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Australian new home approvals at high levels, but uneven across states
New home approvals in Australia bounced back in July and remain at very high levels by historic standards, according to the latest figures from the Australian Bureau of Statistics (ABS). During July 2014, a total of 16,320 dwellings were approved, a 2.5% increase on the previous month. Compared with the previous three month period, approvals were also up by 2.5% and over the 12 months to July new home approvals totalled 195,227. The increase in building approvals nationally during July was driven largely by a 23.1% increase in Western Australia in seasonally adjusted terms. In Queensland approvals were up by 0.9% but there were significant declines in other states, led by a 7.7% fall in Tasmania, followed by a 5.7% decline in New South Wales, a 4.6% decline in Victoria and a smaller fall of 1.9% in South Australia. In trend terms, new home approvals increased by 16.7% in the Northern Territory but fell by 9.3% in the Australian Capital Territory during July. ‘These figures mean that Australia’s home building industry has broken yet another record this year. Total seasonally adjusted new home approvals over the past 12 months are the highest since records began back in 1984. Having broken through the 195,000 threshold for the first time, new home building approvals is now at an even higher level than during the 1994 building boom,’ said Housing Industry Association senior economist Shane Garrett. However, he pointed out that despite this achievement, there have been signs of slowdown in new home building approvals over the past six months. ‘It is also worth bearing in mind that the bulk of the July increase was driven by an exceptional large expansion in Western Australia,’ he said. ‘The key is to ensure that a number of markets, like Sydney for example, achieve sustainably healthy levels of new home over the coming decade which far outweigh what has been built over the last ten years. Numerous government policies across all tiers stand in the way of this objective being achieved,’ he added. Other ABS figures show residential building work done continued to strengthen in the June 2014 quarter, following healthy growth in March. There was $13.4 billion of residential building work done, some 2.2% higher than in the previous quarter and 9.6% higher than in the June 2013 quarter. ‘These preliminary figures indicate that new home building activity is likely to represent a positive contribution to overall GDP growth in the national accounts figures to be released next Wednesday,’ said HIA economist, Diwa Hopkins. She explained that a closer look at these preliminary results shows that the detached house segment was the key driver of growth in residential building during the June 2014 quarter, compared with the March quarter when multi-unit building led the charge. In the June 2014 quarter, new house building work contributed 1.6% points to the 2.2% growth in total residential building work done. ‘These developments are largely in line with what… Continue reading
Wear and tear is most misunderstood issue for tenants and landlords
Fair wear and tear is the most misunderstood area of the whole renting process and agents and landlords still have unrealistic expectations centred on the deductions that can and cannot be made from the tenant deposit, it is claimed. According to the Association of Independent Inventory Clerks (AIIC) it is a commonly held view in the lettings industry that a tenant cannot be held responsible for damage at the end of a tenancy caused by ‘reasonable use of the premises and the ordinary operation of natural forces’. However, while the precise source for this quote is unknown, it is a general guideline that has been accepted across the industry, and the source of most disputes. Recent figures from the Tenancy Deposit Scheme annual survey reveal that cleaning related issues make up 56% of all disputes. Damage to property accounts for 43%, redecoration 30%, rent arrears 17% and gardening issues 13%. It seems that 55% of all disputes are raised by tenants unhappy about the proposed deductions from their deposit and of these, only 21% received all their deposit back. In contrast, 45% of disputes were raised by landlords and agents and of these, only 19% received the amount in dispute. ‘I have lost count of the number of times that a landlord or letting agent has demanded that a property is repainted from top to bottom following a five year tenancy, when the marks on the walls are no more than normal wear and tear,’ said Pat Barber, chair of the AIIC. ‘Everyone has their own view of what constitutes fair wear and tear. Landlords and letting agents may hold the view that a tenant is responsible for repainting a whole property at the end of their tenancy, however the law may not agree. A tenant on the other hand may believe that all the marks, pin holes and damage to the interior walls at time of check out will be covered by normal wear and tear. The same viewpoint is often also applied when assessing damage and wear to the contents of the property and its fixtures and fittings,’ she explained. She pointed out that there are two main things to remember with wear and tear. Firstly, the tenant has a duty of care to return a property in the same condition at the end of the tenancy as found at the start and as listed on the initial inventory report with allowance for fair wear and tear. Secondly, the law does not allow for betterment or ‘new for old’ when assessing the action needed to be taken after a check out inspection. So, if an item was old at check in and after a two year tenancy, there is some additional damage, the law will not allow a landlord to simply replace this item with a new one. Instead, some sort of compensation is allowable towards future replacement…. Continue reading
New mortgage rules in UK next month, including new stress test
The UK mortgage industry will see the largest change to regulation in a decade next month and changes are already being introduced on applications. The changes will be formally implemented on 26 April when the Mortgage Market Review (MMR) rules come into play. They are being introduced to reinforce consumer protection, are overseen by the industry regulator, the Financial Conduct Authority (FCA). With a month to go, lenders, brokers and consumers will be noticing changes in mortgage applications, and the ongoing administration of mortgage accounts, as lenders begin to switch over to the new rules, according to the Council of Mortgage Lenders (CML). The rule changes are wide ranging and include the introduction of a clear distinction between mortgages sold on an ‘advised’ and on an ‘execution only’ basis, with most future sales and variations being advised, requiring staff to be trained and qualified to the required standard to give advice. Also, procedures for giving advice to borrowers will be more detailed. Firms will need to ask more questions to determine what mortgage product is suitable, taking into account individual needs and circumstances, so mortgage interviews could take longer and may even be split into two separate interviews. As well as buyers, remortgagors will also find that the process has changed. People wishing to make changes to their existing mortgages will also be affected, and may be required to go through an advised process and a new affordability assessment. The new rules reinforce measures to assess the future affordability of mortgages, as well as initial payments. Lenders will apply an interest rate stress test to ensure that the loan would still pass the affordability requirements even if the borrower's payments were higher. Lenders will also have to consider the impact of known future changes, such as retirement or redundancy, when assessing affordability. Lenders will have to make a more detailed assessment of the borrower's expenditure, including normal spending as well as credit card and other loan repayments. Borrowers may need to produce more evidence of their spending habits and other commitments than before. It will still be possible to take out an interest only mortgage, but this is likely to remain a niche product. Customers wishing to take out an interest only loan must demonstrate a credible repayment strategy to repay the loan at the end of term and any costs associated with that strategy must be taken into account in assessing affordability. To help consumers prepare for the changes, the CML has been working with the Money Advice Service which will publish online guides in April to explain how applying for a mortgage works under the new system. The CML said it will work with lenders to assess the impact of the new rules and minimise any disruption while they are put in place. Reassuringly, a recent FCA survey found all firms planning to conduct mortgage business, brokers as well as lenders, will be ready to implement the new… Continue reading
