HIPs rein in house prices

House prices rose by just 0.8% last month as the planned June 1 start date for home information packs (Hips) drove more sellers on to the market.

Although an improvement on the 0.4% price rise in May, the June increase was below the monthly average of 1.3% seen through the first half of the year, according to the Rightmove house price index.

London fell behind the national average with more than half of London boroughs showing a fall in prices.

However, at the very top end of the capital's market - in boroughs such as Westminster and Kensington and Chelsea - prices continued to rise sharply, reflecting elevated City bonuses and strong foreign demand, as well as an ongoing shortage of supply.

Hips delay
The planned introduction of Hips on June 1 saw more properties coming on to the market as sellers rushed to market their property without having to commission a pack.

Consequently, average stock levels per estate agent branch rose to a two-year high of 67 in May from 61 in April.

Having more properties on the market should lead to a fall in prices, although it remains to be seen how housing supply will be affected over the coming month by the delayed Hips.

As it stands, properties with four bedrooms or more will need a pack from August 1, with other properties being phased on to the scheme over the coming months.

Miles Shipside, commercial director of Rightmove said: "The rush to beat the planned Hips deadline appears to have attracted some poorly motivated sellers to the market. They are chancing their arm at some fairly bullish prices considering there is now a lot of property up for sale.

"Their main motivation will have been to save some money avoiding a Hip, rather than being realistic on price because they had seen a property they desperately wanted to buy.

"More property available is good news for buyers, as sellers that need to sell urgently will have to drop their price. Ironically, those that sought to save a few hundred pounds by avoiding Hips have contributed to a glut of property on the market, which will actually cost them money as they will have to discount their prices to sell."
Overall, the Rightmove survey supports the view that house prices are now coming off the boil due to increased affordability pressures and higher interest rates.

Significantly, the Bank of England reported that mortgage approvals fell back to 107,000 in April, which was the equal lowest level since September 2005 and down from a peak of 128,000 in November.
Coastal costs
Meanwhile, according to the Halifax annual seaside towns review, the best performing UK seaside towns in terms of house prices are in Scotland. Girvan in Ayrshire saw the average house price in March rise by 41% to £131,512.

After Girvan the next best performing seaside towns were Arbroath and Ardrossan. Six of the 10 best performing seaside towns in the past year were in Scotland.

In England, the best performing seaside town was St Mawes in Cornwall, with a 26% price rise to £306,212. In Wales, the best performer was Colwyn Bay, up 12% to £174,758.

The survey found the most expensive seaside town in the UK is Sandbanks in Dorset with an average price of £488,761. Padstow in Cornwall and Milford-on-Sea in Hampshire are the next most expensive.

If you want to snap up a bargain in a seaside town try Dover or Margate in Kent. These towns are among 16 seaside towns that trade at a discount of at least 20% on the average price in their county.

Source: the Guardian

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Spree by super-rich raises prices even for first-time buyer

Gabriel Rozenberg and Helen Nugent

An international elite is pricing British citizens out of the housing market with the help of government tax breaks for foreigners living in the country, figures reveal.

More than half of London’s multimillion-pound houses are now bought by “nondoms” (nondomiciles) who, unlike most British citizens, are able to use offshore trusts to pay far less stamp duty.

Economists say that the new boom in house prices in the capital fuelled by foreign money is rippling down the market, making it harder for first-time buyers to get on the property ladder.

Gordon Brown will come under pressure today to justify the rules, which critics claim create a double standard. The Government exempts nondoms from tax on their international earnings, even though in most cases their home countries do not tax them either.

While it tends to be wealthy foreign citizens who take advantage of the rules, many British-born people can also declare themselves nondom, on the ground that their family origins and “cultural ties” lie overseas.

A study published by the International Monetary Fund in April ranked Britain alongside Switzerland, Bermuda and the Cayman Islands as an “offshore financial centre”, provoking accusations that the City of London has effectively become a major tax haven.

Liam Bailey, head of residential research at Knight Frank, the estate agent, said that 50 to 60 per cent of properties that sold for £3 million or more now went to foreign residents. He said: “The more expensive you go, the bigger the share of foreign buyers.”

Figures from Savills, the estate agent which specialises in properties at the top end of the market, show that some 68 per cent of properties selling for more than £5 million last year went to foreign buyers.

The Liberal Democrats have described the situation as grossly unfair, saying that the Chancellor has avoided the issue out of fear that tackling it would spark an exodus of wealthy foreigners from the City, undermining the booming financial services sector.

Vince Cable, the Liberal Democrat Treasury spokesman, promised to close the loophole that exempted nondomiciles from tax on their British homes. Under his proposals, which will be expanded upon in a report by the Lib Dem tax commission today, nondoms would also lose their status if they stayed in Britain for more than 17 years.

Government figures show that there were 112,000 nondoms in 2005, an increase of 74 per cent from three years before, and accountants believe that the figures are continuing to rise rapidly. The Treasury says that it does not know how much tax they are able to save on their overseas earnings each year.

Fionnuala Earley, chief economist at Nationwide, said: “Neighbouring regions’ property prices have been picking up alongside London, which suggests that the ripple effect is alive and well.”

As a case study, The Times examined the Land Registry records for properties on the west side of Cadogan Square. Flats on this street regularly sell for more than £1 million.

Of the 13 properties looked at, five were held by offshore companies, ranging from firms based in the British Virgin Islands to Jersey, suggesting that their owners could be taking advantage of the tax breaks for nondomiciles. A further three were registered to companies not listed at Companies House.

Supporters of the rules say that they have encouraged talented people to move to London. Patrick Stevens, tax partner at Ernst & Young, the accountants, said: “If you are trying to boost the City then changing the nondom rules would be insane.”

The Treasury said that the policy towards nondomiciles had been under review since 2002, but senior accountants believe that the issue has been kicked into the long grass. One said: “A minister told me that the review was likely to continue for several years yet. He smiled broadly as he said it.”

Nondom rules

— In most countries, citizens living abroad are not taxed; noncitizens are taxed on their worldwide earnings for as long as they are resident

— In Britain, noncitizens who claim nondomiciliary status are taxed only on the money they earn or bring into the UK. Property taxes can often then be avoided using offshore trusts

— The main exception is the United States, which continues to tax its citizens when they live abroad on their worldwide earnings. US citizens claiming nondom status in London do not enjoy an equivalent tax break to those from other countries

— British citizens living abroad generally pay tax on their worldwide earnings to the country in which they are resident

Source: the Times

Affordable first-time buyer homes

Cool architecture doesn't have to cost a fortune: one group of architects has designed a home costing only £53,000

EVERYONE deserves the choice of a house and garden. So says SLAM, a group of architects who have devised a home design that costs only £53,000 to build yet includes outdoor space and can be adapted to include up to two bedrooms.

Amy Lam and Yasser al-Saheal’s design also meets government environmental targets, such as the inclusion of biomass boilers, and affordability requirements.

“We were fed up with all these shoebox-size one-bed flats built by the larger developers to combat the housing crisis,” says Lam. “It’s all very well buying these to get your foot on the property ladder, but what happens when you need more room?” al-Saheal adds.

The stylish one-bedroom house module, pictured right, requires little land – only 28 sq m – and is 90 per cent built off-site, which reduces waste and controls quality and building costs. The two-up, two-down terrace façade allows it to blend into a typical street. With little fuss, the one-bedroom can be transformed into a two-bedroom by building into the roof space.

Al-Saheal says: “There are so many small pieces of land scattered around cities, which could be used to build these flexible properties.”

Now all that is required is for someone to build one.

Al-Saheal says: “Of course, we would be delighted for a big developer to build them on a grander scale. People should have the choice of where they live and in what type of property. With a little lateral thinking, this can be achieved.”

www.slarchitecturemobile.co.uk