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Enjoy the spring as the going could get tough

The daffodils are out, the cherry trees are in blossom and farms are advertising their lambing weekends, so the traditional popular time for house hunting must be upon us.

The early signs are that, despite the usual end of year warnings a few months ago, 2007 will be just as voluminous in lending terms as was 2006.

Enjoying the morning drive to work with sunny skies and fresh crisp spring air in our lungs could lead us to think that everything in the garden is rosy. Even the base rate has been stable for the past two months.

While the spring sales boom presents a wonderful opportunity, there are many threats lurking, hints of which can be seen in recent news stories.

One of the cornerstones of the government’s financial policy is the control of inflation. In the past, politicians might have sacrificed worthy long-term objectives to save short-term interest rate pain.

But the Bank of England, with a single inflation objective and robust failure reporting, will not shy away from prescribing medicine, however nasty the taste.

Although stable interest rates over the past two months might lull buyers into thinking we are through the worst, maybe we’re not.

A recent report suggests that there are now eight house buyers for each house seller. You don’t need a degree in economics to realise that such a mismatch will lead to a rise in house prices.

Ultimately this will lead to a rise in inflation, which in turn will result in further doses of BoE medicine.

Maybe media speculation of an 8% base rate is not far off the mark.

March is a busy period for potential sellers putting their houses on the market so supply should remain buoyant, for a while at least. The issue that should be exercising our minds is the effect of Home Information Packs on supply.

I guess there will be a burst of activity before June as some sellers see an advantage in putting their home on the market without HIPs.

But this effect will be short-lived as those sellers realise that potential purchasers expect to see HIPs. At that point HIPs will have to be arranged retrospectively and some sellers may even take their houses off the market.

Although I can see the benefits of moving the information collection aspect of housing transactions from the back end of the process to the front, nobody knows what effect HIPs will have on supply.

Any cut in the number of properties available for purchase will lead to a worse demand and supply mismatch, more house price inflation and more BoE medicine.

So enjoy the spring – things might get tougher later this year.


PISCES updates HIP standards

PISCES, the e-commerce standards organisation, has updated its Home Information Pack standards.The PISCES HIPs Standard provides the electronic information that makes up the HIP. It addresses all steps, from the HIP being requested to the delivery of the completed HIP, and includes maintaining the HIP for subsequent pack updates. Roger de Boehmler, director general of […]

Tenancy scheme tariffs unveiled

Tenancy Deposit Solutions has unveiled its tariff for agents who join its tenancy deposit protection scheme. Following a one-off joining charge, fees will be payable by agents on a pay-as-you-go basis. An annual renewal fee per branch is also required – £50 for members and £75 for non-members.

One in 10 buy with cash

Just 13% of the three million people planning to buy property between February and July claim they won’t need a mortgage, research from reveals. The vast majority will be downsizing and plan to spend or invest the remaining equity in their homes.

FSCS poised for overhaul

The Financial Services Au-thority has deemed the present funding system for the Financial Services Compensation Scheme “not fit for purpose”.

Strong dollar can be a powerful driver of UK dividend growth in 2015

By Robin Geffen, fund manager and CEO 

This year threatens to be a challenging one for UK dividend hunters. Last year saw an all-time record amount paid out in UK dividends — some £97.4bn, according to research from Capita Dividend Monitor. Yet as Capita also pointed out, out the biggest single factor driving the growth in the fourth quarter of last year was easy to identify: the rising US dollar. 

In our view, this trend is much more than simply a one-quarter phenomenon. It is actually the most profound issue to get right as a UK equity income investor in 2015. We believe that the US dollar will continue to strengthen significantly from its current level. This is due more to the US economy’s demonstrable de-coupling from the rest of the world than to a view on the UK. The US has a strong chance of tightening monetary conditions this year without jeopardising growth or de-stabilising its housing market. The same can unfortunately not be said about the UK.


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