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Legislation to make driving under the influence of drugs a specific offence was announced in the Queen’s Speech last week.

Before the legislation, police had to demonstrate the driver’s ability had been impaired by drugs to be able to prosecute. However under the new rules police will have hand held devices similar to breathalysers to test the level of drugs in the body by the end of the year with penalties for the new offence be a maximum of six months jail, £5000 fine and an automatic driving ban.

The news has been welcomed by road safety groups including charity Brake were described it as “an incredibly important step forward”.

According to the Road Accidents and Safety Annual Report 2010 by the Department for Transport, there were 889 accidents caused as a result of drug driving, 42 of which led to fatalities.

Mike Penning is the Road Safety Minister:

“Drug-driver are a deadly menace – they must be stopped and that is exactly what I intend to do “The new offence sends out a clear message that if you drive while under the influence of drugs you will not get away with it.”

With lending criteria tighter than Manchester City’s title win, many Brits are upping sticks and heading for pastures cheaper and sunnier!

According to Taylor Wimpey España, there has been a 21 per cent increase in the number of units sold in the first four months of the year compared to the same period in 2011.

The Spanish property giants also confirmed Brits account for the biggest buyers with Mallorca remaining a firm favourite. In fact there are now 23,773 Britons living on the island according to the latest census from the Spanish National Statistics Institute.

Marc Pritchard is the Sales and Marketing Manager at Taylor Wimpey España:

“The pound is now at its strongest against the euro in nearly 2 years reaching an exchange rate of £1:€1.20 meaning that British families have more money to spend.”

Goldsmith Williams Overseas Ltd (GWOL) specialises in helping people buy a holiday home abroad and is able to offer a full and comprehensive overseas legal property service in 14 countries including Spain, France and Greece.

The latest data from the Council of Mortgage Lenders (CML) has shown a 5 per cent dip in buy-to-let lending in Q1 2012.

32,300 loans (£3.7bn) were completed during January, February and March this year compared to 34,000 loans (£3.9bn) in the final three months of 2011.

Yet despite this quarterly dip, buy to let lending was up 32 per cent year-on-year with just 24,900 (£2.8bn) completed in Q1 2011, demonstrating the growing appetite in this market.

Buy to let now represents an estimated 12.8 per cent of the total value of outstanding mortgages. However whilst the annual increase is encouraging, the CML is quick to highlight the gap between now and 2007; current lending is just a third of 2007 activity.

Nevertheless Paul Smee, Director General at the CML, remains upbeat:

“Even though buy to let lending is running at only around a third of its peak levels, the sector is continuing it gradual expansion. It has become an important part of the overall landscape of housing provision in the UK.”

Drawdown, the most popular type of equity release, has seen an 11 per cent increase, according to findings from Key Retirement Solutions (KRS).

>Drawdown equity release products, which allows homeowners to access their equity in stages similar to having a monthly income, accounted for 66 per cent of all equity release sales; an increase of 11 per cent against its 55 per cent share of the market throughout the whole of 2011.

Equity release is growing in popularity nationwide with half of the UK regions experiencing growth in the total number of plans sold. The North experienced the largest increase (65 per cent) whilst the East Midlands saw a rise of 53 per cent.

With more and more homeowners looking for ways to subsidise depleted savings and poor pension provisions in light of the recent financial climate, drawdown equity release is being increasingly viable.

The investigation by KRS found home and garden improvements maintain its position as the most popular use of equity release funds (57 per cent). However more people are using the money obtained through equity release to repay debts (33 per cent) than go on holiday (31 per cent) highlighting necessity is now a driving force in equity release activity over material want.

With household bills rising at double the rate of inflation, older homeowners are showing an increased interest in equity release.

New research by high street bank Santander suggests bills have been rising at approximately double the rate of inflation for the last ten years, therefore bearing a significant impact on savings and retirement.

This means in many cases savings alone may not longer suffice for a comfortable retirement and could lead to an increase in equity release activity.

According to an additional poll by the lender, 29 per cent of Britons have already had to downgrade their standard of living in order to meet their rising outgoings while 1 in 10 admitted they would find it difficult to remain in the black if bills increased again in the next 12 months.

Carlos Palacios is the Banking Director at Santander:

“People have already been forced to make a number of adjustments to their lifestyle to cope with the hikes and many will struggle to cope with further increases such as the water bill hikes recently announced.”

It is predicted products such as equity release will continue to grow in popularity as the gulf between the cost of living and pension provisions widens with many industry professionals expecting equity release to become a mainstream product in the next few years.

An email detailing a tactical proposal by the insurance industry regarding a £150 fixed fee for low value personal injury claims has been leaked.

The communication was rumoured to be sent by the Association of British Insurers (ABI) Assistant Head of Motor and Liability, James Dalton to members of the ABI and suggests a ‘tactical steer’ to set limits for the RTA portal.

It goes on to ask the General Insurance Council committee to use the £150 figure as a ‘negotiating tactic’ as it expects the Ministry of Justice (MoJ) will ‘inevitably set a number higher than that’.

Upon hearing the news, Co-ordinator of the Access for Justice Action Group and Solicitor, Andrew Dismore has accused the insurance industry as attempting to oust solicitors from the claims process:

“They are playing a cynical and duplicitous game with the MoJ even though they get what they want anyway.

“The ABI want to drive any professionalism out of legal services and turn it into a tick box exercise. Their ultimate aim is third-party capture and before-the-event insurance driving independent advice out of the market.”

Dalton claims the figure has derived after cost consultations investigated the work conducted by claimant law firms when processing low-value claims through the portal, considering staff salaries and overheads.

A spokesperson for the ABI commented:

“We have long argued that the current £1200 fee is far too high and needs to be slashed if we are to be able to reduce car insurance premiums for customers.

“We are considering a number of options as part of our response to the consultation and this should not come as a surprise. And these are just options amongst a range of others we are considering before we finalise our response and provide it to the MoJ.”¹

¹Law Gazette (May 2012)

Homeowners are being encouraged to check their current mortgage rates as more lenders increase their standard variable rates (SVR).

According to consumer watchdog Which? homeowners are set to pay an additional £300m a year due to lenders increase of SVRs.

Four lenders last week increased their SVRs; Halifax (3.5% to 3.99%), Co-operative Bank (4.24% to 4.74%) and Yorkshire and Clydesdale banks (4.59% to 4.95%). Halifax customers with a £150,000 mortgage will now pay an extra £480 a year in repayments while those with a £200,000 mortgage will face a hike of £660.

With many homeowners already concerned over the rising cost of living, now could be a good time to remortgage.

Further investigation by Which? revealed a staggering 75 per cent of mortgage-holders said they would be affected if their repayments rose by even £50 a month.

While homeowners with little or no equity may find remortgaging difficult, and borrowers utilising the 2.5 per cent on SVRs with Nationwide and Lloyds are unlikely to find a new cheaper rate, remortgaging is certainly an avenue worth exploring especially with a growing fear within the industry of other lenders following suit.

Peter Vicary-Smith is the Chief Executive of Which?:

“These SVR rises are the consequences of the lack of competition in the market and the failure of the government to take action to promote competition.

“This is why the new financial regulator, the Financial Conduct Authority, needs to be a watchdog not a lapdog. It must stand up for consumers and stand up to the banks.”

Halifax is offering to pay half of all homebuyers Stamp Duty fees for properties valued between £125,000 and £250,000.

This pledge, which could save buyers up to £1250, is available to first time buyers as well as homemovers and comes six weeks after the Government withdrew its Stamp Duty exemption for first time buyers.

A recent study from the high street lender revealed nearly half the properties bought in Q1 2012 were worth between £125,000 and £250,000 albeit there some significant regional variations; London, for example, saw just 39 per cent of homemovers purchase within this price range while East Anglia and the South West saw two out of every three move into a property in this bracket.

Stephen Noakes, Mortgage Director at Halifax, explains the reasons behind its pledge:

“Buying a home is one of the most expensive purchases many will ever make and the costs associated can place an extra burden on homemovers. Many initiatives launched over the last 12 months that are solely aimed at first time buyers, but more needs to be done to help movers across all rungs of the ladder, which is crucial in the creation of a vibrant housing market.

“We have seen over the last two years that support provided to buyers has a positive impact, with the Stamp Duty exemption helping over 40 per cent of first time buyers. We’re keen to assist homemovers to purchase their next home, and support with their Stamp Duty bill does just that.”

The legal arm of Kent County Council, Kent Legal Services (KLS), has announced plans to apply for an alternative business structures licence in association with regional law firm, Geldards.

This partnership is nothing new; two years ago KLS and Geldards launched Law:Public which provided local authorities access to legal advice. It is believed its ABS application is the next step in its attempts to establish an economical specialist public sector law firm.

Geoff Wild is the Director of Governance and Law:

“There is a real place in the market for a specialist public sector law firm that doesn’t necessarily charge the same as Eversheds, Trowers & Hamlins and all the other public sector law firms.”

He went on to describe Geldards as a “very fitting partner” one that gave greater geographical coverage as well the potential expansion into the likes of utility companies.

The Motor Accident Solicitors Society (MASS) has issued a statement in response to Wednesday’s whiplash summit, focusing on the importance of assisting genuine accident claimants.

Whiplash claims have dominated industry news of late with insurers alleging such claims add around £90 to every insurance policy. Such assertions have prompted the Government to “crack down” on whiplash claims. However MASS is fearful this potentially drastic and kneejerk reaction could bear a significant impact on legitimate victims.

MASS is in full support of claimants needing to prove their injuries before receiving any compensation via a medical assessment and has welcomed the Government proposals.

It has dubbed the ‘German myth’ - where there should be a speed below which whiplash wouldn’t be considered - as over-simplistic, naïve and unworkable.

It is also strongly against the Government’s proposal to raise the small claims limit from £1000 to £5000 with Chair of the MASS, Donna Scully, issuing this statement:

“This idea has already been consulted on at length and rejected previously by the Ministry of Justice in 2007 on the grounds that it would stop genuine accident victims from receiving access to justice. As an alternative, the insurance and legal sectors have worked together on the Road Traffic Accident (RTA) Portal to bring down costs and improve the system.

“We feel the RTA portal has already been successful and would urge the Government and industry to focus on getting it absolutely right, rather than visiting rejected policy ideas.”

The new Government scheme NewBuy has helped its first wannabe homeowner purchase a property just eight weeks after its launch, according to specialist new build broker Mortgage Talk.

Henna Rai has become the first borrower to benefit from the scheme taking out a 95 per cent loan-to-value (LTV) NewBuy mortgage from Nationwide and completing on a new build Bovis Homes property in Peterborough, Cambridgeshire.

Speaking about her purchase, homeowner Rai described her frustration at renting and cohabitating:

“I was done with renting and living with other people and felt it was time to do things on my own and stand on my own two feet. This is my first place and it really feels like a new chapter in my life – it’s great to be spending money on my own mortgage rather than someone else’s.”¹

NewBuy is designed to help first time buyers get on to the property ladder as well as assisting existing homeowners trapped in their current property and unable to move up by addressing the high deposits now required to purchase a property.

With property developers and the Government financing an indemnity guarantee, lenders are able to offer larger LTV mortgages on new build homes.

Lisa Burns-Kent, Head of New Homes at Mortgage Talk who helped secure the milestone, believes NewBuy could help bolster the dormant property market:

“We’ve already seen huge levels of interest from potential borrowers and this deal is the first of many more. We have no doubt that NewBuy will be successful; it is a very useful product and has the potential to open up homeownership to thousands of people.”¹

News this week however has seen lenders hike rates.

¹Mortgage Solutions (April 2012)

Housing Minister, Grant Shapps, has pledged support to what he dubs the “boxed-in generation” as they try and move up the property ladder.

His speech to house builders follows a recent survey by Findaproperty.com which discovered nearly a third of parents regard their current home as insufficient in size to accommodate their family, a figure which jumps to 40 per cent for younger families.

With much focus on first time buyers Shapps wants these “overlooked owners” to also receive the help they need and reminds the industry that the Government’s NewBuy scheme is not confined to first time buyers.

The NewBuy Government scheme allows lenders to offer larger loan-to-value mortgages on new-build homes with the associated risk mitigated through an indemnity guarantee financed by property developers and the Government.

Whilst it is designed largely with first time buyers in mind, it is actually available to anyone who is looking to buy a newly-built property including second time buyers stuck in their first home as Shapps explains:

“For years increasing numbers of people have outgrown their homes but been unable to move, and first time buyers have been unable to buy.

“They know who they are. Hardworking people who have bought their home when they were single, maybe met someone, fell in love and now have a couple of kids. They expected to trade-up – because that’s what their parents were able to do. But now they’re boxed in, home outgrown. Stuck in a flat, when really what they want is a family home.

“The NewBuy Guarantee will give our second-time buyers a second chance, as this is the first scheme of its kind not confined to first time buyers, but available to anyone looking to buy a newly-built home.”¹

There are currently four lenders offering 95 per cent loan-to-value (LTV) mortgages and nine house builders supporting the scheme:

¹My Introducer (April 2012)

The Solicitors Regulation Authority (SRA) has approved two further alternative business structures applications last week.

New Law, a personal injury firm based in Cardiff, and Russell Jones & Walker are the fourth and fifth ABS firms to be authorised by the SRA.

New Law, which has around 270 staff, is the first legal practice to become an alternative business structure in Wales.

The news of Russell Jones & Walker’s ABS bid comes as no real surprise after the firm was acquired by the Australian practice Slater & Gordon earlier this year with the takeover predicated on RJW succeeding in its ABS application. Andrew Grech, Managing Director of the Melbourne based firm, understands the potential opportunities alternative business structures will open up:

“This is the optimum time to enter the UK market because of the changes in ownership laws and impending changes to the personal injury sector.”¹

Chairman of the SRA, Charles Plant, last week confirmed 74 ABS applications were now at an advanced stage.

¹Law Society Gazette (April 2012)

Equity release advances rose to £199.1m in Q1 2012, an increase of 10 per cent against Q1 2011, according to Safe Home Income Plan (SHIP) members.

The amount of equity release plans also improved, experiencing an increase of 6 per cent to 4,057 from 3,838 year-on-year.

Drawdown mortgages, which allow customers to access their equity in stages much like a monthly income, remain the most popular option accounting for 67 per cent in Q1 2012 while lump sum mortgages represented 32 per cent and home reversions 2 per cent.

90 per cent of the equity release plans sold in the first three months of the year were via intermediaries at a value of £179.5m, once again highlighting the opportunity this market is now offering introducers.

Richard Espley is the Head of Equity Release for Goldsmith Williams:

“This steady increase is very encouraging for the equity release market and demonstrates the growing interest towards such a product.

“Equity release is offering solutions for both customers and intermediaries hit hard by the increasing cost of living and stagnant property market. This increase is something we expect to continue especially that the financial landscape is looking bleak as evidence by the news earlier this week about the country’s collapse back into recession.”

Personal injury claims have taken a severe beating in recent weeks, being made the scapegoat for inflated insurance premiums. However a recent investigation by Which? shows insurers are charging customers “exorbitant fees” for tiny policy alterations.

According to the research, insurers AXA and Hastings charge £30 and £35 respectively to change an address, update a surname (i.e. after a marriage) or change the vehicle cover.

Budget customers face a £75 cancellation fee whilst AXA, Zurich, Sheila’s Wheels and More Than consumers are charged £50.

Customers are also punished if they are unable to pay their premium in full with Budget and AXA charging between 29.3% and 32.3% annual interest.

Peter Vicary-Smith, Chief Executive at Which?, describes these charges as a “disgrace”, stating the charges should reflect the cost to the company and “not a way of making easy money”.

The personal injury industry is currently awaiting the implementation of the Legal Aid, Sentencing and Punishment of Offenders (LASPO) bill expected later this year. The bill is the vehicle to take forward the proposals of the Jackson reforms and is expected to include details on the proposed ban on referral fees and the restriction/abolishment of success fees and ATE policies.

Simon Cottrell, Senior Partner at Goldsmith Williams, welcomes the Government’s investigation into fraudulent claims but understands there is a bigger picture:

“Clearly, there are problems within the industry and I welcome the fact the Government is looking into it, but there is a deafening silence as to how much the insurance industry would be prepared to reduce premiums by if the Government were to uphold some or all of the recommendations put forward.

“The sector is claiming that premiums have risen as a result of whiplash injuries and fraudulent claims, but the reality is that the cost of insurance has rocketed as a consequence of many factors. Premiums have increased due to the need for insurance companies to make profits in a depressed market.”

Buy-to-let is currently creating the biggest buzz in an otherwise stagnant property market. Predictions that the industry will grow to £20bn by 2015 are described by senior partner Eddie Goldsmith as refreshing in what has been a miserable few years.

However it is not just professional landlords who are contributing to the buy-to-let boom; first time landlords accounted for 23 per cent of all BTL mortgages in Q1 2012 and with it present a new, exciting opportunity to brokers.

Unlike the savvy professional, newbie landlords require different kind of advice. Whilst many are from a property background, either as a tradesman or even solicitors, there appears to be a reoccurring theme of confusion and a lack of objectivity; uncertainty over jargon and subjectivity over the type of property to purchase.

Neil Patterson is the site partner of Property 118, an online community for landlords:

“Things like ‘gearing’, ‘loan to value’, ‘valuation’ – there’s quite a few words that we will use even within our industry that will be called different things.

“The first thing to get across to a first time buyer is the difference between buying an investment property and a residential property. Often people fall in love with property whereas a BTL is more of a commercial decision. It’s a business, not a personal residence, and they don’t often understand the difference.”¹

Providing a specifically targeted service to meet the needs of this market group could allow brokers to stand out from the crowd.

There is also another type of first time landlord breaking through the BTL surface –dubbed the “accidental landlords”. Due to static nature of the conveyancing market, this market is opting to rent their existing property as a funding tool for their next move.

This means this market group boast even less industry know-how as Lee Gladwell, Business Development Director at Platform, explains:

“What we’re dealing with here is largely people who are in a situation where they have to let out their existing property in order to move.

“Brokers can do a fantastic job helping borrowers with the new set of issues that BTL mortgages throw up. If anything I think the sector could do more to promote the fact that there is that kind of breadth of advice available.”¹

Last month Platform revealed “accidental landlords” accounted for a fifth of its recent BTL business.

¹Mortgage Solutions (April 2012)

With the announcement of the first three SRA approved alternative business structures and now the recent facelift of the Quality Solicitors website with TV advertising to boot, the legal services industry is starting to witness firsthand the foretold changes of the ABS revolution.

With big plans now being supported by the financial backing required to see them through to fruition, competition in the consumer legal services is heating up and business generation is getting creative.

With an open display of legal service providers coming to the surface, consumers are now presented with choice. This means solicitors can no longer rest on their laurels and rely on returning clients. They must now be proactive in their approach and provide clients with convincing reasons to “choose them”. It’s like being picked for PE all over again.

For firms looking to preserve their business and retain clients they must put themselves out there. The playing field may not be level; we do not all have the luxury of a budget which extends to national TV coverage.

Nevertheless everyone must adopt some form of strategy to present the benefits of their services; apathy will only lead to invisibility.

After all attack is the best form of defence.

Gross lending in bridging finance rose to £911million in 2011, according to the latest quarterly Bridging Index from West One Loans.

This is a 110 per cent year-on-year increase which resulted in lending surpassing the projected forecasts by the previous Bridging Index by more than £100million.

Buy-to-let business has been cited as the primary reason for this staggering increase.

Despite the influx in the buy-to-let deals appearing on the market, demand is still failing to be met. With landlords desperate to add to their property portfolio whilst the rental market remains vibrant, this previously niche funding tool is now being utilised to bridge the gap as the Chairman of West One Loans, Duncan Kreeger, comments:

“Despite banks increasing the number of buy-to-let mortgages, they have been unable to keep pace with the proliferation in demand. Buy-to-let lending is still very low by historic standards. In 2011 there were only 124,000 buy-to-let loans, compared to 346,000 in 2007. As a result more landlords are using bridging loans to finance the development of properties they can’t get mortgages on. Demand for bridging loans is sky high, and will continue to push towards the stratosphere in 2012.”

Last year the number of bridging loans rose by 62 per cent with net lending increasing by 67 per cent.

The Legal Aid, Sentencing and Punishment of Offenders Bill (LASPO) is currently in the latter stages of its 12-step process, with both the House of Commons and the House of Lords considering any proposed amendments before agreeing on the final content.

Originally scheduled for October 2012, LASPO is set to come into effect from April 2013 and will undoubtedly change the face of the personal injury industry.

As the vehicle to take forward the proposals of the Jackson reforms, the bill is expected to include details on the proposed ban on referral fees and the restriction/abolishment of success fees and ATE policies. Final confirmation of the bill is expected later this year and the hope is sufficient time and clarity of change is given to allow the industry to adapt.

The aim of the reforms is to create a “fairer” personal injury system which is currently being blamed for escalating insurance premiums. Fairer for who however, especially with the apparent collaboration between the Government and the insurance industry? The Law Society’s Chief Executive, Desmond Hudson, describing the reforms as “legislation for the insurance industry, by the insurance industry”.

Whilst clearly a crackdown on fraudulent claims is essential, it is vital these measures do not punish those genuinely injured. There remains a strong prejudice against compensation claimants, one that already deters many from making a claim in the first instance. The proposed changes are only likely to add further discouragement.

Genuine claimants are not the only potential victims of the reforms; in addition to LASPO the Government proposes extending the RTA portal in 2013 and capping legal fees on RTA claims within it at £300. This would mean firms would barely break even and sections of the industry believe such a move would actually negate the aim of the reforms and increase the number of fraudulent claims.

Nevertheless change is inevitable and LASPO will be at the heart of it. However until the final content and wording of the Bill is confirmed and released, the full implication is mere speculation. Until then, it’s business as usual.

Both 90 and 95 per cent loan-to-value (LTV) mortgage products have seen significant growth over the last year, according to recent figures by financial information firm, Moneyfacts.

As of Tuesday 17th April, there are sixty-one 95 per cent LTV deals available on the market, up from 27 this time last year. 90 per cent LTV products have also increased with now 316 products now on offer compared to the 228 in April 2011, a 43 per cent increase.

However while product availability is stronger, tighter lending conditions means this news does not guarantee the resurrection of the first time buyer market.

Louise Holmes is a spokesperson for Moneyfacts:

“Over the past couple of years we have seen the high LTV mortgage market stage something of a comeback, mainly due to high demand from borrowers with limited deposits.

“The first time buyer market is often considered to be the life blood of the housing market and mortgage lenders recognise this. Risk is still a major factor, however, and the majority of mortgages with high LTVs require the financial backing from a third party, such as a guarantor, as well as strict credit checks and lending criteria.”¹

Nevertheless with things having been so bleak for so long, this news should be greeted with a degree of positivity as Holmes points out:

“These latest figures will be good news and a welcome relief to many borrowers who have struggled to find suitable mortgage deals within their financial capabilities.”¹

¹My Introducer (April 2012)