Employee Screening and Tenant Checks

August 21st, 2010 No comments »

It is becoming increasingly common for employers and landlords to carry out employment screening and tenant checks before hiring or letting a property. For tenants these checks include searches for financial problems such as CCJs or bankruptcy, previous landlord referencing, risk evaluation scores, etc.  For employers the screening goes even further and can include criminal record checks, all previous employment history, driving licence checks, and more.

Specialist companies such as CREDIT CHECK SERVICES provide screening to landlords and employers, often within one working day, and with pricing from less than £10 it makes sense to check a prospective tenant.

Within the next 5 years it is projected the majority of employers and landlords will obtain specialist screening reports on prospective employees or tenants. 

So as an employee or tenant what should you do?  Well, first and foremost start managing your financial history, don’t see CCJs as a minor inconvenience, if you do have a debt problem agree a payment plan rather than letting it go to the court for enforcement.

Managing your credit profile is not only to enable you to obtain credit form banks, increasingly it will affect your ability to rent a property and gain employment.

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The medicine needed for the UK economy?

April 24th, 2010 No comments »

Almost everyone agrees that the UK economy is in a very poor state, the problem is that our political parties cannot agree, at least in public, on the measures needed to get recovery going for the longer term.

Within 5 years the UK debt is forecasted to grow to £1.4 trillion, that is a staggering 1400 billion pounds.  Reducing debt can only be done through increasing income (eg tax revenues) or reducing expenditure (eg cuts in public spending), or a combination of both.

For an income approach the dilemma is this, if you focus only on the income side, that is raising taxes, it will effectively choke off the economy as the burden of huge tax increases will impact employment and spending, and if unemployment increases too much it will effectively reduce taxable income and worse still increase public spending on unemployment benefits.

For a spending cuts approach, again too much focus will have a negative impact.  Cuts in spending will ultimately lead to cuts in employment and in turn cuts in income from tax revenues. 

Clearly a balanced approach is needed, that is focus on BOTH spending cuts and tax increases.  There are no easy choices here but some thoughts are:

1 – Raise VAT by 2.5%, this will raise over £10 billion per year.

2 – Cut wasted spending, but focus more on spending that has less impact on UK employment.  Examples may be projects such national ID cards.

3 –  Provide greater encouragement for people to go out to work by reducing benefits paid.  There are many opportunities with almost 6 million “economically” inactive people being supported on benefits.

Clearly these are just simplistic headings but getting the economy back on track is about combined measures of increasing taxes and cutting expenditure in a way that is sustainable so as not to push the economy back into recession.

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Expenses scandal MPs get legal aid, poor mother of 3 refused legal aid

April 12th, 2010 No comments »

It is bizarre how our legal processes in the UK do not deliver fairness in the way legal aid is applied, here is a clear example:

Today it was announced that three labour MPs facing court action for allegedly defrauding the tax payer will now have legal aid to represent them at the tax payer’s expense, and it has been estimated the legal fees could escalate to as much as £3 million.

Now take the situation of a mother with 3 young daughters, stranded in France by her ex-husband (a German national).  Unable to get a job in France to support her family she applied to return to the UK with her British daughters.  She then found that her ex husband took legal action to prevent her living in the UK with the children.  She applied for legal aid, which was denied.  She now has debts of more then £20,000 after successfully defending her right to have her children living with her in the UK.

It is quite bizarre that our legal system in the UK will support alleged “wrong doers” of considerable wealth whilst a poor mother is unable to get legal aid to help keep her family together.

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UK national debt is at very dangerous levels

March 25th, 2010 No comments »

In recent months all of our politicians have failed to really grasp the nettle and really outline the size of UK’s debt and how it is going to be addressed.

The figure revealed in the in the details of the March 2010 budget (not given airtime in the House of Commons) is £1.4 trillion.  That is 1,400 x £1 billion, or 1.4 million x £1 million.  It is a huge amount of debt.

Look at it another way, we currently have approximately 27 million people working and paying taxes.  The £1.4 trillion debt equates to almost £52,000 for every one of those 27 million tax payers.

Somehow the UK Government has to deal with the vast debt, somehow we, the British public, are going to pay off this debt through a combination of tax increases and cuts in services. 

Lets assume that the UK national debt is not cut and we stay at £1.4 trillion.  Today the interest rates are low, but it may be reasonable to assume in a few years time we could be paying as much as 5% on this debt, that would mean annual interest payments of £70 billion.

Prior to the credit crunch the UK was borrowing at a rate of less than £50 billion a year to fund the budget deficit.  So in “good times” we might assume we only need to borrow £50 billion a year.  But if we now add the possible annual interest of this vast £1.4 trillion debt we will need to borrow an additional £70 million a year, giving a total of £120 million a year including the annual budget deficit.

These figures are unworkable, unless the UK national debt is cut we could have a prolonged period of economic turmoil.  Whoever gets elected lets hope this issue of cutting UK’s debt gets more attention.

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The UK economy and strikes

March 23rd, 2010 No comments »

Following the high profile campaign of Unite in its conflict with British Airways there are now other companies including British Gas where the threat of strikes loom.

What is it with the union culture, are they led by egotistical union management who like to flex their muscles and show their membership that they are worth their vast wages? 

Or maybe there really is unfairness on part of the companies such as British Airways in their treatment of staff?

A straw pole of people we have spoken with suggest that the majority of people do not support the strikers who in many cases are very well paid, not forgetting the 4 million plus “economically inactive” people of working age who do not have a job.

In today’s world of employment legislation to protect the worker, and the increased flexibility for people to move jobs, do we really need unions to “fight the cause” of the worker? Moreover should such workers going on strike have the right to disrupt the lives of other hard working individuals through what some might see as a selfish action?

Jobs for life are no more, the vast majority of the working population will change jobs several times during their careers, so do we really need a protectionist and outdated union culture to stand up for “the worker”?

Going back to the specific case of British Airways.  The industry is hugely competitive and has undergone major change with the increase in low cost flights, it is clear the British Airways has to change its cost base, and sadly that will mean some redundancies, changes to working practices, etc.  Simply going on strike, disrupting the lives of many ordinary people and damaging the UK economy does not seem to be a sensible approach. 

To make matters worse our political system is affected by those who “sponsor” parties through “political donations”, as such the recipients of the donations are not in a position to act without bias against the hands that feed them – in this case the unions.

Lets hope common sense will soon prevail, if not the unions will gradually sink the British economy.

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New build – dangers of buying off plan

March 11th, 2010 No comments »

Over the last decade there have been numerous developers selling off plan with buyers paying a modest deposit to secure purchase as a fixed price on completion of the development.  In the rising property market this has been great news for many investors who managed to sell on their contracts for a tidy profit without ever buying the property.  But now the tables have turned.

Property developers who sold almost anything off plan from hotel rooms through to luxury houses are now following through on build completions only to find that many buyers no longer want to purchase, willing to forfeit their deposits rather than purchase today at prices set in the peak of the property market.  It seems like a good idea, just lose your deposit of say £10,000 rather than buy a property at £50,000 over value?

Unfortunately for many who purchased off plan they did not read the small print, in many cases there were clauses such that if another buyer was not found for the purchase price agreed then the original off plan buyer becomes liable for the shortfall.  Today there are cases of legal action being pursued against off plan buyers who walked away from their commitment to buy.  Developers are suing for the losses incurred from reduced selling prices and marketing fees.

Not a pleasant situation for the off plan buyer, but on the positive side we are near the bottom of the property cycle (no one knows for sure), but buying off plan today with two years to completion may not be a bad deal – that is assuming you know you can raise the required bank finance when the property is completed.

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Predicting property prices in 2010

February 26th, 2010 No comments »

Nationwide have just announced a 1% fall in property prices for February 2010, this is after a period of over 9 months with reported increases, so what is happening, what is the prospect for property prices in 2010?

We have previously blogged about the weakness of the property market and that we are not in a normal market where any increases or decreases can be taken as predictors for future prices.  The fact is the volume of property sales is well below historical averages, this lends itself to more unpredictable property prices.

Other factors also come into play, in particular the restoration of stamp duty thresholds on 1st January 2010.  Such changes in an already thin market have a more pronounced effect on property prices.

But key for most of us will be future property prices.  Unfortunately it is tough to predict, as we highlighted in our blog post about property prices in October last year.  The key factor for 2010 will be the election, who gets in power and what actions will they take to address the UK’s economic issues.  Whilst we are not in the same precarious situation as Greece we do have challenges to face, and how we face them will impact property prices.

So, back to the heading of this post, predicting property prices in 2010.  The fact is this year will probably be one of the most difficult to predict, because we have so many unknowns with the pending election.  Our best guess is that prices will be relatively flat in 2010, some months of increase, some of decrease.  Time will tell!

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Posted in UK House Prices

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Estate Agents, we love them, don’t we?

February 24th, 2010 No comments »

How many times have you driven down the street to see for sale signs? The answer is probably often, even in these tough times for the property market people are still managing to sell their properties, albeit often after a long wait.

These for sale signs are of course great advertising for the local estate agents, many of who are desperate to make sales in what is a very slow market for them.  With lower revenues many estate agents are also getting ever more creative on their advertising trying to increase exposure at a lower cost. 

So what is the canny estate agent doing now? Well we have received many reports of “fly boarding”, this is where the estate agent places their for sale board outside (typically) a block of flats.  Well, who in the flats would know?  In some cases we have reports of 10 or more estate agent boards placed outside a large block of flats. 

Many flat residents are getting wise to the “fly boarding” as they speak to others in the block and managing agents.  Maybe the best solution is for managing agents to impose a rule, any for sale board has to be placed with their approval, that way it should be easier to control some of the more “eager” estate agents … but we do love them, don’t we?

If you are a victim of fly boarding then you can also report the estate agent to your local trading standards who will often be willing to take up prosecutions against the offenders.

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Reducing the UKs national debt, we have the answer!

February 15th, 2010 No comments »

Well, maybe not quite THE answer but we have some thoughts and ideas on this subject.

Firstly there is pretty much a unanimous view amongst the major political parties that we have to reduce national debt.  But equally there is also a consensus that we cannot reduce debt too quickly such that we enter into a situation where we plunge the economy into the deep and prolonged recession (or depression).

In effect it is a balancing act, how do we reduce national debt quickly enough without creating a prolonged recession?  There is no easy answer to this, otherwise our politicians would be less reticent about giving us clear information on how they intend to deal with the UK’s debt problems.

Well, as we don’t have to stand for election it is probably easier for the editors at the house4sale blog to make some comments and suggestions, and who knows we might even spark some ideas for our political masters … ok, maybe we are getting a little carried away :-)

So here are 5 suggestions:

1 – Increase taxes on those areas that are less harmful to the UK economy. For example, tax goods where there is a very high percentage of imports, white goods, plasma TVs and the like may fall into this category.  This isn’t an import duty, this is an additional tax on sales that targets a product category, thus increasing tax revenues without contravening international trade conventions.

2 – Reduce final salary pension commitments in the public sector.  Whilst we feel it would be unfair to reduce payments for those already receiving pensions maybe increasing focus on those who have not yet retired is to be considered.

3 – Increase the retirement age immediately, maybe not making it compulsory for the next 5 years but at least giving people the opportunity to choose to keep on working. 

4 – Stop funding university places for degrees that do not improve the economy.  For example do we really need degree courses in wind surfing? And just how many degree courses in media studies should the tax payer fund?

5 – Cut back on benefits.  According to Government statistics we have over 8 million people of working age that are “economically inactive”, this compares with 28 million employed.  To put it another way over 1 in 5 people of working age are potentially claiming benefits. Every £1000 per person saved in benefits equates to £8 billion p.a.

Some of these are tough measures, but we have to take tough decisions if we are to at least maintain future living standards. Taking no action is not an option.

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UK’s credit rating expected to remain at AAA

February 10th, 2010 No comments »

Today the Governor of the Bank of England, Mervyn King, announced that inflation may exceed 3% in the short term but will quickly drop back to less than 2%.  The main reason for this was the recent increase in VAT.

Mervyn King also added that the recovery in the UK economy will be slower than some had originally been forecasting.  He also went on to discuss UK’s AAA credit rating and saw no reason why this should change, but his speech contained a caveat regarding the election and what a future Government may seek to do.  In Mervyn King’s words, the AAA rating was ours to lose.

So why is the AAA rating so important to the UK economy?  There are two key and related factors here.

Firstly, the cost of UK borrowing would increase substantially if the credit rating was to fall below AAA.  Put simply the higher the perceived risk the higher the interest rate on borrowing.

Secondly, and perhaps more importantly, the effect of a fall in UK’s AAA credit rating would increase interest rates.  Higher interest rates, especially at a time of weak economic growth would slow the growth down even further and quite possibly create a longer recession.

So, it is good news to hear that UK’s AAA rating is “ours to lose”, let’s hope whoever gets elected looks after our credit rating!

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Posted in UK Economy

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