Mark Swallow, underwriting manager at titlesolv, said: “The property downturn of the 1990s saw claims against solicitors soar as the huge number of repossessions shed light on a high number of title defects that had not been protected by legal indemnities. When lenders came to sell these properties on, they realised less than the mortgaged value as a result. This led to an increase in claims made by lenders against solicitors and resulted in some high profile action against the solicitors’ fund in 1999.”
The Council of Mortgage Lenders currently estimates that 45,000 homes will be repossessed this year. According to Ministry of Justice figures, there were almost 39,000 mortgage possession claims issued in the first quarter of 2008 by lenders and landlords, 16% more than in the first three months of 2007.
Swallow added: “There can be no doubt that solicitors are likely to face increasing actions from lenders, seeking to recoup losses from any instance of potential negligence. While they can’t take out any additional cover to protect themselves against past cases, solicitors can take positive action now to protect themselves going forward.
“We strongly recommend that whenever any title defect is identified as part of a purchase or remortgage case, the appropriate legal indemnity is acquired. These cheap, simple band aids provide effective cover as well as protecting a solicitor against a potential claim for negligence. However, not all title defects are that obvious and may not come to light immediately and so we urge solicitors to recommend the application of title insurance to lenders. This simple, single premium policy usually covers losses against existing and historical title problems – whether known or unknown. While it is ultimately up to the lender as to whether they take the solicitor’s advice or not, this advice does represent an effective risk mitigation tool for the solicitor.”
Landlords warned over HMRC probe
Wealth management firm, Route Group, is warning buy-to-let investors that HMRC is turning the spotlight on undeclared rental income – even if they have now sold the property in question.
Simon Pimblett, head of research and development at Route Group, said: “Given current market uncertainties surrounding residential property, and the increased costs of mortgage finance, some smaller landlords are looking to call it a day on their buy-to-let investments and sell up. While this might mean that they are facing fewer liabilities in the short term, if they have not declared the rental income on these properties, they could still be facing a significant legacy tax bill in addition to any Capital Gains Tax charges.
“HMRC has started to focus strongly on the issue of undeclared rental income and now has the technology to track down those who have ‘overlooked their obligations’. HMRC can now cross-reference information from the Land Registry, Stamp Duty records and property agents’ records with taxpayers’ self assessment to identify culprits. Should they believe a landlord has not submitted the correct returns, they have the right to request detailed income and expenses statements for the last six years.
“Earlier this year, HMRC conducted a pilot exercise whereby it sent out letters to landlords it believed were in breach, and has promised to widen the search during the latter half of 2008. Therefore, we recommend that all landlords, get their records in order – prior to an unwanted letter or phone call from their local tax office, who will not only claim back what is owed but could also impose interest and penalties.”
NLA refutes reports of death of BTL market The National Landlords Association (NLA), has said that the fundamentals of UK buy-to-let remain strong and rejected suggestions it will bring down the UK housing market.
NLA Mortgages is continuing to offer landlords access mortgage finance and a “guaranteed” cashback sum.
The association says that NLA Mortgages, in addition to traditional buy-to-let loans, also has access to alternative lines of funding not generally available in the marketplace which means there are still financial solutions available for the professional landlord.
David Salusbury, the chairman of the NLA, commenting on NLA Mortgages, said: “The NLA does not subscribe to the view that the end is in sight for the buy-to-let market. On the contrary, we believe now is a good time for the professional portfolio landlord, many of whom will be benefiting from increased demand and rising rents.
“In the current economic conditions it will be important for landlords to keep in close contact with their mortgage broker. NLA Mortgages free online dedicated sourcing and quotation system for landlords is precisely the type of tool many of our members already find helpful in order to find their next mortgage or remortgage.
“It has to be said, alongside keeping landlords up-to-date with the latest mortgage deals, the guaranteed 0.25% cashback for NLA members should also go some way to helping reduce the costs of obtaining a new loan advance.”
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