Mortgage lending on the increase

Paragon Advance’s statistics reveal Scotland as the biggest rent loser

Tories to reinstate direct payments of Local housing allowance

UK economy still in a recession

Yet more legal problems for Chelsea Barracks project

A report on mortgage lending trends by the Bank of England (BoE), published in October 2009, revealed that total net mortgage lending rose by +£1bn in August after being down £0.2bn in July, with the annual rate of lending growth increasing for the first time since September 2007.

The report stated that gross mortgage lending for house purchases maintained its upward trend in September despite the remortgaging market continuing to stagnate.

Michael Coogan, CML’s director general, said: "As we surmised when we published our September gross lending data, the new report confirms that September saw a continuation of the two-speed mortgage market, with lending for house purchase continuing to increase but remortgaging remaining weak.

"But, also as we have highlighted, funding conditions remain challenging, despite the encouraging signs of a slight thaw in wholesale funding markets. This report very much confirms our own assessment of market prospects - the most likely scenario is a slow and long-drawn out recovery."

Major lenders however stated in the report that mortgage credit availability had fallen during Q3 2009 but was expected to increase in the next quarter with the demand for house purchases to rise further.

Paragon Advance’s statistics reveal Scotland as the biggest rent loser

A report by Paragon Advance has revealed that only three regions of the UK achieved an increase in average rents from 2008 to 2009 including the North East of England with a +3.1% rise giving a rental figure of £527.04pcm, the West Midlands went up +0.31% giving an average of £571.11pcm and rent in the East Midlands increased by +0.18% to £553.11pcm.

However, the report indicated that despite London and the South East having had the highest average rents of 2009 with £1163.95pcm and £885.88pcm respectively, the South East showed a decline of -16.88% for that year. But the regions experienced their highest rent increases during the period 2007 to 2008 of +18.37% for London and +18.65% for the South East. Scotland’s rents, meanwhile, significantly dropped by -24.13% from 2008 to 2009 giving an average rent of £444.57pcm.

Janie Gaston, Paragon Advance’s general manager, said: “The Midlands has continued to sustain and even realise increased rents compared to most other regions, despite the overall economic conditions. Our sales manager for the Midlands region, Ian McLaughlin, has reported that there is still a large demand for rented property in the region but, because of the difficulty at the moment getting buy-to-let mortgages, no new stock is coming onto the market, hence sustaining the rent values.”

Tories to reinstate direct payments of Local housing allowance

Local housing allowance (LHA) will be paid directly to landlords should the Conservative party succeed in coming to power at the next election, according to shadow housing minister Grant Shapps.

The Conservatives said in a statement that “the current Local Housing Benefits system has led to a lack of housing availability and contributed to the issues of Broken Britain”.

The move has been welcomed by the British Property Federation (BPF), who have been campaigning against the change since it came in to force in April 2008, as well as the National Landlords Association (NLA) who have stated that landlords should not have to risk an increase in levels of rent arrears just because they choose let to housing benefit claimants.

Ian Fletcher, BPF director of policy, said: “Direct payment has been an unmitigated disaster for many landlords who have lost thousands of pounds and many tenants who have run up arrears. The Conservatives have shown they have listened to those on the ground and we are glad to see this decisive stance being taken.”

The NLA recently surveyed 1,000 landlords in the UK, who between them have 13,000 LHA tenancies, and discovered that the total rent arrears accumulated by these landlords since the introduction of LHA is £4.4m, or an average of £4,400 per landlord.

David Salusbury, NLA’s chairman, said: “LHA is now actively contributing to a shrinking of housing supply for benefit claimants. This latest proposal from the Tories is to be welcomed, but more importantly we want to see LHA properly assessed and tenants to be able to choose how their rent is paid. If a tenant wants their rent to go directly to their landlord – and this might be for a number of reasons – then this should be permitted within the rules. In the same way, if a tenant wants to manage their own rent payments, this is their choice.”

Local Housing Allowance (LHA) was introduced for new tenancies in April 2008 when it replaced the previous housing benefit system. The new rules meant that instead of rent being paid directly to private landlords, it went straight to the tenants who are responsible for paying the rent money to their landlord. However, many tenants failed to make the payments and this causes major problems, with some landlords refusing to let to tenants who are in receipt of Housing Benefit because of rental arrears.

UK economy still in a recession

According to a study by the Office for National Statistics (ONS) the UK economy contracted by -0.4% between July and September 2009 and overall by -5.9% in the last year, despite some analysts predicting growth in that period.

It was expected that the ONS figures would show an increase of +0.2% after Chancellor Alistair Darling had all but predicted the slump was over, but it appears that due to recent figures showing a -2.5% decline in industrial output in August and no growth in retails sales, the increase hasn’t happened.

This has resulted in UK gross domestic product (GDP) contracting over the last six quarters for the first time since quarterly figures were first recorded in 1955. As a result of this decrease the opposing parties have stated that the study casts serious doubts on the Government’s rescue plans.

The services sector appears to have been the key factor for the unexpected decline with analysts stating that the worse-than-expected GDP figures may prompt the Bank of England (BoE) to consider extending its policy of quantitative easing.

Yet more legal problems for Chelsea Barracks project

The developer Candy & Candy has instructed its lawyers to begin legal proceedings against the Qatari Diar real estate investment vehicle Project Blue Developments Ltd, over unpaid fees which relate to the Chelsea Barracks project.

The fees, which are in excess of £1m, are said to be owed to Candy & Candy for marketing purposes when the two companies had previously been development partners on the scheme. It has appointed solicitors Wragge & Co LLP to take steps to recover the fees.

A Candy & Candy spokesperson said: "We deeply regret having to take this action, but have been given no other choice. We hope this unfortunate matter can be resolved quickly."

A similar announcement was made by architects Rogers Stirk Harbour Rogers who had spent two years preparing designs for the site only to be sacked by Project Blue Developments Ltd.

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