House subsidence threat from concrete drives


Over 100,000 London homeowners - and many more in the South East of England - could face an increased risk of subsidence because they, or their neighbours, have succumbed to the urban trend for turning front gardens into off-road parking spaces, according to new research by esure home insurance.

The research includes a report commissioned by esure from the British Geological Survey which describes how new driveways - and other impermeable surfaces such as patios - can cause rainfall to 'run off' into drains rather than penetrating lawns or flowerbeds where it will seep down to reach thirsty tree roots.

This can then create the conditions for subsidence as roots searching for water upset the moisture balance in the soil that underpins nearby foundations.

The number of properties in Greater London at risk from this phenomenon is estimated by esure home insurance to top 100,000. This is equivalent to the 7% of homeowners in the South East who have already converted their front gardens into parking spaces (source ICM) - plus their direct neighbours - as a percentage of the estimated half million homes in the Greater London area built on London Clay with a large tree nearby (source: Addressology 2006).

Nikki Sellers, head of home insurance at esure, said: "It is very appealing for homeowners in busy streets to create a bespoke parking space for their property.”

“Unfortunately, for houses with a street tree or large front garden tree nearby this can significantly increase the risk of subsidence. A dedicated space may increase the value of your home but subsidence damage will do quite the reverse."

Nikki added, "It is essential that driveway or patio conversions are sympathetic to the fact that nearby trees will always need moisture."

Lee Jones of the British Geological Survey said, "It is a simple fact that trees need moisture, so anything that deprives them of moisture over time in clay soil areas can create the conditions for subsidence. The dramatic rainfall we have seen recently will only reach trees if the ground above allows the water to penetrate the soil and reach their roots."

The risk of subsidence is further compounded if homeowners have laid impermeable surfaces such as concrete driveways or patios rather than gravel or brick paving which still allow some water to filter through.

Without adequate moisture entering the soil, esure's research concludes that tree roots may extend under properties in search of moisture. In clay soil areas - particularly during dry periods - this can contribute to soil 'desiccating' under properties. This can significantly increase the chances of subsidence, particularly if a number of adjacent neighbours all do the same thing, effectively cutting off one of the main water sources for a tree.

Tips for converting a driveway or adding a patio safely:

Be very conscious of nearby trees when making any change to lawns or front gardens that will reduce or increase the amount of water entering the ground. Tree roots can extend up to 30m for some trees and much of the moisture absorption comes from the last few metres.

Avoid laying concrete in a place where soil or lawn was previously close to a large tree (ie one with a potential full grown height of over 15ft). This can make an area of ground practically impermeable to moisture. Instead consider block or brick paving with permeable gaps.

Consider leaving areas of open soil or flower beds adjacent to newly paved areas and to ensure the paving 'cambers' to allow moisture to run off into them - particularly if it slopes right down to meet pavement.

Watch out for new cracks - particularly diagonal cracks bigger than a 10p piece - in the front bay, porch way or brickwork of your home. These can be the first signs of subsidence. Notify your insurer early if concerned.

1 in 5 home buyers to invest in buy-to-let


A fifth of those planning to buy a home in 2007 will purchase their property as an investment, according to research by buy-to-let mortgage lender, Birmingham Midshires.

The findings also reveal that in 2006 Northern Ireland provided the largest return on investment properties.

As part of an ongoing study of the specialist mortgage market, Birmingham Midshires asked a GB representative sample of 2,000 people whether they plan to invest in property during the next 12 months.

At a time when the value of the UK's buy-to-let property markets stands at over £94.8 billion , the latest findings from the lender reveal that as many as 40% of twenty-something's planning to buy a property in 2007 will do so as an investment, as will one in four single parents.

Examining the market in 2006, the top five property hotspots are identified below. The dynamic nature of the property market means these hotspots are always changing with regional movements.

Tim Hague, director of mortgages at Birmingham Midshires commented: "The buy-to-let market has grown consistently over the past decade. When you consider the returns available, in terms of both capital appreciation and rental yield, it's easy to understand why property investment continues to grow in popularity. A growing number of people see property as an important part of a balanced investment portfolio."

Key facts on the buy-to-let market:

The buy-to-let market is currently worth £94.8 billion, and as many as 330,000 buy-to-let mortgages were taken out during 2006 - representing as much as 11% of all new lending.

Over the last 10 years, average weekly rents have increased by 37% - 1.3 times the rate of inflation. Average weekly rents have increased from £75 to £118.
Birmingham Midshires was 2006's biggest buy-to-let mortgage provider.

On average, buy-to-let has consistently outperformed other investment opportunities. Since 2002 the average return to a FTSE100 shareholder stands at 6.9%, compared with the average interest rate for savers of 3.9%. In contrast, buy-to-let investments make an average return of 11.25% for investors (Rent & Capital Appreciation against initial costs).

High house prices in Central London have resulted in good capital appreciation for investors (217% over 10 years). Buy-to-let investment in Central London returns an average annual rental yield of 4.7% compared with 5.9% in Manchester and the North West.

Mortgage lending cools – but tops last January

Gross lending hit an all-time January high of £26.8 billion according to the latest data from the Council of Mortgage Lenders. Although this was down by 6% on the £28.5 billion lent in December, it is up by 16% on January 2006 (£23 billion).

Commenting on today's data, CML director general Michael Coogan said: "Mortgage lending kicked-off 2007 in robust shape, and we expect this strength to continue over the next few months.”

“Quite how strong it will be later in the year depends on what happens to interest rates. While we avoided a rate rise earlier this month, the markets are still expecting at least one more quarter point rise by the middle of the year. And, because of this uncertainty, it would be surprising if some home buyers did not review the timing of their decision to move".

Shock tactic’ halves house price growth

The shock tactic of an unexpected rate rise early in the year appears to have dramatically cut rises in house asking prices.

And the smaller than anticipated monthly rise in asking prices has resulted in a sharpest drop in the annual rate for 18 months.

The annual rate fell 2% last month, from 13.5% to 11.5%, Rightmove said today.

Analysts are forecasting a slowdown in the annual rate to around half the current level of 11.5% by the end of 2007. However, it is highly unusual for sellers to constrain their price aspirations so early in the year.

This month’s report shows that 143,000 newly marketed properties have increased in price by just 0.9%, by far the lowest February figure for the last 5 years. Since Rightmove started its house price index five years ago average asking prices have always increased by over 2% in February.

This is all the more surprising given wider analysis of our data. Estate agents continue to report good levels of sales activity, and our data shows average property for sale per estate agency branch at a 3 year low for this time of year. This, in conjunction with a speeding up of stock turnover since the New Year, has led to a fall in time on the market, from 88 to 78 days. This combination of factors would usually generate a rise in prices similar to previous years.

The contrary statistics point to the shock January interest rate rise knocking sellers’ traditional New Year optimism.

Miles Shipside, Rightmove commercial director commented: “The shock tactic of one unexpected rate rise early in the year appears to have had the desired effect. February price rises are normally two to three times higher than we have measured this month.”

“With three interest rate rises in the last six months and the looming threat of another, it looks like we have finally reached the point where the market is highly interest rate sensitive. We are at a crossroads, and the path taken by those in charge of interest rate policy will dictate the direction of the housing market in 2007”.

Only 78pc of people now believe prices will continue to rise compared to 84pc in December. Buyer confidence was found to be far lower than that of sellers, prompting concern that the market could be set for a downward turn.

Britons are tops at looking after their homes

Britons spend the most in Europe on maintaining and cleaning their homes, a new report from Datamonitor reveals.

Not only do the British pay more than most other Europeans for their homes, they also spend more on home hygiene products and are more likely to renovate their kitchens and bathroom within a five year timeframe

Home sweet home

ouse prices across the UK and much of the West have seen sustained high growth for a number of years and the UK now ranks amongst some of the highest property prices in the world.

Property has become consumers’ biggest single asset, and it means that Britons are more willing to spend money on renovating their houses.

“This rise in property prices is significant. Many consumers, when they see their major asset appreciating in value, tend to feel richer, and as a result are more likely to spend their extra cash on it,” said Nick Beevors, consumer markets analyst at Datamonitor and author of the report.

The kitchen and the bathroom are the two rooms more likely to get a facelift. British consumers renovate their kitchens and bathrooms more often than their European counterparts, according to the report.

What is more, 15% and 14% of Brits profess to renovate their kitchen and bathroom respectively every 1 to 2 years.

Beevors commented, “People enrich their self image through their homes. The social phenomenon of ‘existential consumption’ - whereby consumers build their self identities through what they consume or own - is highly relevant to how people choose and reside in their homes.”

Clean living

In 2006 British consumers shelled out £1.4bn on home hygiene products, outstripping by far France (£901m) and Germany (£862m). The average UK consumer spent £24 on cleaning their home; double that of German, Swedish and Italian consumers.

Home hygiene spend is growing as consumers seek more effective and convenient products to preserve the quality of their household living environment.

Cleaning most commonly occurs once a week. Just under 30% of UK consumers clean their house once a week, and a quarter 2-3 times a week. Still household chores are largely disliked, with a quarter of consumers finding housework boring. The least preferred household chores were ironing and oven cleaning.

Consumers increasingly see their homes as a refuge from the outside world. This phenomenon often referred as ‘cocooning’ involves shutting oneself off from the rest of the world in a comfortable and secure place to have time to think and relax.

“Consumers struggle to come to terms with growing ambiguity and change, and with the growing information and opportunities technology has brought as close as the nearest hotspot,” commented Beevors. “They are finding new ways to create and exercise their own control, and cocooning is one solution.”

“Because of their desire to shelter themselves from the ‘harsh realities’ of the modern world, consumers are investing in making their homes fun, relaxing, satisfying places to spend time,” he concludes.

Interest rate to rise again warns Bank

The Bank of England has signalled that interest rates will need to rise one more time to pull inflation back in line.

In its quarterly inflation report, the Bank said that inflation was on course to decline sharply over the year, settling at around the government's 2% target by the end of 2008. However, this forecast is based on City expectations for one further quarter-point rise in interest rates to 5.5%.

Economists have pencilled in May as the most likely month for an interest rate rise but beyond then homeowners have some glimmer of consolation as the Bank hinted rates could be coming down again next spring.

The report suggested inflation would fall from its current 2.7% to about 1.8% by the end of this year thanks to tumbling energy costs and lower import prices. It is then seen picking up again to hit the 2% bull's-eye at the two-year horizon - the point at which current interest rate decisions have their biggest effect. Thereafter, it drops back down again.

The predictions assume rates will be raised again during the second quarter. If they were not increased, the Bank believes that inflation would overshoot the target.

B of E Governor, Mervyn King, said inflation had been remarkably volatile by the standards of the past decade but the medium-term outlook was what mattered.

"Just as 3% inflation did not mean the end of the world was nigh, so 2.7% does not mean that we can ignore concerns about inflation ahead," he said. "The outlook over the next year is highly uncertain because of the large impact which reductions in gas and electricity prices are likely to have on inflation."

Warning over cash-back phone offers

Citizens Advice Bureaux are reporting increasing numbers of people who have been lured into a mobile phone contract by a sales pitch promising they will be able to claim back most of the money they pay out in monthly bills, making it appear much cheaper than other contracts on offer.

People are tempted by very low monthly rates which look like a bargain. But often they miss out on the promised discount completely and end up paying the full rate – or even being chased by debt collectors and threatened with court.

The scam works because the cash-back offer is not part of the contract signed with the service provider who does the billing: it’s a separate contract with the shop selling the cash-back package.

Many cash-back deals have complex terms and conditions buried in small print, and claiming cash-back from them may not be as simple as consumers are sometimes led to believe.

In some cases the firm that should have paid the cash-back has gone bust, leaving consumers with a provider’s contract that is anything but cheap, and which ties them in for a minimum period before they can switch. Customers can find themselves out of pocket to the tune of hundreds of pounds.

In one case a CAB client signed a contract with a mobile phone company offering a monthly cash-back deal of £65, slashing the cost from £75 a month to £9.99. After six months the company went bust, and the network provider was demanding full payment of £75 a month.

In another case a client signed up to a package where she got a free mobile and £40 per month cash-back on her £60 payment. When the company who should have been paying that £40 ceased trading soon afterwards, she could not afford to keep up the full contractual payments to the network provider and is now being vigorously pursued by debt collectors.

Other cases, clearly cons, abound and include:

Missing the date for applying for the first cash-back payment, all future cash-back payment claims are invalidated.

Vouchers worth £1300 after paying 18 months rental. When the vouchers were sent they were returned address unknown.

A number of 12 month mobile phone contracts on the promise of cash-back payments after six months and 12 months. The company said they never received the cash-back applications in the post.

Citizens Advice consumer affairs social policy officer Susan Marks said: “Some cash-back deals work well for mobile phone users who sign up to them. But we are seeing growing numbers of people who lose money.”

“People are attracted to these deals because they appear to work out much cheaper than other mobile phone packages, but once the money is handed over it can prove impossible to get it back. In some cases people find the company concerned has vanished into thin air when the time comes that their refund is due.”

“Remember that it is much harder to get money back once you’ve handed it over, so don’t be tempted to pay up front on the promise of cash-back in the future unless you’re prepared to accept that you may never see that money again. Some of the deals which look a little more expensive at first sight may work out cheaper in the long run.”

Self-employed to lose out in retirement

The self-employed are not all as young as one might expect, with almost six out of ten aged over 50 years old, a study shows. However, despite being around the corner from retirement, only a third are saving adequately for their retirement, and two in five are not saving at all, putting increased pressure on retirement income.

According to the study published by Scottish Widows, self employed people are under-saving significantly compared to their employed counterparts. With no access to the State Second Pension, no employer to contribute to their pensions and, under new reforms, no automatic enrolment in to personal accounts, this is putting them in a very vulnerable position, particularly those so close to retirement.

The Scottish Widows pension index, which tracks the percentage of the population saving adequately for retirement, currently stands at 46%. Of those employed in the public sector, this rises to 59% , the self-employed are more likely to not be saving at all and less likely to be saving adequately than their employed counterparts.

Ian Naismith, head of pensions market development, commented: “The position of the self-employed is a particular concern. Losing out on employer contributions, including in the proposed personal accounts, means that it is imperative they have a savings plan in place for their retirement.”

“What is more, over half only became self-employed in the last 5 years, highlighting how many of us currently in good employer schemes may find ourselves over 50 and having to strike out alone.”

“It is understandable that as people get older and have greater experience in their profession that they would want to opt for a more flexible lifestyle, but the financial implications of self-employment are still profound.”

The study reveals that under a quarter of self-employed people feel they are able to save regularly. On average they have both a higher mortgage debt of £146,945 and monthly non-mortgage debts of £9,643 compared to employed people, which is likely to impact on their capacity to save.

Not surprisingly, the self-employed are less optimistic about their retirement than their employed counterparts, with nearly a quarter (23%) believing that, realistically, they may not be able to afford to retire until they are 70 or over, compared to just 16% of employed people.

The study does suggest though that self-employed people are perhaps more motivated in their work. Nearly half (46%) of employed people stated they would stop work tomorrow if they could afford to, compared to 36% of self-employed people. The self-employed also stated that 67 would be the age they would begin to feel angry if they were still working; a good two years more than employed people who stated 65.

Ian Naismith said, “The inability to save is something both the industry and policymakers need to be aware of. With over half of this working group aged over 50 a large proportion will be soon be reaching an age of desired retirement with little personal pension provision in place to help them have a comfortable retirement. Many may well face having to work into their 70s to provide them with the necessary income to live off.”

Homeowners put all their eggs in one basket

Nearly two thirds of homeowners in a study of English mortgage holders store almost all their savings in one single asset – their own home – new academic research from Durham University suggests.

The study highlights the danger that millions of families face should the value of the housing market drop or experience a crash similar to that of the late 1980s.

Ironically the initial findings of the two year Banking on Housing; Spending the Home project highlights that just under a third of mortgage holders do not even think of, or use, their owned homes as a means of storing or accumulating wealth, despite the fact that almost two thirds of these homeowners have no other savings investments apart from their home and pension.

"This study really draws attention to the precarious position of the majority of English homeowners' savings," said Professor Susan Smith. "While many would think it strange to invest everything they have into one particular company, to all intents and purposes more than seven million people in England are doing just this."

Professor Susan Smith added: “We found that most people understood and made good use of their mortgages to free up housing wealth to spend on other things. Most people agree that home equity should not be spent rashly but almost everyone we spoke to views their home as a financial buffer or safety net that they can cash in on if times get tough.”

“If the housing market did downturn and these safety nets disappeared the political, economic and social impact could be devastating.”

The academics believe there are several policy implications that will arise out of this project including the potential need for guidelines on how much to reinvest into housing to safeguard the future value and quality of the housing stock.

There is also the question of what, if people are using housing wealth as a safety net now, they will turn to in the future; and the issue of how best to manage, or hedge, the risks of having all your eggs in a single housing basket.

Little Hampshire town set for 8,000 new homes

Up to 8,000 new homes could be built on land sold by the Ministry of Defence when the Army leaves the little town of Bordon in north east Hampshire.

For almost three years the Whitehill/Bordon Opportunity Group, made up of town, district and county councils, the MOD and government agencies have been developing a masterplan for the town.

The aim of the plan is to create a more sustainable future for the town by building a better mix of housing to attract investment for a new town centre, shops and leisure facilities.

Now the MoD has confirmed that up to 150 hectares of land it owns in Bordon will be privately sold after 1,800 military and civilian staff and students leave the town in 2011, which will now become the focus for regeneration efforts in the town.

The removal of the army garrison will mean job losses in the town and now revelations that not all of the land released is brownfield and indeed may be sold off piecemeal has sparked a great deal of public interest. Nevertheless, the army is going and many new homes are set for the area.

Ferris Cowper, leader of East Hampshire District Council, said: "This is a once in a lifetime opportunity to develop the town in a way that meets the needs of residents and creates a sustainable future for the area."

The town where there’s no shortage of homes

Estate agents in the North-east town of Darlington reckon sheer numbers of new homes being built are driving prices down, the only place in the country where this is happening.

Land Registry figures showed that there were hardly any areas in England and Wales that did not share in the average 7.8% growth last year. But just one town, Darlington, managed to record a minus 0.4% drop to an average of £119,832.

The town is set for a pedestrian centre as part of a restoration project that will see many buildings demolished and did take part in a mini house price boom several years ago, but estate agents are ‘baffled’ reported the Independent newspaper. However, Simon Bainbridge, at local agents Smiths Gore, agreed that Darlington's poor performance could reflect the fact that there was no shortage of homes.

The ‘Pedestrian Heart’ project will introduce new enhancements to the town centre, creating a quality environment. Traffic is being re-organised making a series of safe pedestrian spaces.