Almost 2 Million UK Would Be Homeowners Can’t Get on Property Ladder

New research suggests that almost two million would be homeowners in the UK, mostly families, can't get on the property ladder because they can't afford to save for the deposit needed, according to this September 4th, 2013 recent article by the Property Wire.

According to housing charity Shelter around 1.8 million families face a life time of renting a home with three quarter priced out of the market and even with the government’s flagship Help to Buy scheme some 78% are unable to afford the repayments on a family sized home.

In contrast, the report finds that mortgage repayments on a shared ownership home would be affordable for 95% of families on low or middle incomes.

The charity is calling for a major new house building programme of shared ownership homes to revolutionise ownership for what is describes as ‘forgotten families’. This would allow families to find an affordable home of their own, and provide a real alternative to the confusing postcode lottery of existing small scale schemes, or the overheated private rental market.

The report says that investing £12 billion, less than 1% of GDP, could build 600,000 new shared ownership homes which would be enough to give almost half of England’s private renting families the chance to own their own home. 

‘We need to see a new generation of shared ownership for the ordinary families priced out of home ownership. The reality is that soaring house prices mean that the traditional market is no longer working for ordinary people,’ said Kay Boycott, director of campaigns and policy at Shelter.

‘Building the new shared ownership homes we desperately need is the only way to give thousands of families a stake in the stable home they want at a price they can afford,’ she added.

But the government says it is doing more to help families onto the housing ladder. As well as schemes like Help to Buy and Funding for Lending, both credited with boosting the number of first time buyers, it points to the fact that it has also launched a new scheme to bring back empty homes into the housing stock.

It is working with the public and private sector through the National Empty Homes Loan Fund (NEHLF) to give borrowers access to a secured loan at a fixed 5% interest to renovate some of the 710,000 empty homes in England.

A joint £3 million initiative has been launched with the charity Empty Homes, the Ecology Building Society and 39 participating local authorities to help home owners who cannot afford to bring the property up to a useable standard.

The Ecology Building Society, a specialist mortgage lender that supports sustainable communities, said that it should provide funding for hundreds of properties and is available to individuals aged 18 and over who own a property that has been empty for six months or more. 

‘We know that many homes are empty because it is difficult for owners to raise the money that is required to bring them back up to a habitable standard. This initiative will kick start efforts to tackle this. This scheme is a first in England and is a great example of central government working together with the public and private sector to try and reduce the number of empty homes in the UK,’ said David Ireland, chief executive of Empty Homes.

Paul Ellis, chief executive of the Ecology Building Society, said that at a time when there is increasing demand for homes but an acute lack of supply it makes sense to bring new life to existing but neglected properties.

Article Source:  http://www.propertywire.com/news/europe/uk-property-ladder-families-201309048193.html

Small Debts Enough for UK Lenders to Force Borrowers to Sell Property

UK lenders can now go to court and force their borrowers who has unpaid credit card bill worth 1,000 pounds to sell their property as revealed in this August 20, 2013 issue by RT.

An unpaid credit card bill worth 1,000 pounds is now enough for a UK lender to go to court, forcing debtors to sell their property. A recent regulation puts tens of thousands of British homeowners at risk of losing their houses. Frankie Waller, an owner of a modest London dwelling, might well soon lose the place holding memories of the last 20 years of his life. September court hearings will decide if he can keep his home or will have to sell it to repay 6,000 pounds of credit card debts he has run up.

“Nobody asked me or twisted my arm to take out the credit. That’s my doing entirely”, Waller confessed to RT’s Polly Boyko. “But the word ‘unsecured’ was attached to it.”

That key word – unsecured – is supposed to mean the loan is not attached to any of your assets. However, as of October 2012 the rules of the lending game have been changed by a government regulation, making it easier to turn unsecured debt into secured. That means failure to pay it off puts borrowers at risk of losing their homes.

A creditor has been given the right to apply to court for a charging order, forcing the debtor to sell his property. As of April, accumulating a debt of just 1,000 pounds is enough for the ‘un’ prefix to disappear from your unsecured loan.

Edward Ware from Step Change Debt Charity, which is trying to help those with serious debt problems, believes the regulation makes too many homeowners vulnerable.

“We wanted that threshold set at 25,000 pounds because we wanted that extra layer of consumer protection. The government have [sic] made it easier for lenders to get charging orders,” Ware told RT.

Britain’s Office for Fair Trading has already warned major banks over threatening to force debtors to sell their homes over debts of just over 1000 pounds.

However, when the threshold was introduced in April, the Justice Ministry justified it as a measure helping protect debtors.

“With a high threshold, such as 25,000 pounds, there is a risk that creditors may seek to recover their debt by initiating bankruptcy proceedings as an alternative to enforcement. This would be a more draconian outcome for debtors than an Order for Sale”, Lord McNally, Minister of State (Ministry of Justice) said.

However, house prices in the UK are on the rise, and debt charities are predicting a surge in charging orders. Because if a debtors’ house gains value, its sale is guaranteed to return their debts to their creditors.

Besides, a recent survey, issued on Monday, suggests the Britons have become less cautious with unsecured loans, finding them increasingly easy to obtain. Households' perceptions of credit availability rose to 48.4 in August from 47.7 in July, survey compiler Markit says, adding that it’s the biggest rise since the survey began in February 2009.

"A brightening economic and financial outlook, alongside some signs of improved access to household credit, looks to have spurred consumer spending again in August," senior Markit economist Tim Moore, as cited by Reuters.

Frankie Waller, however, has been sobered out of his own bright vision of lending and spending.

“How’d you think it makes me feel?” he asks. “I mean I feel thoroughly sick, and my wife feels thoroughly sick over it. It’s something in the good times we took pride in paying and throughout the bad times we’ve struggled for very hard. This extra pressure, financial pressure is causing a rift between my wife and I. Our relationship is very strained… life’s not good.”

And Waller’s not alone in his grief. Eighty-one thousand and fifty-nine Britons faced charging orders in 2011, according to the most recent statistics by the Ministry of Justice. The post-regulation statistics is yet to come.

Article Source: http://rt.com/news/uk-regulation-charging-order-718/

House Price Rise Doesn't Have Any Bearing on Real Life

In this article on August 17, 2013 by Kate Hughes of The Independent discussing the value of house price rise means nothing because a house only worth what someone will pay for it and besides it's a home and you can't sell what you still need. 

Your home might be worth more on the market, but you still need somewhere to live.

Feeling better about cash, the economy and everything yet? The latest rounds of financial and economic survey data suggest we should be.

Just by way of a quick recap, unemployment is down by 4,000 to 2.51 million in the quarter to June this year, and the number of "economically inactive" people aged 16-64 in the UK was down 10,000 from the first quarter of 2013, according to the Office for National Statistics. Total pay also rose in the last year by 2.1 per cent.

Inflation is also down, very slightly, across the board, with the Consumer Prices Index down just a touch from 2.9 per cent to 2.8 per cent in July, thanks in part to the drop in leisure, cultural and clothing costs, and the Retail Prices Index, which includes housing costs, was down from 3.3 per cent to 3.1 per cent.

Meanwhile, Gross Domestic Product – the broad measure of the state of the economy – is up 0.7 per cent in the last quarter to July according to this month's estimate, following 0.6 per cent growth the quarter before.

And unless you've been in a coma this week, you'll already know that house prices are up by 3.1 per cent in the year, compared with 2.9 per cent in May. The term "escape velocity" is being used with reckless abandon. Happy days.

Except that last piece of good news in particular has no bearing on real life. First, a house is only worth what someone will pay for it, and until the money is in your account, a valuation means nothing. Some unscrupulous agents are already overegging valuations in a bid to max out their commission if it does come off, safely hidden from view by this rising tide.

Second, the British obsession with owning property means we often forget that our house may be our greatest asset, but it's a home first and foremost. And you can't sell what you still need. So unless you're not too worried about having a roof over your head, when exactly are you going to crystallise that "gain"?

Third, if you do sell to move on what difference does it make anyway as your next step on the ladder is likely to have headed the same way, unless you're moving far, which is statistically unlikely, or you are downsizing significantly.

Of course, there's the much-repeated argument about house prices, consumer confidence and economic wellbeing. But consumer confidence based on thin air puts us right back where we were a few years ago, or have we all forgotten?

Unless you have some truly altruistic wish to support the wider economy rather than yourself, go out and spend your cash when you (eventually) get a pay rise, when there is real money in your pocket, not when someone with a sharp but cheap suit tells you your house is worth 5 per cent more than it was the last time you blinked.

Finally, and most importantly, as those outside the South-east of England have learned, house prices can fall as well as rise. But historically low interest rates and pressure on banks not to repossess mean the rest of us have forgotten what that really looks like.

The average house price is now £169,624. (And here I acknowledge that "average" covers a multitude of north-south divide sins.) Meanwhile, the average UK salary before tax is £23,244. Even if there are two or more adults working full time in your household, with one far outstripping the other, this isn't rocket science. And the problem is far, far more extreme in the South-east.

I feel for first-time buyers watching property prices sprint off into the distance. But for them there should be some comfort drawn from the fact that this too is temporary.

Article Source: http://www.independent.co.uk/money/spend-save/kate-hughes-house-price-rise-doesnt-have-any-bearing-on-real-life-8772589.html

Southern Eurozone Countries Continue to Attract Property-Buyers From the UK

An interesting article by The Economic Voice on August 13, 2013 showing how southern delights of the Eurozone drawing property buyers from UK.

Knock-down property prices in southern Eurozone countries continue to attract property-buyers from the UK, with interest in Spain, Italy, Portugal and Greece getting noticeably stronger during the second quarter of the year.

Demand for information about foreign property rose 36 per cent year-on-year for the three months to the end of June, according to the most recent Overseas Guides Company (OGC) Quarterly Index, which measures interest in destinations popular with second homeowners and expats.

OGC – a free resource for overseas property-buyers – attracted 9,096 direct requests for information in the form of downloads of its free Buying Guides for Q2 2013, compared with 6,707 in Q2 2012. While this represented a decrease of six per cent from the 9,685 enquiries it generated in the first quarter of 2013, the slight fall was largely down to the seasonal fall in enquiries about long-haul destinations, including Australia, USA, Canada and New Zealand.

“It seems the euro’s continued strength during the second quarter hasn’t put British buyers off tapping into some very attractive property prices in southern Eurozone countries,” said Richard Way, Editor at The Overseas Guides Company. “There are reports of buyers taking advantage of current favourable euro mortgages, expecting their loan to become even better value if the pound strengthens in coming months.”

Mr Way continued: “Enquiries for Spain were up, if slightly, on Q1, while Italy, Portugal and Greece saw hikes of 18 per cent, 9 per cent and 48 per cent respectively. It’s interesting that enquiries for Turkey were also up by 30 per cent on the previous quarter, despite the civil unrest in Istanbul – and that while France’s enquiries fell by 5 per cent, it still remains our most popular destination.”

The total number of enquiries received by OGC for the first half of 2013 was 18,781, a year-on-year increase of 43 per cent from 13,175 for the same period in 2012.
OGC has a quality database of approximately 64,800 people interested in buying overseas property and/or moving abroad.

Article Source: http://www.economicvoice.com/southern-delights-of-the-eurozone-drawing-uk-property-buyers-looking-for-a-bargain/50039353