Bradford & Bingley to be nationalized
Monday, September 29, 2008

Troubled mortgage lender Bradford & Bingley is to be nationalized, according to the Treasury. The Government will be taking over the bank's £60 million mortgage and loan books and Spanish banking giant Santander will be taking over its retail deposits and branch network...

The Government's move is an attempt to preserve the country's financial stability in a time of global economic turmoil.

Chancellor Alistair Darling has lined up Spanish bank Santander to buy B&B's 200 branches and £22 billion worth of savings. Meanwhile, £41 billion of mortgages have been taken into state hands.

Last week, Santander agreed to take over Alliance & Leicester, and it also owns Abbey, which will bring its total UK branches to more than 1,200.

Alistair Darling told the BBC the reasons behind the nationalization were to ‘stabilize the system, as had they let Bradford & Bingley go down it would have destabilized the entire system, especially given what's going on in the world at the moment.'

The BBC said the Treasury will then try to sell the company's 200 branches and savings business to other banks.

Dan Johnson, Director of TheMoveChannel.com, said, "One of the largest mortgage lenders has been eliminated from the marketplace, thus removing a large chunk of lending options, which may make it more expensive for investors to get the finance they require.

"However, there is some good news. The nationalisation of Bradford & Bingley does mean that potentially bad debts will be removed from the market. This should ensure that they will be less concerned about lending to each other, which in turn should help return some liquidity to the market," added Mr Johnson.

It is widely believed that the Government will combine Bradford & Bingley bad debts with those of Northern Rock, the infamous mortgage lender that was nationalized by the in February of this year, giving the Government £100 billion of Northern Rock mortgages. HBOS PLC sold itself to Lloyds TSB Group PLC earlier this month.

Bradford & Bingley specializes in buy-to-let mortgages for rental properties, now considered one of the most volatile parts of Britain's troubled housing market. There are fears that this new nationalization will add billions to Britain's worsening national debt. The bank's shares have plunged from around 300 pence at the start of the year to 20 pence B&B's shares will be suspended at 20p and its shareholders left with nothing.

Paul Bartlett, Sales Director at EM Concepts, which have spent ten years managing private clients' international property investments, told TheMoveChannel.com, "Although it comes as no surprise to the markets - the Bradford & Bingley nationalisation will no doubt heap more doubt onto any potential new entrants to the UK property market and exasperate distrust in the credit markets further.

"Increasing underlying mortgage rates will make it harder for those wanting to purchase a property in the UK raise the necessary finance. It may create opportunities to help some buyers cash in on sellers fears and pick up a heavily discounted property.

"Current turbulence will affect a large number of Anglo Saxon property markets that have been afflicted with overexposure to bad debt for some time.

"Buyers shouldn't jump into offerings which look attractive on the surface without first looking in depth at the local market and the problems it may be facing.

"In our opinion only countries with immature mortgage markets which have good current account balances, strong local demand and steady growth, even in these turbulent times, should be considered.

"Partnering with a company that takes careful consideration over its markets is key and only those who do the strictest due diligence should be listened to," Mr Bartlett added.

Another viewpoint was from Giles Cook, Area Director at Chesterton, who told TheMoveChannel.com, "The Bradford and Bingley nationalisation will have an impact on consumer confidence but not nearly as much as people may think. Its effect on the property market is just a ripple in an ever-widening pool of turmoil.

"Seven months after Northern Rock, this is another blow, another headline hitting the front pages. But this time there are no images of panicked customers queuing in the streets.

"The key question is whether or not £350 billion financial package in America is sufficient to prevent a worldwide recession or are we just at the tip of a widening financial disaster?

"Recent experience has taught the government what they can do in these situations and they are able to swoop in and manage expectations.

"In summary, there is a general perception that help is at hand which should be reflected in a stabilising property market," Mr Cook added.

15 years to save a deposit?
Friday, September 26, 2008

A survey has found that it could take first time buyers 15 years to save enough money to put a deposit down on their first home...

A study from Fairinvestment.co.uk has discovered that it could take first-time buyers 15 years on average to save a deposit for their first home.

According to the Halifax, the average house price currently stands at £174,178. Fifteen percent of this is £26,127 and with the average amount of £139 being saved each month, this equates an annual total of £1,668, taking approximately 15 years to save the amount required.

To support this theory, research from mform.co.uk earlier this week, established that first-time buyers looking to borrow more than 90 per cent of a property's value will struggle to obtain a mortgage.

The online mortgage company found that mortgages for first-time buyers without a sizeable deposit are becoming scarcer with only Abbey and Halifax offering 95 per cent loan-to-value (LTV) mortgage deals.

The majority of lenders require a deposit of 20 per cent for many best buy mortgages, which is the equivalent of £37,000 on the average property.

However, borrowers would also have to pay an arrangement fee of around £1,000, according to mform.co.uk.

Fairinvestment.co.uk's survey of over 2,000 also found that women would take longer to save the amount than men as, on average women save just £121 each month, meaning it could take 18 years to save the amount required. Meanwhile, the average man would save £185 each month, meaning it would take just under 12 years to save a deposit.

Sharon Bratley, Fairinvestment.co.uk's Chartered Financial Planner, said the news is shocking but considering the state of the housing and mortgage market currently, it is no real surprise.

Ms Bratley added that without hefty savings or generous parents, first-time buyers will find it extremely hard to get a foot onto the property ladder.

Fairinvestment.co.uk recommends starting saving as early as possible and advises consumers to shop around for the best high interest savings accounts.

Agents pull out of newspaper advertising
Friday 26th September 2008

The first hard evidence that estate agents have pulled out en masse from local newspaper advertising has been presented in new figures from the Daily Mail group.

The publisher has revealed today that revenue from property advertising in its regional titles was down 45% in July and August.

Canny investment advice
Friday 26th September 2008

If you had purchased £1,000 of Northern Rock shares one year ago, it would now be worth £4.95.

If you’d bought £1,000 worth of shares in HBOS, this week your investment would have been worth £16.50.

If you’d plumped for £1,000 invested in XL Leisure, your shares would now be worth less than £5.

But if you bought £1,000 worth of Stella Artois one year ago, drank it all, then took the empty cans to an aluminium re-cycling plant, you would get £214.

So clearly, the canniest investment advice is to drink heavily and re-cycle. Cheers – and if you can improve on this, let us know. Have a good weekend.

Market brings opportunities for landlords
Thursday, September 25, 2008

Falling house prices, rising tenant demand, the slow sales market and the new stamp duty holiday have created a market that affords many opportunities for landlords, according to Leaders, one of the UK's largest independently owned letting specialists.

"Demand for rented property is currently at an all time high, and house prices are lower than they have been for some time," says Leader's Managing Director Paul Weller.

"So, anyone considering investing in a property to rent out, or increasing their letting portfolio, could benefit significantly from the current market conditions," added Mr Weller.

"There are some excellent opportunities around now for those in a position to buy, and of course any purchases under £175,000 will benefit from the stamp duty holiday that is now in place.

"Most one and two bedroom flats will fall into this category, and these are still very much in demand among people looking for rented accommodation," he added.

Many applicants are choosing to rent as they are unable to secure a mortgage in the current economic climate; some are renting while they wait for house prices to stabilise; and a large number prefer to rent as it offers the flexibility and convenience they require for their work and lifestyle.

Whilst there are many opportunities around - both for a favourable purchase price and a good rental income - landlords should still take care before buying to let.

They should always seek detailed advice from an independent specialist on exactly what property types and locations are most in demand in order to make sure they choose the right property for their investment.

Mr Weller says, "Rental demand varies from town to town and even from road to road. You need a local letting expert who knows exactly what is happening in your market to advise you when considering buying a property to let.

"Letting can be a minefield when you consider the knowledge required and the legislation involved with doing it properly, however it is actually very simple when you have the help of a professional letting specialist.

"The right property in the right place will let very quickly; and if you can buy it at the right price you are well on your way to a successful investment," Mr Weller added.

Malta celebrates 44 years of independence
Wednesday, September 24, 2008

Malta was granted independence from the UK, as a Constitutional Monarchy, on 21st September 1964, and this year it celebrates 44 years of independence.

Valletta and Floriana set the scene yesterday for the official celebrations marking the 44th anniversary of Malta's independence from Great Britain in 1964.

A number of activities and festivities marked the 21st of September, which is a national holiday.

Malta was granted independence after 56 per cent of voters taking part in a referendum held on the 2nd May 1964 agreed to a new constitution.

The country geared up for independence after the talks of integrating with the UK collapsed in 1958. The Mintoff Government resigned and George Borg Olivier refused to form a government of his own.

From 1958 to 1962 Malta was governed directly from the British Colonial Office. The Nationalist Party was returned to government in March 1962 after winning the general elections.

St John's Co-Cathedral in Valletta hosted mass on the anniversary, run by Archbishop Pawlu Cremona.

Following mass, President Fenech Adami together with Prime Minister Lawrence Gonzi laid a wreath in front of the Independence Monument in Floriana.

Whilst unemployment in Malta is at its lowest level for some time, the country still faces challenges, such as illegal immigration and sustainable development.

The Maltese Prime Minister announced that in the coming days, Malta will be presenting the EU with a proposal on reallocation of immigrants in other countries. The proposal will be discussed during a meeting between the Ministers for Justice and Local Affairs.

Malta's joining of the EU in 2004 sealed their independence.

When the Knights of St John were exiled from Rhodes in 1530, the King of Spain leased them the Maltese Islands, for the yearly rent of one Maltese falcon. Fast forward five centuries and property on the tiny Mediterranean island is now commanding serious money.

Prices have shot up by 400 per cent over the past fifteen years, with its climate, tax advantages and 6000 years of history attracting a more discerning crowd of second home owner and investor.

2012 site in jeopardy due to credit crunch
Wednesday, September 24, 2008

The global financial crisis is affecting major construction projects, including the London Olympic site.

It wasn't so long ago that Boris Johnson was calling for the Olympic Park to be made ‘truly groundbreaking.' (See TheMoveChannel.com's news article of August 22nd 2008).

Now, the turmoil that the financial markets are in all over the world has worsened the problem of securing funding for the £1.2 billion Olympic Village.

The Lehman Brothers collapse and the bail out of Halifax Bank of Scotland by Lloyds TSB, (all documented in TheMoveChannel.com's news over the past few weeks) has made the funding situation even direr.

Much of London's Olympic budget was built on the assumption that the city would be able to sell off many of the assets after the Games, including the athlete's village, and thereby recoup its capital costs.

This, however, was based on the assumption that property values would rise, and instead, they have fallen more than 10 per cent in the past year alone.

The Olympic Delivery Authority's (ODA) chairman John Armitt, said, "Securing any form of private sector loan is very difficult in current market conditions.

"The reality is that the situation is changing by the day. There was a certain amount of finance available six months ago, less two months ago and the reality is there is even less now," added Mr Armitt.

Originally, Lend Lease had agreed to finance the project, but the current uncertain climate has put this into jeopardy. So far, the ODA has just half of the funding needed to complete the Olympic site, construction of which is planned to start next year.

Buyers want to move fast
Tuesday, September 23, 2008

New research has shown that, despite the current financial turmoil, those who want to buy a property want to move fast, and London is still attracting much interest.

New research from Rightmove shows that buyers in urban areas, such as London and Birmingham, expect the move through the house shopping process to be significantly quicker than may have been anticipated in the current climate.

For sellers, the key to a quick sale is ensuring their property is easy to find as buyers have less and less time to research or view properties before beginning the purchase process.

The research also found that nearly half of Londoners expect to see between six and 10 properties before finding the right one; a third of Londoners only allow themselves a week to research potential properties before they were prepared to enter the buying process; and property portals are the favoured method for London property searches, followed by local agents' websites and agents' windows.

Miles Shipside, Commercial Director of Rightmove says, "London, as a capital city has always attracted a high level of demand for properties and despite the credit crunch this is still the case.

"However, the current financial situation has led to a readjustment which will make property prices more affordable, though admittedly still beyond the reach of many as wage inflation has failed to keep pace with property price inflation.

London has actually recorded a four per cent growth in prices in our September figures despite an overall downward trend of minus one per cent nationwide.

"Our research shows that those that are looking to purchase a new property want to do so quickly - but are struggling to find properties in their budget.

"They are spending less time searching than may have been expected, and actually viewing fewer properties than expected.

"Nearly three quarters of people in London agree that the current shortage of buyers gives people a better chance of securing a good deal," added Mr Shipside.

As of 1st October 2008, Energy Performance Certificates (EPCs) will become compulsory for all new residential lets, affecting the marketing of around 10 per cent of properties for sale. Unlike before, no property, whether it is bought, sold, built or rented, is exempt, regardless of its time on the market.

Certain regulations permitted the marketing of properties without a Home Information Pack (HIP) or EPC.

This typically included homes which were marketed prior to the various applicable commencement dates and where those properties had been continuously marketed ever since.

The exemption provisions cease on 1st October 2008, which means that, for all properties for sale as of that date, where contracts have not been exchanged, the seller must provide the buyer with an EPC prior to exchange.

The Energy Performance of Buildings Directive will require that all buildings have an EPC from that date. This affects both commercial buildings (non-domestic) and homes (domestic).

This relates to all properties being sold regardless of when listed and whether or not they have been openly marketed.

The seller is responsible for procuring the EPC, having a copy available for prospective purchasers to view and providing a hard copy to the purchaser prior to exchange.

EPCs tell you how energy efficient a home is on a scale of A-G. The most efficient homes - which should have the lowest fuel bills - are in band A.

The Certificate also tells you, on a scale of A-G, about the impact the home has on the environment. Better-rated homes should have less impact through carbon dioxide (CO2) emissions.

The average property in the UK is in bands D-E for both ratings. The Certificate includes recommendations on ways to improve the home's energy efficiency to save you money and help the environment.

According to London estate agent Kinleigh Folkard & Hayward, the new rules will have an impact on approximately 10 per cent of the properties they currently have for sale.

Carl Brignell, HIPs Expert at Kinleigh Folkard & Hayward, says, "In just a week every property on the sales market will need an EPC.

"Unlike the HIPs regulations, under the new rules the seller is responsible for complying, not the agent.

"Unsurprisingly, there has been very little noise from the Government about these new regulations however they affect roughly 10 per cent of our current stock," added Mr Brignell.