Rent before you buy a home
scheme announced by Flint
The Government is putting another toe into the rental market by introducing a new Rent to Home buy scheme.

People with an income of up to £60,000 are being offered the opportunity to rent a flat or a house for up to three years at a discounted rate under the plans announced by Housing Minister Caroline Flint.

The affordable rent of no more than 80 percent of the market rate is designed to allow first time buyers to save for a deposit to buy the property.

At the end of the agreed rental period the tenants will have the option to buy from 25 percent of the property.

These affordable homes will be provided through the government which has set aside £200m to buy up housing stock which builders have not been able to sell during the recent credit crunch.

Flint has expressed her desire to promote long-term stability and fairness in the housing market.

Barking and Dagenham, Newcastle, Nottingham and Manchester are the first to get new local housing companies. These will be made up of partnerships between councils and the private sector with the aim of providing new homes on surplus land.

CML comes up with plan to
kick start mortgage market
The Council of Mortgage Lenders (CML) has drawn up a blueprint to address the funding problems in the mortgage market.

The idea, which has already been submitted to the Crosby review team and to the Treasury, is what the organisation sees as an innovative approach which helps the financial system to help itself.

The CML was disappointed by speculation this week that the Crosby review of housing finance was unlikely to offer policy recommendations in its interim report.

The CML’s suggested action plan is essentially a way of kick-starting the markets for UK residential mortgage-backed securities (RMBS) and covered bonds (CBs) back into life.

Mortgage lending is set to halve this year, with many borrowers who could afford new mortgages being unable to access funds.

The plan would involve the Bank of England offering a repo facility (essentially a form of secured lending), using as collateral new UK residential mortgage backed securities (RMBS) or covered bonds (CBs).

To qualify, the RMBS or CBs would first have to be sold to investors in a public issue. The investors would take the credit risk in the usual way. But the repo facility would give them confidence, and so help to break the current vicious circle.

Ombudsman warns estate
agents over ‘fixed fee’ confusion
Estate agents adopting a fixed fee approach to commissions rather than the more recognised percentage of the sale price should take care, says the Ombudsman for Estate Agents.

The Ombudsman, Christopher Hamer, says in his latest quarterly report: “I have seen many cases recently where an agent has employed a fixed fee basis, generally arrived at by calculating a percentage of the asking price but then described as a cash amount, which has clearly not been explained fully or where some ambiguity has crept in as to whether that fee is a percentage or a fixed monetary amount.

“If a Seller has signed a contract on a fixed fee basis I will not rewrite that contract but if there is evidence that some confusion has been built into the process by the agent I am likely to make an award of compensation against the agent.

“This fixed fee issue is particularly serious where the property has been overvalued either deliberately or carelessly and sells for significantly less than the asking price and where there were no supporting valuation comparables.

The effect of this is to give a huge advantage to the agent in terms of the fee received – particularly so in today’s market conditions.

“To avoid disputes and dissatisfied clients in relation to this matter, my message is that the property valuation must always be supportable but reflect the market situation and the fee must be openly described as fixed irrespective of the price finally achieved for the property.”

Mr. Hamer also points out that after a recent widely reported Appeal Court decision on when commission becomes payable an “introduction” must now be shown to have been the effective cause of the applicant becoming the purchaser to qualify for a fee.

“An introduction must be more than just proof that a viewing took place. The Buyer’s interest must be referable to that viewing and to whatever else the agent did to promote the Buyer’s interest,” he explained.