Chancellor George Osborne said in [...]]]> Business Secretary Vince Cable has said tax on high value properties may have to rise – if the 50p tax rate is axed.
Nick Clegg told the Financial Times it would not be a return to the Lib Dem “mansion tax” policy but could include looking at council tax or stamp duty.

Chancellor George Osborne said in the Budget that the 50p rate would be temporary but the government would look at tax on “very high value” properties.

Mr Osborne said high personal tax rates “crush enterprise, undermine aspiration and often undermine tax revenues as people avoid them”.

Mr Cable said he agreed with the chancellor that the government had to move away from “extremely high rates of tax on income” if it turned out to be “counter-productive”, but at a time when people were suffering hardship that tax had a “political purpose”.

There was a “strong argument” for having a “proper base for taxing property”, he said.

In the Budget, Chancellor George Osborne said he agreed with his Labour predecessor Alistair Darling, who introduced the 50p tax rate, that it should be temporary – but now was not the right time to remove it.

He said he had asked HM Revenue and Customs to look at how much it was actually raising, but said the wealthiest should pay more and the government would be “redoubling our efforts to find ways of ensuring that owners of high value property cannot avoid paying their fair share”.

A Treasury spokesman said the chancellor had been referring specifically to tax avoidance and evasion, and not to new ways of taxing property.

In 2009 while in opposition, Mr Cable conceded that he should have consulted more widely in his party after his “mansion tax” proposal for a 0.5% charge on properties worth more than £1m prompted criticism from some fellow Lib Dem MPs.

The party later raised the threshold to £2m, a policy which was in the Lib Dem manifesto last year.

With the average life of a windmill farm estimated at 20 years, this could add up to [...]]]> Local communities in England which agree to host a windmill farm will receive payments from the government.
Renewable UK, the renewable energy trade association, will launch a “wind energy industry guarantee” that will average £20,000 per year per project.

With the average life of a windmill farm estimated at 20 years, this could add up to £400,000.

There are also plans to offer other benefits.

There will be a commitment to pay £1,000 per megawatt (MW) of installed capacity each year for the lifetime of a wind farm whose average output is expected to be 20MW.

However, the Renewable Energy Foundation (REF) said the payment was not enough, as it reflected just 0.5% of the total annual income of the average wind farm.

It said the average turbine generated an income of about £500,000 a year, half of which is subsidised by consumer energy bills.

Under the new scheme, the community benefit would be £2,300 per turbine.

REF said “more generous and less divisive forms of community reparation would be preferable”.

Windmill farms have been controversial in some areas, with some campaigners saying they are noisy and spoil the landscape.

The figures were released [...]]]> Many first time buyers must save the equivalent of more than a year’s salary to be able to afford a deposit for a home, the Council of Mortgage Lenders (CML) have warned.
The typical deposit stood at £12,700 at the start of 2007, but rose to £31,500 by the second half of 2010.

The figures were released as housing and lending bodies faced government calls to help first time buyers.

However, the actual lenders themselves were not invited to the meeting.

Housing minister Grant Shapps summoned various parties to “frank and open” discussions on difficulties facing first-time buyers.

The government estimates 1.4 million households want to own their own home, but face a mortgage squeeze.

Mr Shapps used the meeting to discuss options such as creating new products specifically aimed at helping people get on the property ladder, as well as shared ownership or specialist insurance for lenders.

The CML and the Building Societies Association – which represent lenders – attended the summit along with watchdogs and

Mr Shapps said that he wanted members of the industry talking between themselves, but not to return to reckless lending levels.

“I do not want to see the current generation completely locked out of the market,” he said.

“The pendulum has swung too far the other way, where even if you have a good salary and save to get a deposit, you still cannot get a deposit.

“We want to do more to help aspiring first-time buyers – the average age of the first-time buyer with no support from their family is now 37, and there are 1.4 million households who aspire to own a home but are simply unable to do so because of house prices and mortgage availability.”

However, the CML questioned the minister’s figures, saying that the typical age of a first-time buyer who did not receive help from relatives was 31.

The lenders’ group said that funding problems for lenders and stricter regulations – which required lenders to hold more capital for lending to “riskier” borrowers – meant that things could not change quickly.

“First-time buyer numbers will only recover slowly over time, and may take several years to approach the annual rate of 400,000 to 500,000 purchases that we have seen historically,” the CML said.

“A range of initiatives – including shared ownership, product innovation and mortgage insurance – could all potentially play a part, but none is likely to be a magic bullet that restores normality to the mortgage market, for first-time buyers or anyone else.

“This is likely to be a gradual process as confidence in funding markets and lending decisions is restored.”

One has been the Bank of England’s determination to keep interest rates as low as possible, for as long as possible.

And the other has been the lower than expected rise in [...]]]> With unemployment growing and government cutbacks in the pipeline will UK house prices plummet?Maybe not- with two factors stopping sales and prices falling more sharply.

One has been the Bank of England’s determination to keep interest rates as low as possible, for as long as possible.

And the other has been the lower than expected rise in unemployment.

The recession may be formally over, but big government spending cuts are in the pipeline, with the jobless count likely to rise significantly.

Many economists think that interest rates will stay as they are through 2011, but one of the biggest lenders, the Halifax, reckons they may in fact rise by the end of the year.

It is forecasting a 0.25% increase in the Bank of England’s bank rate by the time 2011 is over, if the economy picks up a bit more.

Will this cause fear and panic among borrowers accustomed to the historically low rates they have enjoyed over the past 18 months or so?

Re-Mortgager thinks not, whilst interest rates may be more expensive, compared to inflation- which may rise top 5%- the overall costs will be lower.

Four providers have been ordered to “address concerns” about the way some consumer [...]]]> Some people are being forced to put their homes at risk because of debts of as little as £600, the Office of Fair Trading (OFT) has found.
The regulator is clamping down on lenders who tell customers to pledge their homes against unsecured debts.

Four providers have been ordered to “address concerns” about the way some consumer debts are enforced.

In a minority of cases across the industry, lenders sent “oppressive and misleading” paperwork to borrowers.

The process of securing these debts is known as a charging order.

Financial companies have the right to apply to a court for a charging order when borrowers have failed to keep up payments on credit card debt, loans or hire purchase commitments.

This order turns these unsecured debts into debts secured on the borrower’s property.

Over the last five years, the number of charging orders applied for has risen from 45,000 to 164,000.

Only a relatively small proportion of orders lead to people being forced to sell their homes.

“‘Our investigation uncovered instances of charging orders being used to secure debts of less than £600. Lenders are entitled to use charging orders but must do proportionately,” said Ray Watson, the OFT’s director of consumer credit.

“Where we consider the using of charging orders to be unfair or oppressive we will take action to protect consumers.”
‘Pressure’

The OFT has told four offshoots of major lenders to address the way they use orders.

The four are: Alliance and Leicester Personal Finance, HFC Bank – part of the HSBC group, American Express Services Europe, and Welcome Financial Services – part of Cattles.

Each of the four co-operated with the OFT during the investigation, and have made changes to address the problems identified, the regulator said.

In general, during the investigation of the whole sector, the OFT found that some providers failed to consider the customer’s circumstances, applied substantial charges for bringing in debt collection agencies, and did not have adequate checks in place during lenders’ decision-making process.

Repayment of credit card debt is narrowly outstripping the amount of new borrowing. The only reason that credit card [...]]]> Major banks have offered more evidence of a subdued mortgage market in the UK with budget uncertainties also keeping other lending low.
This reluctance to borrow is also seen in the British Bankers Association’s figures for unsecured credit.

Repayment of credit card debt is narrowly outstripping the amount of new borrowing. The only reason that credit card borrowing in total rose slightly in September was because of the build up of interest on existing debts.

Demand for new personal loans – often used to buy big ticket items such as cars or for major home improvements – also continued to fall.

New borrowing via these loans was 7% lower in September than a year earlier.

People may not be renovating their properties, but there is also little suggestion that they want to buy a new home.

Most recent house price surveys show that prices have reached a plateau as fewer buyers enter the market and the number of sellers goes up.

But the number of [...]]]> House prices edged ahead by just 0.1% during June as demand from potential buyers stalled, research indicated today.Estate agents in England and Wales reported only a 0.1% rise in new buyer registrations during the month, with falls in demand recorded in six out of 10 regions, according to property intelligence group Hometrack.

But the number of new homes coming on to the market continued to increase, rising by 2.9%, further easing the mismatch between supply and demand.

The group said the supply of homes for sale had increased at three times the rate of demand since March.

It said a combination of the general election, pre-Budget talk of austerity measures and the ongoing mortgage shortage had all contributed to uncertainty in the market.

The number of sales agreed continued to rise during June, despite the fall in demand, increasing by 2.8%.

The amount of time a property takes to sell remained broadly unchanged at an average of 8.4 weeks, while homeowners are achieving an average of 94.3% of their asking price.

The average home in England and Wales now costs £158,900, 2.1% more than in June last year.

But only 11% of postcode areas saw a price rise during June, down from 25% in February.

East Anglia saw the biggest price increases during June, with the average cost of a home rising by 0.3%, with prices in all other regions either edging up by 0.1% or remaining flat.

London saw the biggest fall in buyer demand at 0.9%, followed by the North East at 0.7%.

Meanwhile, the number of mortgage deals on offer has risen [...]]]> House prices in England and Wales are continuing to rise strongly, according to the latest figures issued by the Land Registry.Prices in April rose by another 0.2%, pushing up the annual rate of increase to 8.5%.  This was the fastest rate of growth since September 2007.

Meanwhile, the number of mortgage deals on offer has risen again to more than 2,000 as lenders continue the modest relaxation of their lending criteria.

That was a 14% increase in the number of mortgages in past month, although the proportion of them requiring at least a 25% deposit was steady at 56%.

The Land Registry said the cost of the average home in England and Wales now stood at £165,596.

Prices have been rising fastest in London over the past year.

They were up by 14.8% in the twelve months to April and put the capital’s average house price at £341,487 after an increase of 1.6% in April alone.

“While London’s annual change mirrored that of England and Wales for quite some time, the capital’s growth rate is now overtaking steadily,” the Land Registry said.

All of the 10 regions in England and Wales have seen prices rise in the past year, with the smallest increase being in Yorkshire and Humberside at just 0.7%.

Despite the acceleration of prices, sales are still very sluggish.

Last month figures from HM Revenue & Customs (HMRC) showed that completed sales had fallen by 2,000 in April to 71,000.

Although sales across the UK in the first four months of the year were 26% higher than in the same period last year, they were still nearly half the level reported in either 2005, 2006 or 2007.

It gives an average value per household of £237,000, three times the £73,000 in 1959 (at today’s prices).

The difference between household wealth and value per household is due to the rise in the number of homes since then.

There [...]]]> The total worth of UK households’ property, savings and investments, was £6.3 trillion at the end of 2009.

It gives an average value per household of £237,000, three times the £73,000 in 1959 (at today’s prices).

The difference between household wealth and value per household is due to the rise in the number of homes since then.

There were 16.7 million private addresses 50 years ago, compared with 26.6 million last year.

Of these, 22.1 million – 83% – are in the private sector with 68% owner-occupied. Fifty years ago, 72% of households were in the private sector, but only 43% were privately owned.

At its peak in 1981, the social sector – for example, council housing – accounted for 33% of homes.

House prices have risen faster than earnings over the period. Average earnings grew by 2% annually, with house price inflation at 2.7% on average.

As a result, housing wealth accounts for more than a third of assets, compared with just over a fifth in 1959.

The 1980s saw the most notable change in values, when people’s collective assets more than doubled.

Despite the steep rise in value since 1959, households were less well off at the end of 2009 than they were in 2007.
Government action

Collective wealth fell by 15% between 2007 and 2008 because of falls in the housing and share markets and despite some recovery over last year, it is still 8% below the peak reached in 2007.

The chancellor said he would stick to the plan to cut borrowing by half over the next four years although he made no mention how he would achive this accounting trick as he also downgraded his growth forecast for [...]]]> Labour govt will need to borrow  record £167 billion Alistair Darling has announced in the 2010 Budget.

The chancellor said he would stick to the plan to cut borrowing by half over the next four years although he made no mention how he would achive this accounting trick as he also downgraded his growth forecast for the UK economy.

Although lower than first feared, borrowing this year is still expected to be at a record high – equivalent to 11.8% of GDP.

By 2014, the chancellor now expects borrowing to be reduced to 5.2% of GDP – lower than the 5.7% previously targeted.

That will have a minimal impact on the total amount of government debt, which is now forecast to rise to 75% of GDP by 2015, instead of the 78% previously forecast.

The chancellor now expects GDP to grow by 3% in 2011, rather than the 3.5% forecast in the pre-Budget report.

That earlier forecast was regarded as too optimistic by many independent forecasters, with the new forecast now in line with that of the Bank of England.

Mr Darling remained upbeat about other areas of the economy. He said that government action had helped the recent falls in unemployment.

The chancellor gave no indication of spending plans beyond 2010, but said the next spending settlement would be “the toughest for decades”.

Cuts and savings already identified, he said, would cut £20bn from spending from 2011.

People buying their first home were aged 27 on average in the north of England and in Yorkshire and Humberside.

Those in the North paid an average deposit of 19%, the figures [...]]]> First time buyers in the north of England were the youngest and paid the smallest deposits compared with other areas of the UK in 2009.

People buying their first home were aged 27 on average in the north of England and in Yorkshire and Humberside.

Those in the North paid an average deposit of 19%, the figures showed.

First-time buyers were oldest on average in Greater London at 30, the Council of Mortgage Lenders (CML) said.

The mortgage market is a much tougher place for first time buyers without significant savings than it was a few years ago.

The availability of mortgages has dropped and while some 100% mortgages were available until early 2008, the average deposit was generally between 20% and 25% in 2009, the CML said.

Some 39% of first-time buyers in East Anglia were exempt from paying stamp duty in 2009 because of the concession – the highest proportion.

In Northern Ireland, properties sold under the £175,000 threshold increased from 62% of first-time buyers in 2008 to 86% in 2009.
 

On January 1 2010 the Treasury is due to lower the stamp duty threshold on houses from £175,000 to £125,000, catching well over 100,000 home buyers, many of them [...]]]> The recovery in the UK housing market will be shattered by the increase in property stamp duty, if it is implemented at the start of next year.

On January 1 2010 the Treasury is due to lower the stamp duty threshold on houses from £175,000 to £125,000, catching well over 100,000 home buyers, many of them first time buyers, in the tax trap.

The move will reverse the so-called holiday introduced last year by Alistair Darling, the Chancellor.

However, a coalition of estate agents, house builders and mortgage lenders are writing to the Chancellor over the weekend, imploring him to reconsider the move, arguing it will shatter the fragile recovery in the housing market.

One third of all home buyers will hit by the lowering of the tax threshold, it is estimated.

House prices have started to recover in recent months, as a lack of people putting their house on the market, has led to a shortage of supply, pushing up prices.

However, first time buyers are still finding it very hard to find a mortgage, because banks are extending loans only to those with large deposits. Raising the stamp duty threshold will make it even harder for first-time buyers to get a step on the ladder, the industry argued.

The stamp duty holiday was introduced a year ago by the Treasury as part of a package of measures to help rescue the consumer economy, which at the time was in a dire condition. The so-called fiscal stimuli included a lower rate of VAT, the car scrappage scheme and the record low interest rates.

The housing market was in a particularly parlous state at the time, with the drop in house prices the most severe seen in Britain since 1931.

The lower rates of VAT and stamp duty are both being reversed on January 1, providing an unwelcome New Year’s hangover for many consumers. Retailers have fought a mostly unsuccessful campaign to extend the VAT holiday.

The stamp duty holiday exempted all properties worth less than £175,000 from duty – raising the threshold for the 1 per cent transaction tax from the previous bottom limit of £125,000. The Treasury estimated that the measure would save the majority of home buyers about £1,640 because the average property at the time cost £164,000.

The stamp duty holiday has been a major benefit to the housing market, according to research undertaken by the mortgage lender Halifax. The data show 112,000 homebuyers in England and Wales, or 31 per cent of all buyers, bought properties between £125,000 and £175,000 in the first nine months of the tax holiday.

This means they were exempt from paying the tax but would have had to pay the tax if the threshold was at its original level of £125,000.

David Cameron said that while Mr Brown was accusing the Conservatives of planning cuts of 10 per cent, and insisting that he did not want to do the [...]]]> Gordon Brown was accused last night of misleading the Commons after leaked Treasury papers disclosed unpublished government plans to cut spending by £36 billion a year by 2014.

David Cameron said that while Mr Brown was accusing the Conservatives of planning cuts of 10 per cent, and insisting that he did not want to do the same, his own officials were telling him that spending might have to be reduced by 9.3 per cent in five years.

The papers suggest that the Treasury privately took a far more pessimistic view about long-term unemployment and the cost of servicing the national debt than did independent commentators at the time of the Budget.

The document, headed HM Treasury Fiscal Tables, projects that spending will be reduced by just under 1 per cent in 2010-11, 4 per cent in 2011-12, just under 2 per cent in 2012-13 and 3 per cent in 2013-14.

Based on figures published at the time of the spring Budget, the Institute for Fiscal Studies (IFS) suggested that the Government would cut spending by 7 per cent by 2014. The Treasury’s own “assumptions”, based on Alistair Darling’s declared intention to cut the budget deficit in half by 2014, were more conservative than that. Its figures, circulated within the Treasury in June, suggested that social security spending would rise to £193billion, a real-terms increase of 2.1 per cent, as late as 2013-14, squeezing government spending elsewhere.

The papers also project that debt interest payments will rise from £27billion this year to nearly £64billion in 2013-14. The IFS had based its figures on the payments rising to £52billion.The leak was damaging to Mr Brown but also presents a challenge to Mr Cameron, who has said that he will cut the deficit faster than Labour.

Conservative officials emphasised last night that the figures showed the scale of the task facing any government. They pointed out that their existing plans meant that they would begin cutting spending a year earlier than Labour.

Mr Cameron told a press conference that Mr Brown’s integrity was on the line. “Gordon Brown was denying something that his own civil servants were telling him was true,” he said. It was a “cover-up” of the true state of the nation’s finances.

“Wednesday after Wednesday, the Prime Minister stood up in the House of Commons and repeated the line that the coming battle was between Labour investment on the one hand and Tory cuts on the other,” he said. “All those words have turned to dust and, as I consistently warned week after week, reality has now caught up with our Prime Minister.”

Mr Cameron said that the Conservatives had been candid about the need for spending cuts and would spell out their plans in more detail closer to the next election. “Let me make it clear: they are not wrong to be planning cuts but they are wrong to try to cover up their plans for cuts,” he said.

“This is about honesty, it is about trust. This is about not taking people for fools and on this issue, as I have to say on so many others, the Prime Minister does not seem to have learnt.”

George Osborne, the Shadow Chancellor, went farther, saying: “This is about Gordon Brown misleading the House of Commons, not telling the public the truth about his own Budget.” 

The number of people claiming jobseeker’s allowance rose by 24,400 to 1.61 million in August — the highest since May 1997 and the eighteenth monthly rise in a row, according to the Office for National Statistics (ONS).

The [...]]]> British unemployment hit 2.47 million in July, its highest level since 1994, as 210,000 more people lost their jobs.

The number of people claiming jobseeker’s allowance rose by 24,400 to 1.61 million in August — the highest since May 1997 and the eighteenth monthly rise in a row, according to the Office for National Statistics (ONS).

The recession’s impact on young people was also underlined by jobless totals among 16 to 24-year-olds reaching 947,000 — the highest level since ONS records began in 1992.

The jobless rate among young people also hit a record 19.7 per cent, meaning one in five is looking for work.

Unemployment is set to rise despite indications that British economy has returned to growth.

Mervyn King, Governor of the Bank of England, said yesterday that there were signs that the British economy was growing again though he added that the strength of recovery remained “highly uncertain”.

Earlier in the week, a European Commission study concluded the economies of Britain and Continental Europe would return to growth by the end of the year while last week a study from the National Institute of Economic and Social Research, a leading think-tank, said Britain was climbing out of recession.

However, both warned that, following the emergence from recession, a period of stagnation could follow.

Speaking a year after the collapse of Lehman Brothers, the US investment bank, Mr Greenspan said: “The crisis will happen again but it will be different. They (financial [...]]]> Alan Greenspan, the former US Federal Reserve chairman blamed in some quarters for not doing enough to prevent the financial crisis, has predicted that more crashes are inevitable.

Speaking a year after the collapse of Lehman Brothers, the US investment bank, Mr Greenspan said: “The crisis will happen again but it will be different. They (financial crises) are all different, but they have one fundamental source,” he told the BBC. “That is the unquenchable capability of human beings when confronted with long periods of prosperity to presume that it will continue.”

He added that, although the current crisis was triggered by the trade in US sub-prime mortgages, any factor could have been the catalyst. “Something sooner or later would have emerged”, Mr Greenspan said.

The former US central bank chief claimed that the world’s financial institutions should have foreseen the looming crisis. “The bankers knew that they were involved in an under pricing of risk and that at some point a correction would be made,” he said. “I fear too many of them thought they would be able to spot the actual trigger point of the crisis in time to get out.”

He also warned that Britain would be harder hit than the US by the current recession and collapse in world trade.

“Obviously we’ve both suffered very considerably but … Britain is more globally oriented as an economy and the dramatic decline in exports globally and trade generally following the collapse of Lehman Brothers had dramatic effects in the financial system of Britain,” Mr Greenspan said. “It’s going to take a long while for you [Britain] to work your way through this.”

But he cautioned that the path to recovery should steer clear of protectionism as applying strict regulations could hamper recent developments that have opened up global trade. “The most recent endeavour to re-regulate is a reaction to the crisis. 

Jean-Claude Trichet, the President of the ECB, said that it was too soon to end its support measures. Apart from reducing [...]]]> The European Central Bank (ECB) said yesterday that it was in no mood to withdraw the emergency measures it has been using to stimulate the eurozone economy in the face of the global financial crisis.

Jean-Claude Trichet, the President of the ECB, said that it was too soon to end its support measures. Apart from reducing interest rates, these have included pumping extra cash into the eurozone in an attempt to kick-start lending.

Speaking after the ECB voted to maintain interest rates in the eurozone at 1 per cent, Mr Trichet said the significant contraction in the 15-member zone had ended, but dismissed suggestions that the bank should now begin to unwind its support.

He added: “Today is not the time to exit. It is more of a bumpy road ahead. Uncertainty is high. Prudence and caution are still of the essence. Overall, the recovery is expected to be rather uneven.”

Mr Trichet confirmed that, later this month, the ECB would offer to lend unlimited funds to banks for the next year at a flat rate of 1 per cent. This is in line with the rate charged on the €442 billion (£384 billion) of 12-month funds that the ECB made available in June. The move defied predictions in some quarters that it might charge banks slightly more in a sign that monetary tightening was imminent.

His comments sent yields on the two year bonds issued by leading eurozone economies, such as Germany, to their lowest levels for six months.