Tag Archives: Inflation

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 quarterly inflation report summary Landlord News, Latest Articles

No need to panic about interest rate rises as we are still in a bad place, but an improving place economically.bank_of_england

Yes “Forward Guidance” is dead because the Bank of England got their unemployment prediction wrong, but we still don’t really know why.

Unemployment dropped to 7.1% from 7.7% in three months making redundant the figure of 7% unemployment being any kind of trigger for looking at the bank base rate. This drop is statistically unprecedented being 4 times more than any previous drop for the same level of growth!

However Forward guidance could be said to have been a success by giving confidence for the economy to grow with GDP increasing by 0.7% in the 4th quarter. Forward Guidance was largely understood to have a stabalising effect by the business industry even if it wasn’t by households and popular press.

The irony is that the growth was largely caused by household spending even though incomes are stagnant and not any productivity increase, although construction figures have recovered.

BofE Household spending

This growth in household spending on goods and services could be pent up demand from previous years de-leveraging household debt. Eg a new car purchase may have been put off since the credit crunch, but now it is getting older and more expensive to run people are now making those purchases. This type of growth is not sustainable in the long term and is why the Bank of England are cautious about the future recovery especially with heavy economic headwinds from European demand falling.

We are still buying more from abroad and with European growth stalling and hence demand for our goods and services so our trade deficit is actually worsening. It is the strength of the Pound, which although having a positive effect on keeping external inflation lower, is making our exports less attractive. This is the age old economic conundrum that what is good for one part of the economy is usually bad for another.BofE Tradedeficit

 

 

Looking forward The Bank of England believe there is still a lot of spare capacity in the labour market and that is what should be targeted to see a sustainable improvement in growth. What they mean is that on average workers are underemployed and could be more productive. During the recession output dropped by a far greater ratio than employment and especially considering the recent figures on unemployment there must be spare capacity for employees to be more productive.

 

It is this spare capacity that the Bank of England are going to be carefully monitoring and targeting for any future decisions on monetary policy. The Bank of England believe that the natural level for unemployment is around the 5% point and that we are unlikely to see too much wage lead inflation before this is reached.

BofE Labour Productivity ChartSo in summary the good news is that the main target figures of growth at 2% and inflation at 2% are on target, but productivity is slow and the trade deficit is increasing. Therefore there is no short term requirement to dampen a fragile recovery by increasing interest rates and if there is any need to do so in the medium term it would be by very gradual small amounts.

BofE GDPchart

 


Good News – GDP has grown by 1.9% in 2013 Landlord News, Latest Articles

The Office for National Statistics (ONS) has this morning reported the UK economy has grown by 0.7% in the fourth quarter of 2013 with total GDP for the year growing by 1.9%.

These are the best annual growth figures since 2007 (recorded at 3.4%) although we are still 1.3% behind the peak GDP figure in Q1 2008. We are therefore still recovering from the deepest recession in history in which GDP decreased by 7.2%.

GDP graph

 

The contribution an industry sector makes to GDP quarterly growth is dependent on its weighting to the economy with services contributing 77.8%, production 15.2%, construction 6.3% and agriculture
0.7%.

Construction output decreased by 0.3% in Q4 2013, following an increase of 2.6% in the previous quarter. Between Q4 2012 and Q4 2013, construction output increased by 4.5%. Growth figures in the construction industry although not greatly affecting the overall economy are a positive signal considering it is the lack of housing supply that is driving the price boom in London and parts of the South East.

The Office for Budget Responsibility recently revised its 2013 UK growth forecast from 0.6% to 1.4% and is currently forecasting growth of 2.4% for 2014, but if the economy continues recovering at its current pace this may yet have to be revised again.

The International Monetary Fund has also increased its growth forecast for the UK economy from 1.9% to 2.4% making us the fastest growing economy in Europe.

With GDP now nearly hitting the Bank of England target of 2% growth and inflation matching its target of 2% the recovery is within forecast plans, but still fragile due to foreign economic uncertainty. Mark Carney The Governor of the BofE has confirmed there is no pressure to increase interest rates above their current level.

I deliberately used the title Good News as I have already seen headlines by the press scaremongering without evidence over interest rates.


Consumer Price Index finally hits Bank of England 2% inflation target Landlord News, Latest Articles

The Consumer Price index (CPI) inflation rate fell to 2% in December down from 2.1% in November finally hitting the Bank of England’s target medium term figure for inflation.

CPI is the measure used by Government for targeting inflation and this is the first time since November 2009 the inflation has been at or below this target. CPIH annual inflation, which is the measure of consumer price inflation including owner occupiers’ housing costs, was actually lower at 1.9% in December.

According to the Office for National Statistics (ONS) the largest contributions to the fall in inflation came from prices for food, non-alcoholic beverages and recreational goods and services. However, these were partially offset by an upward contribution from motor fuels.

This vindicates the Bank of England’s dogged insistence for the past 4 years that inflation was being caused by external rises in the cost of imports that we have no control over rather than any domestic demand lead inflation. Had we seen the Bank of England react to this inflation by increasing interest rates before the recovery, as called for by many sections of the press, we could have seen an even deeper recession than we have already.

The good news for Landlords with mortgages or commercial loans is that for the time being there is no pressure from inflation (the main economic target) to increase interest rates.

The main stream popular press are reporting that the next thing to worry about is unemployment dropping below 7% from its current 7.4% level. The 7% figure was only used as an economic reference by Mark Carney the governor of The Bank of England to show that we should not consider raising interest rates until the economy has hit this measure. It is NOT a figure that would trigger interest rate rises on its own.

The Prime Minister David Cameron said, “It’s welcome news that inflation is down and on target. As the economy grows and jobs are created this means more security for hard-working people.”

CPI


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


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