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New powers for Bank of England regarding Help to Buy scheme welcomed
The Royal Institution of Chartered Surveyors (RICS) has welcomed a move to give further powers to the Bank of England to manage property’s role in the country’s economy. It said that the decision announced this week by the Chancellor of the Exchequer George Osborne is a responsible step when housing development is being heavily stimulated. But it warns that a ‘permanent’ Help to Buy scheme needs to be carefully considered. Whilst there is a commitment to annual scrutiny by the Financial Policy Committee, RICS has called for a concise and clear exit strategy for Help to Buy and believes existing schemes should be focused on those regions which are seeing least activity and development, and have the greatest housing need. Under the change the Bank's Financial Policy Committee (FPC) will make annual reviews of the scheme, starting next September. The committee had been due to make an assessment of Help to Buy only after its first three years of operation. Osborne believes that the recent recovery in parts of the housing market has raised questions about the impact of the scheme so he has given the Bank more control. The FPC will be able to modify parts of the scheme to keep it in check. The FPC will also be allowed to review the scheme and could reduce the £600,000 cap, so fewer homes are affected. The FPC could also make loans less attractive by recommending that the Treasury raises the fees paid by lenders for the guarantees. Help to Buy was originally launched to help buyers of new properties in England, with other schemes operating in Wales and Scotland. A second, potentially much bigger phase of the scheme is due to begin in January to assist buyers who might otherwise be unable to afford a down payment on a home. The scheme provides taxpayer insurance for up to 15% of a mortgage on houses worth up to £600,000, allowing banks to provide up to 95% mortgages at a reduced risk. The plan has been criticised by opposition politicians and private sector economists for risking pushing up house prices, which have since risen by around 10%. However, in its first assessment this week the Bank of England has given a clean bill of health to the Help to Buy mortgage guarantee scheme, saying it does not pose material risks to financial stability. It also said it was not to blame for prices risesas it only accounted for around 5% of mortgages and was most used in regions where house prices had risen least. 'The scheme does not appear to have been a material driver of (house price) growth. For example, take up of the scheme has been weak in London where house price growth has been strongest,' the FPC said, adding that mortgage lending standards had not deteriorated since the launch of Help to Buy, and house prices appeared to be cooling sooner than the FPC had expected when it last met in June and imposed caps on general… Continue reading
UK govt already agreed to buy over 350 properties affected by high speed rail link
The UK government has now agreed to buy over 350 properties along the route of the new High Speed rail link from London to Birmingham. They are affected property owners who have served Statutory Blight notices or applied via the Express Purchase Scheme. This makes clear the government’s commitment to acquire a significant amount of the property required for the construction of HS2 before the necessary legislation enabling the railway has even passed through parliament. However, even when the government has accepted a Statutory Blight notice, care should be taken when negotiating a final settlement, according to experts at independent property consultants Knight Frank. James Del Mar, head of Knight Frank’s HS2 Team, pointed out that compulsory purchase and compensation legislation is complex. ‘Those facing Compulsory Acquisition or making a Statutory Blight or other compensation claim are entitled to be represented by properly qualified professionals. HS2 will meet those professionals’ reasonable fees incurred in assisting claimants,’ he said. He explained that the ‘disturbance’ aspect of a claim, for example, has a multitude of facets. ‘As well as the value of the property, which needs to be evidenced by reference to actual market transactions, there is the Home Loss Payment of a further 10% capped at £47,000 or a business loss payment for those that aren’t home owners,’ he said. ‘There is the Stamp Duty Land Tax, itself a significant sum, the removal costs and all other associated expenses which can be considerable. In many cases HS2 are hoping to settle on a full and final basis and are leaving little ability for claimants to come back if they’ve forgotten something,’ he added. Knight Frank has a dedicated team of Compulsory Purchase and compensation specialists with over 100 years’ experience between them. The team has a 100% success rate in its dealings with HS2 with all fees being directly paid by HS2. ‘It’s an enormously stressful event and taking the comfort in the form of professional advice is one way of diffusing some of that emotion and receiving the reassurance that HS2’s proposal is correct and appropriate,’ said Del Mar. Continue reading
Property prices in Ireland up almost 15% in last year
Residential property prices in Ireland have increased by almost 15% in the last 12 months, according to the latest data from the Office of National Statistics. In the year to August, residential property prices at a national level, increased by 14.9%, up from 13.4% in July and an increase of 2.8% recorded in the 12 months to August 2013. Residential property prices rose by 2.3% in the month of August. This compares with an increase of 2% recorded in July and an increase of 0.9% recorded in August of last year. A breakdown of the figures shows that in Dublin residential property prices grew by 3.5% in August and were 25.1% higher than a year ago. Dublin house prices rose by 3.5% in the month and were 24.7% higher compared to a year earlier while apartment prices were 32.6% higher when compared with the same month of 2013. However, and ONS spokesman said that it should be noted that the sub-indices for apartments are based on low volumes of observed transactions and consequently suffer from greater volatility than other series. The price of residential properties in the rest of Ireland rose by 0.8% in August compared with an increase of 0.1% in August of last year. Prices were 5.6% higher than in August 2013. House prices in Dublin are now 39.2% lower than at their highest level in early 2007 and apartments in Dublin are 45.8% lower than they were in February 2007. A separate report by Myhome.ie says the average asking price for a home increased by 1.4% nationwide over the last quarter while in Dublin it rose 3%, taking the average asking price to €193,000. It is the sixth quarter in a row that Dublin has recorded an increase and puts the mix adjusted average asking price in the capital at €263,000, up €8,000 in three months. The annual percentage change for Dublin is 9.6%. Caroline Kelleher from DKM Economic Consultants and author of the report said that a supply problem in Dublin is continuing to drive price increases. ‘There were only 500 completions in the capital in the first quarter and given that the Housing Agency has forecast a requirement of 5,700 units in Dublin alone this year it is clear the current rate of completions falls significantly short. As a result our expectation is that prices will continue to rise over the coming months,’ she explained. The report also highlights a growing value gap between Dublin and elsewhere in the country with a semi-detached house in Cork some 66% cheaper than in Dublin. Continue reading
