The much derided and incompetently drafted Home Information Packs (HIPs) legislation has been given another sound battering, this time by the Royal Royal Institution of Chartered Surveyors (RICS).
RICS has highlighted a loophole which renders the HIPs unnecessary and costly box ticking procedures useless.
New rules put forward in Parliament state that packs must be commissioned when a home is put on the market. However, and here is the clever bit, RICS say that no purchase of the same pack is necessary before exchanging contracts.
RICS state that vendors can exploit this, by completing the sale but never going through with the £400 purchase of a HIP.
Spokesperson Jeremy Leaf said:
"This is another example of rushed policy that fails to meet the needs of consumers and the housing industry.
Unless the Government can show us the regulation that says a property cannot be sold without a HIP, consumers and industry will draw their own conclusion."
It is a sad reflection of the current government that many pieces of their headline grabbing legislation have been rushed, and have been very poorly drafted.
The irony with HIP's is that Labour have been pushing this idea since 1997. You would have thought that they could have ironed all the problems out in that 10 years.
Evidently not!
Needless to say the Association of Home Information Pack Providers (AHIPP), who of course were relying on all that lovely money that HIPs would have earned them, are not best pleased with the RICS view of reality.
Mike Ockden, Director General of AHIPP, said:
"The allegation made today by RICS, claiming to have found a loop-hole in the latest Home Information Pack regulations, which will not require sellers to produce a HIP at the exchange of contracts, is nothing more than the typical anti-HIP propaganda we have learned to expect.
Following our own investigations into the regulations, this allegation is totally unfounded."
The astute amongst you will notice that despite his venom, Ockden has not bothered to explain why they dispute the RICS viewpoint.
A cynic might argue that AHIPP, since they were relying on the future income stream, would say anything to guard their income income stream.
I think it is fair to say that, whatever the views of AHIPP, HIPs are in effect so fatally fractured that they will die a death.
Good riddance to bad rubbish!
Saturday, June 16, 2007
Friday, June 15, 2007
Mortgage Effectiveness Review
The Financial Services Authority (FSA) is to up the ante on its investigation into the UK mortgage market, with a new focus on those consumers considered most at risk from mis-selling.
This will be the second stage of the FSA's Mortgage Effectiveness Review, and will focus specifically on sub-prime lending and lifetime mortgages.
This shift in emphasis comes at a time when there is increasing concern that lenders are engaging in irresponsible lending to consumers, who might not be able to afford repayments if circumstances change.
These doubtless would be the same lenders who gorged themselves during the endowment mortgage heyday in the 1980's.
Vernon Everitt, the FSA's director of retail themes, said:
"Although there are signs that the UK housing market is coming off the boil, the question is, to what extent are consumers prepared for the consequences of a weaker economic environment?
With recent base rate rises, the ratio of payments to income is creeping up and many fixed-rate deals are coming to an end, potentially increasing the vulnerability of both borrowers and lenders.
So given this climate, all the players in this market clearly need to think through their decisions very carefully indeed. We are, as you would expect, taking these issues seriously and have made debt and affordability one of our priorities.
Initially we are looking at this in respect of more vulnerable groups: the sub-prime market, interest-only mortgages and those taking a mortgage into retirement.
We want to make sure that consumers are not being offered sub-prime rates when they could be eligible for much better prime rates."
In other words, the level of consumer debt, and the rise in the housing market, make some people desperate and vulnerable to the actions of less than scrupulous lenders.
The question is, what does the FSA intend to do once it has completed its review?
This will be the second stage of the FSA's Mortgage Effectiveness Review, and will focus specifically on sub-prime lending and lifetime mortgages.
This shift in emphasis comes at a time when there is increasing concern that lenders are engaging in irresponsible lending to consumers, who might not be able to afford repayments if circumstances change.
These doubtless would be the same lenders who gorged themselves during the endowment mortgage heyday in the 1980's.
Vernon Everitt, the FSA's director of retail themes, said:
"Although there are signs that the UK housing market is coming off the boil, the question is, to what extent are consumers prepared for the consequences of a weaker economic environment?
With recent base rate rises, the ratio of payments to income is creeping up and many fixed-rate deals are coming to an end, potentially increasing the vulnerability of both borrowers and lenders.
So given this climate, all the players in this market clearly need to think through their decisions very carefully indeed. We are, as you would expect, taking these issues seriously and have made debt and affordability one of our priorities.
Initially we are looking at this in respect of more vulnerable groups: the sub-prime market, interest-only mortgages and those taking a mortgage into retirement.
We want to make sure that consumers are not being offered sub-prime rates when they could be eligible for much better prime rates."
In other words, the level of consumer debt, and the rise in the housing market, make some people desperate and vulnerable to the actions of less than scrupulous lenders.
The question is, what does the FSA intend to do once it has completed its review?
Thursday, June 14, 2007
Slow Down In Housing Market
The UK housing market slowed slightly in May, as housebuyers started to take on board the effects of the recent interest rake hikes by the Bank of England.
The Royal Institution of Chartered Surveyors (RICS) issued its regular monthly report, which said that a balance of +24% of its members reported house prices rising in May, lower than the 29% in April and below the +26% predicted.
RICS spokesman, Jeremy Leaf, said:
"With interest rates expected to rise even higher and some home owners fearing the end of fixed rate deals, affordability conditions are set to worsen across the board and will herald a cooling market."
RICS noted that the effect of the rates rises have had on new buyer enquiries has so far been quite limited, with the absolute level of demand still high in light of buoyant economic conditions.
This modest slow down augurs for a further rate rise, as the Bank of England will wish to temper the housing market further.
The Royal Institution of Chartered Surveyors (RICS) issued its regular monthly report, which said that a balance of +24% of its members reported house prices rising in May, lower than the 29% in April and below the +26% predicted.
RICS spokesman, Jeremy Leaf, said:
"With interest rates expected to rise even higher and some home owners fearing the end of fixed rate deals, affordability conditions are set to worsen across the board and will herald a cooling market."
RICS noted that the effect of the rates rises have had on new buyer enquiries has so far been quite limited, with the absolute level of demand still high in light of buoyant economic conditions.
This modest slow down augurs for a further rate rise, as the Bank of England will wish to temper the housing market further.
Wednesday, June 13, 2007
HBOS Loses Customer Data
HBOS's reputation for professionalism has taken another knock, as it emerged that it has lost a disc holding confidential data on 62,000 HBOS banking group mortgage customers.
As if this were not embarrassing enough, it transpires that the disc was not encrypted.
One wonders quite what their internal audit and IT departments are being paid for, if they do not have procedures in place to ensure that confidential data held on discs is encrypted as a matter or course.
Regrettably, for HBOS, this was not the first time that it has lost customer data. There was also a loss of data in March, we are assured that the second loss was "unrelated" because the data had gone missing in a different way.
So that's alright then!
This month's data breach included names, addresses, dates of birth and mortgage account numbers on a CD-ROM sent by HBOS subsidiary Bank of Scotland to a credit reference agency. It was reported missing when the agency did not receive the expected monthly dispatch of information.
The lost data would enable any self respecting fraudster to have a "jolly time" doing what he does best, namely perpetrate identity theft.
An HBOS spokesperson said:
"The disc would usually be encrypted.
Unfortunately, due to human error on this occasion the usual policy was not followed. We apologise to our customers for this."
As if this were not bad enough HBOS, for some unknown reason, chose to send the data via the Royal Mail's ordinary service rather than a secure service. This invites theft, as the Royal Mail is notoriously prone to theft and losses.
HBOS said:
"That was a mistake on our part."
Quite!
In March, Halifax building society, another HBOS subsidiary, lost a printout containing data on 13,000 mortgages from an employee's car.
HBOS general manager for group communications, Shane O'Riordain, at the time said:
"Lessons have been learned. We are reviewing our procedures as a matter of urgency."
This was the same month in which HBOS, along with 11 banks, was ordered by the information commissioner to sign a formal undertaking to comply with Data Protection Act principles, after dumping customers' personal data in rubbish bins outside their premises.
HBOs now claim the following:
"Lessons have been learned and we have revised our procedures accordingly," he said. "The other incidents ... are all unrelated. One was the theft of a briefcase from an employee (which has been recovered) and the undertaking referred specifically to the disposal of confidential waste."
Given that banks are forever lambasting their customers over their handling of passwords and personal data, this series of events is pretty pathetic.
Sauce for the goose is evidently not sauce for the gander.
As if this were not embarrassing enough, it transpires that the disc was not encrypted.
One wonders quite what their internal audit and IT departments are being paid for, if they do not have procedures in place to ensure that confidential data held on discs is encrypted as a matter or course.
Regrettably, for HBOS, this was not the first time that it has lost customer data. There was also a loss of data in March, we are assured that the second loss was "unrelated" because the data had gone missing in a different way.
So that's alright then!
This month's data breach included names, addresses, dates of birth and mortgage account numbers on a CD-ROM sent by HBOS subsidiary Bank of Scotland to a credit reference agency. It was reported missing when the agency did not receive the expected monthly dispatch of information.
The lost data would enable any self respecting fraudster to have a "jolly time" doing what he does best, namely perpetrate identity theft.
An HBOS spokesperson said:
"The disc would usually be encrypted.
Unfortunately, due to human error on this occasion the usual policy was not followed. We apologise to our customers for this."
As if this were not bad enough HBOS, for some unknown reason, chose to send the data via the Royal Mail's ordinary service rather than a secure service. This invites theft, as the Royal Mail is notoriously prone to theft and losses.
HBOS said:
"That was a mistake on our part."
Quite!
In March, Halifax building society, another HBOS subsidiary, lost a printout containing data on 13,000 mortgages from an employee's car.
HBOS general manager for group communications, Shane O'Riordain, at the time said:
"Lessons have been learned. We are reviewing our procedures as a matter of urgency."
This was the same month in which HBOS, along with 11 banks, was ordered by the information commissioner to sign a formal undertaking to comply with Data Protection Act principles, after dumping customers' personal data in rubbish bins outside their premises.
HBOs now claim the following:
"Lessons have been learned and we have revised our procedures accordingly," he said. "The other incidents ... are all unrelated. One was the theft of a briefcase from an employee (which has been recovered) and the undertaking referred specifically to the disposal of confidential waste."
Given that banks are forever lambasting their customers over their handling of passwords and personal data, this series of events is pretty pathetic.
Sauce for the goose is evidently not sauce for the gander.
Tuesday, June 12, 2007
Rate Rises In The Pipeline
Those of you who breathed a sigh of relief last Thursday, when the Bank of England chose not to raise interest rates, should take heed from the warning issued by Mervyn King (Governor of The Bank of England).
King, in a speech to business leaders at a CBI dinner in Wales, has put borrowers on notice that there will be further rises in rates. King warned of "persistent inflationary pressures" the result being that the Bank "may need to take further action".
King warned of the dangers of excess debt:
"It is unwise to borrow so much that the repayments are affordable only if interest rates remain at initial levels."
That is a clear message to all, that further rates rises are coming.
King noted that there are inflationary pressures within the system, as there are attempts by businesses to raise prices as spare capacity has been taken up by strong demand stoked by a buoyant world economy, as well as the fastest growth in business investment for almost a decade.
King added:
"There has been some underlying upward pressure on inflation that is in part hidden by the volatility in domestic energy prices."
He said that the Bank's Monetary Policy Committee (MPC) would be watching gauges of spare capacity, of companies' pricing plans, and of inflation expectations.
Quote:
"If these indicators remain elevated, the MPC may need to take further action."
The message is clear, those of you who are heavily in debt need to ensure that your finances can withstand a rise of between 0.5% to 1% in rates in the coming year.
King, in a speech to business leaders at a CBI dinner in Wales, has put borrowers on notice that there will be further rises in rates. King warned of "persistent inflationary pressures" the result being that the Bank "may need to take further action".
King warned of the dangers of excess debt:
"It is unwise to borrow so much that the repayments are affordable only if interest rates remain at initial levels."
That is a clear message to all, that further rates rises are coming.
King noted that there are inflationary pressures within the system, as there are attempts by businesses to raise prices as spare capacity has been taken up by strong demand stoked by a buoyant world economy, as well as the fastest growth in business investment for almost a decade.
King added:
"There has been some underlying upward pressure on inflation that is in part hidden by the volatility in domestic energy prices."
He said that the Bank's Monetary Policy Committee (MPC) would be watching gauges of spare capacity, of companies' pricing plans, and of inflation expectations.
Quote:
"If these indicators remain elevated, the MPC may need to take further action."
The message is clear, those of you who are heavily in debt need to ensure that your finances can withstand a rise of between 0.5% to 1% in rates in the coming year.
Monday, June 11, 2007
Abbey Launches 100% Mortgage
Abbey has announced that it will launch a new range of 100% mortgage offers, as from June 13, with maximum lending of up to £500,000 and no higher lending charge.
The offers will be available at 6.29% as a two year tracker, from 6.35% as a two year fix, 6.99% as a three year fix and 6.79% as a five year fix.
Abbey expects the product to mainly appeal to first time buyers, as well as the recently divorced getting back on the housing ladder.
I trust that the launch date, 13th June, is not a bad omen for either Abbey or their clients.
The offers will be available at 6.29% as a two year tracker, from 6.35% as a two year fix, 6.99% as a three year fix and 6.79% as a five year fix.
Abbey expects the product to mainly appeal to first time buyers, as well as the recently divorced getting back on the housing ladder.
I trust that the launch date, 13th June, is not a bad omen for either Abbey or their clients.
Saturday, June 09, 2007
PINsentry
In the war against on line fraud and id theft, Barclays have announced the launch of PINsentry.
Barclays customers who use their online bank account, to set up payments to new third party accounts, will begin using PINsentry devices in the latter part of this year.
The devices will be used together with the customer's normal debit card and PIN, to authenticate their identity at log in and for making certain payments. This will replace the need for passcodes and memorable words.
Over half a million customers will be automatically sent free PINsentry card readers and instructions by the end of the year, with this number increasing further as more customers are added to the service.
Customers who simply wish to use online banking to view their accounts and pay bills to established payees, will be able to continue to use online banking as normal without the need for PINsentry.
It is a good idea, and unfortunately a necessary one. Quite how long it will take for the fraudsters to find a way around the new controls is not clear.
Barclays customers who use their online bank account, to set up payments to new third party accounts, will begin using PINsentry devices in the latter part of this year.
The devices will be used together with the customer's normal debit card and PIN, to authenticate their identity at log in and for making certain payments. This will replace the need for passcodes and memorable words.
Over half a million customers will be automatically sent free PINsentry card readers and instructions by the end of the year, with this number increasing further as more customers are added to the service.
Customers who simply wish to use online banking to view their accounts and pay bills to established payees, will be able to continue to use online banking as normal without the need for PINsentry.
It is a good idea, and unfortunately a necessary one. Quite how long it will take for the fraudsters to find a way around the new controls is not clear.
Friday, June 08, 2007
Bleak House
The Times yesterday painted a bleak future for the housing market and for first time buyers. It is estimated that by 2026 the average house price will be 10 times the average person's salary.
Quote:
"The next generation of first-time buyers will face house prices equivalent to ten times their average incomes, putting home ownership out of reach for the majority of young people, a new government agency says today.
The average home in England currently costs seven times annual earnings, but that is set to rise to ten times by 2026 even if the Government succeeds in its aim of sharply increasing the rate of homebuilding, the analysis reveals.
Campaigners said that the developing crisis would "stop social mobility in its tracks", and force young people to live in overcrowded conditions and take out ever-riskier mortgages.
The stark warning comes from the National Housing and Planning Advice Unit (NHPAU).."
How has this sorry situation come about?
Aside from the very obvious points that the UK is not building enough new houses, and that the rising population is placing an intolerable burden on the scarce housing stock, there are also other factors at play here:
This is unlikely to happen in the short term. Hence the situation looks very bleak indeed for first time buyers.
Quote:
"The next generation of first-time buyers will face house prices equivalent to ten times their average incomes, putting home ownership out of reach for the majority of young people, a new government agency says today.
The average home in England currently costs seven times annual earnings, but that is set to rise to ten times by 2026 even if the Government succeeds in its aim of sharply increasing the rate of homebuilding, the analysis reveals.
Campaigners said that the developing crisis would "stop social mobility in its tracks", and force young people to live in overcrowded conditions and take out ever-riskier mortgages.
The stark warning comes from the National Housing and Planning Advice Unit (NHPAU).."
How has this sorry situation come about?
Aside from the very obvious points that the UK is not building enough new houses, and that the rising population is placing an intolerable burden on the scarce housing stock, there are also other factors at play here:
- A rise in single person households
- The greater wealth of "younger" buyers, and their greater aspirations, means that they leave home earlier in their lives
- The elderly are no longer living with their children, and are often (before being "homed") living in the original family homes
- There has been a rise in multi house ownership
This is unlikely to happen in the short term. Hence the situation looks very bleak indeed for first time buyers.
Thursday, June 07, 2007
Interest Rates
The Bank of England will announce its decision on interest rates in the next couple of hours.
Pundits do not expect any change, this month, on the current rates of 5.5%. However, it is expected that there will be at least one further rate rise this year.
The consumer price index (CPI) is currently at 2.8%, well above the 2% target that the government has set.
The effect on the housing market will not be pleasant, should there be another ate raise.
I cannot help but observe that had Gordon Brown not removed house prices from the inflation index, then much of this pain could have been avoided. Interest rates would have been raised some time ago, thus slowing the housing market down long before the current excess levels were reached. This in turn would have prevented people from overburdening themselves with debt.
The market correction, as and when it comes, may well be painful for many.
Pundits do not expect any change, this month, on the current rates of 5.5%. However, it is expected that there will be at least one further rate rise this year.
The consumer price index (CPI) is currently at 2.8%, well above the 2% target that the government has set.
The effect on the housing market will not be pleasant, should there be another ate raise.
I cannot help but observe that had Gordon Brown not removed house prices from the inflation index, then much of this pain could have been avoided. Interest rates would have been raised some time ago, thus slowing the housing market down long before the current excess levels were reached. This in turn would have prevented people from overburdening themselves with debt.
The market correction, as and when it comes, may well be painful for many.
Wednesday, June 06, 2007
The World's Costliest Airline
Martin Waller in today's Times takes up the point that I raised a few days ago about the pricing disparity between BA and Iberia for the same flight to Barcelona.
He notes that BA's explanation for this disparity -
"BA claims that this is because it has the cost of the flight, while Iberia is merely issued with its own allocation of tickets."
- hardly makes much sense.
He then raises the question as to what will happen to the BA/Iberia flight prices, in the event that BA make a bid.
Will BA drop their prices or will Iberia raise theirs?
Maybe this very valid question should be raised with the Office of Fair Trading?
Rate Hikes Yet To Be Fully Absorbed
The recent interest rate hikes by the Bank of England have yet to be fully absorbed by the UK housing market.
That at least is the conclusion of the Royal Institute of Chartered Surveyors (RICS).
Quote:
"The full impact of current rate hikes on the housing market should not start to appear until after the summer."
It would seem that there are indications that there is some cooling off in the housing market. The Land Registry survey for April showed that prices are being buoyed by London, while house prices fell in four English regions. Figures from the Bank of England showed mortgage approvals fell for the third month running in April.
It is expected that the Bank of England will raise rates at least one more time this year.
Belt tightening time is upon us.
That at least is the conclusion of the Royal Institute of Chartered Surveyors (RICS).
Quote:
"The full impact of current rate hikes on the housing market should not start to appear until after the summer."
It would seem that there are indications that there is some cooling off in the housing market. The Land Registry survey for April showed that prices are being buoyed by London, while house prices fell in four English regions. Figures from the Bank of England showed mortgage approvals fell for the third month running in April.
It is expected that the Bank of England will raise rates at least one more time this year.
Belt tightening time is upon us.
Tuesday, June 05, 2007
RBS Puts The Boot In
The Royal Bank of Scotland has put the boot in to Barclays bid for ABN Amro Holding NV, by claiming that the Barclays bid would cost 9,000 jobs net.
RBS said its proposed deal would lead to a maximum of 2,000 job losses in Britain, but the Barclays deal would lead to 11,000 losses.
RBS also hit the headlines this weekend, when its cash machines went off line; leaving millions of RBS and NatWest customers in the UK unable to withdraw money.
Although they are now back on line, Royal Bank of Scotland has refused to explain what happened.
The problems started at around 10pm on Friday, when a system failure meant that 13 million customers of RBS and NatWest were unable to use ATMs to take money out of their account. The problem extended to customers trying to use other banks' machines to access funds.
A spokesperson for the banking group said:
"It would be inappropriate to go into any further details due to security implications."
Derek French, director of the Campaign for Community Banking Services, said:
"It is appalling for a bank to be off-line and more importantly unable to deliver cash over a weekend at which point branches will be closed."
Another nail in the coffin of the reputation of British banks.
RBS said its proposed deal would lead to a maximum of 2,000 job losses in Britain, but the Barclays deal would lead to 11,000 losses.
RBS also hit the headlines this weekend, when its cash machines went off line; leaving millions of RBS and NatWest customers in the UK unable to withdraw money.
Although they are now back on line, Royal Bank of Scotland has refused to explain what happened.
The problems started at around 10pm on Friday, when a system failure meant that 13 million customers of RBS and NatWest were unable to use ATMs to take money out of their account. The problem extended to customers trying to use other banks' machines to access funds.
A spokesperson for the banking group said:
"It would be inappropriate to go into any further details due to security implications."
Derek French, director of the Campaign for Community Banking Services, said:
"It is appalling for a bank to be off-line and more importantly unable to deliver cash over a weekend at which point branches will be closed."
Another nail in the coffin of the reputation of British banks.
Monday, June 04, 2007
Call To Close Pension Fund Loophole
Gordon Brown and the six Labour deputy leadership contenders face calls by the GMB to close the legal loophole which enables "private equity racketeers" (as the GMB calls them) to pass on £2BN of pension liabilities to the taxpayer.
The GMB wants the UK laws that allow private companies to asset-strip failing firms, before winding them up with pension-fund liabilities left unpaid, scrapped.
The GMB wants the UK laws that allow private companies to asset-strip failing firms, before winding them up with pension-fund liabilities left unpaid, scrapped.
Saturday, June 02, 2007
The World's Costliest Airline
Here's a little conundrum for you.
What's the difference between the following?
A business class return air ticket for two people (Gatwick to Barcelona), flight to be taken in July, purchased via Iberia.
A business class return air ticket for two people (Gatwick to Barcelona), flight to be taken in July, purchased via BA.
In terms of the departure times, airport terminals, lounge facilities and airline operating the aircraft...no difference whatsoever.
The flights are operated by BA.
However, here's the rub.
The price of the two return tickets, if purchased via Iberia will set you back £455.80.
The price of the two return tickets (for the identical flight), if purchased via BA will set you back a stonking £1165.80 (256% of the Iberia price).
Don't believe me?
Try it for yourselves:
-www.ba.com
-www.iberia.com
Could BA please explain this differential?
Oh, and by the way, BA own 10% of Iberia.
Friday, June 01, 2007
Gordon's Legacy
As Gordon Brown limbers up to change jobs, after holding only one office of state over the last 10 years (Chancellor of the Exchequer), Grant Thornton have issued a timely reminder as to his tax legacy.
Brown, during his stint in office, increased the tax burden by an equivalent ten pence on the basic rate of income tax.
Additionally, the UK is now lumbered with more than double the number of pages in its tax code, increasing from 4,555 to just under 10,000 since 1997.
The number of higher rate taxpayers now stands at 3.5M, an increase of 58% since 1997 when Labour came to power.
Francesca Lagerberg, head of Grant Thornton's national tax office, said:
"Silently the tax take continues upwards with fiscal drag raking in yet more revenue year on year.
If income tax allowances had risen in line with earnings, then the average taxpayer would achieve tax freedom a lot earlier in the year.
Despite headline announcements in this year's Budget of dropping the basic rate of income tax, aligning national insurance contributions and reducing mainstream corporation tax, the reality is that other increases will lead to a maintenance of the status quo."
Aside from Brown's economic legacy calling into question his qualifications to be an effective, dynamic and forward thinking Prime Minister, there is also one other very obvious hole in his CV.
He has never held any office of state, other than that of Chancellor, he has been in exactly the same job for 10 years.
Where was his ambition?
Where is his experience of the other major offices, eg Foreign Secretary?
He may well not be up to the job of Prime Minister, nor will he let go of the Treasury so easily (as his successor will soon discover).
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