PRESS DIGEST - Financial Times - July 4

Financial Times

KNIGHTS UNITED IN PROPERTY VENTURE

Broadcaster Sir David Frost and the manager of English football team Manchester United, Sir Alex Ferguson, are set to join forces in a 1 billion pound ($1.64 billion) property venture. Their investment company, aAim Capital Finance, is backed by Middle Eastern investors to snap up real estate at bargain prices. "I continue to be confident in a recovery on the real estate front and am sure that the aAim people will flourish again with their knowledge and adaptability to changing situations," said Ferguson.

MINISTERS CONSIDER EASIER TERMS FOR FUNDING OF COUNCIL PENSIONS

According to a paper by the local government, funding requirements for 3.7 million council workers' pensions could be loosened by the government. The move is being made in an attempt to head off a sharp rise in local taxes or a showdown with the unions. The paper says that because of councils' "constitutional permanence", they do not face the same threat of bankruptcy as private companies. For this reason, they should not have to keep enough money on hand to pay all promised pension benefits.

PENSION TAX-RELIEF CURB TO BE EASED

In an attempt to defuse criticism from the self-employed and other irregular savers, a controversial restriction on pension tax relief for high earners is set to be eased. The amendment to the Finance Bill will raise the amount that can be saved, with full tax relief by high earners who lack a regular pattern of pensions savings. This eases a temporary measure aimed to stop a big splurge in pensions savings ahead of tax changes to the pensions regime in 2011. However, advisory firm Baker Tilly's George Bull said the move was a token gesture that did not repair the damage caused by the "arbitrary and sudden measure".

TENANTS FACE STIFF CREDIT CHECKS FOR TOP HOMES

As landlords with expensive properties in central London become increasingly concerned about the threat of rent defaults and periods of vacancy, they are being more discriminating about whom they accept as tenants. Prospective tenants are facing rigorous credit checks by letting agents as property owners demand proof of income and personal information such as savings accounts. Knight Frank is one agent that has reviewed its reference process to suit the new data needs of landlords.

SOCIETIES RENEW FAITH IN 90 PER CENT MORTGAGES

According to product comparison website Moneyfacts.co.uk, building societies are showing a renewed appetitive to offer loans for 90 per cent of a property's value. Since the start of June, the number of mortgages for borrowers with a ten per cent deposit has soared by 21 per cent, as competition begins to creep back into the market for mortgage borrowers with small deposits. However, Ray Boulger, of mortgage broker John Charcol, says there is no sign of lenders venturing back into the riskier 100 per cent mortgage market. "Nobody is offering mortgages at 100 per cent, and while the number of 90 per cent deals are increasing this is from a very limited number," said Charcol.

PRICES RISE FOR PRIME SOUTH-EAST HOUSES

Property company Knight Frank has unveiled figures that shows the value of prime country homes has started to increase again in home counties as the return of bonuses inspires confidence. According to Knight Frank, prime country homes increased by 0.8 per cent in the south-east of England in the second quarter of 2009. However, the group warned that this was the only market sector with signs of growth. Overall, prices for prime country houses fell by roughly one per cent. Average prices have decreased by 17.5 per cent in the 12 months to the end of the second quarter.

BA LAUNCHES FRESH ROUND OF CUTS

British Airways (BAY.L) hopes to staunch losses and the slow outflow of cash with a fresh round of job cuts and reductions. The UK carrier is slashing capital spending and deferring new deliveries of aircraft as it plans to cut 3,700 jobs by March 2010. The lay offs are an addition to the 2,500 chopped in the ten months to the end of March 2009. The airline is struggling to cope with plummeting revenues caused by shrinking demand for air travel, particularly from its premium business passengers. This drop has been exacerbated by a fall in average fares as carriers are forced to discount prices to fill seats.

HALABI FAMILY TRUSTS HIT BY DEFAULT ON ONE BILLION POUND LOAN