The week ahead

This week Nationwide and Halifax will release data measuring house prices for June, the Bank of England will reveal household borrowing figures and St Mowden Properties, Persimmon and construction management specialist Carillon will post trading updates. St Mowden is expected to report yearly net asset growth of 2.3%, from 9.6% to 11.9%, while sales are forecast to fall to £109m, down from £133m, with pre-tax profit dropping from £34m to £14m.

Bank of England cracks down on mortgages

The Bank of England has taken fresh steps to prevent people from taking on unaffordable mortgages. Under the proposals, lenders will not be allowed to lend any more than 15% of residential mortgages at more than 4.5 times a borrower’s income. In addition, the Bank’s Financial Policy Committee recommends that lenders check mortgage applicants can cope with a 3% rise in interest rates – slightly tougher than the current affordability checks. The new measures are designed to cool the housing market without derailing the economic recovery. Mark Carney, the BoE’s Governor, stressed that controlling debt, and not prices, was the Bank’s biggest concern. He noted that while “history shows that the British people do everything to pay their mortgages,” this had knock-on effects for the rest of the economy. “That means cutting back deeply on expenditures when the unexpected happens, potentially slowing the economy sharply. That's why recessions that follow periods of rapid growth, like the record one from which the UK is emerging, tend to be deeper and longer lasting,” he said. Mr Carney also stated that house prices could rise another 20% over the next three years, without posing a significant risk to the economy, a phenomenon which he would “tolerate”. Meanwhile, the Treasury has announced that it would stop any new loans larger than 4.5 times income from being issued to borrowers under the mortgage element of Help to Buy. Separately, theFT notes a 3% rise in interest rates would add around £3,600 a year to the average person’s mortgage costs

Carney plays down rate rise

The Bank of England is behaving like an “unreliable boyfriend” and is using “smoke and mirrors” to keep changing its message on interest rates, MPs have claimed. Bank Governor Mark Carney appeared to play down speculation of an imminent rate rise yesterday, as he stressed that soaring employment and robust UK growth were not matched by higher wages and rising productivity. MPs on the Treasury Select Committee reminded Mr Carney that less than two weeks ago he said the MPC could vote to raise rates from a record low of 0.5% “sooner than markets currently expect”.

House prices will rise faster if Scotland votes No

House prices will rise more quickly if Scotland remains in the UK than they would if there is a Yes vote, a leaked document from Savills has suggested. A presentation given by the estate agent this month, titled Financing Property 2014, obtained by the Better Together campaign, estimated that Scottish house prices would rise by 25.2% in the years between 2014 and 2018 in the event of a No vote. According to Savills, if Scotland leaves the UK, the house price rise over the same period to 2018 would be only 10.9%.

Construction slowdown expected

A survey by Barbour ABI has found that Britain's construction industry is expected to slow during the summer. The study shows that a rise in contract signings between April and May of 5.3% was not enough to offset a fall over the spring that left the value of contracts down 3.7% on the same time last year. The survey found that residential housing starts accounted for around a third of the entire sector's work amid signs of weak activity in the infrastructure and civil engineering industries. Michael Dall, lead economist at Barbour ABI, said London was the UK's hotspot for construction activity in May, accounting for 24% of the UK total.

MPs critical of Help to Buy

The Government has yet to demonstrate that its Help to Buy mortgage guarantee policy is providing value for money, an influential committee of MPs has found. The House of Commons Public Accounts Committee warned that the scheme has created a "medium and long-term risk" to the taxpayer in the form of a £10bn portfolio of loans which will impose a "heavy administrative burden" for years to come. In a new report, the spending watchdog said the scheme was introduced smoothly and quickly and helped 13,000 homebuyers within nine months. But it noted that Eric Pickles’ Department for Communities and Local Government violated Treasury guidelines by failing to carry out any assessment of alternative options before going ahead with the scheme.

BoE dove expects rates to rise

David Miles, the most doveish member of the Bank of England’s nine policymakers, has revealed that he expects to vote for an increase in interest rates by May next year. His comments underscore remarks made last week by Mark Carney that rates could rise “sooner than markets currently expect”. Mr Miles’s change in tone appears to confirm that the MPC has turned distinctly more hawkish. He also hints, in an interview with the Times, that the minutes of this month’s rate-setting meeting will show that the MPC is moving closer to ending five years of policy at a record low 0.5%.

House price growth slows

According to Rightmove's latest House Price Index, house price growth has slowed across Britain this month and fallen in London. The price of new houses put up for sale in June nudged up just £272 or 0.1% from May, compared to 3.6% the previous month. In the capital, new seller prices recorded a drop of 0.5% in June. Rightmove said buyers were put off by high values but also had more choice, with a 20% rise in the number of houses coming to market in London. Across the country, new seller numbers were up 9.6% compared with last year. The firm’s Miles Shipside said the figures showed that after months of steep rises, the London property market was "starting to run out of steam." However, he added that the legacy of rises in central London continue to ripple out to its better-value commuter-belt, fuelling price increases in all southern regions. Commenting on the figures, Lucian Cook,Savills UK head of residential research, said: "We've reached a point where the gap between London and the rest of the country is becoming irresistible to London home-owners who have for several years put off moving out. The result is more stock on the London market and slightly more realism from sellers."

Osborne to incentivise brownfield construction

George Osborne will announce new incentives for developers to build new homes on derelict urban sites in an effort to spare the green belt. Figures show there is enough brownfield land for 2.5m homes, but developers are often reluctant to build on it due to having to decontaminate soil on former industrial sites. "It looks like a welcome recognition that more needs to be done to use sites in towns and cities that are derelict and not force development sprawling into the countryside,” said Shaun Spiers of the Campaign to Protect Rural England.

Construction activity eases

UK construction activity eased back in May, however, a strong performance from the house building sector helped the index remain at elevated levels. The Markit/CIPS construction purchasing managers' survey fell to 60 in May, its lowest level since October last year. Tim Moore, senior economist at Markit, said overall the construction sector was enjoying its "strongest overall phase of expansion since the summer of 2007."

Landlords could face jail if they let to criminals

In a crackdown on organised crime it will be announced in the Queen's Speech that landlords who knowingly lease premises to criminal gangs will face up to five years' imprisonment under new laws.The owners of residential properties could be prosecuted for "participation in an organised crime group" if they fail to report suspicions that premises are being used for crime. The offence will also apply to commercial landlords and others who provide services such as transport or parcel delivery.However, the new measures will be primarily aimed at corrupt lawyers and other professionals who "turn a blind eye" when working for organised crime gangs. Karen Bradley, the organised crime minister, said: "This new offence sends out a clear message to those individuals – if you are helping to oil the wheels of organised crime, you will be prosecuted and face being jailed."

Small developers to be exempt from carbon rules

Small housing developers will be exempted from new environmental controls to encourage the building of thousands of homes, under legislation to be announced in the Queen's Speech. Measures introduced last year to ensure that every new home in Britain would have to be built to a "zero carbon" standard by 2016 will be watered down so they do not apply to "small sites", which house builders say are developments with fewer than 50 homes. The legislation is also expected to exempt larger developers from having to meet the highest level of energy efficiency. Instead they will be allowed to design homes to a lower standard and offset the extra carbon that the homes produce by paying into a government fund for energy efficient projects.