Tag Archives: CPI

Inflation falls for a record 6 consecutive months! Landlord News, Latest Articles

Consumer Prices Index (CPI) inflation reduced for a record sixth month to 1.6% for the year to March 2014.Inflation

That means you now need to spend on average £101.60 to buy the same things 12 months ago. This sounds bad, but it is predicted to be the first time inflation will fall below average wage increases since 2008 when the latest figures are released.

Therefore in theory our buying power will increase for the first time since the “Credit Crunch” (is this the beginning of the end of the recession for real people).

The good news good news story is that the economy is growing, we seem to have demand lead growth and all well within the target inflation figure of 2%. This will take the pressure off any concerns for now about the need to raise interest rates and hopefully encourage stable growth. A word of caution though is that the world economy in general is still unstable so I would still look to be cautious on a month to month basis.

The official ONS statistics show the decrease in inflation came primarily from motor fuels with petrol prices unchanged between February and March this year compared with a rise of 2.2 pence per litre between the same two months a year ago. Diesel prices fell by 0.4 pence per litre this year compared with a rise of 1.9 pence per litre in 2013. Clothing and furniture & household goods also had a small positive effect on inflation.

We do need some inflation as it is an indicator of increasing demand and growth, and without it would be very difficult to repay the UK’s debts and could lead to stagnation as we are seeing in some parts of Europe.

Overall this is encouraging for business and also for Landlords with economic factors pointing in the right direction for their customers (tenants) and their costs (interest rates).

CPI Inflation

 


Bank of England Inflation report and what it means for Interest Rates House Prices, Latest Articles

dont panicUnlike the press DON’T PANIC, the economic news is good but not that good in the Bank of England Inflation report.

Reports of imminent Bank Base Rate rises next year are wildly exaggerated and unhelpful to the economy. We had one piece of good news on unemployment and the FTSE 100 took a tumble.

Let’s just start with the facts as CPI inflation is now down to 2.2% from 2.9% in June. This means we are much closer to the medium term targeted inflation than we have been since December 2009. The disclaimer in my previous article about the ONS CPI inflation data was that it did not include the recent energy price increases. However, I have since found out that these increases are actually smaller than at the same time last year so should have no effect on year on year figures.

If you strip out four of the big contributors to inflation: Education, Food, Fuels and Lubricants, Electricity, Gas and other Fuels     you will see that the Core underlying inflation is actually below target at about 1.4%. See table below

Bank of England inflation report

Unfortunately it has been a consumption lead recovery in the UK rather than production as we are sucking in exports from Europe quicker than we are able to expand our export trade to places like China. Hence we are running a trade deficit and not expecting a robust recovery like in the USA, because our increase in export trade has not been dynamic enough.

This can be seen in where the recovery is happening in house prices. London which is lead by the service industry and consumption has had house prices rising by 10% where the National average is 4.3%. The North where manufacturing industry has traditionally been based is seeing little or no increase in house prices dependent on the area.

The figures that got the press in a spin was the decrease in unemployment rates, because the Bank of England had indicated that it would only look at raising the interest rate if unemployment dropped below 7%. However even if it was below 7% now the recovery is not robust enough to even consider raising rates and it is expected that there will only be a 60% chance of unemployment dropping below 7% by the end of 2015. see chart to the right and below:

BofE unemploymet chart

The productivity gap where we were seeing an increase in private employment, but a much lower level of increase in output has now started to close which is good news, but to really see a long term sustainable robust recovery it is business investment that needs to increase so we can compete with emerging low cost markets.

The current figures do not show that corporate investment is increasing, but it does appear that this is changing and may be reflected in future data. Companies may be using their current reserves before seeking borrowing to invest in productivity

The GDP figures shown in the chart below are predicted to improve with growth at about 2 -2.5% per year, but this is within target for GDP without putting pressure on inflation levels or interest rates.

BofE GDP

Predicted future inflation rates inflation rates by  the Bank of England are pretty much spot on the targeted 2% level as seen below

BofE inflation

 

 

 

 

 

 

Overall the UK economy is in a much healthier position than it was a year ago, but stagnation in our main trading partners in Europe and lack of corporate investment and exports means we have little to worry about at the moment concerning an imminent boom and a need to increase interest rates before the end of 2015 or beyond on current projected figures.


CPI Inflation down – releasing more presure on Bank Base Rate Landlord News, Latest Articles

The Consumer Price Index CPI inflation figures for October show a year on year fall to 2.2% from 2.7% in September as released today by the Office for National Statistics (ONS).

This surprise fall means that the basket of goods and services measured under CPI which cost £100.00 in October last year would now cost £102.20. We are also now much closer to the Bank of England’s medium term target inflation rate of 2%, which inflation has been above since December 2009.

The Bank of England’s new forward guidance also indicated that it would not consider an increase in interest rates unless unemployment was also below 7%. We will know more when the Bank publishes it’s latest forecast tomorrow.

Although not directly related the European Central Bank also cut it’s rate from 0.5% to an all time low of 0.25% last week in an effort to alleviate fears of deflation (price falls) across Europe with inflation now running at 0.7% against a target of 2% as in the UK. A stalling European inflation rate will have some downward pressure on UK rates as they are our largest and closest trading partner.

The largest contributing sectors to the fall in CPI inflation came from transport (notably motor fuels) falling 1.5% and education (tuition fees) increasing by 8.2% down from 19.1% last year according to ONS figures. Falling transport prices may also have affected prices at supermarkets with food inflation falling from 4.8% to 4.3%.

However it is not all good news for inflation figures as the recent large price increases by energy suppliers has yet to take effect on, but economist are not predicting the Bank Base rate to be seriously reviewed even after the recent economic upturn until late 2015.

CPI Inflation

 


Should I raise rent in line with RPI or CPI? Latest Articles

I have just read the latest survey about rent rises.

We have several properties, but one, a townhouse, is coming up for review. In light of the latest RPI, and CPI which this month are aprox 2.7% and 3.3% respectively I am considering a rent increase.

I was thinking of using these figures as a guide for a natural increase, which in effect is no increase. The rent is currently £860.00 per 4 weeks, and the tenants get most of this in Housing Benefit. I was thinking of raising it to £895.00 as the general costs have risen, and because they are in receipt of benefits the insurance is 50% higher than normal.

What does everyone think and do you have any advice?

Regards

AlanRPI


Rightmove doubles 2013 forecast for house prices Latest Articles, Property Market News, Property News

Rightmove doubles 2013 forecast for house prices as it reports ‘aggregation of marginal gains’ fueling a predicted 4.8% annual growth.

There have been seven monthly rises on the trot and two consecutive record months as the price of newly marketed property increases by 0.3% (+£860) in July boosting year-on-year growth to 4.8% (+£11,561)

Rightmove’s 2013 forecast has been increased from 2% to 4% as latest increases fuel recovery of the housing market.

There are signs finally of a broader-based recovery with all regions up year-on-year for the first time in nearly three years contributing to the positive national picture. Confidence in the market is said to be on the up with the proportion of people expecting average prices to be higher a year from now doubling compared to this time last year, now at 62% from 31%.

Rightmove reports an increase in movers and predicts more to come as property transactions are already up 5% year-to-date and lead indicators suggest more in the pipeline. Email enquiries to agents and developers are up 18% on 2012, new sellers up 5%, mortgage approvals up 6%.

It has already been reported that Surveyors are struggling to cope with the increase in demand with waiting lists for surveys pushing up into weeks. This is however also due to the number of Surveyors who have left the market since the Credit Crunch.

Rightmove along with many financial analysts predict a positive borrowing window as markets do not expect a base rate rise for three years. Funding for Lending competition is easing rates and availability of finance, plus the ‘brick-shortage success’ of Help to Buy!


Oven Cleaning is one of the biggest issues in a rented property Landlord News, Latest Articles, Property News

ovenOven cleaning is one of the biggest issues and this article is to help Landlords present this particular item in their property in its best condition for an inventory inspection and help tenants bring an oven back to its initial clean state when leaving the accommodation.

Let’s put it into perspective, the cleanliness of a property makes up 51% of tenancy deposit disputes and some of which can be attributed to people forgetting or missing an item to be cleaned, another is that differing people have differing ideas of what is clean. Let me give you an idea how we all think the same but differently.

Picture a cat in your head,
How big is it?
What is it doing?
What colour is it?

While we have all just seen a cat in our minds eye, some cats will be small, medium, large. It might be sleeping, sitting, jumping around and any colour you want. Nevertheless, it is still a cat. The same is true for cleaning, someone might have actually worked very hard to clean a property but yet it is not you to your high standard. Maybe they just don’t know how to do the task correctly and yes some are just simply too lazy to do it. It is a rare situation that we know which of these statements is true for a given household and it might be a combination of all of these factors.

There is a continuum for the level of cleanliness form: never been cleaned, attempted but still dirty, cleaned to an average household standard up to what we call in the inventory profession “cleaned to a high domestic standard” and “cleaned to a professional standard” the best of course being a professional clean.

Here is a list of key phrases I use when describing the cleanliness of an oven from best to worst:
1. As New
2. Cleaned to a professional standard
3. Cleaned to a high domestic standard
4. Clean to a domestic standard
5. Partly cleaned
6. Needs finished clean
7. Not clean.

I must add that fortunately, most inspection I do I only have to decide if the cooker/oven has been cleaned to a domestic or professional standard.

If you look at the picture below, this is an oven an oven cleaned to a high standard but its condition is excluded from our discussion on cleaning. This is a worn oven and unless you have prior information, to this picture, it is not possible to say if this is through damage or due to age and fair wear and tear.

 

This oven is clean but through age and use, it is marked and even rusted at the sides.

Then we have the oven that is clean to a high domestic standard that is to say it is grease free but there are still baked on marks.

 

You should also watch out for chemical residue, many of the excellent oven cleaning products on the market leave residue marks on surfaces if you don’t wash off the product fully, which technically means the oven is still partially dirty, need a finish clean.

There are several very good cleaning products on the market. But there is one that I prefer to use it gets the job done and is fairly easy to use and normally takes a clean to domestic standard to a professional clean level. It is a strong chemical so you have to be careful and follow the manufactures instructions it is “Oven Pride”. Please note that I don’t have shares in the company and I am not getting any benefit for mentioning this product my motivation for mentioning it is to   help anyone who reads this article in particular Landlords and Tenants.

About the author of this Post

Sydney Lewis A+ Inventories

Syd Lewis has been a private landlord for over 20 years, he is an accredited member of the National Landlords Association (NLA), Residential Landlords Association (RLA), Sponsor of the Good Landlords Campaign, a full member of the Association of Professional Inventory Providers (APIP) and a Certified Electrical Portable Appliance Tester (NIPIT). He is passionate about what he does which is providing residential inventory services, PAT testing and marketing floor plans for Agents, Landlords and Tenants. Inventories start from £56.00 to find out more see:-


Bank of England Inflation Report and Economic Roundup Financial Advice, Latest Articles, Property Investment News, Property Market News

“When is the Bank of England base rate going up?” is the most frequent question I am asked by property investors. Not this year or next is how I assess the latest figures from the May Bank of England inflation report.

Below are some of the key factors affecting the UK and Euro-zone along with a full copy of the Bank of England report. Continue reading Bank of England Inflation Report and Economic Roundup


Eastern Landlords Association MARCH 2012 NEWSLETTER Eastern Landlords Newsletter, UK Property Forum for Buy to Let Landlords

Deposits

Three cheers for competition. A few weeks ago TDS, The Dispute Service, announced Deposit Guard, which at launch undercut the costs charged by My Deposits, and made a push for self-managing landlords, rather than agents. My Deposits have retaliated, by reducing their fees for agents, but not landlords. This may follow, and we shall keep members informed. The third, custodial scheme, used by many, as a free scheme is not affected.
Continue reading Eastern Landlords Association MARCH 2012 NEWSLETTER


Hush-hush Chancellor Quietly Puts up CGT and IHT Latest Articles, Overseas Property, Property Investment News, Tax & Accountancy

Property investors will pay more inheritance tax and capital gains tax after the government changed the basis for calculating index-linked increases in reliefs.

The back-door move will increase the amount of tax collected on all transactions from April 2012 despite Chancellor George Osborne promising CGT rules would remain the same during the life of this Parliament. Continue reading Hush-hush Chancellor Quietly Puts up CGT and IHT


How Will 5.2% Inflation Hit Buy to Let Investors? Latest Articles, Property Investment News, Property Market News

With inflation hitting a 20 year high at 5.2%, the headlines are screaming doom and gloom. Instead, step back and read what high inflation and quantitive easing means to landlords running a buy to let business.

The Consumer Price Index (CPI) – the government’s official inflation monitor – has registered 5.2% for September and is going to directly impact returns from savings and investments.

A saver paying basic rate tax (20%) would need a savings account paying 6.5% to earn a return, a higher-rate taxpayer (40%) would need an account paying at least 8.67%. Both are unobtainable in the current market. Continue reading How Will 5.2% Inflation Hit Buy to Let Investors?


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