The basis of valuations for secured commercial property lending in the UK

In the context of the financial crash and the commercial property market downturn, this paper examines the basis of valuation used in the UK commercial property lending process. Post-crisis there is discussion of countercyclical measures including the monitoring of asset prices; however there is no consideration of a different approach to property valuation. This paper questions this omission, given the role that valuations play in the bank regulatory process. The different bases of valuation available to lenders within International Valuation Standards are identified as Market Value (MV), Mortgage Lending Value (MLV) and Investment Value (IV), with MV being the most used in the UK. Using the different bases in the period before the financial crisis, the UK property market is modelled at a national office, retail and industrial/warehouse sector level to determine the performance of each alternative valuation basis within the context of counter-cyclical pressures on lending. Both MLV and IV would have produced lower valuations and could have provided lenders with tools for more informed and prudent lending. The paper concludes by recognising some of the practical issues involved in adopting the different bases for the bank lending role but recommends a change to IV.

A bank lending channel or a credit supply shock?

Shifts in credit supply could have a bearing on house prices e.g. through financial innovations and changes in regulation independently of the existence of a bank lending channel of monetary policy. This paper assesses the responses of US house prices to an exogenous credit supply shock and compares them with the effects from variations in credit supply associated with a bank lending channel. The contribution of the study is twofold. First, innovations in credit supply are identified using a mortgage mix variable, thereby accounting for the market-based financial intermediaries. As a robustness check a survey variable of bank lending standards for mortgage loans is also used. Second, the policy-induced credit supply effect on house prices is disentangled and compared with the effect from an exogenous credit supply shock. It is shown that in the first 3 years credit supply shocks affect house prices exogenously rather than through the bank lending channel. Monetary policy has still a large impact on house prices, even when the bank lending channel is ‘turned off’.

Are mortgage lenders guilty of the housing bubble? A UK perspective

Existing theoretical models of house prices and credit rely on continuous rationality of consumers, an assumption that has been frequently questioned in recent years. Meanwhile, empirical investigations of the relationship between prices and credit are often based on national-level data, which is then tested for structural breaks and asymmetric responses, usually with subsamples. Earlier author argues that local markets are structurally different from one another and so the coefficients of any estimated housing market model should vary from region to region. We investigate differences in the price–credit relationship for 12 regions of the UK. Markov-switching is introduced to capture asymmetric market behaviours and turning points. Results show that credit abundance had a large impact on house prices in Greater London and nearby regions alongside a strong positive feedback effect from past house price movements. This impact is even larger in Greater London and the South East of England when house prices are falling, which are the only instances where the credit effect is more prominent than the positive feedback effect. A strong positive feedback effect from past lending activity is also present in the loan dynamics. Furthermore, bubble probabilities extracted using a discrete Kalman filter neatly capture market turning points.

Heritage property, tourism and the UK Disability Discrimination Act

Heritage tourism depends on a physical resource based primarily on listed buildings and scheduled monuments. Visiting or staying in a historic building provides a rich tourism experience, but historic environments date from eras when access for disabled people was not a consideration. Current UK Government policy now promotes social inclusion via an array of equal opportunities, widening participation and anti-discrimination policies. Historic environments enjoy considerable legislative protection from adverse change, but now need to balance conservation with public access for all. This paper discusses the basis of research being undertaken by The College of Estate Management funded by the Mercers Company of London and the Harold Samuel Trust. It assesses how the 1995 Disability Discrimination Act has changed the legal obligations of owners/operators in managing access to listed buildings in tourism use. It also examines the key stakeholders and power structures in the management of historic buildings and distinguishes other important players in the management process.

Modeling infant speech sound discrimination using simple associative networks

Infants' responses in speech sound discrimination tasks can be nonmonotonic over time. Stager and Werker (1997) reported such data in a bimodal habituation task. In this task, 8-month-old infants were capable of discriminations that involved minimal contrast pairs, whereas 14-month-old infants were not. It was argued that the older infants' attenuated performance was linked to their processing of the stimuli for meaning. The authors suggested that these data are diagnostic of a qualitative shift in infant cognition. We describe an associative connectionist model showing a similar decrement in discrimination without any qualitative shift in processing. The model suggests that responses to phonemic contrasts may be a nonmonotonic function of experience with language. The implications of this idea are discussed. The model also provides a formal framework for studying habituation-dishabituation behaviors in infancy.

Exploring block construction and mental imagery: evidence of atypical orientation discrimination in Williams syndrome

The visuospatial perceptual abilities of individuals with Williams syndrome (WS) were investigated in two experiments. Experiment I measured the ability of participants to discriminate between oblique and between nonoblique orientations. Individuals with WS showed a smaller effect of obliqueness in response time, when compared to controls matched for nonverbal mental age. Experiment 2 investigated the possibility that this deviant pattern of orientation discrimination accounts for the poor ability to perform mental rotation in WS (Farran, Jarrold, & Gathercole, 2001). A size transformation task was employed, which shares the image transformation requirements of mental rotation, but not the orientation discrimination demands. Individuals with WS performed at the same level as controls. The results suggest a deviance at the perceptual level in WS, in processing orientation, which fractionates from the ability to mentally transform images.

The role of perirhinal cortex in visual discrimination learning for visual secondary reinforcement in rats

Perirhinal cortex in monkeys has been thought to be involved in visual associative learning. The authors examined rats' ability to make associations between visual stimuli in a visual secondary reinforcement task. Rats learned 2-choice visual discriminations for secondary visual reinforcement. They showed significant learning of discriminations before any primary reinforcement. Following bilateral perirhinal cortex lesions, rats continued to learn visual discriminations for visual secondary reinforcement at the same rate as before surgery. Thus, this study does not support a critical role of perirhinal cortex in learning for visual secondary reinforcement. Contrasting this result with other positive results, the authors suggest that the role of perirhinal cortex is in "within-object" associations and that it plays a much lesser role in stimulus-stimulus associations between objects.