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Please send your advertisement together with your name, email and contact telephone number to at@globespanmedia.com. If you have any industry friends or former colleagues out of work who do not receive our newsletter please forward this opportunity.

Record Fall in Prices
Nationwide says the average UK home lost 1.7 per cent of its value in September, leaving prices 12.4 per cent lower than they were a year ago. The drop is steeper than during the house price crash of the early 1990s, when in the final three months of 1990 prices were 10.7 per cent lower.

According to the survey, the average home is now worth £161,797, down from £164,654 in August and it expects the next two years to be "difficult" for the once-booming housing market.

Fionnuala Earley, chief economist, said: "We would need to see a significant shift in consumers' sentiment before we begin to see any real recovery in activity and subsequently house prices."

As Mortgage Lending Plummets 95%
The Bank of England says mortgage lending dived to just £143 million during August – its lowest since this data was first collected in April 1993 and a fraction of the £2.998 billion lent in July.

The bank also revealed that mortgage approvals fell to 32,000 last month from 33,000 in July. While marginally higher than analyst forecasts, it was the lowest since data began being collected and means approvals are running at less than a third of their 109,000 total in August 2007.

Howard Archer, chief UK and European economist at Global Insight, said: "The dire Bank of England mortgage data show that housing market activity is being decimated by the highly damaging combination of stretched buyer affordability and tight lending practices. Widespread expectations that house prices will continue to fall markedly for some considerable time to come is also significantly limiting housing market activity, as is heightened concern over the economic outlook and job prospects."

And Residential Land Values Collapse
The value of urban development land outside London has fallen by 33 per cent over the past year and by 15 per cent in the past quarter alone, according to the newly established Knight Frank Residential Development Land Index.

Greenfield sites have fared slightly better, with falls of 30 per cent over the past year and 13 per cent over the past three months. Yorkshire and Humberside have been hit hardest by the downturn, with land in both categories now worth around half its value a year ago. The North-West is close behind, with drops of 41 per cent and 36 per cent reported for brownfield and greenfield sites respectively.

London, meanwhile, has avoided the full impact of the downturn, with prices in Inner London falling by just ten per cent. Outer London areas have fared only marginally worse, with a fall of 15 per cent.

But “super-prime” sites in the most sought after areas of the capital have barely been affected. Demand has dropped by as much as half, but still vastly exceeds supply, with some sites still capable of fetching the equivalent of £100 million plus per acre.

Jon Neale, head of development research at Knight Frank, said: “Over the past year, developers have put their land acquisition activities on hold, which has dramatically reduced demand for sites – by as much as 60 per cent in some parts of the country.

“Developers have found it almost impossible to access finance to buy land, while the pronounced slowdown in the sale of new homes has prompted them to reconsider the size of their future needs. Indeed, many are selling sites to raise cash and bolster their balance sheets, which has dramatically increased the supply of land on the market, further depressing values.

“There is evidence that many other vendors have not yet come to terms with the changed market conditions, and have unrealistic expectations of what price their site can achieve, particularly if it was bought at the top of the market.”

The index also highlights the important role of the Housing Association sector during the current downturn. Outside the capital, they now represent 30 per cent of all acquisition activity – compared to just 16 per cent for private sector developers.

Speculators are also an increasing feature of the market, representing 21 per cent of buyers nationally. In London, where development sites have always been in short supply, they represent almost 50 per cent of the marketplace. They are clearly seeking bargains from the current spate of ‘forced sales’, expecting land to rise in value in the longer term, as housing remains in short supply in the UK.

Neale added: “More supply will come to the market as developers reduce the size of their land banks, and it will be some time before they are ready to acquire again. Nevertheless, the presence of Housing Associations and, increasingly, speculators will help to cushion the market against the sort of declines seen over the past year.

“Values are likely to continue to fall, albeit at a lower rate of around ten per cent over the next twelve months. The regions that have suffered the earliest and most dramatic falls, such as Yorkshire and Humberside, may be among the first to see recovery.”

SH Note: There seems to be an awful lot of hope being pinned on housing associations coming to the rescue. But this could prove a red herring if public finances tighten up as much as is feared.

Government Mortgage Report Delayed
The Crosby report aimed at kick-starting the mortgage market has been delayed by a fortnight so it can be updated to take September’s market turbulence into account.

The report is to address whether the government should renew or extend the Bank of England's Special Liquidity Scheme (SLS) past January 2009 or guarantee high-quality mortgage-backed securities. The government has so far resisted intervention on the scale of the US government’s $700 billion (£380 billion) rescue package, although the Chancellor has said that the bailout will help the UK’s economy.

The Crosby report was due to arrive on Mr Darling’s desk on Tuesday but the deadline has been extended until the week beginning October 13th, according to Treasury sources, who will make its contents public and probably before the Pre-Budget report anticipated in the next couple of months.

The interim Crosby report, published in July, was criticised by the property industry for not recommending enough decisive action on the mortgage market. It predicted that the seizure in Britain’s mortgage market will persist for at least three more years.

SH Note: If this report, as increasingly expected, suggests the government does nothing, then waiting a couple more weeks for its publication won’t be too painful.

Oakdene in breach of banking covenants
Oakdene has failed to raise £5 million through a share placement and dropped more than £6 million into the red for the first six months of 2008. It is also in breach of its banking covenants and relying on a temporary facility from its lenders.

The group said it had placed 8,987,108 of the ten million shares it had planned to and was seeking legal advice about what to do next. It is thought one or more investors got cold feet given the fact shares were being offered at 50p despite the fact Oakdene’s share price fell to 17p today. By way of a sweetener it offered warrants with each share – or options to buy at 50p at a future date.

One City analyst said: “It clearly wasn’t enough. The share price has been heading south for a few weeks now and someone has obviously pulled out.”

The company’s loss of £6.4 million in the first half of 2008 followed land writedowns of £7 million. Turnover was down 41 per cent from £18.9 million to £11 million.

The company said: “In common with most housebuilders Oakdene has suffered from the effects of the turmoil in the global markets which has led to a shortage of mortgage availability. Discussions around future banking terms are ongoing with our bankers. We are extremely grateful for their support to date and we are seeking to reach agreement on future support shortly.”

 Barratt Slashes 43% off Price of Some New Builds
Barratt is offering the discount to buyers prepared to take five or more flats or houses off its hands in its Yorkshire East division, according to the Dresdner Kleinwort, which has seen documents sent to property professionals.

The bank also claimed that the six leading property agents in Leeds have between them sold just six new apartments in two months.

Alastair Stewart, an analyst with Dresdner Kleinwort, said: "Prices of urban apartments appear to have fallen in many cases by 40 per cent to 50 per cent, volumes have dried up to virtually zero, many developers have gone bust and land in many cases appears to be worthless."

Tory Party Conference Views on Government's Housing Schemes
Grant Shapps, the Tory housing spokesman, has launched a fierce attack on Mr Brown over housing, accusing the government of halting social mobility by failing to help people buy their own homes.

He said: “This government has blocked access to aspiration, bricked up the door to mobility. Despite the government claiming their homebuying schemes are an effective tool, there are doubts about how many people actually take advantage of these schemes. Their Social Homebuy scheme – meant to enable 10,000 to own a stake in their own homes – has helped just 207 families.

“Homeownership is falling for the first time since records began. 1.7 million families languish on the council house waiting list,” he said. “And last Christmas 130,000 children were homeless – twice that of a decade ago.”

Shapps pledged that a conservative government would abandon central government targets for home building, instead cutting regulation and empowering local communities to make more of their own decisions on development projects.

Home Owners hit by Mortgage Rate Hikes
HSBC, the Woolwich and Yorkshire Building Society have announced rises of up to 0.5 percentage points on some of their most competitive mortgages. Experts expect a "torrent" of lenders will follow suit because banks are nervous of lending to customers who may be unable to repay the debt.

As a result, borrowers are being urged to secure the remaining best rates now before they disappear and are replaced with more expensive deals.

Louise Cuming, head of mortgages at moneysupermarket.com, said: “We are seeing an unprecedented liquidity squeeze. Banks are nervous about lending money after the turmoil of last two weeks. They would rather keep hold of their cash just in case of emergencies. They don't want to find themselves in a position where they have lent money to customers who may end up defaulting on their repayments.”

Further evidence of lenders cherry-picking the most low risk customers came when Abbey announced yesterday that it is cutting the rate on one of its fixed-rate deals for customers who are looking to borrow up to 60 per cent of the value of their home.

It joins the increasing number of lenders offering preferential rates to borrowers with a significant deposit of 40 per cent. These include Lloyds TSB, Halifax and Nationwide.
The 40 per cent lending tier did not exist six months ago and has been introduced as a result of the credit crisis. More lenders are expected to introduce the tier into their range of mortgages.

Banks are also tightening their lending criteria with West Bromwich and Alliance & Leicester changing the way they calculate how much customers can afford to borrow.

Cabe and RIBA plan Review of 20,000 Schemes a year
The UK’s leading architecture and planning bodies are plotting a massive expansion of the design review programme to clamp down on poor design on large schemes.

RIBA, Cabe, the Royal Town Planning Institute and the Landscape Institute are proposing a significant reform of the way the planning system assesses the quality of designs.

At the moment, Cabe analyses about 500 planning applications a year – a process it set up in 1999. Since then, the 30 panellists have made criticisms of several large schemes, including Berkeley Homes’ Woolwich Arsenal development, which have led to design changes.

Now the bodies are considering a process in which all major applications would be reviewed as standard. This could involve as many as 20,000 applications a year. It is not yet decided if Cabe would run the reviews or merely set standards for local review panels.

Sunand Prasad, president of RIBA, said the groups were considering whether a statutory role for design review within the planning process was needed. The plan builds on proposals by John Callcutt, former chief executive of Crest Nicholson, in his review of housing delivery last autumn. He said there should be a national review process to advise councillors on design quality. 

SH Note: 20,000 major schemes a year! Where are they going to be built then – on La La land?

Housebuilders Produce ‘Absolute Rubbish,’ Claims Tory
Shadow culture minister Ed Vaizey says housebuilders build “absolute rubbish”. And he’s called for a “chief architect” to sit in government and advise on good design in public sector projects.

The shadow culture minister made his attack during a debate on happiness in architecture organised by the RIBA. He said: “The problem is so little thought goes into design. At the risk of offending a main source of Conservative party funding, I have a real problem with housebuilders and developers. I think they build absolute rubbish off a menu, and it amazes me that they get away with it. It is a symptom of major conglomerates building in small places.”

Vaizey, who will have responsibilty for architecture if the Tories come to power, said: “I don’t think we take design seriously enough. The opportunities are huge and manifold. I want a figure at the centre of government who can ensure good design is kept at the heart of decision-making.”

Government to Demand VAT on Housebuilders’ Unsold Stock
Housebuilders face another financial hurdle following an announcement by HMRC that it will be seeking repayment of VAT for unsold newly built houses that are being made available to rent.

Although developers are entitled to reclaim VAT incurred on newly built properties intended for sale, if newly built properties which cannot be sold are subsequently put on the rental market, a proportion of that VAT must be repaid to HMRC.

Alex O’Connor, partner at the law firm, McGrigors, said: “This will be a real problem for housebuilders. Many will have already recovered VAT believing their properties will be sold. The statement by HMRC clearly indicates that the taxman is aware that housebuilders may now be intending to rent properties and is looking to pursue them to claw back VAT.

“The trigger for the repayment of VAT is the ‘intention’ to rent, not the signing of leases. This is a crucial distinction because housebuilders may be liable for repayments to HMRC without any rental income coming in. Special provision should be made for recovering VAT from housebuilders who are in financial difficulty. HMRC should consider allowing housebuilders to defer payments over several years to ease the pain of these repayments, or at least only recovering VAT when properties have actually been rented.”

According to calculations provided by HMRC, a housebuilder recovering £50,000 in VAT on two houses worth £500,000 each built to be sold, which are then intended to be rented for three years generating an estimated rental income of £200,000, would have to repay £8,334 in VAT. HMRC has said that it may ask housebuilders for evidence to show that the repayment calculation is reasonable, such as a business plan showing the price the properties were originally expected to be sold for; reports from estate agents showing this price to be unobtainable and estimating when a sale will be achievable; board minutes from the time of the decision to put the properties on the rental market etc.

SH Note: Well, it’ll be interesting to see just how reasonable the taxman will be on this issue. The industry should jump on this to reiterate just how tough it is for us at the moment AND point out that the rental option is helping ease the housing crisis the government says it’s so keen to address. But the with the Treasury coffers bare, we’ll have to put up a robust case…

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