Wednesday, March 16, 2016

Rees Page Excel at Lexcel

The Firm's Annual Lexcel Monitoring Visit was completed in mid-March. For the first time we were assessed against the latest version of Lexcel and the firm passed with flying colours.

In her Report Summary Assessor Jane Blackstock, echoing the Firm's website strapline, said:-

"With roots going back well over 100 years Rees Page is a successful local Law Firm that not only has a rich heritage but also a reputation for forward thinking and providing clear and practical advice at a fair cost.

The outcome of this Lexcel v6 Year 2 AMV is excellent. Files reviewed by the assessor were found to be in excellent order. Matters move along in a timely fashion and there is a structured approach in terms of file maintenance." 

Welcoming the result Andrew Lund said:-

" It is always difficult to know how you are fairing against the competition in the local market. The Lexcel Standard is the internationally recognised bench mark for excellence in legal practice in England and Wales so it makes sense for us to use this as a tool to see how we shape up. Since we first obtained Lexcel we have shown consistently good results against the backdrop of a seismic change in the way legal services are shaped and delivered. Lexcel has also provided a framework for us to integrate Estate Agency services into our more mainstream offering. These audit results are a credit to everyone at the Firm and an achievement of which we may all feel justifiably proud."

Looking to the future Nick Wynn-Williams said:-

"I was  struck by the comments Jane made about the areas of good practice she singled out as exceeding even the high standards set by Lexcel. In particular where she spoke about morale saying:- 

"There is optimism for the future. There is a good team spirit and excellent morale. The commitment of the Firm to the staff and the commitment of staff to the Firm is very evident."

These comments are particularly encouraging as I prepare to assume the mantle of Senior Partner and look forward to working with everyone at the Firm to build upon the strengths that Jane speaks of." 

Monday, February 15, 2016

QE Too?

In a previous article we reported how Lenders were filling their boots with Buy to Let mortgages and the adverse impact that this was having on First Time Buyers who were unable to compete because of affordability constraints. It hadn’t occurred to us that Quantitative Easing could have amplified these effects by beefing up BTL cash purchases as well. However, this is the scenario postulated by Standard and Poor. In a recent piece on QE and the effect it has had on driving wealth inequality in the UK they said:-

“…the share of cash-financed buy to let transactions appears to have started out pacing mortgage financed buy to let transactions at about the same time when QE was first deployed… increasing number of new additions to the rental market must have been financed by means other than mortgages, which we consider a good proxy for cash purchases. We think this points to the portfolio-rebalancing effect of QE, when investors liquidate lower yielding positions in their portfolio where yields have come under downward pressure due to QE (such as yields on government debt), in order to acquire higher-yielding assets from the proceeds. Higher demand for BTL property is likely to exert upward pressure on house prices.”  

If this analysis is correct then this would explain why the Bank of England is increasingly concerned about the threat to financial stability posed by the BTL sector since if yields elsewhere become more attractive then it follows that there will be a flight of money away from bricks and mortar.

Wednesday, January 13, 2016

Telling it how it is

Everyone knows we have a Housing Crisis here in the UK. However despite sky high prices and rentals where is the political will to tackle the issue?
The following, you may think represents a refreshingly pragmatic approach from a leading Government figure who in an Annual Policy Speech recently said:-

“90.         Housing is still the most important livelihood issue we have to address.  Exorbitant property prices, high rentals, small living spaces, the proliferation of subdivided flats and record high PRH applications all tell us clearly that we must tackle the housing problem with resolve and perseverance.

91.         Since taking office, the current-term Government has stated its determination to increase housing supply and curb property speculation and overheated investment.  It has also reminded the community of the need to watch out for fluctuations in the property market caused by a long period of ultra-low interest rates and low supply.

92.         Our efforts over the past three and a half years have produced results.  The housing supply has significantly increased and property prices and rentals have started to fall, reversing the perception that property prices and rentals can only go up.  Some people wonder whether the Government will relax the demand-side management measures or even reduce land supply.  In the past three and a half years, other government officials and I have reiterated the Government’s courage and determination to tackle the housing problem and there should be no doubt in this regard.  While it is the Government’s responsibility to provide land and public housing to cater for the housing needs of the public, it is not the Government’s duty to ensure that property prices can only go up.  Neither should property prices be kept at a high level by generating a man-made shortage.  The current property price and rental levels are still beyond what people can afford, and have distorted the values of the younger generation.  We should continue to tackle the housing problem head-on and must not concede. “

So who is this sensible fellow?

The answer - Hong Kong Chief Executive Leung Chun-ying

A pity that a Proxy for the Chinese State seems more able to tell it how it is than our own ruling elite!

Wednesday, December 09, 2015

The Devil is in the Detail

The ink is barely dry on the Bank of England’s Financial Stability Report and a couple of days later we have the minutes of the FPC meeting that informed its contents. The Report itself had a fair bit to say about Buy to Let but buried in the Minutes we have the following:- 

“Some asset prices and property prices, in particular, appeared elevated relative to incomes or rents. Increases in property prices had, in previous cycles, been associated with a subsequent increase in credit growth. Commercial Real Estate prices had risen strongly in recent years and prime CRE appeared overvalued on some metrics. UK house price inflation had picked up recently. Valuations were vulnerable to an increase in market interest rates or premia demanded by investors for holding risky or long-term assets.”

 In other words when interest rates rise then the value of some assets (including property) will fall which, for the Financial sector, poses a risk. 

It will certainly be interesting to see what happens if the US Federal Reserve raises its bench-mark rate later this month, for history shows that when the US makes a move the UK is not that far to follow.

Tuesday, December 08, 2015

Filling their Boots Part 2

In May we reported that the Banks were piling into Buy to Let and questioned whether or not that was a good thing. Well it seems as though the FPC is now getting concerned about the threat that Buy to Let lending may pose to financial stability going forward. Having observed that it was BTL that was almost exclusively driving growth in mortgage lending, the FPC pointed out in its recent Financial Stability Report that lenders apply much stricter criteria to owner – occupiers, particularly in relation to so-called stress testing and affordability, than they do to their Landlord Borrowers. The FPC calculated that if mortgage interest rates rose by 3% then nearly 60% of those taking out BTL mortgages in recent times would see their rental coverage collapse thus signalling repayment issues. On the same measure only 4% of recent owner-occupiers would struggle. With a raft of tax measures that will make it harder for BTL to make attractive returns will the inevitable “normalisation” of interest rates see disgruntled Landlords sell up?