Party squatters: London landlords beware!

Midnight, Mayfair, London: your £6 million investment, carefully boarded up and being readied for refurbishment. Suddenly a swarm of more than 2,000 people clamber up the building defences, bringing in music equipment, cans of spray paint and an idea to party the night away!

For many a London landlord, the above scenario is possibly the worst nightmare possible. Not only is the clean-up and damages bill horrendous, there could be charges brought against the landlord from neighbours or in extreme cases, from the revellers themselves, if they manage to hurt themselves while in the property.

Sounds like fiction? Current events prove otherwise. Thanks to the rise of social networking websites such as Facebook, the rise in illegal occupation of properties by ‘party squatters’ for one or many nights is becoming common.

In August 2006, squatters took over a £5 million property on Primrose hill, North London and trashed the place will all night parties. Police had to be called out on that occasion and also more recently in February 2010, a £6 million Mayfair property was occupied and vandalised by 2,000 plus ‘ravers’.

Legalities

Although unlawful, squatting is not illegal according to UK law. Evicting squatters can prove to be an expensive and time-consuming process for the landlord. In some cases, public sympathy is with the squatters, especially in the case of long unoccupied or neglected properties, seen in the light of the lack of housing available in London.

Resources in terms of advisory websites and charities make it easy for potential squatters to find unoccupied properties and target them.

But whereas the genuinely homeless can claim to be occupying unused space, the real threat to London landlords still comes from parties and raves organised through Facebook. Ravers set up group invitations on their Facebook accounts and make it public, so that anyone looking at the invitation or having been forwarded the invitation can feel free to show up. Sometimes a small fee (£3 was charged for the Primrose hill event) can be levied, and generally people bring their own drink and often, drugs.

The venue selected for the party is normally a neglected or long unoccupied property, usually in a high-profile area like Notting Hill or Mayfair. The party organisers then infiltrate the premises with music equipment and other paraphernalia, and at the very last minute, the venue is released via social networking applications such as Twitter, Facebook or mobile texts.

Very soon, an overwhelming number of people, mostly young, descend on the property and break in. The authorities are called but can be swiftly overwhelmed simply by vast numbers and the nature of the crowd behaviour. At the Primrose Hill event, riot police in full gear had to be called out, as was reported by the media.

The authorities normally let the party die out and wait for the people to leave before they move in and arrest a few of the organisers or anyone who was particularly violent. After the event, the extent of the damage has been reported to be broken fixtures, graffiti on the walls, broken bottles, cans and drug paraphernalia littered all over the property resulting in a huge repair and clean-up bill.

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Interest rates on UK mortgages: whither goest they?

If recent history has taught us anything, a bad recession leads to banking collapse, this leads to resentment and eventually conflict. One could even be forgiven for believing that the advent of another disastrous world war was upon us; what with the recent firestorm of mistrust, a lack of confidence in financial institutions leading to a near collapse of previously solid high street lending institutions, which coupled with high levels of unemployment, could lead to social unrest. 

None of this is new or surprising to seasoned economists who point out that years of frenetic economic activity and irresponsible lending, leading to easy access to credit, and the creation of fiscally unsound financial instruments created a gigantic ‘bubble economy’. The collapse of this bubble precipitated the greatest recession since the great depression of the 1930s.

As part of the efforts to steady the ship, the Bank of England (BoE) reduced the base rate of interest, to historical lows. As on the 2nd of November 2010, the base rate of interest was 0.5%, in order to stimulate borrowing, by getting the banks to offer mortgages at easy rates of interest and lead to momentum in the now moribund housing market.

This happens because the high street lenders set their rate of interest on secured loans on the BoE base rate of interest, and where the base rate is low, the interest on secured loans from a high street bank will be low and hence make mortgages more attractive to prospective home buyers.

What does this mean for home buyers?

To the dismay of the mandarins at the Bank of England, the high street banks have not passed on the benefits of the low base rate of interest to borrowers. Mortgage approvals are at an all-time low, and where they are available, the deposit required against approval is typically 25% to 45% in some cases.

First time buyers are finding it particularly hard to secure a mortgage. Across the housing market there has been a slowdown as of October 2010, after seeing a small rise earlier this year.

As always, London seems to buck the nationwide trend with positive movements on the house price index, but this is also because of increased demand by foreign purchasers taking advantage of a weakened Pound.

According to reports by the BBC and the Economist, this trend could continue for as long as the next five to six years, before manufacturing and other sectors of the economy improve dramatically enough to see a fall in the unemployment rate, leading to a full growth economic recovery.

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