Zoopla Property Group, the well-known property listings website has been valued at just under £1 billion as it went public recently. Zoopla priced its shares at £2.20 for its initial public offering which is a touch under the midpoint of its initial price range of £2 – £2.50. These figures reflect the company’s value which is said to now have a market capitalisation of £918.8 million.

The IPO was made during a time of uncertainty regarding the UK’s red-hot housing market. Leading financial individuals have repeatedly sent out warning messages that there needs to be a change in the lending rules so as to manage the risk which is currently posed to the slow economic growth and unemployment figures.

The head of London law firm Eversheds, Bruce Dear, which specialises in real estate said that this offering by Zoopla has been partially caught office by the county’s central bank which said that the housing market must be cooled down. He stated that the comments by the Bank of England explain Zoopla’s “sensible” lower half pricing choice. Mr Dear is of the opinion that a better timing to go public would have been three months earlier when the housing market wasn’t under such scrutiny.

Zoopla was formed in 2008 and the online giant now attracts over 20m visitors per month making it a terrific success story. It is estimated that 19,000 real estate agents across the country pay a subscription fee every month which allows them to have access to the 20m visitors and advertise their properties. The vast majority of the website’s income comes from the subscription fees.

In a statement made last month when announcing its plan of an IPO the property website stated that it had “strong market penetration levels” which represent around 90% of residential listings in Britain made by property experts.

Zoopla are expected to generate around £369.9m if an over-allotment of shares is fully exercised with the public float on its own representing around 38.3% of the company’s share capital. General Trust and Daily Mail made a reduction in its share hold9ings in Zoopla by way of the IPO, now only retaining a 33.7% stake as opposed to its previous holding of 52.6% prior to the offering. However, Zoopla is only one of many companies which have recently announced plans to list on the London stock exchange this year. Shelf Drilling, Morta-Engil Africa and SSP Group are amongst many companies which are rushing to raise capital by way of an IPO.

£3 billion is to be reserved by the publicly owned Royal Bank of Scotland to deal with compensation claims as well as litigation. £465 million of which will be reserved for Payment Protection Insurance compensation claims. The reservation of funds is estimated to shift RBS’ annual loss to an estimated £8 billion.

Ross McEwan, chief executive of RBS commented: “I would say at least now we are in such a good financial position we can take having to put aside close to £3bn to really again look after litigation and conduct issues from the bank’s past history.

“We were the biggest bank in the world and we had businesses on all continents, so I don’t think it’s surprising that some of these things will emerge as regulators and people take litigation against banks.”

He continued: “What’s really important here is we are in a position to handle these losses now, these provisions… When exceptionally large banks go wrong, which is what happened here, it takes a very long time to get them right again.”

1Business Secretary Vince Cable stated that “They are absolutely shocking numbers and taxpayers will be appalled they are still facing the bill for abuses that took place, five, ten years ago, the chronic mis-selling, the swaps that were sold to small business, and insurance mis-selling.

RBS said after “recent third party litigation settlements and regulatory decisions” a further £1.9 billion was used for mortgage-backed securities.

MP Andrew Tyrie who is the chairman of the Treasury Committee said: “It is crucial for the recovery that lending, particularly to (small and medium-sized businesses), is not constrained as a result.”

JPMorgan Chase paid £8 billion ($13 billion) in America last year because of grievances over mortgage securities and mortgages. A subsidiary of RBS also paid £95.5 million ($153.7 million) because an inquiry in the US in which they were suspected to have misinformed investors with a sub-prime mortgage product.

Negative equity happens when a property price decreases in value, by such an extent, that it falls below the original amount of the mortgage at the beginning of the term. This not only poses a problem for the property owner but also for the mortgage lender, as there is no longer sufficient security for the full amount of the loan. For instance, Shafiq Caan purchased a property in West Yorkshire in 2008 for £115k, which was supported by a £95k mortgage. The house has decreased in value to £75k. Shafiq would need to pay his mortgage lender £20k before selling the property. In an attempt to resolve this issue, he started renting out the property, but his mortgage lender has now increased his repayments by £250 a month.

There are many property owners in the same difficult financial position and who also have become landlords as a way of resolving this issue.  A property lettings agent in Tyneside reiterates this by confirming that as many as 25% of landlords are in this predicament. Others are from a result of divorce and will wait until the prices have risen to sell their properties.The charity Shelter advises landlords, renting isn’t that easy, there are many guidelines to adhere to and it can be very costly, after safety checks etc are made.

Land Registry confirms that there has been a decline in the value of properties from last summer in the north-east of England. Merseyside and Scotland have also been affected. It may take at least five more years before property prices start rising in the north of England and Northern Ireland.

The BBC have launched a housing calculator to help people search for properties and to help them assess if it is feasible for them to rent or to buy. In order to calculate this, the amount of bedrooms required and the amount of money you are willing to pay each month has to be input.

Kate Faulkner from Propertychecklist.co.uk states, “Negative equity is only a problem if you need to move”.  She advises people who do want to move to speak to their lenders and discuss “porting” which means taking your mortgage to your next property. There is a criteria for this which the Nationwide informed the BBC: “eligible customers must be in permanent employment, and be able to afford any additional borrowing”.

Kate also encourages property owners by saying, “It may well be that they will allow you to take your mortgage with you, and take that loan that you owe to the next property. So it’s not disastrous if that happens. The trick is to talk to your lender as early as possible”.

In contrast London only has 1% of homeowners in Negative equity. This is due to an increase in house prices in this region.

Government statistics have shown a decline in individual insolvencies in 2013 over England and Wales. Compared to 2005 and before, 101,049 individuals declared themselves insolvent. There has also been a decline in companies going into liquidation. Only 14,982 companies were affected in comparison to 2007 and before, although overall the statistics are still higher prior to the financial crisis.

Compared to the previous year, individual insolvencies dropped by 8% and company liquidations dropped by 7.3%. This is partially due to less consumers being able to obtain lending. Insolvency expert David Birne from HW Fisher believes, “with many of Britain’s businesses still just ‘hanging on’, thousands of our weaker firms are far from out of the woods yet”.

1Insolvency expert, Mark Sands from Baker Tilly said “It’s a combination of the fact that consumer lending has been subdued for the past five years, together with forbearance on credit cards”.

The experts believe that when interest rates rise it will impact on the current situation. As the UK economy continues to rise after remaining at 0.5% from 2009, forecasts will be brought forward.

Managing director of Debt advisor, Bev Budsworth said, “for me, the acid test for personal insolvency will be when the Bank of England starts to raise interest rates and people’s mortgages follow suit”.

David Birne said, “these are the best insolvency figures we’ve seen in a while,” and then went on to say, “sooner or later, interest rates will rise and bank forbearance will end – and when that happens the weaker firms will be in serious trouble.”

It is also worth noting that Debt Management Plans are not taken into account when compiling these statistics. Giles Frampton, vice president of R3 stated, “until the government begins to monitor new DMPs, the true scale of personal insolvencies in England and Wales will be hidden”. Giles Frampton also went on to say, “many people will have done their best to avoid insolvency in the run-up to Christmas, so there will be fallout from that in January and February”.

On the whole it seems that these low figures for individual insolvencies and company liquidations will not remain low for much longer.

Ofcom have enforced through newly established rules which will be implemented on the 23rd of January, which mean that broadband, mobile phone and landline providers must now inform customers of any price changes 30 days in advance and must not charge their customers any fees if they wish to change provider.

Ofcom’ consumer group director, Claudio Pollack said “We have reached an important milestone in our work to ensure consumers and small businesses have better protection against unexpected price increases.”

1Following over a thousand complaints received from consumers regarding price rises on their initial fixed-price contracts; the new rules will allow customers to switch after being informed without being charged a penalty. This rule also covers choices by telecoms providers to change how much data customers can use or reductions in the number of minutes.

Vodafone in particular, charged additional fees to customers who wanted to access directory enquiries.

The rules however do not prevent Telecoms providers from writing in contracts that there is a possibility that prices could rise, even if it is a fixed contract. Although Ofcom has not directly solved the issue of fixed price contracts rising in price during their term, it may deter telecoms providers from increasing their prices mid-term because there is now more of a risk that they could lose their customers to competitors.

In their defence, the providers explained that the reason for mid-contract price rises was to pay for increased costs they have to pay themselves.

Dominic Baliszewski from Broadband choices, a comparison website said that, “This should avoid any sneaky tactics being used,”although he expressed his concerns over the length of time customers have to switch providers… We are concerned that some customers may miss their opportunity to switch if they miss the notification, for example, if they are away for a few weeks on holiday,”

A checklist has also been formed by Ofcom in order to assist customers in their decision to switch telecom providers by providing consumers with guidelines and what to look out for prior to starting a new contract.

The British Chambers of Commerce (BCC) have predicted that the British economy in 2014 will rise past the highest pre-recession level.

The BCC estimated that the UK’s GDP will see a 2.7% rise in 2014 compared to 2.2% which was estimated before. They have forecasted growth for 2014 to be at 1.4%, with their original forecast being a growth of 1.3%. In contrast to this the BCC reduced their estimation of growth in 2015 to 2.4% from 2.5%, the reasoning for this from the BCC was that the accumulation of personal debt may see a cut in household consumption across the UK.


The BCC commented on their unemployment rate forecasts: “We forecast that the 7% unemployment rate threshold will be reached in [the third quarter of] 2015… However, the [Monetary Policy Committee’s] suggestion that there is a 40% probability that this could be reached by the end of 2014 is too ambitious in our view.”

The Bank of England sees this fall in unemployment to 7% a prerequisite for an increase in interest rates. For interest rates the BCC have predicted that they will increase from the long term low of 0.5% in 2015’s fourth quarter to 0.75% at first and then to 1% in the beginning of 2016.

The head of the BCC, John Longworth commented on the predictions: “If we make important decisions to fix the long-term structural failure in business finance, continue to deliver a major infrastructure upgrade and do more to support exports, it is possible to achieve not just a good recovery, but a truly great and sustainable economy.”

He did however voice his concerns on lasting issues the economy faces, stating that they are “still looming”: “As household consumption slows in the medium term, we have to find ways of boosting business investment and exports.”

Leading UK tax officials have faced questioning from MPS with regards to deals with major corporations such as Google which let them evade payment of tax totalling millions of pounds.

An ex-Google employee had sent emails to HMRC which is said to have detailed staff, staying in the UK, who worked in the sale of advertising while revenues were logged by its Irish business, to which Google stated that it “complies with all the rules”.

Although Google has purchased numerous properties in the UK they still maintain that they are US and Ireland based, allowing them to pay tax just for these countries despite the location of any transactions.

1HM Revenue & Customs’ director-general of business tax, Jim Harra, as well as two other employees are due to face questioning by the Public Accounts Committee with regards to the email, including what will be the response to the proof.

Along with Google, the PAC will most likely ask the taxation details of other large US based online companies, including Facebook and Amazon.

Chair of the House of Commons public accounts committee and Labour MP, Margaret Hodge said to the officials “It looks to me that you should be litigating. Why have you not chosen to litigate and test your powers?”

However Harra has explained that “What we have to look for is this: is there evidence that the offshore operation does nothing more than rubber-stamp?”

In total, on last year’s revenues of £3 billion Google paid £11.2 million in corporation tax which brought into question as to just how these foreign companies manage to cut UK tax costs. While the official estimate for the tax gap is £35 billion, Margaret Hodge held reservations on whether this was the true gap:

“It does not include a lot of what ordinary punters in the street think you should be collecting, particularly in regard to the large corporations… The tax gap is really the tip of the iceberg in the gap between the money that you collect and the money if everyone paid their fair share.”

Interest rates having been stuck at 0.5% from 2009 could now viably increase with Bank of England approval. A policymaker of the recently established Help to Buy scheme has pointed out that Bank of England interest rates are able to rise by a “fair amount” whilst not alienating homeowners.

Committee member, Ben Broadbent, who helps in choosing interest rates, warned: “We want to ensure that this recovery continues and is not choked off by a premature rise in interest rates.” However he also said “I think there is a fair amount they could go up before borrowers got into great difficulties.” However if interest rates were to rise, the majority of homeowners would be charged more on monthly repayments which could in turn cause an increase in the number of house repossessions.

1Mr Broadbent spoke to Sky News about the Help to Buy Scheme: “The numbers entering this scheme are relatively low and although interest rates will, as you say, at some point start to rise, it is worth remembering quite how low a level we are starting from.”

The Help to Buy scheme now allows people to take a mortgage out with just a 5% deposit, the government also covers 15% of the loan in a 7-year taxpayer guarantee for the lender.

Spencer Dale, the Bank of England’s chief economist said in a Questions and Answers session on Twitter: “Rates will only rise when had sustained period of strong growth as long as no risk to stability.”

The Bank Monetary Policy Committee said that the monetary stimulus of £375 billion used in the quantitative easing initiative wouldn’t be changed. This programme faced heavy criticism with it being pointed out that the initiative fails to help all of the economy and instead focuses on the financial industry.

When queried on the impact of higher interest rates on house repossessions, Mr Dale said: “Don’t know…. But when we raise interest rates economy should be stronger, higher employment, higher real wages.” Mr Dale however, believes that it is doubtful that the economy will grow to a sufficient level to warrant an increase in the national interest rates in 2014.

Previous CBI director general for years 2006-2011, Sir Richard Lambert has been appointed a position to head a newly created UK bank monitoring body. The position is to be one without bias to banks in spite of their decision and role in his appointment. This included many of Britain’s major banks, including: RBS, HSBC, Standard Chartered, Lloyds and Barclays.

“The appointment of Richard Lambert to set up this new monitor of bankers’ behaviour shows just how low bankers’ self- esteem has sunk,” a spokesperson said.

Sir Richard has stated that his plan of action would be to first look at how trust can be restored to banks, as well as the evaluation of qualifications required in banks. Sir Richard pointed out that the reason for these plans is because the reputation of banks is “still bruised”, with corruption and the Libor, Payment Protection Insurance and interest rate scandals meaning that many have lost faith in banks.

Sir Richard commented on the new organisation: “The new professional body will be independent of the banks, and will cover all sectors of the industry. I hope it will be supported by all banks and building societies doing business in the UK.” His plans involve a “clean sheet of paper”, with independence of the body being of paramount importance.

Sir Richard now has a number of administrative decisions to make, such as how future members will be appointed to body as well as how it will work as a whole.

John Cridland, CBI director general has faith in Sir Richard’s placement in the new body, also emphasising the importance in improving the reputation of banks, saying that it is “absolutely fundamental to the future of the UK economy”.

He also said that Sir Richard’s “breadth of experience and fearless independence are exactly the attributes needed to address the cultural and professional challenges which parts of the banking sector face,”

Sir Richard said that “The blueprint will have to demonstrate that this outfit will not be a bunch of patsies.” This issue seems to be of importance to him in the creation of this new body.

The European recession is on its way out, following 18 months of a struggling economy. During 2013 the GDP increased by 0.3%. This had been forecasted due to the increase of 0.7% from Germany in May and France’s increase to 0.5%, both improving upon previous predictions. However in relation to the countries in the euro, Portugal has had the smallest increase while Germany and France have the highest increase.

Despite Spain relying on help from others, there was still a decline of 0.1% in their economy, with the Netherlands and Italy showing a decrease of 0.2%. Capital Economics Analysts said: “The return to modest rates of economic growth in the Eurozone as a whole won’t address the deep-seated economic and fiscal problems of the peripheral countries.”

Olli Rehn, the European Commission Vice-President noted  “A number of member states still have unacceptably high unemployment; the implementation of essential, but difficult reforms across the EU is still in its early stages. So there is still a very long way to go.”

Germany holds the strongest place supporting the Eurozone, with France following closely behind. This was helped by motivated businesses as well as consumers. Economic adviser Michael Fuchs said this was an opportunity for Germany to become a “locomotive” and a leader in the improvement of the European economy. He also commented about the other countries “I do believe that some of the countries in the periphery are doing better than expected… in Spain, the last three quarters, the unemployment rate went down. It’s getting slightly better.”

“They did reforms, maybe not enough yet, but I believe that at the end of the day they will be competitive again, but it takes some time.”

All in all the Eurozone economy is on the rise and continues to improve as business and consumer confidence grows with countries like Germany and France leading the economy out of recession.