Homebuilders agree to put £2bn towards fixing unsafe cladding on high rises in England

(qlmbusinessnews.com via theguardian.com – – Wed, 13th April 2022) London, Uk – –

Michael Gove announces deal involving 35 firms but further £3bn still needed to fully address fire safety issues

More than 35 homebuilders have agreed to put £2bn towards fixing unsafe cladding on high-rise buildings in England identified in the aftermath of the Grenfell Tower disaster, Michael Gove, the housing secretary, has said.

The move had been expected after Gove asked 53 homebuilders to contribute towards fixing buildings they have had a role in developing. More than 35 said they would commit £2bn, but that still leaves a further £3bn needed to address fire safety problems in high-rise buildings across the country.

Gove said the further £3bn would be raised by an extension to the building safety levy, forcing industry to pay for the remedial work on buildings where the developer cannot be traced or forced to pay up. This will be paid by developers applying for building control approval for higher-risk residential buildings in England.

Gove called on companies yet to sign up to the voluntary pledge to do so, saying they would face the consequences if they do not.

The government is introducing new powers that would allow the housing secretary to block those who refuse to make the commitment from building and selling new homes. The proposed laws, announced in February under the building safety bill, are also intended to make sure leaseholders have a cap on the costs of historical building safety defects.

Gove said: “Today marks a significant step towards protecting innocent leaseholders and ensuring those responsible pay to solve the crisis they helped to cause. I welcome the move by many of the largest developers to do the right thing.

“But this is just the beginning. We will do whatever it takes to hold industry to account, and under our new measures there will be nowhere to hide.”

By Rowena Mason 

Taylor Wimpey to buy back shares worth $201 mln after profit rise

(qlmbusinessnews.com via uk.reuters.com — Thur, 3rd Mar 2022) London, UK —

 UK homebuilder Taylor Wimpey Plc (TW.L) on Thursday forecast growth in the number of homes built in 2022 and announced an about 150 million pound ($201.14 million) share buyback after posting a more than two-fold surge in its annual profit.

UK homebuilders have stayed optimistic about demand in the undersupplied housing market even after Britain's January inflation rose at its fastest annual pace in nearly three decades, while the worsening Russia-Ukraine conflict adds further pressure on fuel prices.

“We continue to expect to deliver low single digit year-on-year completions growth in 2022 and to make further progress towards our 21-22% operating margin target,” the company said in a statement.

Britain's third-largest homebuilder last month said insider Jennie Daly would take over as its next CEO from the end of April, after activist shareholder Elliott criticised the homebuilder's strategy and called for the appointment of an outsider to the role.

The FTSE 100 firm declared a final dividend of 4.44 pence per share and said it has instructed Citigroup Global Markets to buy up to 75 million pounds of shares as first tranche of the buyback programme.

The homebuilder said it expected sales price growth to continue to offset build cost inflation in 2022, which was currently running at about 6%.

Taylor Wimpey's bigger rivals Barratt Developments (BDEV.L) and Persimmon (PSN.L) too have forecast strong market activity this year.

Pre-tax profit for the year ended Dec. 31 came in at 679.6 million pounds, compared with 264.4 million pounds a year earlier and 835.9 million pounds in the 2019 fiscal.

Reporting by Aby Jose Koilparambil

Developers in England maybe forced to shoulder the cost of dangerous cladding under new laws

(qlmbusinessnews.com via theguardian.com – – Tue, 15th Feb 2022) London, Uk – –

Firms could in effect be blocked from housing market if they do not fix cladding safety issues

Ministers have outlined further details on how the government intends to make developers and manufacturers in the housing industry in England shoulder the costs of replacing dangerous cladding in an effort to protect leaseholders.

The Department for Levelling Up, Housing and Communities said under the plans developers and manufacturers could in effect be blocked from the housing market if they did not help fix cladding safety issues.

It said the changes would put into law a commitment to protect leaseholders living in medium- or high-rise buildings from having to pay anything for the removal of unsafe cladding.

The government said that if the changes became law it would hugely reduce invoices sent to leaseholders for taking down cladding, which in some cases have exceeded £100,000.

Outlining the plans on Monday, the government said it would go further to protect leaseholders by limiting how much they can be asked to pay for non-cladding costs, such as charges for “waking watches” to patrol sites – with some building owners and developers expected to pick up the bill.

The proposed changes, to be introduced through amendments to the building safety bill making its way through parliament, would also allow building owners and landlords to take legal action against manufacturers who used defective products on a home that had since been found unfit for habitation, the government said, adding the power would stretch back 30 years and allow recovery where costs have already been paid out.

In an effort to ensure that manufacturers found guilty of misconduct are also charged to fix the problems they cause, the government said cost contribution orders would be able to be placed on manufacturers who have been successfully prosecuted under construction products regulations, requiring them to contribute financially to buildings requiring remediation.

The government said the proposed changes to the bill would also allow it to apply a proposed building safety levy – paid by developers applying for building control approval for higher-risk residential buildings in England – to more developments.

Ministers hope they will not have to use the powers and want responsible developers and manufacturers to operate freely.

The courts would also be given fresh powers to stop developers using shell companies that make it difficult to trace or identify who they are run by and so avoid responsibility, the government said.

Discussions with industry leaders on the issue of dangerous cladding are ongoing, the government said, but added that progress was being made.

The levelling up secretary, Michael Gove, said: “It is time to bring this scandal to an end, protect leaseholders and see the industry work together to deliver a solution.

“These measures will stop building owners passing all costs on to leaseholders and make sure any repairs are proportionate and necessary for their safety. All industry must play a part instead of continuing to profit whilst hard-working families struggle.

“We cannot allow those who do not take building safety seriously to build homes in the future, and for those not willing to play their part they must face consequences.”

Under the plans to reduce non-cladding costs for leaseholders, the government said developers that still owned a building over 11 metres that they had built or refurbished – or landlords linked to an original developer – would be required to pay in full to fix historical building safety issues in their property. Building owners who were not linked to the developer but could afford to pay in full could also be required to put up the money, the government said.

A cap on leaseholder costs would then be in place for what the government described as the small number of cases where building owners did not have the resources to pay.

It said the cap would be set at similar levels to what is known as Florrie’s Law, which applies to some repairs to social housing – £10,000 for homes outside London and £15,000 for homes in the capital.

The government said this would limit how much leaseholders could be asked to pay for non-cladding costs, including waking watch charges.

Any costs paid out by leaseholders over the past five years would count towards the cap, which would protect leaseholders from paying any more, the government said, but added it would carry out further consultation before finalising the details.

The amendments to the bill are due to be debated in the House of Lords next week.

By PA Media

Energy firms call for green levies on bills to be scrapped

(qlmbusinessnews.com via bbc.co.uk – – Fri, 7th Jan 2022) London, Uk – –

The bosses of two energy firms are calling for green levies on bills to be scrapped to help customers facing higher prices.

The founder of Ecotricity described the levies on energy bills as a “stealth tax” of hundreds of pounds a year.

Centrica's boss is also urging government to fund green programmes through general taxation instead.

Thousands of households have seen their energy bills rise in recent months.

Spiralling wholesale gas prices, increased demand for energy in Asia and a summer with little wind have all contributed to soaring costs faced by suppliers and consumers.

Dale Vince, the chief executive of green energy firm Ecotricity, told the BBC's Wake up to Money programme: “The government talk about high energy prices and bemoan them… but what they don't talk about is the fact they take £9bn a year from our energy bills in a combination of VAT and about five social and environmental policies.”

Currently, about 12% of an energy bill set at the level of the Energy Price Cap of £1,277 goes towards funding green energy programmes, such as support for low-carbon electricity generation.

The price cap, which sets the maximum a supplier can charge annually on a dual fuel tariff in England, Scotland and Wales, will go up again in April after a review by the regulator Ofgem.

Mr Vince suggested that prices could jump because of green levies applied to bills.

“That's about half of the rise that's coming through the price cap. [The government] could take that away in a flash,” he said.

Writing in the Sun on Friday, Centrica's chief executive Chris O'Shea suggested one way forward would be to strip the environmental and social levies out of energy bills and “fund ‘green' programmes through general taxation instead”.

Mr O'Shea argued the move would reduce annual bills by £170 and spread the cost more fairly.

He also called on the government to consider suspending VAT on energy bills to help struggling households.

Torsten Bell, chief executive of the Resolution Foundation think tank, suggested suspending VAT would make a “small dent” to higher costs, but that it might not be as effective as it would benefit higher-earners as well.

“The important thing is that we have a much larger intervention aimed at lower-income households,” he said.

Windfall tax

Ecotricity boss Mr Vince also suggested that North Sea gas suppliers should face a windfall tax as some have seen profits increase as wholesale prices have surged.

According to experts at energy consultancy Wood MacKenzie, UK North Sea oil and gas companies are set to report near-record cashflows of nearly £14.9bn for the current financial year.

“The North Sea operators have been making a killing this winter,” Mr Vince told the BBC.

“A windfall tax would be a fair thing to do, the North Sea operators don't need that money, weren't planning to have that money and it's a hole we've got in the economy somewhere else.”

Last month, other energy bosses, such as Ovo Energy's chief executive Stephen Fitzpatrick, predicted that the rise in wholesale gas prices and its impact on people would be “an enormous crisis for 2022”.

Energy UK, the industry's trade body, has warned bills could soar by another 50% unless the government intervenes.

The idea of targeted financial support for fuel bills – along the lines of the current Warm Home Discount scheme – is emerging as a frontrunner in the race to tackle rising costs, although a number of options are being considered by government officials.

The current scheme offers those receiving certain state benefits the option to apply for a one-off £140 payment every winter.

This could be increased and the number of people eligible could be expanded more broadly.

Small Business Minister Paul Scully told the BBC's Today programme: “We'll always look at what we can do, especially for targeted approaches, to support the lowest-paid because there is a wider cost-of-living issue.”

A spokesperson for the Department for Business said that the current energy price cap was “insulating millions of consumers from high global gas prices”.

“We'll continue to listen to consumers and businesses on how to manage the costs of energy.”

The department also pointed to schemes currently in place to help those facing high bills, such as the Warm Home Discount scheme, as well as the £500m Household Support Fund, which sees local councils distribute grants to struggling households in England.

UK house prices cap strong year with another jump – Nationwide

(qlmbusinessnews.com via uk.reuters.com — Thur, 30th Dec 2021) London, UK —

British house prices rose by a stronger-than-expected 1.0% in December from November, capping the biggest full-year rise in prices since 2006, figures from mortgage lender Nationwide showed on Thursday.

Economists polled by Reuters had expected prices to rise by a monthly 0.5%.

House prices this month were 10.4% higher than in December 2020 and the average price of a property stood at record high of 254,822 pounds ($343,296.20).

Britain's housing market rebounded strongly after the first coronavirus lockdown in 2020 and has powered ahead since then, helped by a now-lapsed tax break for buyers and by ongoing demand for bigger properties as more people work from home.

“It appears likely that the housing market will slow next year, since the stamp duty holiday encouraged many to bring forward their house purchase in order to avoid additional tax,” Robert Gardner, Nationwide's chief economist, said.

But the outlook remained extremely uncertain, he said.

“The market still has significant momentum and shifts in housing preferences as a result of the pandemic could continue to support activity and price growth,” Gardner said.

“Indeed, the Omicron variant could serve to reinforce the shift in preferences in the near term.”

Reporting by William Schomberg

Purplebricks to set aside millions to cover historic failure over deposit registrations

(qlmbusinessnews.com via news.sky.com– Mon, 13th Dec 2021) London, Uk – –
The company's shares face further pressure as it warns that its lettings management business may face claims for a historic failure over deposit registrations.

Purplebricks, the online estate agency, has revealed that it expects to make a provision of millions of pounds to cover an apparent blunder in its lettings management business.

The company said on Monday that it was finalising the amount it was to set aside to cover tenant claims, though its early estimates suggested a potential financial risk in the range of £2m-£9m.

That sum was reported to be based on the assumption that everyone eligible to make a claim did so.

The blunder, it said, concerned an alleged failure to properly serve legally required documents to tenants explaining that their deposits had been put into a national protection scheme.

The company said on Monday morning: “During an internal review the company recently became aware of a process issue in how it has been communicating with tenants on behalf of its landlords in relation to deposit registrations.

“Further enquiries into this matter are currently being conducted and the communications process is now being corrected.

“In light of the above, the company believes that it is prudent to provide for any potential future claims which could arise under the Housing Act in relation to this regulatory process issue.”

Its statement added: “Purplebricks is now in the process of finalising the level of provision required and associated disclosures and has therefore taken the decision to delay its results for the half year ended 31 October 2021, which were due to be published on 14 December 2021.”

Shares – down 70% in the year to date – opened 20% lower on Monday morning.

Much of the earlier slide followed a trading update in November which warned: “After an exceptionally strong period for the UK housing market in FY (full year) 2021, buoyed by the stamp duty holiday, the six-month period to 31 October 2021 has been more challenging.

“New instructions have slowed significantly in recent months, given continued strong demand across the housing market is not being met by sufficient supply of instructions.

“This imbalance has resulted in new instructions coming to market being approximately 23% below the comparative period last year.”

By James Sillars

EV charging stations required in new homes from 2022, Boris Johnson to announce

(qlmbusinessnews.com via news.sky.com– Mon, 22nd Nov, 2021) London, Uk – –

unite and level up across the country.”

The new measures will apply to both homes and non-residential buildings, and also renovations on properties with more than 10 parking spaces.

Using a normal wall plug at home to charge an electric vehicle is a time-consuming process, with the RAC saying it is “by far” a better option to have a dedicated charger.

The company says the average cost for installing a dedicated charger at home is around £800 – but financial support is available from the government.

In response to the announcement, Labour said it does nothing to address the “appalling divide” in charging ports between northern and southern parts of the country.

Ed Miliband, the shadow business secretary, said: “The government is failing Britain's automotive companies and workers.

“Rather than step up to support the car industry in the global race for green technologies, ministers have stepped back and left manufacturers, workers and the public on their own, failing to take the action necessary to make the switch affordable for families hit by a cost of living crisis.

“To back the car industry and create jobs, Labour would bring forward ambitious proposals to spark an electric vehicle revolution in every part of the country.

“By extending the help to buy an electric car for those on lower and middle incomes and accelerating the roll-out of charging points in areas that have been left out, we would ensure that everyone could benefit and make the green transition fair.”

Mr Johnson is expected to tell the CBE the UK will gain advantages from being first to change its economy and transition to net zero.

He is expected to say: “This is a pivotal moment, we cannot go on as we are.

“We have to adapt our economy to the green industrial revolution.

“We have to use our massive investment in science and technology and we have to raise our productivity and then we have to get out your way.

“We must regulate less or better and take advantage of new freedoms.”

Reporting by Tim Baker

Nationwide: Says Average house price now more than £250,000

(qlmbusinessnews.com via bbc.co.uk – – Wed, 3rd Nov 2021) London, Uk – –

A typical UK home costs more than £250,000 for the first time after prices rose by 9.9% in the last year, according to the Nationwide.

The building society said the average house price was £250,311 in October, up 0.7% on the previous month.

It said this was an increase of £30,728 since the start of the pandemic. Covid has coincided with intense demand from buyers unmatched by supply.

Official forecasters say the pace of house price rises will slow.

“The dynamics of the housing market may be about to shift slowly once again, but make no mistake, the boom still isn't over,” said Nicky Stevenson, managing director at estate agent Fine & Country.

Demand during pandemic

UK house prices have risen sharply over the last 18 months owing to changing preferences of buyers, who are now looking for more indoor and outside space, but those properties have not been plentiful on the market.

That has led to intense competition among potential buyers in some areas, particularly in rural and coastal spots.

The market also been buoyed by tax incentives, with ministers introducing stamp duty holidays, as well as cheap borrowing costs.

Those tax breaks are now over, and there is widespread speculation that mortgage rates will rise from the ultra-low levels of recent times.

“We expect house prices to continue to beat expectations in the near term before a gradual rise in mortgage rates applies the brakes in the second half of 2022,” said Andrew Wishart, property economist at Capital Economics.

The outcome of Thursday's Bank of England interest rate decision will be one factor affecting house prices in the months ahead.

“The outlook remains extremely uncertain,” said Nationwide chief economist Robert Gardner.

“If the labour market remains resilient, conditions may stay fairly buoyant in the coming months – especially as the market continues to have momentum and there is scope for ongoing shifts in housing preferences.”

The government's official, independent forecaster – the Office for Budget Responsibility – said that house prices would continue to rise in the coming years, albeit at a slower rate.

It means potential first-time buyers are facing another period of difficulty if they wish to buy a home, especially if the cost of borrowing rises.

The OBR has now predicted that house prices will go up by 8.6% this year, compared with a year earlier. The annual rise would then slow to 3.2% in 2022, before decelerating further to 0.9% in 2023, it said.

This would be followed by rises of 1.9% in 2024, 2.9% in 2025, and 3.5% in 2026, although longer-term forecasts and more difficult to make accurately.

By Kevin Peachey
Personal finance correspondent

Evergrande property giant missed $83.5m deadline for interest payment

(qlmbusinessnews.com via bbc.co.uk – – Fri, 24th S 2021) London, Uk – –

Investors were left in the dark after troubled property giant Evergrande missed a deadline for a $83.5m (£61m) interest payment.

The Chinese firm is yet to make an announcement regarding the payment, which was due on Thursday.

Earlier in the week, the company said it had struck a deal over another interest payment worth $35.9m.

Global markets have been rocked by concerns over the firm's ability to support its more than $300bn of debts.

Evergrande's fell by almost 12% in Hong Kong on Friday after jumping more than 17% the previous day.

Meanwhile, Chinese authorities have reportedly warned local governments to be prepared for the potential failure of Evergrande.

The actions being ordered were described as “getting ready for the possible storm,” according to the Wall Street Journal, which cited officials familiar with the discussions.

The move has been seen by some investors as a further sign that the Chinese government is reluctant to bail out the crisis-hit real estate giant.

The Chinese government has made no major announcements on Evergrande, and state media has given few clues about Beijing's thinking on the firm's debt crisis.

The company is due to make a series of other bond interest payments in the coming weeks.

Under agreements with investors, the company has a 30-day grace period before the missed payment on the $83.5m offshore bond becomes a default.

Some analysts have cautioned that the failure of such a large and heavily-indebted property developer could have a major impact on the Chinese economy, and could potentially spread to the global financial system.

The real estate industry is a major component of the Chinese economy, accounting for almost 30% of gross domestic product, so any impact on the sector is likely to hit the country's already slowing growth.

And while there are major risks to both the Chinese property industry and the country's wider economy, only around $20bn of Evergrande's debts are held by foreign investors.

Jewson fears price rises amid shortage of building materials

(qlmbusinessnews.com via theguardian.com – – Tue, 7th Sept 2021) London, Uk – –

Supply chain crisis means cement, plasterboard and insulation are being rationed by manufacturers

One of Britain’s biggest builders’ merchants has warned of shortages of materials as the UK construction industry struggles under mounting pressure from the deepest supply chain crisis in decades.

Jewson has told customers that prices for a range of goods – including timber, wheelbarrows, insulation and adhesives – will rise by as much as a fifth this month amid growing evidence from across the construction sector of severe and sustained disruption linked to Covid and Brexit.

It said supplies of cement, plasterboard and insulation were being rationed by manufacturers, forcing it to limit the availability of some products, while other products would go up in price or take longer to deliver to customers.

In a further sign of the fallout in the UK from the coronavirus and exiting the EU, the latest snapshot from IHS Markit and the Chartered Institute of Procurement and Supply (Cips) revealed a decline in growth across housebuilding, commercial work and civil engineering for the construction industry last month, as the restricted supply of materials and transport issues weighed on activity.

The monthly purchasing managers’ index fell to 55.2 in August, down from 58.7 in July on an index where anything above 50 separates growth from contraction. City economists had forecast a reading of 56.9.

Brian Berry, the chief executive of the Federation of Master Builders, said: “Builders throughout the UK, particularly smaller firms, are struggling to recover from the pandemic as a result of the continued materials crisis.”

Reflecting intense disruption across the industry, Jewson said that some building materials producers were using an “allocation process” to limit the supply of in-demand products. This would in turn affect its wholesale customers.

It said Hanson was allocating cement to ensure “fair supply in the market”, which had led Jewson to limit certain products to five an order. British Gypsum had introduced an allocation process for plasterboard, while the insulation firm Recticel had undertaken similar steps.

Jewson said soaring demand for certain products and supply shortages had forced it to put up some of its prices this month, such as a 10-15% increase for wheelbarrows, a 5-20% rise for sealants, adhesives and chemicals, a 12% increase for glass wool insulation and a 20% jump for MDF mouldings.

It also told customers to expect longer delivery times for kitchen appliances with in-built microchips, such as combi and microwave ovens, amid shortages of chips worldwide.

“We are aware of the importance of getting you everything you need when you need it. However, sometimes our suppliers inform us of issues in the supply chain, which means that some products may not be as readily available as we would hope,” it told its customers.

It comes as construction industry leaders voice concerns of severe disruption across the sector. Travis Perkins last month warned of shortages of timber and plasterboard, while firms including Ikea, B&Q, Homebase and Argos have also warned of supply chain problems.

Business leaders have said chronic shortages of workers and key materials are beginning to weigh on Britain’s economic recovery from the winter lockdown, with disruption to global supply chains caused by the pandemic exacerbated by Brexit migration rules and border controls.

Economists have said that higher costs facing industry are likely to be passed on to British consumers in the form of higher prices for a range of goods and services.

The Bank of England forecasts inflation will rise to 4% this year, the highest level for a decade, before then fading closer to its target rate of 2% as temporary problems linked to the pandemic ease. However, some economists warn the rate of inflation could remain elevated as temporary disruption persists.

Construction firms said their costs rose at the second-fastest rate in the 24-year history of the PMI survey, surpassed only by a record rise in June 2021. Among those materials reported as up in price, the most common were concrete, fuel, steel and timber.

Businesses noted a continued resumption of projects that had been delayed because of Brexit and Covid but said client confidence was being hit by shortages of raw material supplies and increased cost burdens.

Duncan Brock, the group director at Cips, said: “A combination of ongoing Covid restrictions, Brexit delays and shipping hold-ups were responsible as builders were unable to complete some of the pipelines of work knocking on their door.

“Material and staff costs went through the roof as job hiring accelerated to fill the gaps in capacity left behind by employee moves, overseas worker availability and brought on by skills shortages.”

By Richard Partington,
Economics correspondent

Taylor Wimpey rejects suggestions UK housing market is in a bubble

(qlmbusinessnews.com via bbc.co.uk – – Wed, 4th Aug 2021) London, Uk – –

Housebuilder Taylor Wimpey has rejected suggestions that the UK housing market is in a bubble after it announced bumper half-year profits.

Chief executive Pete Redfern told the BBC that market conditions were completely different from the time of the last house price crash in 2007.

Taylor Wimpey completed more than 7,300 houses in the first six months of 2021, a record performance.

It made operating profits of £424m, as against a £16m loss a year earlier.

The firm said it had raised its full-year profit expectations to £820m and expected to complete up to 14,000 new homes over the full 12 months.

It had previously said it expected profits for the year to come in at about £779m.

Mr Redfern told the Today programme that in 2007, mortgage lending had been “significantly laxer” than now, while house price growth had been “well above” inflation levels.

At the same time, there had been a high number of investors buying homes.

“None of those things is true today,” he said, adding that the UK currently had an “entirely healthy and stable housing market”.

Housing boom

Taylor Wimpey said it had seen “strong demand” for homes in the UK during the first half of this year, underpinned by low interest rates, good mortgage availability and government support for customers in the form of the Help to Buy scheme.

It added that there had been healthy levels of customer interest in reservations, extending well beyond the end of the stamp duty holiday.

It also reiterated that it had brought in a new cladding fire safety provision of £125m to make apartment buildings safe and mortgageable.

As the country emerges from the Covid pandemic, the housing market has been showing signs of a boom.

Last week, property website Zoopla said surging demand for houses would last well into 2022 as buyers continued to look for more room after being cooped up during the pandemic.

A search for space had pushed up the average price of a house by 7.3% over the past year, reaching a new high of £230,700, it said.

House prices in the UK hits a 16 year all time high driven by the pandemic

(qlmbusinessnews.com via uk.reuters.com — Tue, 29th June 2021) London, UK —

LONDON, June 29 (Reuters) – British house prices jumped by the most in more than 16 years this month, soaring by 13.4% from June 2020, and demand is expected to stay strong while a coronavirus emergency tax break remains in place, mortgage lender Nationwide said.

In monthly terms, house prices were 0.7% higher than in May as buyers rushed to take advantage of the tax incentive and sought bigger homes after their experiences of lockdown.

“While the strength is partly due to base effects, with June last year unusually weak due to the first lockdown, the market continues to show significant momentum,” Nationwide's chief economist Robert Gardner said on Tuesday.

Economists polled by Reuters had expected prices to rise by 13.7% in annual terms and by 0.7% from May.

The tax break, introduced last year as part of British finance minister Rishi Sunak's emergency support for the economy, had originally been due to expire at the end of March.

But the first 500,000 pounds ($693,250) of any property purchase in England or Northern Ireland are now due to remain exempt until the end of June, and a 250,000 pound tax-free allowance will run until the end of September.

“Underlying demand is likely to remain solid in the near term as the economy unlocks,” Gardner said.

“Consumer confidence has rebounded while borrowing costs remain low. This, combined with a lack of supply on the market, suggests further upward pressure on prices. But as we look toward the end of the year, the outlook is harder to foresee.”

THE BOE IS WATCHING

As well as the tax break, Sunak's huge jobs support programme is also due to be phased out by the end of September, raising fears of an increase in unemployment.

Nationwide said it was still possible that the shift in demand for larger properties seen during the pandemic would continue to help the market once the tax break is gone.

The lender published a survey last month showing that almost seven in 10 homeowners who were considering a move would be doing it even without the extension of the tax incentive.

Nationwide said house prices were close to a record high relative to incomes, making it harder for first-time buyers to raise a deposit. But mortgage payments were not high as a proportion of pay, due mostly to low mortgage rates.

The Bank of England has said is monitoring the housing market as it weighs up the chances of a broader pick-up in inflation as the economy reopens. 

Last week, the central bank left its key interest rate at an all-time low or 0.1% and made no change to its plan to increase its government bond purchases to 895 billion pounds.

Despite the signs of recovery in Britain's economy, most BoE rate-setters said they wanted to “lean strongly against downside risks to the outlook”.

Nationwide said house prices in London rose at the slowest rate of any region in England during the second quarter of 2021 but they still increased by 7.3%. Northern Ireland was the strongest performing region, with prices up 14% year-on-year.

($1 = 0.7212 pounds)

By William Schomberg

Leaseholders benefit as CMA secures deal with Aviva and Persimmon

(qlmbusinessnews.com via news.sky.com– Wed, 23rd June 2021) London, Uk – –

The Competition and Markets Authority warned other housing firms and investors to fall in line too or face possible legal action.

Leaseholders “trapped” in homes they struggle to sell are among thousands set to benefit after Aviva and Persimmon agreed to changes following an investigation by the competition regulator.

Hundreds living in homes whose freeholds are owned by Aviva will be affected after it said it would remove contract terms which allow ground rents to double every 10 to 15 years.

The ground rents will revert to the original amounts and leaseholders who were affected by the “doubling” clauses will be refunded excess amounts paid, the Competition and Markets Authority (CMA) said.

Thousands more will benefit after house builder Persimmon said it would offer leasehold house owners the option to buy the freehold of their property at the discounted price of £2,000.

Anyone who has already bought a freehold from the company at a higher price will receive a discount, under the agreement.

It follows concerns that homeowners been led to believe they could buy their freehold at a certain price “only to find out later that this price had increased by thousands of pounds with no warning”.

CMA chief executive Andrea Coscelli said: “This is a real win for thousands of leaseholders – for too long people have found themselves trapped in homes they can struggle to sell or been faced with unexpectedly high prices to buy their freehold.

“We now expect other housing developers and investors to follow the lead of Aviva and Persimmon.

“If not, they can expect to face legal action.”

Housing secretary Robert Jenrick said practices such as doubling ground rent “have no place in our housing market” and hailed the settlement as a “hugely important step”.

“We have also introduced legislation that will protect future homeowners by restricting ground rents in new leases to zero and I would strongly urge other developers to follow suit in amending their historic practices,” Mr Jenrick said.

The settlement follows the CMA's launch of enforcement action in September against housing developers Countryside Properties and Taylor Wimpey for using potentially unfair contract terms and Barratt and Persimmon over the possible mis-selling of leasehold properties.

In connection with this it has also been investigating investment firms, including Aviva, that bought a large number of freeholds from Countryside and Taylor Wimpey.

It has now written to the investment groups other than Aviva setting out its concerns and “requiring them to remove doubling ground rent terms from their contracts”.

The CMA said its investigation into Countryside, Taylor Wimpey, Barratt, and those investment groups – Brigante Properties, Abacus Land and Adriatic Land – remained ongoing adding that “it should not be assumed that they have breached the law”.

Responding to the CMA announcement, Persimmon said it had not historically sold leasehold homes in high volumes and largely stopped doing so in 2017.

It said the agreement largely extended existing schemes in place to enable leaseholders to buy their freeholds at below market value.

The CMA wrote to Countryside and Taylor Wimpey in March warning them they could be breaking the law if they continue to include unfair ground rent terms in contracts for new homes.

Campaigners have called for the end of leasehold sales for new-build properties.

Flats are often sold as leaseholds with the freehold held by a separate owner, often the builder, who is entitled to charge ground rent to the homeowner.

The government has pledged to reform the system.

By John-Paul Ford Rojas

Stamp duty break extension see house prices rise at their biggest monthly rate since 2004

(qlmbusinessnews.com via news.sky.com– Fri, 30th April 2021) London, Uk – –

The tax holiday had been due to end in March but was extended by chancellor Rishi Sunak in last month's budget.

House prices rose at their biggest monthly rate since 2004 in April after Rishi Sunak extended a holiday on stamp duty, according to new figures from lender Nationwide.

Prices climbed by 2.1% compared to March while they were up by 7.1% compared to the same period last year, the report said.

The chancellor introduced a stamp duty exemption on the first £500,000 of property purchases last year after home sales collapsed during the initial months of the pandemic but it had been due to expire in March.

But in last month's budget, Mr Sunak extended the tax break until June, when the threshold will be lowered to £250,000 until September, before returning to £125,000.

Nationwide chief economist Robert Gardner said: “Just as expectations of the end of the stamp duty holiday led to a slowdown in house price growth in March, so the extension of the stamp duty holiday in the budget prompted a reacceleration in April.

The month-on-month price increase of 2.1% was the highest since February 2004. The annual growth of 7.1% was just below the 7.3% seen last December, which was a six-year high.

Mr Gardner said the housing market looked set to remain “fairly buoyant” over the next six months thanks to the stamp duty holiday as well as continued government job support measures.

Demand for moving home is also being motivated by changing housing preferences in the wake of the pandemic, Mr Gardner added.

Many are swapping the convenience of living close to the cities where they work for the comfort of having a larger home further out as they spend more time there.

Meanwhile supply of homes for sale remains constrained, adding to the pressure on prices.

But Mr Gardner added: “Further ahead, the outlook for the market is far more uncertain.

“If unemployment rises sharply towards the end of the year as most analysts expect, there is scope for activity to slow, perhaps sharply.”

Howard Archer, chief economic advisor to the EY ITEM Club, said: “We believe the strength of the housing market is excessive relative to the economic fundamentals, and the level of prices will ultimately prove unsustainable.”

By John-Paul Ford Rojas

House prices rose at their fastest annual pace in more than six years in February before stamp duty holiday extended

(qlmbusinessnews.com via news.sky.com– Wed, 21st April 2021) London, Uk – –

Official figures show the average cost of a UK home at £250,000 – up almost 9% in the year to February.

House prices rose at their fastest annual pace in more than six years in February, the month before the chancellor extended the stamp duty holiday for buyers in England and Northern Ireland.

The Office for National Statistics (ONS) reported growth of 8.6% over the 12 months.

The figures showed it was the highest rate since October 2014, leaving the average house price at £250,000 – a rise of £20,000 over the 12 months.

While England led the way with 8.7%, all UK regions saw strong rates of annual growth.

Wales recorded a jump of 8.4% while Scotland and Northern Ireland saw prices jump by 8% and 5.3% respectively.

Each has benefited from national government-led stimulus to bolster activity and counter the effects of the COVID-19 crisis.

While support in Scotland ended at the end of March, chancellor Rishi Sunak announced at the budget that England and Northern Ireland would continue to benefit from a stamp duty holiday beyond the end of March to 30 June.

From 1 July, the threshold from which the tax becomes payable falls to £250,000 from the current £500,000.

It reverts back to the usual level of £125,000 from October.

Support in Wales is due to end on 30 June.

Tax holidays and pent-up demand have combined to drive extraordinary levels of activity, according to the most recent data, with buyers clamouring for properties with gardens.

Nitesh Patel, strategic economist at Yorkshire Building Society, said: “Available properties appear to be getting snapped up quickly, adding upward pressure on prices.

“Buying behaviour continues to be dominated by the pursuit for space, with detached homes rising by 9.1% in the year to February 2021, in contrast with flats and maisonettes, which saw a 6.7% increase over the same period.

Separate figures from HM Revenue and Customs showed sales were around double the number seen in March 2020 last month, reporting 190,980 completions.

The property website Rightmove said on Monday that asking prices had leapt by more than 2% in just a month as a result of the frenzy.

Its report was released on the same day that the government moved to give additional help to people to buy their own home through a Treasury-backed mortgage scheme offering deals with deposits as low as 5%.

George Franks, co-founder of London-based estate agents Radstock Property, described the stamp duty holiday as “the bricks and mortar equivalent of steroids” in terms of its effect on the property market.

He added: “Demand has gone through the roof and that, coupled with exceptionally competitive mortgages rates and low supply, has driven average prices ever higher.

“Yes, tax hikes and rising unemployment will almost certainly temper demand at some point, but changing living requirements will counteract that to an extent.”

By James Sillars

UK home movers have a spring in their step, with stamp duty holiday extension, says Halifax

(qlmbusinessnews.com via bbc.co.uk – – Fri, 9th April 2021) London, Uk – –

The extension of the stamp duty holiday put a “spring in the step” of home movers in March, according to the UK's biggest mortgage lender.

The Halifax, part of Lloyds Banking Group, said there was “something of a resurgence” in the UK housing market in March.

Extensions to stamp duty holidays in England, Northern Ireland and Wales were key to the rise in activity.

As a result, the average house price was 6.5% higher than a year ago.

It meant the typical home was valued at £254,606 in March.

Although rising house prices will be welcomed by some, it will frustrate those wanting to buy a home for the first time – particularly if Covid uncertainty has affected their income and ability to borrow through a mortgage.

There was some support announced in the Budget as a government guarantee means first-time buyers should get a wider choice of mortgages that require a deposit of just 5% of the loan.

The economic fallout of the pandemic could affect longer-term pricing of property, according to Russell Galley, managing director at the Halifax.

“With the economy yet to feel the full effect of its biggest recession in more than 300 years, we remain cautious about the longer-term outlook,” he said.

“Given current levels of uncertainty and the potential for higher unemployment, we still expect house price growth to slow somewhat by the end of this year.”

Defying expectations

The Halifax said that UK house prices rose by 1.1% in March compared with February, according to figures based on the lender's own mortgage data.

That meant they had risen in cash terms by £15,430 over the last year – a 12 months dominated by Covid, with various lockdowns and other restrictions.

“Casting our minds back 12 months, few could have predicted quite how well the housing market would ride out the impact of the pandemic so far, let alone post growth of more than £1,000 per month on average,” Mr Galley said.

Anna Clare Harper, chief executive of asset manager SPI Capital, suggested that lockdowns and rising living standards had encouraged existing owners to buy bigger properties.

However, she said inequality among generations and incomes meant many would need to rent instead, which could increase demand in that sector.

The UK housing market is judged by average prices, but there are a host of local markets in which schools, housing development and regional employment that can affect property values.

By By Kevin
Peachey Personal finance correspondent

Builders told to remove ‘unfair’ ground rent terms by UK competition watchdog

(qlmbusinessnews.com via bbc.co.uk – – Fri, 19th March 2021) London, Uk – –

Housebuilders Countryside and Taylor Wimpey have been told to change their leasehold contract terms by the UK competition watchdog or face legal action.

The Competition and Markets Authority (CMA) said the “unfair” terms, which double ground every 10 to 15 years, “trap” people.

It said the contract means people can struggle to sell or mortgage homes.

The builders said they had already taken steps that address the issue.

The CMA said it had concerns that the clauses in the contracts may break consumer protection law. They must be removed and not used again, it said.

“These ground rent terms can make it impossible for people to sell or get a mortgage on their homes, meaning they find themselves trapped,” said CMA chief executive Andrea Coscelli.

“This is unacceptable. Countryside and Taylor Wimpey must entirely remove all these terms from existing contracts to make sure that they are on the right side of the law.”

He added: “If these developers do not address our concerns, we will take further action, including through the courts, if necessary.”

The watchdog is also looking into Barratt Developments and Persimmon Homes contracts.

The difference between a freeholder and a leaseholder

Someone who owns a property outright, including the land it is built on, is a freeholder.

With a leasehold, the person owns a lease, which gives them the right to use the property. But they still have to get their landlord's permission for any work or changes to their homes.

When a leasehold flat or house is first sold, a lease is granted for a fixed period of time, typically between 99 and 125 years – but sometimes up to 999 years. People may extend their lease or buy the freehold, but this can be complicated and expensive and involve legal fees.

Leasehold house owners are also often charged expensive ground rent, as well as fees if they want to make changes to their homes. A leasehold house can also be difficult to sell.

Campaigners have called for leaseholds to be banned on new builds, and the government has said previously it would work to end the practice.

Housing Secretary Robert Jenrick said unfair practices, including crippling ground rents, have “no place in our housing market”.

He added: “This behaviour must end and I look forward to appropriate redress being forthcoming for leaseholders.”

Taylor Wimpey said: “We will continue to cooperate with the CMA and work with them to find a satisfactory resolution, within the required timescale.”

The housebuilder added that it stopped selling leases that doubled ground rent every ten years on new developments from 1 January 2012.

In 2017 it launched a voluntary help scheme that covers the cost of converting terms so ground rents are linked to rises in the retail price index (RPI) measure of inflation and set aside £130m to cover the cost of lease conversions.

The company said a “significant number” of Taylor Wimpey customers have already used this scheme and it remains open.

Countryside said it had “sold no properties with doubling ground rent clauses since 2017” and that it had an assistance scheme for people who charges doubled more than every 20 years.

It said it would “continue to engage constructively with the CMA to resolve this complex issue.”

‘Feudal system'

The National Leasehold Campaign (NLC), which wants to abolish new-build leasehold, said that Taylor Wimpey and Countrywide were “two of the worst offenders in the leasehold scandal”.

NLC founder Katie Kendrick said the campaign was “delighted” with the CMA's stance.

However, she said that ground rents “are only one of the ways for freehold investors to make money at the expense of leaseholders.”

“Leaseholders are navigating a feudal system that is stacked against them, with rip-off permission fees, escalating service charges and, for many new build estates, estate management fees.

“The big developers could do more to provide redress for the systematic mis-selling of leasehold homes; they choose not to,” she added.

House prices climbed 8.5% in 2020 amid tax holiday

(qlmbusinessnews.com via bbc.co.uk – – Wed, 17th Feb 2021) London, Uk – –

UK house prices climbed 8.5% in 2020, the highest annual growth rate since October 2014, according to official figures.

The average UK house price reached a record high of £252,000 in December 2020, the Office for National Statistics said.

The North West had the highest growth of 11.2%, while London rose just 3.5%.

The stamp duty holiday due to end this March contributed to the rise, the ONS said.

Spending more time at home in the pandemic meant some people also decided they needed more space.

That was reflected in the average price of detached properties climbing by twice as much as flats and maisonettes during 2020, up 10% and 5% respectively.

Meanwhile Wales experienced the fastest price growth, with property values rising 10.7% to £184,000.

In England, prices climbed 8.5% to £269,000, in Scotland, 8.4% to £163,000 and in Northern Ireland 5.3% to £148,000.

“Recent price increases may reflect a range of factors including pent-up demand, some possible changes in housing preferences since the pandemic and a response to the changes made to property transaction taxes across the nations,” the ONS said.

Regional variations

The UK housing market is made up of lots of local markets, with different factors affecting property prices such as the performance of schools and the availability of jobs. The ONS figures are based on sale completions.

Although average London prices were up by 3.5%, over last year, prices fell in the capital by £5,000 between November and December, despite a UK-wide price increase of 1.2% over the month.

But the city still has the highest average house price in the UK, at £496,000.

The North East continued to have the lowest average house price at £141,000, and has become the final English region to surpass its pre-economic downturn peak of July 2007.

Cheap debt

“2020 was the year that fundamentals came home to roost,” said Nicky Stevenson, managing director at estate agent Fine & Country.

“There was no escaping a lack of space for households who suddenly found they were living on top of each other with little respite. That has powered annual growth that reached a six-year high.”

There were four major drivers of overall house price rises in 2020, said Anna Clare Harper, chief executive of asset manager SPI Capital.

“The temporary stamp duty reduction and cheap debt as a result of very low interest rates, which give buyers a ‘discount'; the release of pent-up supply and demand and desire to improve surroundings amongst existing homeowners; and the ‘flight to safety', since in times of uncertainty, people want to keep their money in a stable asset with low volatility.

“But looking to the future when the temporary stamp duty reduction ends, we're likely to see a slowdown in house price rises,” she said.

“However, there is still some life in the market as lockdown helps to concentrate many potential buyers and sellers' minds as far as moving is concerned,” said north London estate agent Jeremy Leaf.

“Intense speculation remains as to whether the 31 March stamp duty deadline will be extended and we can't help but have sympathy for many who have started the process several months ago who have been unavoidably delayed by a backlog in searches, surveys, conveyancing, or all three, to say nothing of problems in the new-build industry.”

By Simon Read

Low-deposit mortgages return as markets emerge from Covid-related slowdown

(qlmbusinessnews.com via bbc.co.uk – – Wed, 20th Jan 2021) London, Uk – –

Low-deposit mortgages have made a return as the market emerges from a Covid-related slowdown.

Mortgage products for homeowners with a deposit of 10% of their property's value have risen more than fourfold compared with last summer's low.

The increase, based on figures from financial information service Moneyfacts, could offer some relief to first-time buyers.

But the cost of mortgages will remain an issue for many.

‘Homeownership dreams'

In early September last year, there were only 44 mortgage products available for those able to offer a 10% deposit. At the same time, first-time buyers putting money aside for a deposit were faced with pressures of poor savings rates and rising house prices.

That choice has now risen to 197 products, according to the Moneyfacts figures, with some big lenders returning in recent weeks.

Mortgage products for those able to offer a 15% deposit have also risen sharply, although the choice was already much greater.

“First-time buyers who may have been concerned that with record low savings rates and increasing house prices, their homeownership dreams may have had to be shelved, may have been pleased to note that we are now seeing some providers return products for those with 10% deposits,” said Eleanor Williams, from Moneyfacts.

Lenders had been grappling with the practical effects that the coronavirus pandemic brought to their business.

While some new businesses targeted first-time buyers on social media, many traditional lenders withdrew products from the market.

Staff shortages, and employees working from home, meant they were unable to process applications as fast as they had before the pandemic.

There were also concerns among lenders that, despite strong activity in the housing market, riskier – and younger – first-time buyers could find it difficult to make mortgage repayments during an economic slowdown caused by the pandemic.

Research has shown that younger workers are more at risk of redundancy.

Aaron Strutt, from mortgage broker Trinity Financial, said lenders were now working more efficiently despite staff still being at home.

He said that some of the biggest mortgage lenders had returned to the market. Some of the mortgage rates they were offering were not as attractive as they had been, but competition would help push down costs.

“If you are planning to purchase a property and have a 10% deposit the mortgage rates are not as cheap as they used to be, but they are getting better,” he said.

Many thousands of existing mortgage-holders who had struggled to make their repayments during the pandemic had taken payment “holidays”, which are deferrals on payments.

The latest figures from UK Finance, which represents lenders, show that 130,000 mortgage payment holidays were in place at the end of December 2020, down from a peak of 1.8 million in June last year.

By Kevin Peachey
Personal finance correspondent