Since 2008, London has been the most traded real estate market in the world [...]]]> The London property market has seen a huge increase in global capital flight- as it is seen by many as a safe haven during the eurozone credit crunch.On the high end of this scale of capital investment is the commercial property market.

Since 2008, London has been the most traded real estate market in the world with 60% of the total investment from foreign investors.

The system in London is very investor friendly with transparent legal structures and it has fiscal benefits in terms of tax and capital gains which give it a certain advantage.

International corporations use London as a base for Europe, Africa and the Middle East- and London also responds quickly to global market pressures.

In late 2008, there was a 40% drop in values post the Lehman Brothers crash and as Sterling weakened. Bizarrely, perhaps, this huge markdown did little to dampen investor sentiment. In contrast to the fortunes of the US and other real estate markets, it led to a substantial increase in overseas interest.

As such, London stole the crown from New York in 2008 as the most traded real estate market in the world.

During the 2008-2011 period, some 42% of sales were from UK owners to foreign investors, with just 6% being traded the other way.

These foreign investors are discerning and are focusing on prime assets.

UK buyers are still the biggest group, holding 48% of all property here, followed by German investors which own 16%, US investors which own 10% and Middle Eastern investors which own 6%.

Japanese investment has fallen two percentage points from a high of 11% in 1995, while and European investment excluding Germany has fallen to 5% from a high of 8% in 1995.

There has also been a growing trend towards the super-rich, often labelled high net worth individuals, buying property.

The super-rich are also buying in the City. Officially they own some 6% of the office space there, but many think that could be an underestimate as it is difficult to trace ownership and there is a culture of secrecy.

The figures were [...]]]> Average private sector housing rents in England and Wales rose by another 0.7% last month, to hit a new monthly high of £718, a report has said.It means rents have risen by 4.3% in the past 12 months, with tenants paying an average £29 a month more than they were a year ago.

The figures were compiled by LSL Property Services, which owns a number of estate agents and letting agencies.

LSL said rents had risen fastest in the South East and East Midlands.

David Newnes of LSL said rents were rising everywhere, due to high demand from people who were still unable to buy a home, and were being forced to rent instead.

“In many cases, buying a home is now cheaper on a monthly basis – provided renters can get past the stumbling block of the substantial deposit requirements,” said Mr Newnes.

“For the majority, saving a £25,000 deposit is a Herculean task as inflation and rents climb – and most would-be buyers are biting the bullet and prolonging their stay in increasingly costly rental accommodation.

“As things stand, we won’t see competition amongst prospective tenants diminish without a substantial expansion in the supply of rental properties available on the market,” he warned.

Earlier this month, the housing charity Shelter said private rents had become unaffordable in 55% of council areas in England.

It said homes in these areas cost more than 35% of median local take home pay.

Wolseley reported a pre-tax profit of £391 million in the year to July, compared with a £328 [...]]]> Building and heating materials group Wolseley has returned to a full year profit in 2010/11.The group suffered when the housing market was hit during the recession, but said it had focused on improving its “customer, product and vendor mix”.

Wolseley reported a pre-tax profit of £391 million in the year to July, compared with a £328 million loss a year earlier.

It said markets were broadly stable but there had been “no strong rebound in activity after the recession”.

Sales revenues rose 3% to £13.6 billion.

The group also took a £39 million charge on its Bathstore and BCG brands in the UK, “reflecting a deterioration in the outlook for retail markets”.

It added that in the current environment, it remained cautious about its cost base.

“Recent economic forecasts have weakened, and over time this is likely to have an impact on our markets,” said chief executive Ian Meakins.

The company has been selling off units as part of a disposal strategy over the past 18 months.

In July, it sold its French distribution division Brossette and British Build Center business to France’s Saint-Gobain for £310 million.

Money would also be offered to the Scottish and Welsh administrations, which will choose [...]]]> Money to extend a council tax freeze in England to 2012-13 has been unveiled by Chancellor George Osborne.The government cannot force councils to freeze bills but it is offering to give those that limit spending rises to 2.5% the money they need.

Money would also be offered to the Scottish and Welsh administrations, which will choose how it is spent.

The £805 million move will be funded by efficiency savings but Labour said it would save people just £72 a year.

A similar pledge was included in the coalition agreement and resulted in all local authorities in England freezing or reducing their council tax bills in 2011-12.

Scotland will get an extra £67.5 million in its block grant but ministers are still deciding how to spend it. The SNP has already pledged to freeze council tax for five years.

The chancellor is under pressure to spell out detailed plans to get the UK economy growing again amid mounting criticism from Labour and senior figures in his own party.

The government had “activist” policies on dealing with the deficit, keeping interest rates low and cutting corporate taxes and more investment in apprenticeships, he said.

It is not unusual for some to spend less than expected and this time the chancellor will seize the money to ease household bills.

The key point from the Treasury’s point of view is that this does not change the overall spending plans or the deficit reduction strategy.

He cited the increase in time an employee has to work before they can claim unfair dismissal as an example of how the government will lift the burden on business.

With business groups calling for further help, Mr Osborne said his corporation tax cut from 28% to 23% – announced in March’s Budget – was a “real sign of our commitment to getting business growing.”

The bulk of Mr Osborne’s plans will not be announced until November in the second phase of the government’s growth review.

Barclays said it had cut complaints by 14% compared with a year [...]]]> More complaints were made about Barclays than any other banking brand by UK customers in the first half of the year, figures have shown.The bank received 251,563 complaints, with 53% of closed cases upheld in customers’ favour, the Financial Services Authority (FSA) figures show.

Barclays said it had cut complaints by 14% compared with a year earlier.

Other banks high on the list included Lloyds TSB (181,907), Santander (168,888) and NatWest (147,109).

The data pulls together figures released in recent weeks by banks.

Nearly 10,000 complaints were filed every day to financial institutions, with a total of 1.85 million made in the first six months of the year.

The FSA figures showed that, among the most complained-about banking brands, Santander was the most likely of the major brands to deal with cases within eight weeks.

It closed 98% of cases within that timeframe. This compared with 74% at Royal Bank of Scotland, 77% at Lloyds TSB, 86% at NatWest, 89% at Barclays and 90% at HSBC.

Complaints were dominated by those about payment protection insurance (PPI), especially after banks lost their legal challenge on PPI rules in April.

PPI is supposed to cover borrowers’ loan repayments if they fall ill, die, or lose their jobs.

But mis-selling cases led to new rules on how cases should be dealt with, and also created an extra compensation bill running into billions of pounds for the banks.

The FSA’s complaints figures are published relating to banking brands.

Barclays headed the list but said the number of complaints had fallen by 14% compared with the same period a year earlier.

“We want to get it right every time. When we do get it wrong, we apologise, try to correct it quickly and identify how to prevent it from reoccurring,” said Antony Jenkins, chief executive of Barclays Retail and Business Banking.

“We have made good progress in reducing complaints with a substantial and sustainable reduction in banking complaints by nearly a third.”

“However, there is much more to be done and we are working hard to further improve our service to our customers, putting them at the heart of our business and getting it right first time, every time.”

The largest group – Lloyds Banking Group – had most complaints when all its brands were added together.

Some complaints that are unresolved by the banks themselves end up with the independent Financial Ombudsman Service. It recently said that the largest number of these complaints, in the first half of the year, also related to Lloyds Banking Group.

It also said that nearly two-thirds of the new complaints made in the six months to the end of June were about PPI.

It warned those on lowest incomes were likely to [...]]]> Household budgets could be squeezed for the next 10 years as the impact of tax rises and cuts is felt, the Institute for Fiscal Studies (IFS) has warned.Its survey suggests families have seen the biggest fall in living standards in 30 years in the last financial year.

It warned those on lowest incomes were likely to suffer a further significant reduction in their spending power.

The IFS cross-country study found that UK households had been relatively insulated from the immediate impacts of the recession, partly because of state welfare systems and increases in state financial support.

It said much of this protective effect was concentrated on households in the bottom half of the income distribution.

But it said earnings, state benefits and tax credits had all fallen in real terms in the UK over the past year.

IFS researchers estimated this was likely to have led to a fall in median net household income of 3.5%, the largest single-year drop since 1981, returning it to its 2003-04 level.

The pain of the recession had been delayed rather than avoided, they concluded.

Robert Joyce, a research economist at IFS and a contributor to the report, said: “The current economic downturn began more than three years ago, and may seem like old news.

“But, as in other developed countries, the most severe consequences of the recession on UK living standards have only just begun to be felt, and will continue to be felt for years to come.”

Previous IFS research has shown that the decline in average living standards looks set to continue until at least 2013-14.

There have been a growing number of calls in recent weeks from opposition politicians and some economists for the government to rethink its programme of spending cuts in the light of weak economic growth, not only in the UK, but also in Europe and the US.

The latest report found that the fall of 6% in UK GDP from peak to trough during the recession lies somewhere in the middle of the international experience.

The Irish Republic, Japan and Sweden had experienced sharper falls, whereas countries such as Canada saw smaller falls.

The rate of employment fell by a good deal less than GDP – by 1.6 percentage points between 2007 and 2009, the IFS said.

Again, this was roughly in the middle of the global experience. Over the same period, the employment rate rose in Germany, was almost unchanged in France and fell by more than four percentage points in the US.

And those specifically to first time buyers reached a 10 month high, up 24% from May to 18,100.

Although the level of [...]]]> Mortgage lending jumped in June- allbeit from a very low level, the Council of Mortgage Lenders (CML) has said.The total number of new home loans to house buyers rose by 22% from May, to 46,700.

And those specifically to first time buyers reached a 10 month high, up 24% from May to 18,100.

Although the level of lending was still significantly lower than a year ago, the CML said the latest figures were encouraging.

“Recent increases in Bank of England approvals figures also show that more completions are expected in July, so the more encouraging numbers may persist for a while,” said Paul Smee, director-general of the CML.

The number of new mortgages arranged in June was back to the level recorded last October.

It was also 63% higher than in January this year, when newly arranged loans had been at their lowest monthly level for nearly two years.

Despite more first time buyers coming on the scene, they still had to put down an average deposit of 20% of the value of the home they were buying.

The CML said although this was down from the high point of 25% recorded during 2009, it was still much higher than the “historic norm” of 10%.

Potential buyers are also being helped by a fall in the interest being charged on new fixed rate deals.

The financial information service Moneyfacts said the average five-year fixed-rate deal was now at 4.99% – and that this was the first time since 1988 that such offers had been below 5%.

This is despite the [...]]]> UK interest rates have been kept at the record low of 0.5% again by the Bank of England’s Monetary Policy Committee.
Data this week pointed to a slowdown in growth in manufacturing, construction and services, which economists took as a sign that the Bank would not change rates with the recovery still weak.

This is despite the fact that inflation is currently at 4%, double the Bank’s target rate.

The MPC did not reveal any new quantitative easing measures either.

The Bank has faced a difficult choice – either keep interest rates low to try to aid the economic recovery, or raise them to try to cool inflation.

Raising interest rates takes demand out of the economy and slows down inflation, but it also increases the cost of borrowing, and there are concerns this may tip the UK back into recession.

The economy shrank by 0.5% at the end of last year, but returned to growth in the first three months of 2011, expanding by 0.5%.

Although the Bank was widely expected to leave rates unchanged, some members of the committee have been pushing for an increase.

They returned £7 billion in the final three months of the year, [...]]]> UK homeowners paid off more of their mortgage borrowings last year than they had done in any other single year official Bank of England figures show.
Mortgage borrowers paid back more than £24 billion to lenders in 2010, the highest since records began in 1970.

They returned £7 billion in the final three months of the year, a record amount during any quarter since the Bank started collecting the figures.

The figures also include money paid as deposits by homebuyers.

Lenders demanding higher deposits and rationing home loans would also increase the financial stake that homeowners have in their properties.

In the boom, people used extra mortgage borrowing to cover other spending. From July 1998 to March 2008 homeowners borrowed an extra £328bn against the rising value of their homes

This is known as housing equity withdrawal. Homeowners cashed in on the increasing value of their homes to buy cars and holidays.

Now the opposite is happening, as families try to reduce their debts and lenders demand higher mortgage deposits.

Borrowers have also taken advantage of low interest rates to pay back more of their home loans while mortgage costs are low.

There has been an injection of housing equity for 11 quarters in a row, the figures show.

Homeowners have now collectively injected £57.4 billion into their housing equity since the second quarter of 2008, when the trend switched from withdrawal.

Lenders demanding higher deposits has also increased first-time buyers’ financial stake in their homes.

The latest figures show that households spent the equivalent of 2.7% of their post-tax income on reducing their mortgages.

During the boom times, equity withdrawal was providing homeowners with the equivalent of a 9% post-tax boost to their incomes.

Mortgage rationing through demands for higher deposits has contributed to the trend in equity injection.

The CML said the fall was larger than expected at the time of year and due to an “unusual [...]]]> The number of new mortgages lent to house buyers slumped by 29% in January compared to December, the Council of Mortgage Lenders (CML) said.
At just 28,500 the figure was also 12% lower than in January last year.

The CML said the fall was larger than expected at the time of year and due to an “unusual combination of factors”.

The figures suggest the property market may be heading for a new downturn in activity due to mortgage rationing and the uncertain state of the economy.

“With the effects of last year’s government spending cuts beginning to bite, and rising inflation and tax measures putting pressure on household budgets, potential house-buyers are likely to have been discouraged,” the CML said.

“This, coupled with December’s extreme winter weather, and uncertainty over future interest rate rises, has led to a lack of movement in the mortgage market.”

January’s fall in mortgage lending, which the CML admitted was “substantial”, takes lending back to its difficult position seen in the first few months of 2009, in the immediate aftermath of the international banking crisis.

Compared to earlier in the decade, the latest figures are a massive drop.

For instance, in January 2003, 90,300 new mortgages were agreed with home buyers.

For the few first-time buyers able to agree new mortgages – just 10,500 in January this year – borrowing requirements eased slightly.

The average deposit they had to put down fell to 20%, the lowest level of downpayment for more than two years.

He said: “Why do banks in [...]]]> Banks are trying to maximise short-term profit at the expense of customers, the Bank of England governor has said.
Mr King said that, over the past two decades, too many people in financial services had thought “if it’s possible to make money out of gullible or unsuspecting customers, that’s perfectly acceptable”.

He said: “Why do banks in general want to pay bonuses? It’s because they live in a ‘too big to fail’ world in which the state will bail them out on the downside.

“We’ve not yet solved the ‘too big to fail’ or, as I prefer to call it, the ‘too important to fail’ problem. The concept of being too important to fail should have no place in a market economy.”

He also said there was “too much weight put on the importance and value of takeovers” and that “it doesn’t make sense to destroy a company with reputation” in the hunt for short-term profits.

He went on to draw a contrast between manufacturing companies, which he said largely cared about their workforces, customers and products, and the banks.

“There’s a different attitude towards customers. Small and medium firms really notice this: they miss the people they know,” he said.

The terms of the [...]]]> Iceland’s parliament has voted to approve a new plan to repay the UK and the Netherlands the £3.1 billion they lost when the Icesave bank collapsed.
The money will be used to repay the UK and Dutch governments for reimbursing 400,000 citizens who lost savings when Icesave’s parent, Landsbanki, collapsed late in 2008.

The terms of the agreement must now be approved by Iceland’s president- who has recently said that this deal was much better than a previous deal.

He had refused to approve the last parliament backed repayment proposal.

Under the terms of the latest deal Iceland will have longer time to repay the debt, and at a lower interest rate than before.

Iceland will pay the money back to the UK at a 3.3% interest rate between 2016 and 2046, rather than a 5.5% interest rate between 2016 and 2024.

The actual cost to the state is expected to be much less than the £3.33 billion euros owed, as the government says most of the repayment will come from selling the assets of Landsbanki.

The Netherlands and UK agreed to reimburse account holders in their countries and the Icelandic parliament agreed to the terms of a repayment deal in December 2009.

A referendum in Iceland overwhelmingly voted down the plan in March 2009, with the majority saying they, as citizens, should not be made to pay so much for their banks’ bad decisions.

Late last year, the UK, Netherlands and Iceland agreed a new deal, pending approval by the Iceland parliament and president.

The issue of repayments created a diplomatic row between Iceland and the UK, as well as political controversy in Icesave’s home country. It also created uncertainty over Iceland’s economic recovery.

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 CEBR calculated that UK house prices rose by 6.4% in 2010 compared with 2009.

However, regions [...]]]> Higher inflation and weaker employment prospects will lead to a fragile economic recovery, the Centre for Economics and Business Research (CEBR) suggests.
This would push down house prices in 2011, followed by a slow paced recovery in subsequent years, it said.

The CEBR calculated that UK house prices rose by 6.4% in 2010 compared with 2009.

However, regions most prone to public sector job cuts would lead a fall in the value of properties in 2011, it predicted.

Although homes would become more affordable for first time buyers, the CEBR said demand for mortgage lending would remain low as householders took a low risk approach by repaying debts and rebuilding savings.

More relaxed lending criteria from banks, and greater consumer confidence would see some recovery, starting with a 2.3% increase in prices in 2012. This would accelerate to a 5.5% rise in 2015, it predicted.

Long term house price predictions are generally very difficult, owing to the number of variables involved in the calculation.

No commentators are predicting runaway house prices in 2011, but opinion is divided over whether they will rise or fall compared with 2010 prices.

Most observers are certain that mortgage borrowing, and completed sales, will stay at the very low levels seen currently.

The Bank of England will monitor whether [...]]]> A long awaited banking agreement with the largest UK banks on lending, pay and bonuses has been announced entitled Merlin.Under Project Merlin, banks will lend about £190bn to businesses this year – including £76bn to small firms – curb bonuses and reveal some salary details of their top earners.

The Bank of England will monitor whether loans targets are being met.

However, Chancellor George Osborne formally ruled out imposing a bonus tax.

Mr Osborne acknowledged that the package would not be enough to assuage public discontent with the banks’ role in the financial crisis, saying: “The anger will remain”.

Treasury sources said that the time had come to move on from “retribution to recovery” – focusing on the lending boost from banks rather than issues over bonuses.

However, groups representing small businesses said that despite the increased lending, they feared the cost of borrowing would remain prohibitively expensive for many firms.

HSBC, Barclays, Royal Bank of Scotland (RBS) and Lloyds Banking Group have signed up to the Project Merlin agreement, while Santander has agreed to the lending parts of the deal.

Other pledges include providing £200m of capital for David Cameron’s Big Society Bank, which is supposed to finance community projects.

However, while banks have also been asked to show restraint in bonus payments, these are expected to total more than £6bn this year.

Banks loaned £179bn to businesses last year and the government wanted a commitment that this would increase.

They are also going to be providing £1bn of risk capital over three years for small businesses in parts of the UK worst hit by spending cuts.

The government said that the measure of whether banks were providing the promised credit to business would be among the performance targets used to determine bonuses of bank chief executives.

The £76bn to be loaned to small business is up 15% from 2010 levels.

However, the provision of credit to UK businesses will be on commercial terms.

Some 80% of those asked were unsure which benefits and allowances they were entitled to.

Others struggled [...]]]> Two thirds of those asked in a UK survey found financial matters too confusing to make the best choices with their money.
The results of the have raised concerns about financial know-how at a time when family budgets are being squeezed.

Some 80% of those asked were unsure which benefits and allowances they were entitled to.

Others struggled to get value for money or understand small print.

More than a quarter of those asked said they struggled to work out how to shop around for the best electricity, gas, mobile phone and television packages.

“Citizens Advice Bureaux are seeing more and more people coming to us for debt advice, and with money worries.

“We know there is a need out there for people to have the skills to manage their cash,” said John Rhodes, head of financial capability at Citizens Advice.

A range of advice organisations have been calling for more financial education in schools.

Quantitative Easing (QE) is the Bank’s policy of putting new money into the financial system to try [...]]]> Last week the Bank of England’s Monetary Policy Committee (MPC) voted to keep interest rates on hold with no increase in Quantitative Easing.But re-mortgager asks with rising unemployment and government cutbacks- should more be done to stimulate the economy?

Quantitative Easing (QE) is the Bank’s policy of putting new money into the financial system to try to stimulate the economy.

Mr Posen- a member of the MPC wants an extra £50bn to be added to QE programme.

Economists have warned that while putting up interest rates may help reduce inflation, it would also restrict the spending power of homeowners with tracker mortgages and people repaying other debts – further endangering the recovery.

Consumers’ spending power is already being squeezed, because pay packets are not keeping up with inflation – with a report by Vocalink on Thursday suggesting that the growth of take-home pay had fallen sharply in the past three months.

Consumers have also been faced with record petrol prices in recent weeks, and VAT rose from 17.5% to 20% on 4 January pushing up the cost of many goods and services.

Recent data has suggested that manufacturing is the only section of the UK economy to be showing signs of strength.

Official figures released on Thursday showed that growth in car production and food processing had helped manufacturing increase by 0.6% in November – a little faster than expected. However industrial output was slower than predicted, according to the Office for National Statistics.

Meanwhile, business group the CBI said the Bank would come under pressure to increase rates later this year “as its anti-inflation credibility comes under greater pressure”.

It is the 10th quarter in a row that homeowners have put more money into their home than they took out.

Collectively, those with [...]]]> Mortgage holders are continuing to pay down their loans, according to the Bank of England’s latest quarterly figures.
Figures for the third quarter of the year show borrowers cut their collective debt by £6.1bn.

It is the 10th quarter in a row that homeowners have put more money into their home than they took out.

Collectively, those with mortgages have been reducing the amount outstanding since the second quarter of 2008 and have paid in £49.7bn since then.

The £6.1bn figure was the net injection of equity that people have put into their homes since the first quarter of 2009.

The recent trend among homeowners to pay down their mortgages contrasts with their behaviour during the housing boom, when they unlocked a record £17.1bn during the last quarter of 2003.

Recent figures from the Council of Mortgage Lenders (CML) showed mortgage lending fell 5% in November compared with the previous month and was down 10% on a year ago, lenders say.

The uncertain housing market means it is more difficult not only to get a mortgage, but to increase the size of an existing one.