As from 6th July this year the cost of registering your property at the Land Registry is increasing by as much as 300%. At the moment it costs just £50 to register a house costing £150,000 but from July it’ll be £200. How’s that for another blow against inflation!

Land Registry charges are paid whenever the freehold or leasehold of a property is registered.

There will also be increases in the fees for land searches and copies of documents. A postal official search fee is going up from £6 to £8. The official line is that these increases are required because of the decline in the number of properties changing hands as a result of the credit crunch.

What rubbish! The numbers of house sales are down 25 to 40% depending on the region and month you are talking about. How does that justify 300% increases in Land Registry fees?

A spokesperson from the Land registry is reported as saying,” We do not believe that this will deter a recovery in the property market, especially with interest rates at a historical low and lower house prices”.

These costs will hit all home buyers as all changes in the ownership of properties have to be registered. So you will not be able to escape these higher costs.

This is the second set of rising costs to hit home movers this month. Last week, those putting their house up for sale had to have a Home Improvement Pack available before the property went on sale. That’s a cost of about £300, plus or minus £100 depending on who supplies it.

More than half us would consider taking out an Individual Voluntary Arrangement if we were faced with serious debt. 40% of people said they would only consider an Individual Voluntary Arrangement (IVA) as a last resort, but a further 11% said they thought that such arrangements were perfectly acceptable. So says a recent report.
At the same time, 17% said IVA’s were a good alternative to bankruptcy and 9% said they thought IVAs would help alleviate debt and should be made more widely available. Worryingly though, 49% of people said they didn’t know what an IVA really was. To us that’s not surprising. After all why would you go to the trouble of reading up about IVA’s if they were of no interest to you?
So for those that are interested, an IVA is a form of insolvency in which unsecured creditors agree to freeze interest payments on debts and write off part of the debt in return for a set amount being repaid each month for a term of usually 5 years. (Please note: In Scotland, their equivalent to an IVA is a Trust Deed.) But once entered into an IVA will demolish your credit rating for many years. Even getting everday credit such as a mobile phone contract, will be almost impossible.
For people suffering from over bearing debts, an IVA may be an ideal escape route. However, they are not something you should enter into lightly and without considered thought. You also need to take professional advice.
Government figures have showed a 55% jump in the number of people taking out an IVA in England and Wales during the start of this the year.

The British public appreciate that it was necessary to bail out large portions of the UK banking industry. To not have done so, would have left us without a banking system – implying the inability to make or receive payments, savings deposits being lost, a collapsed stock market and a totally inactive economy. A hunter gatherer economy?

But having bailed out the banks and saved the country’s financial skin, we the tax payers, expect the banks to mend their ways. They cannot go back to the ways they operated prior to the big shake up. The banks must be straight about their mistakes and convince the country that they will never return to their previous excessive risk taking and excessive bonus culture (an issue I feel passionately about and have already blogged about on this web site). Those bankers who believe they can keep their heads down for a few months and then it will all be hunky dory – back to the gravy train – must think again! In fact any who are even tempted to think that way should be dismissed without adieu. The banks, and us the bank rolling taxpayers, will be much better without them.

The restoration of the public’s trust in the banks must start with a commitment that past mistakes will never be repeated and this implies a willingness to learn from the mistakes.

This also means that the culture of secrecy built into banking business has in part to change. I am not advocating that banks divulge the activities of its clients (unless required to do so for legal reasons), but regulators working on our behalf, must be much more hands on. For that to work, they have to get inside the banks operation and fully understand what is going on and how the banks are controlling themselves - and the risks they take.

The only problem then, is do the regulators have the necessary skill set to undertake that level of regulation? I suspect not as things sit now, but that will have to be corrected. I only hope they can.

Despite signing up to packages whereby Mr and Mrs UK have effectively lent the UK banks billions, the banks are not keeping to their part of the bargain. They signed up to the agreements on the basis that they would save the banks from going under and provide the liquidity the banks needed to resume bank lending.

What has happened? The banks are still keeping their hands and cheque books deep in their pockets. Mortgages are difficult to obtain and business, particularly small business, abound with stories of uncooperative bank managers more likely to call an overdraft in rather than extend it.

Unless banks get their fingers out, we are in for a deeper recession than anyone predicted. Modern western economies revolve on credit and without it everything grinds to a halt.

I just can’t believe that those on power are going to sit on their hands whilst all this happens. Better brains than me understand what is happening and know the repercussions of failure to free up credit.

At least Mervyn King, governor of the bank of England, says he shares my concerns about the low level of lending. Apparently over the coming months, he expects lending to increase.

I just hope he is right – we are all affected.

The report from Lord Turner about how he proposes the Financial Services Authority should change the way it polices financial services, says much about the mortgage market.

His main two points were that mortgage lenders must reduce the amount they lend relative to the value of the property and also relative to the borrowers income. Sounds like good sense? Yes, but we all now know his advice comes with hindsight and too late.

Thanks to lax regulation in the past, we have arrived at a crisis situation where mortgage lenders are over re-acting. Thousands and thousands of families cannot remortgage because the lenders have ferociously cut back their lending. In almost one bound, we have gone from a situation where lending was handed out like sweets to one where even the most financially solid households cannot find a mortgage.

The have been times before when first time buyers have experienced difficulties funding their home – but never as bad as now. Unless a prospective borrower has a big salary or a huge deposit, or both, then they simply don’t stand a chance of owning their own home.

So you do not have to be a genius to work out what is flushing the housing market down the drain. Without a working mortgage market there will be no housing market and house prices will continue to spiral down. That could spell disaster for the whole UK economy.

House prices could fall a long way from where we are now and we are already 25% off the top of the market experienced in late summer 2007. Are we talking about another 25%? If you ask me, we could be talking about 40-50% unless the Chancellor gets confidence back into the capital markets and a more liquid mortgage market develops.

This year one in four homeowners will see the value of their home fall so dramatically that it will be worth less than their outstanding mortgage. That’s the stark prediction from the Financial Services Authority. They expect 2 million homeowners and 500,000 buy to let properties to fall into negative equity.

These warnings were released as reports showed that mortgage lending had slumped to an 8 year low. The report from the Council of Mortgage Lenders shows how the UK’s housing market is stagnating as banks hold back mortgage lending despite lower prices and the lowest interest rates for more than a generation.

And at the same time the magazine Which? Warns that 35% of homeowners are worried about repossession. But despite these worries, relatively few homeowners have taken out insurance to cover their mortgage repayments in the event of redundancy. With unemployment predicted to rise by 50% this year to 3 million, surely more should take out this insurance?

And whilst writing about the curse of negative equity, we think it best to clarify one commonly held misconception. If your home is sold for less than its outstanding mortgage, you are still personally liable to repay the shortfall. The lender will chase you for the shortfall money. This applies even if the lender had forced you to accept a “Higher Lending Charge” when you arranged the mortgage.

Higher Lending Charges are in effect an insurance policy owned by the lender, which guarantees to the lender that if the sale proceeds of a property do not fully repay the mortgage, the insurance will repay the shortfall to the lender. You will note that the policy belongs to the lender – it eliminates the risk that the lender will not be repaid. Please note that the policy does not belong to you the person who paid for the insurance.

The hard fact is that if there is a repayment shortfall, you are still legally bound to repay that money to your lender and the lender then forwards that money on to the insurance company which underwrote the Higher Lending Charge policy.

The American’s House of Representatives has overwhelmingly voted for a Bill to impose a 90% tax rate on excessive bonuses paid to executives of companies that receive Government bail out money.

If the Bill passes through the Senate, the new tax will apply to executives paid more than $250,000 working for any company that received at least $5 billion from the US Government.

The Speaker of the House said, “We want our money back and we want our money back for the taxpayer”.

Despite all the criticism in the UK of excessive bonuses paid to employees at the banks bailed out by the UK taxpayer (and we are sure some insurance companies and car manufacturers will follow), we haven’t heard of one constructive action to do something concrete about it. After all these companies would have gone to the wall without multi-multi millions from us, the UK taxpayer. And if the companies had gone bust the employees would have had to whistle for their bonuses. Puff, blown into thin air!

So Gordon Brown, what are you going to do to recover those obscene bonuses that are an affront to the UK’s man in the street?

Hello Gordon, ……. hello ……….. hello …….. is anyone there?

Credit cards with no transfer fees and low follow up interest rates have become a very popular option amongst credit card buffs. These cards typically charge interest rate at 6.5% on the balances transferred from rival cards.

I think the best deal like this currently on offer is Barclaycards Long Term Balance Transfer (6.5%). This interest rate is lower than any overdraft or loan rate you’ll find. The credit card also provides you with far more flexibility regarding repayments, allowing you to repay the money in broadly your own time. For the first 10 months any purchases are interest free but thereafter, new purchases attract interest at 16.9% and your balances at this higher interest rate will not be repaid until your 6.5% balances have been repaid.

Also of interest is Citibank’s Life of Balance Mastercard. This has a low life of balance rate of 6.9% but there is also a transfer fee of 2.5%.

Abbey and Virgin Money still offer the best interest free deal. Both these deals last 15 months. Abbey charges a transfer fee of 2.98% and Virgins transfer fee is 3%.

Oh, by the way, unless your credit is perfect, don’t bother applying for any of these cards – you’ll stand no chance!

The cost of insurance which will provide a monthly income in the event that the policyholder is made redundant or becomes sick or has an accident is soaring. Of course it’s not because more people are becoming sick or having accidents – it’s because unemployment in the UK is now forecast the rise to 3 million by the end of 2009.

Insurance companies are now running away from the increased business risks in these types of policy by either withdrawing from the income protection market or charging steeply higher premiums. And some insurers are introducing new policy conditions which make it more difficult for the policyholder to make a valid claim.

If you are thinking about income protection insurance, especially if you want insurance that will pay your mortgage if you are out of work, then you must start the policy before you are aware of any threat to your job - otherwise your cover will be automatically invalidated.

And we have seen on this web site a big increase in visitors searching for Mortgage Payment Protection Insurance and Income Protection insurance.

Through this site a 35 year old man or woman can get cover for £1,000 a month payable for up to 12 months for a premium of £40 a month. It’s the same price for both Mortgage Payment Protection Insurance and Income Protection insurance. A similar policy with Abbey Payment Care would cost £60.

With unemployment forecast to surge and mortgage lenders predicting that there will be 75,000 home repossessions in 2009 (that’s three times the number in 2007), we think it’s time to get insured before it’s too late!

For further information about Mortgage Payment Protection Insurance click on this link https://www.life-assurance-bureau.co.uk/mortgage-payment-protection/

For information about Income Protection Policies use this link https://www.life-assurance-bureau.co.uk/income-protection/

Also see what the Financial Services Authority says about Payment Protection Insurance by following this link: https://www.moneymadeclear.fsa.gov.uk/news/product/ppi/payment_protection_insurance.html

If you take the average deposit being demanded of first time house buyers and add to that the cost of paying the first years’ mortgage repayments, then the result works out at 111% of the borrowers’ average salary. A year ago, the figure was 61% and even that was a lot higher than the long term average of 38%.

This huge burden is the result of the mortgage lenders demanding much higher deposits. On average lenders are demanding deposits of 24% of the purchase price of the property. So on average house price of £128,000 this means a deposit of around £30,000.

And once the first years mortgage payments are added in, the total is more than the average first time buyers’ gross annual income of £33,000. It is true that once you have one, mortgages are cheaper because both interest rates have fallen and house prices are down 20%. However, the increased deposits mean that only those who have been saving for years will be able to start on the housing ladder.

This must increase the popularity of shared equity deals where the first time buyer buys a percentage of the house and the developer or finance house, owns the remaining percentage of the house. In most of these schemes, the “owner” has the right to increase the percentage of the house they own by buying more of the house as their finances allow.

For others, the only option is renting a house or an extended stay with relatives.

If you are considering re-mortgaging you may be in for a shock. Low interest rates are now only available to people whose mortgages represent less than 60% of the value of the property. But as property prices continue to fall, the percentage of the property’s value taken up by the mortgage inevitably rises.

The problem is that homeowners may not realise that the falling value of their property has pushed them into a higher loan-to-value category (LTV). This can really push up the interest rate you’ll be offered when you re-mortgage. Take the Halifax for example. If your LTV is less than 60% then the interest rate you’ll be offered is 4.69%. Between 60 and 75% LTV the rate rises to 5.02% and from 75 to 85% it’s 6.09%. At 85 to 90% LTV you’ll pay 7.09%.

If you’re having your home re-valued, be sure to make the valuer aware of anything which may push up the value of your home in comparison with other properties in your locality. And if you have savings, you should also consider using some of that money to reduce the size of the mortgage you need. If you’re lucky, that money could drop you down into a lower LTV band and into a lower interest rate. That would save you quite a lot of money.

So if your mortgage deal is coming to the end of its offer period, check out the position a.s.a.p. In our view, property prices will continue to fall for some time yet, so the later you get a valuation, the lower the valuation will be.

But the end of a special period is no cause or panic. At the end of the special deal period, most lenders will automatically switch their borrowers onto their Standard Variable Rate (SVR). Since many SVR’s are now down to 3% or so, that in itself can be a good deal.

Our advice is check it out a.s.a.p. but don’t panic!

In my last blog I talked about the bonus culture. Today I want to talk about corporate risk taking.

All businesses take risks. Risks are an inherent part of company development whether it be should they offer a client more credit, whether they should change a product formulation or whether they should expand the business. In the end risk and risk assessment is a fundamental function of senior management and the Board of Directors in particular.

Three fundamental questions emerge from that. To control risk, management has firstly to identify the risk, secondly assess the level of risk and finally make a decision as to whether it is in the company’s best interests to accept, or reject, that level of risk.

So where did the Banks get it wrong? It seems that some managers within the banks did identify the risk and were able to assess the risk as high. It would seem that those above them either rejected their risk assessment or simply went ahead irrespective knowing the risks. The suspicion is that as the toxic investments had “performed well” before they imploded, the Directors were seduced by the illusion of profit and, I suspect, the actuality of their blooming bonuses. Whether it was company interest or self interest which drove them, the answer for me is the same – they made major errors of judgement and for that they must be dismissed.

Coming out these most expensive mistakes in corporate history, we will undoubtedly see a new raft of management – the Corporate Strategical Risk Assessors. Whether they will be an expensive raft of toothless management or whether they will help steer companies around rapids and waterfalls, depends on the risk culture within the Board of Directors as the Directors remain the people who are responsible for the direction the company takes. If the Corporate Strategical Risk Assessors provide high calibre assessments and the Directors bring that work into their decision making process then all will be well.

Otherwise at some point in the future, we will again see the emergence of the sort of problem the banks fell for.

I’m all for a bonus for a job well done. But the recent debacles in the banking industry beg the question “when is a job well done?”

To me it’s got to reflect the financial benefit to the organisation of the employees work. So if the employee’s work results in a fantastic profit only for the deal to go bad and throw up a loss, should the employee get a bonus for the profit and the company ignore the loss? Common sense says the profits and the losses have to be netted off.

This also implies that people who receive a profits bonus must have the bonus assessed over a period of time which is sufficiently long as to allow the entire transaction to be completed and their worth to the company to be fully evaluated.

Furthermore, a clawback reserve should be with-held from current bonuses to cover against the possibility that the employee’s future activities will make a loss. If this is not done, an employee could simply resign in order to avoid repaying a bonus clawback. And yes, I believe that over paid bonuses must be recoverable!

And this raises another issue. How much bonus should employees receive? Bonuses of £million are hard to justify unless they are a tiny % of the profit created. Employees make profit within an organisation because of the whole organisation’s infrastructure creating the opportunity for the employee to make profits. And don’t forget the organisation’s owners are its shareholders. It seems to me that in the banking industry, senior employees have been feathering their own nests rather than allowing profits to flow through to the owners of the organisation within which they work - and without which they would be powerless to make the profits in the first place.

Who is to blame for this nest feathering? It must be the remuneration committees who decide the bonus levels and the Directors whose job it is to keep a watching brief on the company’s activities – i.e. the Non Executive Directors. And if the Non Executive Directors cannot be trusted to do their jobs, then yes, the industry’s watchdogs which for banks, includes the Financial Services Authority and the Bank of England should have their say.

My comments on risk taking and what is an acceptable level of risk, are for another day ………..

Gordon Brown is just a sweet old fashioned man after all! He would like to see a new age of sobriety in British banking and is calling for a return of prudency in old-fashioned High Street banks.

He’d like a return to people saving longer before investing in their first home and an end to low or no deposit mortgages.

“We want to see the reinvention of the traditional savings and mortgage bank in Britain,” wrote Mr Brown in the Observer. He envisages a future where bankers will be the servants, rather than the masters of Britain’s current critically-ill economy. More caution in the mortgage market would reduce the chances of problems in the future, he says.

Well, it may come as a revelation to Mr Brown but there are many thousands of hard working (well they would be if they could find any) and now extremely worried ordinary people who came to this conclusion a long time ago.

His comments were in relation to the UK’s new Banking Act, which gives greater powers of intervention to the Bank of England. The act should enable the Bank to act more speedily to help troubled banks and protect investors. By giving hidden support to stricken banks, the aim is to maintain financial stability.

Not everyone agrees. Critics consider that it will create an air of secrecy around the banking world, which could not be in the consumer’s interest.
Back to the pipe, the slippers and the fairy tales. A “Dad’s Army” style bank could save us all.

The Swedish town of Trollhattan is set some 70 miles or so inland from the port of Gothenburg – Sweden’s second largest city. It’s situated on the banks of the Gota Canal and just above Trollhattan Locks and the area around is magnificent. There are the Trollhattan Falls – a spectacular sight when the sluices are opened and the water cascades down the valley, by-passed by an equally impressive flight of locks, blasted into the rock of the hillside, rise up in staircase style with pine forests and pastel-painted houses accompanying the journey up from the locks into a bright and picturesque town.

In the summer, pleasure boaters moor there for a while, to restock and enjoy the area before continuing on towards the crossing of Lake Vanern and eventually across Sweden and “out the other side” – Baltic bound. In the winter the traffic is solely commercial and as the canal can be frozen for months, a passage is kept open by the ice-breakers, making a terrific din as massive sheets of ice are forced to either side to allow the boats a passage through.

As you leave the town, there’s a massive road bridge and then on one side of the canal there’s a Volvo plant. On the other the Saab factory seems like its own small town and occupies a vast area.

There’s a black cloud hanging over the winter blue skies in the Saab area at present – and no doubt in Trollhattan in general, following an emergency meeting by the Saab board. Trollhattan loves Saab and are the Swedish people are very faithful to their brand. Saab’s been a way of life and they’ve been there since 1940.

General Motors have owned Saab for some years now and they have to cut 47,000 jobs worldwide to shore up its home base and to assure Congress that US federal aid will save American jobs rather than leaking overseas. As a result, the company have made the threat of walking away from Saab unless the Swedish government help out.

Maud Olofsson is the Swedish enterprise minister and she made the statement “The Swedish state is not prepared to own car factories. “We are very disappointed in General Motors. But we are not prepared to risk taxpayers’ money; this is not a game of Monopoly,”
GM has long struggled to make money from its Swedish venture, but the losses have become a torrent in recent months. This begs the question “Has there been a level playing field or have Saab become a pawn in the game?”
For the people of Trollhattan it is beyond belief that their own government is not prepared to back their beloved brand. The future of which is very much in the balance.

Latest figures show that the tax revenue from January’s “big reckoning” is down.

We are told that data shows that “The recession led to a £7bn fall in the amount of tax paid by individuals and businesses in January.”

Public finances are typically boosted by annual tax receipts in January, but these have fallen as unemployment rises and company profits decline.
It’s true that annual tax receipts in January generally boost the public finances, but the fact that these have fallen is nothing to do with the very recent bad news on the financial front. In actual fact the money received by the taxman in January 2009 is from more than 9 months ago and for the tax year April 2007/8. In actual fact this is before anyone admitted to a recession.

Can you even imagine what they’re going to be like NEXT January?

The sun’s shining today. The cold snap may have come to an end. There are signs of life in the garden. Could we forget Lloyds, HSBC and bankers bonus questions for a while and look back at how things used to be?

There seems to be some better news and the hint of hope that the property market is improving. Asking prices were up in the four weeks up to February 7th by 1.2 per cent, or just over 2,500 pounds according to one well-known website.

Low interest rates and sellers reducing their prices could tempt buyers back into the property market at what has always been the house hunting time of the year.

This follows the mortgage lender, Halifax, reporting that house prices increased by almost 2 per cent during January and some helpful reports from both the National Association of Estate Agents and the Royal Institution of Chartered Surveyors that there was more interest from would-be buyers.

For sellers, this is good news. They’re not necessarily looking for increases in values; just a buyer would be the answer to their prayers.
Maybe the record low interest rates and recent price falls are winkling out the buyers. Let’s hope so, it’s surely time to get moving again. Literally.

It goes back years. First of all, it was convenient. They had a branch in a large supermarket near to where we lived. With the coming of the debit card and eventually on-line banking it became irrelevant where the actual bank was situated.

It’s been a good relationship really. Until now. Everything’s changed due to a break in at our village supermarket. The thieves broke in and stole the in-store cash machine. I went in to use the cash point and there it was – gone. In its place was a large stack of family packs of crisps. Not to worry, it would be replaced – or wouldn’t it?

A day or so later my husband needed to speak to a customer accounts adviser at the same bank (they don’t seem to have bank clerks any more) and mentioned the problem– she assured him that to their knowledge the cash point was still there, in store.

We looked. It wasn’t there and still isn’t. I miss it being in its place in a well lit store which opens until late every single night. The girl at the till says it might come back, but probably not.

And the point of all this?

The Office of Fair Trading report into personal current accounts says that only 6 per cent of bank customers switched accounts in the past year, even though they could probably find accounts at other banks that are better suited to their needs and possibly would charge them less.
At the same time, it’s estimated that around twenty per cent of energy customers changed providers in one 12 month period. Mind you, I did that once, and never again.

The general view is that customer inertia is the main reason behind customers staying put - with some staying at the same bank where they opened their first account.

Maybe the time has come to shop around?

The latest figures from the motoring industry revealed that the number of new registrations in January was over 30 per cent lower than a year ago.

On the other hand, dealers report an increased demand for used cars, saying there was a 20 per cent increase in sales over the year.
It seems that many cars are so well built nowadays that they’re seen as an excellent buy when they’re second hand. Without the registration plate to give away the age of a car, it’s often very difficult to tell whether it’s a “just run in” vehicle or a couple of years old. People are worried about their jobs and seem to be prepared to forego that “new car” experience.

If it has to be new, then it seems to be the time to start to look for bargains as the fall in demand has resulted in some impressive promotional offers from the manufacturers. If new car sales continue to fall, there could be some real deals out there.

The bidding started at just 5,000 pounds and rose to 9,000 before the hammer fell on an end of terrace house in Teesside.

A house for just 9,000 pounds clearly has to be a bargain, although admittedly it’s in a rundown state and slightly lacking in a roof. However the estate agent reckoned the house should be renovated for around 27,000 pounds and have a finished value of somewhere around 45,000 pounds.

Properties in the North East don’t appear to have fallen too sharply recently, so the state of the economy doesn’t seem to be blamed for the low price – rather the lack of roof!

As for the rest of the UK, it’s reported that the average cost of a house is now 25 per cent lower than a year ago – standing at 180,000 pounds.