The Government is right now in the middle of another campaign of pure SPIN: The need to License Landlords.
With the advent of the hopeless deposit scheme, its administrative nightmares and the way it bends over backwards to help the tenant is filling us with such foreboding. One case had the tenant abscond after 10 months without paying the rent due. The deposit scheme made the landlord wait 4 months before the deposit was finally handed back to its rightful owner. And why? Because the authorities we waiting to contact the tenant to get their permission!! As they had done a runner with no forwarding address - a futile process.
Where do they get these people from who make such idiotic decisions?
Will this proposed licensing scheme be any better? No way.
The new scheme has identified "accidental landlords" (as a new source of tax revenue?) as a "problem" as they do not understand their obligation to the tenants.
Like any scheme from this vacuous Government it will reduce the supply of private rentals at a time when no amount of social housing providers can satisfy the demand for homes. And they [social landlord sector] still have serious problems with BAD tenants.
When will we have the suggestions for a tenent licensing scheme? I wonder.
Please make any comment as this area needs a balanced review.
Wednesday 6 May 2009
Saturday 4 April 2009
Dollar Denominated Property Under Threat
The coming financial storm no one is talking about
BY MANRAAJ SINGH
Dear Reader,
There’s a major trend that could have a devastating impact on the US dollar.
What’s shocking is that I haven’t come across a single other financial analyst who has fully grasped the implications of it.
This is crazy, given that it will affect anyone who owns dollar-denominated investments, whether it’s gold, international shares or commodities. In fact, even if you aren’t directly invested in them, there is very good chance your pension fund is.
That’s how big this is.
The thing is, though, you can turn this trend to your advantage, as we’ll see in a moment.
I’m talking about the planned creation of a single common currency in the Gulf States. A new monetary union just like the eurozone, but for oil rich countries.
That might not sound like a big deal. After all, who really cares what a bunch of Arab countries are doing with their currencies?
But this is going to have a colossal impact on the world economy. Let me explain…
Last Friday, I explained why the dollar’s long-term value is under threat as the US economy falters. But now let me show you the threat to the dollar that the rest of the world still hasn’t picked-up on…
The great petrodollar merry-go-round is about to break down
You see, right now the dollar receives a huge amount of support from being the standard currency for international trade. The international oil trade is a big part of that. Oil is priced in dollars on the international market. It is bought and sold in dollars.
What that basically means is that countries that want to buy oil need to have dollars. Countries that sell it are left holding dollars. That fuels global demand for the American currency. It props up its value…
Right now, the only major producer that sells in a different currency is Iran. They take their payments in euros and Japanese yen. But it is the Gulf Arab states like Saudi, Kuwait and the UAE that are at the heart of the global oil trade.
But now think of a situation where global oil production is increasingly concentrated in the hands of the Gulf Arab countries. And, as I explained in a recent special report, that is what is going to happen as non-OPEC production collapses.
Now consider what the impact on the dollar is going to be when those countries say they don’t want to be paid in dollars anymore. Once they’ve got a common currency you can bet they are going to price their oil in it. They will want to be paid in Dirhams or Dinars or whatever else it is that they eventually name it.
That is going to short circuit global demand for the dollar. Because oil importing countries won’t need to buy dollars to pay for their oil anymore. The Gulf countries won’t be left holding huge reserves of dollars which they then have to recycle into the US…
Right now the oil-exporting countries are the second-biggest holders of US government debt after China. That’s because they get paid for their oil in US dollars. A lot of that money then gets reinvested in US dollar-denominated assets. But if they aren’t being paid in dollars anymore, they won’t have to recycle them by investing in US government bonds. International demand for the dollar is going to plunge. And the value of the dollar is going to plunge with it.
Two years to D-Day?
The Gulf Co-operation Council (GCC) states have been talking about this for a long time. And they signed the first concrete agreements to implement it last September. Since then they have been moving ahead with their plans. By the end of this year, they should have a monetary council in place. This will be a precursor to the Gulf central bank. And it will decide on the name and value of the currency.
They had planned to have their new currency in place by 2010. I doubt they will manage it that quickly though. The way I see it, the impact of the financial crisis will force them to push it back by about a year.
But there is absolutely no doubt about it – the Gulf common currency is now on its way. And when it happens it is going to kick the legs out from under the dollar.
As I said though, there are ways that you could profit from this. An obvious trade is to go short on the dollar. There are listed funds that allow you to do that. And again, not all dollar-denominated assets will lose out. Whilst the value of US shares, for example, is going to be eroded, the value of certain dollar-denominated commodities like oil and gold rises as the dollar weakens.
Kind regards,
Manraaj Singh
For The Right Side
Editor’s recommendation: Manraaj Singh is Chief Investment Strategist at Profit Hunter. As he explains, when the dollar falls, oil goes up. Click here to receive his latest smart way to play the “oil rebound”.
BY MANRAAJ SINGH
Dear Reader,
There’s a major trend that could have a devastating impact on the US dollar.
What’s shocking is that I haven’t come across a single other financial analyst who has fully grasped the implications of it.
This is crazy, given that it will affect anyone who owns dollar-denominated investments, whether it’s gold, international shares or commodities. In fact, even if you aren’t directly invested in them, there is very good chance your pension fund is.
That’s how big this is.
The thing is, though, you can turn this trend to your advantage, as we’ll see in a moment.
I’m talking about the planned creation of a single common currency in the Gulf States. A new monetary union just like the eurozone, but for oil rich countries.
That might not sound like a big deal. After all, who really cares what a bunch of Arab countries are doing with their currencies?
But this is going to have a colossal impact on the world economy. Let me explain…
Last Friday, I explained why the dollar’s long-term value is under threat as the US economy falters. But now let me show you the threat to the dollar that the rest of the world still hasn’t picked-up on…
The great petrodollar merry-go-round is about to break down
You see, right now the dollar receives a huge amount of support from being the standard currency for international trade. The international oil trade is a big part of that. Oil is priced in dollars on the international market. It is bought and sold in dollars.
What that basically means is that countries that want to buy oil need to have dollars. Countries that sell it are left holding dollars. That fuels global demand for the American currency. It props up its value…
Right now, the only major producer that sells in a different currency is Iran. They take their payments in euros and Japanese yen. But it is the Gulf Arab states like Saudi, Kuwait and the UAE that are at the heart of the global oil trade.
But now think of a situation where global oil production is increasingly concentrated in the hands of the Gulf Arab countries. And, as I explained in a recent special report, that is what is going to happen as non-OPEC production collapses.
Now consider what the impact on the dollar is going to be when those countries say they don’t want to be paid in dollars anymore. Once they’ve got a common currency you can bet they are going to price their oil in it. They will want to be paid in Dirhams or Dinars or whatever else it is that they eventually name it.
That is going to short circuit global demand for the dollar. Because oil importing countries won’t need to buy dollars to pay for their oil anymore. The Gulf countries won’t be left holding huge reserves of dollars which they then have to recycle into the US…
Right now the oil-exporting countries are the second-biggest holders of US government debt after China. That’s because they get paid for their oil in US dollars. A lot of that money then gets reinvested in US dollar-denominated assets. But if they aren’t being paid in dollars anymore, they won’t have to recycle them by investing in US government bonds. International demand for the dollar is going to plunge. And the value of the dollar is going to plunge with it.
Two years to D-Day?
The Gulf Co-operation Council (GCC) states have been talking about this for a long time. And they signed the first concrete agreements to implement it last September. Since then they have been moving ahead with their plans. By the end of this year, they should have a monetary council in place. This will be a precursor to the Gulf central bank. And it will decide on the name and value of the currency.
They had planned to have their new currency in place by 2010. I doubt they will manage it that quickly though. The way I see it, the impact of the financial crisis will force them to push it back by about a year.
But there is absolutely no doubt about it – the Gulf common currency is now on its way. And when it happens it is going to kick the legs out from under the dollar.
As I said though, there are ways that you could profit from this. An obvious trade is to go short on the dollar. There are listed funds that allow you to do that. And again, not all dollar-denominated assets will lose out. Whilst the value of US shares, for example, is going to be eroded, the value of certain dollar-denominated commodities like oil and gold rises as the dollar weakens.
Kind regards,
Manraaj Singh
For The Right Side
Editor’s recommendation: Manraaj Singh is Chief Investment Strategist at Profit Hunter. As he explains, when the dollar falls, oil goes up. Click here to receive his latest smart way to play the “oil rebound”.
Wednesday 18 March 2009
FSA to Destroy the Housing Market
Apparently, potential homebuyers will be banned from borrowing more than three times their annual salary, under new rules to be announced this week. And they'll have to stump up at least a 5% deposit.
The Telegraph reports that the tough new rules are part of a move by the Financial Services Authority (FSA) to change its regulation of the financial industry.
I'm not sure if anyone's told the FSA, but I think the new rules might have come a little bit on the late side…
The latest move to regulate the housing market shows the limitations of regulation. The FSA is talking about asking for minimum deposits of 5% when someone buys a house. But these days, most banks are asking for at least 10% minimum, and 40% if you want the best deals. And that's assuming they don't then find an excuse to get out of lending at all.
Why regulators waited until the bust came along
So why introduce the rules now? After all, during the good times, it was clear that housing was in a bubble. It should have been clear to anyone that lending at six times salary, the widespread use of interest-only mortgages, and 100% or higher loans, were a recipe for disaster when combined with historically high house prices.
And the truth is, it was clear to most people. They might be speaking with the benefit of hindsight, but when you talk to City workers, they all knew that the good times couldn't last forever. But while the music was on, they just kept on dancing.
So why not introduce the rules then? Well, like everything else in markets, it all comes down to human behaviour. During the good times, everyone gets swept up in the bubble mentality. The political pressure to allow bubbles to keep expanding is irresistible. Can you imagine the carnage if the FSA had introduced these rules a couple of years ago?
Mortgage lending would have dried up overnight. The housing market would have collapsed. And the FSA (and by extension, the government) would have been hit with the blame. It doesn't matter that popping the housing bubble prematurely may have left us in better shape for today's big crisis. No one would have won any popularity contests by being the ones to stand up and call a halt to the party.
So that's why regulators tend to wait until the bust comes along. They then try to cram in as much regulation as possible while everyone is still shell-shocked and not thinking straight.
New regulations are useless now
But the trouble with this is that you then end up with completely useless regulations. As we pointed out banning 100% mortgages is pointless now, because you can't get them anymore. The market has already done everything the FSA might want to happen, and more.
So the regulations made today will make life more difficult for tomorrow's mortgage borrowers and lenders. But they won't stop the next bubble. Because that'll inflate in a different area, one that the regulators haven't paid as much attention to. And when that bubble looks like it's getting out of hand, the regulators will just ignore it, because everyone's having fun, and they don't want to be seen as the party poopers.
Then it'll pop, and they'll make up a load of rules to try to prevent it from ever happening again, as always happens.
Of course, the other thing to ponder is how this chimes with the government's mission to "get the banks lending again". I have no problem with the principle of sensible lending – I just think it should be up to the lender to decide what that consists of – but if you're going to restrict loans to three times salary, then we'd really better get used to sharply lower house prices.
Property bargain-hunters look set to be disappointed
Rightmove reports that asking prices in England and Wales rose for the second month in a row over the last four weeks. Sellers are apparently having difficulty adjusting to reality, says the group's commercial director Miles Shipside.
Prices are still down 9% on last year, but with the average price sitting at £218,000-odd, that's well out of the range of your average worker, given that the average salary in the UK is around £25,000 (and I realise a lot of people outside London will think that's overstating it somewhat).
Bulls have tried to point to the fact that Rightmove has seen a 120% rise in the number of enquiries to its site compared with this time last year. However, it's no surprise that people are more interested in looking at properties – with all this talk of a crash, they're probably hoping to find some bargains.
But with sellers "still pricing wishfully high" as Shipside puts it, it looks like they'll be disappointed. Prices still have a good way to come down – Numis Securities reckons as much as 55%, as we noted last week (Read: Will Britain go bankrupt?). And by the time houses are genuinely cheap, we'll no doubt be obsessing over some other asset bubble.
The Telegraph reports that the tough new rules are part of a move by the Financial Services Authority (FSA) to change its regulation of the financial industry.
I'm not sure if anyone's told the FSA, but I think the new rules might have come a little bit on the late side…
The latest move to regulate the housing market shows the limitations of regulation. The FSA is talking about asking for minimum deposits of 5% when someone buys a house. But these days, most banks are asking for at least 10% minimum, and 40% if you want the best deals. And that's assuming they don't then find an excuse to get out of lending at all.
Why regulators waited until the bust came along
So why introduce the rules now? After all, during the good times, it was clear that housing was in a bubble. It should have been clear to anyone that lending at six times salary, the widespread use of interest-only mortgages, and 100% or higher loans, were a recipe for disaster when combined with historically high house prices.
And the truth is, it was clear to most people. They might be speaking with the benefit of hindsight, but when you talk to City workers, they all knew that the good times couldn't last forever. But while the music was on, they just kept on dancing.
So why not introduce the rules then? Well, like everything else in markets, it all comes down to human behaviour. During the good times, everyone gets swept up in the bubble mentality. The political pressure to allow bubbles to keep expanding is irresistible. Can you imagine the carnage if the FSA had introduced these rules a couple of years ago?
Mortgage lending would have dried up overnight. The housing market would have collapsed. And the FSA (and by extension, the government) would have been hit with the blame. It doesn't matter that popping the housing bubble prematurely may have left us in better shape for today's big crisis. No one would have won any popularity contests by being the ones to stand up and call a halt to the party.
So that's why regulators tend to wait until the bust comes along. They then try to cram in as much regulation as possible while everyone is still shell-shocked and not thinking straight.
New regulations are useless now
But the trouble with this is that you then end up with completely useless regulations. As we pointed out banning 100% mortgages is pointless now, because you can't get them anymore. The market has already done everything the FSA might want to happen, and more.
So the regulations made today will make life more difficult for tomorrow's mortgage borrowers and lenders. But they won't stop the next bubble. Because that'll inflate in a different area, one that the regulators haven't paid as much attention to. And when that bubble looks like it's getting out of hand, the regulators will just ignore it, because everyone's having fun, and they don't want to be seen as the party poopers.
Then it'll pop, and they'll make up a load of rules to try to prevent it from ever happening again, as always happens.
Of course, the other thing to ponder is how this chimes with the government's mission to "get the banks lending again". I have no problem with the principle of sensible lending – I just think it should be up to the lender to decide what that consists of – but if you're going to restrict loans to three times salary, then we'd really better get used to sharply lower house prices.
Property bargain-hunters look set to be disappointed
Rightmove reports that asking prices in England and Wales rose for the second month in a row over the last four weeks. Sellers are apparently having difficulty adjusting to reality, says the group's commercial director Miles Shipside.
Prices are still down 9% on last year, but with the average price sitting at £218,000-odd, that's well out of the range of your average worker, given that the average salary in the UK is around £25,000 (and I realise a lot of people outside London will think that's overstating it somewhat).
Bulls have tried to point to the fact that Rightmove has seen a 120% rise in the number of enquiries to its site compared with this time last year. However, it's no surprise that people are more interested in looking at properties – with all this talk of a crash, they're probably hoping to find some bargains.
But with sellers "still pricing wishfully high" as Shipside puts it, it looks like they'll be disappointed. Prices still have a good way to come down – Numis Securities reckons as much as 55%, as we noted last week (Read: Will Britain go bankrupt?). And by the time houses are genuinely cheap, we'll no doubt be obsessing over some other asset bubble.
Subscribe to:
Posts (Atom)