According to the Council of Mortgage Lenders (CML), last year proved to be the strongest ever year for gross mortgage lending by reaching an estimated £362bn, which is up 5% from £345bn in 2006.
However, December gross lending declined to an estimated £22.6bn, which was CML’s lowest monthly figure since May 2005. It was down 25% from £29.9bn in November, and 21% from £28.6bn in December 2006. A 6% seasonal fall might typically be expected between November and December.
Michael Coogan, director general of CML, said: “The ‘credit crunch’ moved into its fourth month in December and continued to constrain the cost and availability of funds to lenders and, in turn, the cost and number of mortgage products available to borrowers.
“Looking forward, the recent decline in interbank lending rates and the prospect of further reductions in base rates in 2008 should provide some help to the market, although lending volumes are likely to remain weak for the next few months.”
South East welcomes 2.5m migrants in a decade
New research from Halifax showed that the South East was the most popular region for people to move to between 1996 and 2006 with 2.5m arrivals from elsewhere in the UK.
However, the South East also recorded the second highest number of people leaving to live in another UK region. Overall, the South East experienced a net gain from internal migration of 384,000; the second biggest of the 12 UK regions.
The South West experienced the largest net gain from internal migration during the past decade. Over 440,000 more people have moved to the South West from elsewhere in the UK, boosting the region’s population by 9%.
Although the population of London is still growing, nearly 2.4m have left the capital to live elsewhere in the UK since 1996. As a result, London recorded, by a significant margin, the greatest net loss from internal migration (608,000) by any region. But London recorded the single biggest population increase over the past decade. The decline due to internal migration, however, was more offset by the arrival of 1m people to London from abroad over the past decade. Overall, London’s population has risen by 583,000 over the last 10 years. This was the biggest increase of any region.
The only region that saw an overall population decline between 1996 and 2006 was the North East with a decrease of 20,000.
The substantial net gain from internal migration has been a significant factor behind the rapid rise in house prices in the South West over the last 10 years. The average price in the South West has increased by 206% during this period, a rate that is surpassed only by Northern Ireland and London.
Martin Ellis, Halifax chief economist, said: “The South East and South West have been the most popular destinations for people to move to from elsewhere in the UK over the past decade. In particular, the high level of migration to the South West has contributed to the rapid rise in house prices in the region in the last 10 years.
“Figures at a local authority level highlight the transient nature of the population in many of the UK’s major cities. Birmingham, for example, recorded both the highest level of immigration and emigration in England and Wales.”
Scottish Widows imposes restrictions on investors
Scottish Widows, the life arm of Lloyds TSB, has become the latest group to impose restrictions on investors wishing to redeem their cash.
It has imposed a 180-day delay period for certain transactions involving its £1bn Life Property fund and £1.1bn Pension Property fund. The group is writing to some 200,000 policy holders informing them of the changes.
The move by Scottish Widows will affect policyholders in these funds who request full or partial redemptions, transfers or switches. But the delay does not apply on death, on retirement, to regular pension payments, to critical illness claims or at a policy’s maturity date and the group said that existing regular withdrawals are also unaffected. The restrictions do not apply to any other Scottish Widows funds, including SWIP’s Property Trust.
The group said: ‘The 180-day delay period for requests to switch between or withdraw from the funds is allowed for within the policy provisions and we are taking this action to be fair to all policyholders. Unlike many other asset classes, commercial property can take time to buy and sell.
‘The delay means that we can implement an orderly programme of sales over a longer period, with the aim of providing liquidity within a reasonable period for those who want to leave the funds. At the same time our fund managers will have the opportunity to obtain fair values for properties we sell, protecting the performance of the funds for the majority of policyholders who wish to remain invested.’
Other property funds have made similar moves to restrict access to their assets in order to prevent a Northern Rock-style run on their resources, including Morley, M&G and Scottish Equitable.
Twin skyscrapers plan for Clapham Junction
Property developers Delancey and Land Securities have revealed designs for a £400m redevelopment of London’s Clapham Junction, known as the busiest railway station in Britain.
The 1.6 hectare mixed-use scheme would include two landmark 127-metre high tower blocks, a two-level shopping street, 500 homes and the station will also benefit from a revamp.
Architect Collado Collins has drawn up designs for the project, which would be delivered by the Metro Shopping Fund joint venture between Delancey and Land Securities.
A roof garden on top of restaurants and cafes is also part of the scheme, which will be easily accessible from the new residential units. The Metro Shopping Fund will be consulting on its plans later this month and aims to submit a planning application to the London Borough of Wandsworth in the spring.
However, experts believe that the plans are likely to meet similar objections to those that greeted a scheme submitted in October for two residential towers on the site of the Young’s Ram Brewery, also in Wandsworth. Developer Minerva, which bought the brewery site for £69m last August, wanted to build two residential towers of 39 and 29 storeys as well as shops, restaurants and riverside cafés but critics, including the Wandsworth Society, objected to the location and the scale of the buildings.
Last summer, plans for a 17-storey building near Sidcup station were rejected by Bexley council. Tower plans are also being fought in Ealing, Lewisham and Elephant and Castle.
TDSL launches guide for landlords and agents
Tenancy Deposit Solutions Limited (TDSL) has launched a step-by-step guide for landlords and agents.
Following the introduction of mandatory tenancy deposit protection in April 2007, any landlord or agent who takes a deposit from a tenant in England and Wales under a new assured shorthold tenancy is required to protect it under a Government-authorised tenancy deposit protection scheme. The guide takes agents and landlords through the process including how to join TDSL, how to protect the deposit, how to return the deposit and how to resolve disputes.
David Salusbury, chairman of TDSL, said: “TDSL now leads the way in making mandatory tenancy deposit protection as transparent as possible for landlords and the new website goes a long way to making the process clear and user-friendly. A massively helpful section is the new Jargon Buster which explains in plain English some of the technical terms that can confuse landlords, agents and tenants.”
BPF encourages build-to-let
The British Property Federation (BPF) has backed a major review of the rented housing sector announced by housing minister Yvette Cooper.
The BPF hopes the review will pave the way for greater investment in the residential market from institutions which could fund large scale, professional ‘build-to-let’ developments and put an end to the housing crisis.
It believes that while the Government’s housing targets have focused solely around building 3m new homes for ownership, the Government has constantly ignored the basic fact that people just cannot afford to buy new homes.
Corporate landlords could offer guaranteed long-term, professionally managed accommodation, with tenants not living in fear of repossession and/or of repairs not being carried out. This is the kind of professional rented sector enjoyed in Germany and across mainland Europe, where up to 50% of the people are housed in rented accommodation.
Ian Fletcher, director at the BPF for residential policy, said: “The modern private rented sector has achieved a lot over the past 20 years, but now has to adapt to new circumstances - for example, the need to house people unable to buy property or to access social housing. This poses new opportunities and challenges, and the review is therefore timely. We are generally positive that the Government is keen to support a sector which delivers for a wide variety of occupiers and landlords. Our hope is that a more strategic approach to the sector across government will help it keep its promises.”
Mortgage approvals have dropped due to credit crunch
Connells Survey and Valuation’s new analysis of the mortgage market showed that mortgage approvals for UK home purchases dropped to 66,000 in December, 21% below November’s level and 43% below December 2006.
The dramatic decline in mortgage approvals is due to the tightening of credit available to households, a reduction in confidence among home buyers and disruption caused by the introduction of Home Information Packs (HIPs) across all properties.
Ross Bowen, managing director of Connells Survey and Valuation, said: “Mortgage approvals have been falling since January last year, but this decline accelerated in the second half of the year and was most acute in December. Much of this was due to the problems in the money markets. This has led to a significant reduction in transaction levels. Unsurprisingly there are no signs that December’s base rate cut has provided a catalyst for improvement and we urge the Bank of England to implement the next cut in rates in February to help start the process of restoring confidence to the markets.”
£400m regeneration scheme in Slough
English Partnerships and Slough Borough Council have announced that the heart of Slough is set to undergo a £400m regeneration plan.
The programme will include 1,500 new homes built in the town centre, over 34,000sqm of new office space, a new bus station and a new hotel established to form the hub of a restaurant quarter.
David Ashworth, area director for English Partnerships, said: “I’m pleased English Partnerships is playing such a pivotal role in revitalising the heart of Slough. It is exciting to see the masterplan take shape and help it come to fruition. The provision of affordable homes, the regeneration of the town centre and the re-use of brownfield land are key elements of the project.”
It is hoped planning consent will be granted by late summer 2008 and construction will begin in the spring of 2009. If approved the scheme is set to be completed by 2018.
Assessing flood risk on residential property portfolios
Housing intelligence business, Hometrack, now has the capacity to assess flood risk on residential property portfolios.
According to the Environment Agency, some 5m people living in 2m properties across England and Wales are at risk of flooding. Last year, the country experienced the wettest May to July since records began, resulting in some 49,000 households being flooded.
Oliver Hughes, Hometrack’s director of capital markets, said: “It is becoming increasingly important for all holders of residential property and property risk to identify those properties subject to the greatest risk of flooding. A flood damaged house will see a sharp drop in value and in many cases will be unsellable until it has been rectified. Being able to identify those properties at the greatest risk will enable more efficient portfolio management, a better understanding of value at risk and an opportunity to manage and divert such risk before it is too late.”
Using a combination of proprietary flood data in conjunction with Hometrack’s automated valuation model, users can now run their portfolios through specific scenario tests such as the likelihood and damage to residential properties if a river should burst its banks or heavy rain fall in a specific area at letter box level.
Do you have buildings and contents insurance?
According to Nationwide, many people are failing to obtain adequate insurance for their homes.
One in five (20%) of those questioned did not have any buildings insurance and would not be covered in the event of damage caused by floods, storms or a house fire. Of those who do have buildings insurance, almost 25% do not know what is covered under the policy.
The biggest majority of those questioned (21%) estimate the total value of their home contents to be between £10-20,000, but around 14% have not taken out cover for the contents in their homes. And 17% of those with contents insurance admit to not knowing what is covered under the policy.
Robin Bailey, Nationwide’s insurance director, said: “It is surprising that so many people are prepared to take such a gamble on their homes and personal belongings when you consider how much time and money we all invest in our homes. You never know what is around the corner and for that reason it is vital that people are prepared by having adequate insurance.”
The research also revealed that almost one third (31%) of those aged 35-44 don’t know what is covered under their buildings insurance or whether they are covered at all. However, those aged 45 and over are more likely to have both buildings and contents insurance and claim to possess full knowledge of what is covered.
Regionally it was found that those living in the North East (35%) were least likely to be covered by buildings insurance and Londoners (23%) were least likely to insure the contents in their home. Those living in Wales (96%), the East Midlands (90%) and the South West (92%) were most likely to be insured for their home contents.
