UK Property Market Stagnating

[Pads]

Yes that was Russethouse thanks . I could'nt see which banks had opted out of the protected sceme or was I being blind? Time to start moving money into different banks I think. better to be save than sorry hey !! 

[Pads]

[quote user="ali-cat"][quote user="Pads"]

Ali cat Hello.....

Where did you check to find out if you bank was one of the vulnerable ones?

Am I right in thinking if you keep less than 30,000 in each bank you are safe  from any loses?

[/quote]

Hi Pads

I just typed my bank's name and "vulnerable" into google and it brought up the gory details.  As I understand it the UK scheme covers 100% of the first £2000 and then a percentage (90%) thereafter up to a maximum of £35,000 compensation.  Offshore accounts in IOM, Jersey, Guernsey are not covered by the UK scheme. IOM offers cover of 75% up to £20,000 (£15,000 total compensation) with lesser schemes in Jersey and Guernsey.  I believe the guarantees relate to each depositor and if you have seperate accounts in banks that all belong to the same group you may only qualify for the £35,000 max rather than £35,000 for each account.

Mr Cat

 

 

[/quote]

I just tried that Ali-cat and I came up with loads of tosh........[:D] Im with the Halifax and Nation wide they should be OK I think [8-)] dont you ? Do you know if they have opted out of the safty scheme mentioned in Russet house link ?

[ali-cat]

Russethouse - Thanks for the very useful link.  It was reassuring to see that joint accounts appear to provide protection up to £70k for joint accounts.

Pads - As we are naming names - Alliance and Leicester and Bradford and Bingley were considered vulnerable plus (though not as exposed as Northern Rock) and HBOS (which owns the Halifax) also saw steep falls in share values.  There has been some bounceback.  Best not to panic but keep a close eye on them.

Mr Cat

 

 

[Pads]

Thanks Mr Cat

 

PANIC PANIC Who's Panicking....................[:D]

As long as they havnt opted out of the scheme on Ruset houses link Im happy. have you seen a list of who has opted out any where ? 

[Gluestick]

Whilst you can deposit your money up to the guarantee limit in a number of separate banks, you will lose on the rate paid.

Probably far better to carefully select the larger institutions with less exposure to both consumer credit debt and residential mortgages.

A lot of research can be carried out on line, as most plcs, these days publish their full accounts under a heading such as "Corporate".

If a number of banks fell over, in any case Treasury wouldn't have the funds to bail them out and meet the guarantee obligations!

The thing to avoid are the smaller deposit takers (who normally attract deposits by offering far higher rates!) and the smaller building societies: they are the most vulnerable in this current market.

 

[Gastines]

LIke Quillan and others I wonder who we should take advice from? Lasr visit to Uk we asked to see an advisor about a few things and the chap who came out,having just taken his school cap off and got into his first pair of long trousers, greeted us with "Alright?"Some years ago when we fortunately cleared our mortgages,we had an endowment on one for £8,500. Not being too bright we kept it as a saving ,due to pay out in about another5 years. The last notification we had told us that the likely shortfall is expected to be £5000. Would we like some advice?

A ex friend who was in the business was only interested in his commission and told me that if the borrower defaults in the first 3 years,he has to repay his commision. Last time things went pearshaped he was offering to loan clients in dire straits the last few payments to take his book over the 3 years. I think very few ethics are involved when it comes to money.

We never had much to worry about, now we have got more than 5bob it's more of a worry.We take and use our own advice then we have only ourselves to blame,

Regards.

[Russethouse]

 I think I have some homework to do - I was just about to a open a Business Investment account with Alliance and Leicester and take out the Barclays ISA - now I find that they are all under  the same umbrella - eeek ![:'(]

To be honest anything to do with UK finance - Money Saving Expert is my first port of call....

[Gluestick]

[quote]I think very few ethics are involved when it comes to money.[/quote]

And thereby lives the core problem.

For too many years, Capital Markets have been about becoming wealthy (for a few) rather than Wealth Creation; which is singularly different.

And as greed for wealth has taken over, ethics and moral value has exited stage right.

Which is fine in the short term, but injured everyone in the longer term.

 

[Gastines]

And another thing.. Russethouse mentions ISA's. I thought, thought being the operative word,that capital put into ISA's was protected. ie, in my terms what you put in ,you got out. Not so we have found out recently.Changing to another bank and cashing in our ISA's the capital lost nearly6%.  As we are tax residents in France ,we aren't allowed to buy more,thank goodness,but there is presumeably no advantage anyway?

In defence of my ignorance in these matters ,In the late 60's I  had a tax rebate of several hundred pounds paid twice,coming from two different offices. About 6 months later I had a letter asking for one payment back as I obviously knew it was an error. I pointed out that I was a mere workman and as they were supposed to know what they were doing  I didn't expect errors from them and I'd spent it. Eventually .I had to pay it back by interest free installments,I managed to spread it out over 3 years, by which time the Credenza I bought with their error of £640  I sold for £1800. About the only time I was ever pleased to deal with UK Inland Revenue.

Regards.

[Gluestick]

Gastines:

The only financial product which is "Protected" is what used to be called "A Guaranteed Growth Bond".

These were issued for a specific period, three to five years and the capital and growth were warranted from day one. All provided, of course, that the issuing institution didn't go "Down the tubes".

Probably, the only common negotiable instrument which is guaranteed today (with again the caveat about the issuer) is a CD; (Certificate of Deposit).

With roiled financial markets and no forward certainty, no one can predict the future, even in the very approximate manner previously used by life assurance companie, pensions providers and the rest.

The magic catch all statement they use today is simply, "Remember, investments can go down as well as up."

All this is nothing new: in the 70s, Barclays Bank Trustees managed to successfully lose over 50% of the capital value of the Aberfan Fund, all the money collected nationally to relieve the suffering after the dreadful disaster.

One would have thought that at least one of the UK's leading banks would have enjoyed rather better information than the rest.

Huh!

[:'(]

[ali-cat]

Isn't life getting complicated.

In the wake of the credit crunch jitters I've had to think hard about our banking and investment needs and the need to cover French inheritance laws,  currency transfers,  hedging against currency fluctuations, protection against bank failures and inflation beating interest rates.

I've come to the conclusion that,  as well as retaining our UK and French current accounts and currency broker, we probably need two independant offshore sterling accounts for each of us (me and Mrs Cat) and at least one Euro savings account or assurance vie each.  A total of 8 bank accounts and a currency broker account!![blink]

Is there any limit on the number of accounts you can hold?  Makes me long for the days when I had one savings account and a weekly cash pay packet!

Mr Cat

[Quillan]

That sounds ever so confusing but I'm sure you know what you are doing (in the nicest possible way)

One thing can I say, if I may, is god forbid that it does but if something ever happened to you and whilst you may have a will that says exactly what it to happen it can become a very long drawn out process.

I say this only because my father did something not too dissimilar and it took 18 + months to sort out mainly because the solicitor needed specialised people to sort out the offshore stuff and some other bits and bobs. You will need to put in or update your wills as to exactly where the money is else it can become expensive for your dependants. Not in tax etc but just getting stuff processed and we all know how much solicitors can make on discharging wills let alone how long they can take to do it. From that point of view I would seek professional advice before doing anything.

[Russethouse]

I spent last night looking at this - in the end I used the google method - type in the name of bank and 'reviews' To be honest, IMHO you may as well toss a coin, but the MSE chart is worthwhile to sort out which banks come under the same financial institution umbrella.

[Gluestick]

Interesting.......................

I have just searched both the Bank of England's site and that of the FSA (Financial Service Authority).

Both deny to the consumer, a list of regulated institustions and Authorised Deposit Takers!

Which just demonstrates what a total con the UK "Financial Services" industry really is!

It is there to serve only the interests of the wheelers and dealers: the interests and concerns of the public are obviously of little or no real concern!

Having been involved in various ways with this since the original Financial Services Act in the 1980s, it is quite obvious the UK has come a long way since then: backwards! [+o(]

So even where and when the consumer trys to take the best steps to protect their hard won assets, the system makes it hard if not impossible to make clear value judgements: indeed, rather it seeks to obfuscate reality and continue to hide behind small print and dubious practices.

Nice.

 

[Alan Zoff]

I once tried to report to the FSA a financial adviser who had taken advantage of an elderly client (who was in no way related to him).  I found out by accident that he had "borrowed" large sums of money from her and had the use of her car for 6 months as he and wife "needed a second car". Nothing in writing, no external advice. His firm was also clearly in breach of other general financial services regulations, e.g. trading under a different name to that appearing on notepaper.

It was extremely difficult to get ANY information out of FSA about obligations/standards for authorised advisers and they never did take any action, as far as I am aware. Instead, her executors (she died just after problems came to light) took possession of the car and took the adviser to court to get a judgement against him, eventually recovering the "loans" through a bailiff. This was 3 years ago and he is still practising as an authorised financial adviser.

Gives you great confidence in the system, doesn't it? 

[Gluestick]

Alan:

Quite a few years ago. my practice acted for the steward of my local club, a charming bloke who had been in the Wavy Navy and spent much of his life as en ex Pat working in West Africa.

After an expensive divorce he had few real assets.

He was confident, however, that the property in a renowned English spa town, owned by his aunt would provide for his future. As so often the case with families, his father had bought it and given it to his younger spinster sister on the condition that it was willed to his son. A bit silly but there people often go.

After his aunt passed on, client and wife went down to sort out the estate: to say he was white faced and devestated on his return, rather understates the case!

It transpired that aunty, who was elderly and rather confused had seen her bank manager and stated that she had little money: whereupon manager took her straight over to the "In House" financial adviser; who proceeded to screw aunty with one of the original income from your house deals.

My chum's problems came after the family solicitors advised him of a large outstanding mortgage on the property![8-)]

When I untangled the plot, it transpired that aunty had been sold a product where she took out a mortgage and a simultaneous annuity, where the income from the annuity was used to pay the mortgage and the balance was hers.

I took the case on "Contigency"; i.e. No Win No Fee, simply because my chum had no ready cash, I felt very strongly, from a moral aspect about it and also very confident in winning!

Now, an annuity is really a life assurance backwards: in this case, the annuitant buys the product for a lump sum, and the underwriter's actuary calculates life expectancy using industry mortality tables and current and projected interest rates. So far so good.

However, in this case, the dear lady was terminally ill with breast cancer!

An annuity was the last thing in God's green earth anyone with any brain, knowledge or integrity would sell such a client!

In those days, financial institutions were regulated by SROs (Self Regulatory organisations) such as IMRO, FIMBRA etc.

Once I started to check into this matter, it transpired that the bank (one of the biggest!) were self-regulatory!

It turned out that this lady had drawn one payment only and then expired: which was hardly surprising since by then she was on the maxium dosage of diamorphine possible outside hospital: I had tremendous willing assistance from her GP: like myself, he was totally outraged.

Additionally, her condition and the drug therapy meant that most of the day she was totally spaced out with little mental focus and acuity.

Now the tenets of the financial service act at that time, required each and every "Adviser" to, "To render every best advice" and "Use all due dilligence".

Ha ha.

In the end after a number of robust threats, the bank unwound the deal and returned the cash.

No names, sadly, as part of the final agreement was a gagging order on me!

More's the pity!

As a happy finale, my client moved abroad and and set up a restaurant and I also helped him with the financial structure and funding.

He was a wonderful cook and his West African curries were exceptional! [:D]

All's well that ends well.

[Alan Zoff]

Your friend/friend's aunt were not the only ones caught in that way, of course. Full marks for the result.

Here's an extract from Times report today which is in keeping with the Subject heading:

"Savills, the property agency, has given warning of steep price falls for multi-million-pound London flats and houses this year and next, reversing a forecast made last Autumn. Fears that City bonuses will be a fraction of the last £7.4 billion payout are expected to put a chill on demand for central London housing in the £1 million to £5 million bracket. Research from Savills indicates that prices in this range have already fallen on average 1.5 per cent this year. The warning comes as David Miles, chief economist of Morgan Stanley, said at Wriglesworth's Great Housing Market Debate that property prices could fall 20 per cent in two years."

My heart goes out to those in the City who will see next year's bonus cut.

[Gluestick]

It's the totally amoral and brainless pin striped suited barrow boys, of course, who hold primary responsibility for this problem.

What people don't seem to realise is these clowns can't create money: they are in my view pimping it out of a completely dysfunctional financial system.

The multi-million pound houses, of course, are being bought by the loss of value of the average bloke's pension fund and investments.

Circa 87% of all fresh new funds inflow to the institutions, comes from the little guy's hard won savings. not some quaint island called Financial Nirvana!

 

[Alan Zoff]

Looks from market reports today as though some of them have been rigging market over past few days, spreading false rumours in order to exaggerate short-term price movements and make quick killings. No scruples of course. Greed took over from scruples a long time ago.

[Quillan]

I'm no fan of some of these people either but it is a bit unfair to tar them all with the same brush. Some of 'these people' are also looking after large funds which contain the money from loads of little people trying to make a few bob for their retirement. You never hear much when things are going well but when they don't everyone starts shouting.

The 'greed' is not just the the people in the city it's the investors, both small and large, down to the average guy in the street.

Remember BCCI, loads of people lost their money but you never heard them telling people how wonderful the bank was when it was paying an extra 2 or 3% more than every one else. Perhaps they should have thought that if it looks to good to be true then it probably is but instead they put their life savings in thinking they were on a killing compared to us schmucks who had theirs in the building societies.

Look at people who brag about the value of their house, "I bought it for X and now it's worth Y" except of course it may not now. At times you get the feeling that it's some form of competition. Funny enough it never seams very long before our English guests (at our B&B) get round to asking how much we paid for our house and what do we think it's worth now. My answer is always nothing as I don't want to sell, it only becomes worth anything when I do and then its all relative to the price of other properties unless you are going to buy a caravan and live in lay-by on the M25.

Does anyone know why HBOS shares were suspended this morning? When I was searching in Google for the answer to that quesion (which I couldn't find) I used 'UK Banks in trouble' there seems to be a lot of stuff going around in Nov 2007 (http://www.marketoracle.co.uk/Article2060.html)  about UK banks being in trouble and there are even articles going back to 2005 so it would seem that the banking sector has been having a few problems for quite a while.

[cooperlola]

Quillan, you and I are both - I guess - in the happy position of not giving a st*ff what our properties are worth.  Here for the duration and all that.  But it is a very important consideration for anybody who is in any way along the road to moving countries, isn't it?  Must be pretty grim for anybody who's mid-move watching exchange rates force up the cost (if not the price) of buying here, whilst their UK home languishes on an estate agent's books.

[WJT]

Following on from Alan and Quillan's comment the below link is in response to some of the rumours. Hopefully this means that no UK bank is really vulnerable at the moment, fingers crossed we have seen the worst of this fiasco.

http://uk.news.yahoo.com/rtrs/20080319/tts-uk-hbos-ca02f96.html

[Gluestick]

Quillan:

One of the problems with markets which zoom on false optimism, is that when the going becomes sticky, then rumours abound.

I was working in the City as a dealer in the madness of the early 70s and well remember one luncheon in our Georgian dining room in the middle of the meltdown. One guest was the FD of a major insurance company, which was being bandied around the City as on the edge of collapse.

We asked him point blank how well founded the rumours were: "Total absolute rubbish!" he responded, robustly.

And history proved him right.

However many financial institutions were in serious trouble. And a large number subequently collapsed or were taken over and renamed.

Do I remember BCCI.......................

Just a bit: I met many of the founding directors in London: and thereafter knew quite a bit about them. Nuff said.

Yes, they like many others, paid above the odds: how and why?

But then so did Norton Warburg: and Barlow Clowes.

The core trouble now is that instead of "The Markets" being subservient to inflowing capital: the markets are prime and the capital subservient to the market!

Cart before horse and tail wagging dog.

Few ISAs, Peps, pensions and life assurance policies have tracked the boom in share values. Indeed, as the market collapsed, earlier, the"Experts" blamed reduced pensions on market losses: yet at the same time, all the other "Experts", the analysts and commentators beseeched the public to hold on to their shares, equities are a long term investment etc.

So why didn't the pension fund managers, whom one must presume are "Experts", follow this collective wisdom? By now, the funds, if they tracked the FTSE would have not only recovered, but should be worth far more. And therefore, inter alia, pensions ought to have increased, not collapsed!

As a good example of the underlying reality, S & P (Standard and Poors, the major US credit rating agency and analysis firm) demonstrated about five years ago, that will ALL major M & A deals (Mergers and Acquisitions), these underperformed the markets by a significant value!

Thus, apart from earning vast fees for investment banks, lawyers, accountants and underwriters, and making hundreds of thousands of workers redundant, what the hell was the point?

Perhaps Will Hutton's seminal article published in the 80s in Management Today, "Why we don't need the City!", says it all.

 

 

[Sprogster]

From my professional experience, over the last few years the majority of buyers of London residential property in areas such as Mayfair, Kensington and Chelsea are foreign nationals, as evidenced by the fact that according to the Land Registry over 70% of these types of London properties are being purchased through foreign companies.

The UK has a uniquely benign tax regime for foreign investors in UK real estate, in that there are no liabilities to UK Capital Gains Tax and the Inheritance Tax exposure can be simply and legally avoided by owning the UK property through a non UK resident Company.

As a result wealthy individuals from Europe, Russia, the Middle East, the Far East all seem to want a second, third or fourth home in central London and seem to be willing to pay anything for a London home with the right address. The wealth being generated in Russia and the Middle East from the current price of oil, gas and minerals is astronomical and a London home seems to be on the must have list, as a safe haven investment and the place to visit. 

[Quillan]

But how do we know in these crazy time that the Bank of England and the DSA are not just the same as the Captain of the Titanic "This ship will never sink".[;-)]

Did they not say everything was OK with Northern Rock, there were 'don't panic statements for that. I read the report given in the link and also noted that the HBOS share price dropped by 15% last year because of problems with loans. Going to be an interesting few months.