Landlord Basics » property market

More and more people taking out repayment mortgages

Rowena — Thu, 12 May 2011 09:05:26 +0000

It has been revealed recently that the number of repayment mortgages being taken out by property purchasers has reached record levels, having increased steadily since 2007 when they hit their lowest level in six years.

The data comes from Paragon Mortgages’ Financial Adviser Confidence Tracking Index (FACT).

According to the data the number of repayments mortgages for the first three months of this year came in at more than 75 percent having increased from 71 percent in the last three months of last year.

The number of repayment mortgages has increased since the third quarter of 2007, around about the time of the onset of the financial crisis, when it hit the lowest level in six years.

Interest only mortgages have, on the other hand, been decreasing and only 14 percent of mortgages that were introduced in the first quarter of the year were interest only mortgages. A rising number of lenders have been shying away from interest only loans because of the higher risk that they represent.

These mortgages have been very popular with first time buyers in the past because they could keep the monthly repayments down by paying only the interest on the loan for the term of the mortgages. However, this is precisely what also made them higher risk for lenders.

One official said that the decline of the interest only mortgage was already clearly evident and that it was set to continue, with more and more lenders exercising caution over these mortgages.

He said: “FACT shows that residential mortgage lenders have been clamping down on interest-only since the start of the credit crunch and the decline of this market shows no signs of slowing down. The Financial Services Authority signalled the demise of interest-only through changes proposed in the Mortgage Market Review and it appears that lenders are positioning their businesses in anticipation of regulatory changes.”

Paragon data also showed that the number of applications for repayment mortgages was increasing, which indicates that the popularity of these mortgages will continue to rise.

More viewings stem from sunshine

Rowena — Wed, 11 May 2011 10:58:32 +0000

As most industry experts know the figures relating to property sales and viewings have not been all that impressive over the past few years, with everything from unusually cold weather conditions to restrictions in the mortgage market keeping potential buyers away from property.

However, the past few weeks has seen something of a turnaround, with officials reporting some encouraging figures when it comes to the property market.

April has been an unusual month for many consumers for a number of reasons. Firstly, the sunshine this year along with the temperatures have been amongst the highest on record for the time of year, which has delighted many consumers who are often stuck in their homes because of the bad UK weather.

On top of this consumers have been treated to two extra long four day weekends on the trot as a result of Easter followed by the Royal Wedding.

This combination has obviously given consumers the time and the inclination to get out and about, as officials from the Royal Institute of Chartered Surveyors reported that there was an increase in the number of people viewing properties for the month of April.

It is thought that the great weather and the extra time off helped to spur people on when it came to viewing, and that this may have been further encouraged by lower property prices in many areas of the country.

RICS surveyors did not want to read too much into the encouraging figures, with one stating: “The return of sellers to the market is positive, but activity still remains subdued and it is difficult to see it picking up materially over the coming months.

Although there are signs that some lenders may be reducing their grip on the purse strings, in particular with mortgages aimed at first-time buyers, there is still a long way to go before lending levels increase enough to have any real impact. Economic uncertainty may also continue to weigh on sentiment for a while to come.”

However, with the group expecting property prices to fall further over the coming months there may be many property investors who will be keeping a close eye on the market in order to snap up the bargains as they come along.

Will The Property Market Repeat The Cycle?

No change to base interest rate

Rowena — Fri, 06 May 2011 08:55:49 +0000

Many homeowners and a variety of industry groups will be celebrating today after it was announced that the base interest rate was to be held for yet another month at the all time low of just 0.5 percent, where it has been for well over two years.

Following the May Monetary Policy Committee meeting the Bank of England announced that there would be no change to the base rate.

For many industry experts and economists the news did not come as any great surprise, and this is due to growth figures that were recently released.

These figures showed that there had been a slowdown in growth at the beginning of this year for the manufacturing, construction, and service sectors. Many believed that given this data it would be too risky for the base rate to be increased at this stage.

The rate of inflation is now at twice the 2 percent target set by the government, which would ordinarily justify an interest rate increase in order to try and keep a lid on soaring inflation.

However, the fragile economy means that the MPC has the challenging task of deciding whether to increase rates to decrease inflation or keep rates on hold to stabilise the economy.

One official said that it would have been extremely difficult for the MPC to have justified a rate increase given the recent growth figures, which is why they had decided to keep the rate on hold.

Some even think that it will now be towards the end of this year and possible even next year before the base rate is increased – good news for many homeowners but not so good for savers.

One official stated: ‘In recent weeks, relatively soft UK activity data had removed any realistic expectations of a rate hike today. For now we still view an August hike to be the most likely outturn.

However we will be tempted to push this back to November or beyond, should the run of activity data continue to disappoint, or indeed if the tone of next week’s Inflation Report is more dovish than we expect.’

Andrew Goodwin, senior economic adviser to the Ernst & Young Item Club, said: ‘We think it unlikely that the Bank will move before November and it could quite easily be 2012 before we see the first increase in interest rates.’

Tenants scramble for property as rental shortage continues

Rowena — Wed, 04 May 2011 08:20:35 +0000

It has been reported recently that the scramble amongst potential tenants for privately rented accommodation is heating up as the shortage of rental homes on the market continues.

Over recent months the situation has become more and more difficult for non-homeowners, as they have found it difficult to secure a mortgage and get their own home and have found themselves vying against many other people who are vying over the same rental property.

One lettings agent has recently reported that it now has a large proportion of small landlords, with 40 percent of its landlords having a maximum of three rental homes on the market.

There is a definite opportunity for property investors who are willing to buy to let, as the severe shortage of rental homes on the market means that potential tenants are queuing around the block to rent a home.

The high demand for privately rented accommodation is also driving the monthly rent on these homes up, which means that those coming onto the market as buy to let landlords can expect to not only find a tenant instantly for the property but can also expect to get a very good rental income, enabling them to get excellent returns on their property investment.

According to officials there is now an average of around five people vying for each of the rental properties coming onto the market. Some areas are still seeing tenants having to put in sealed bids for rented accommodation as the frenzy to be the winning bidder for a rental home continues.

The shortage of rented accommodation in the private sector is also pushing people towards the social housing sector, which is already overflowing with people that are waiting.

One housing officer said: “In the past we used to get tenants coming onto the social housing waiting list because they could not afford to move into privately rented accommodation.

However, these days we are getting a lot of people coming onto the list because they don’t seem to be able find a privately rented home that does not already have people queuing up for it.”

Property seems safe bet for those with cash to invest

Rowena — Thu, 28 Apr 2011 08:36:11 +0000

It seems that many people that have cash to invest are looking towards the property market rather than at savings and other forms of investment, with the number of cash buyers having soared according to recent reports.

The Council of Mortgage Lenders has recently released a report showing how the number of cash buyers has soared to the highest level since records began in 2005.

According to the report the level of cash based property purchases for January was around 40 percent, and this is where buyers were using cash to pay for the property without the need to take out a mortgage loan.

The figures show that the number of cash buyers has actually doubled since 2005, with one estate agent stating that they were historically high and in some areas the number of cash buyers was much higher than the figure given in the report.

He said that in some parts of the South West the number of cash buyers had soared to 50-55 percent and in some areas of London the figure was much higher at around 80 percent. He stated: “In certain regions, the proportion of cash buyers will be even higher than these figures suggest. For example, in south-west England, I would say it is probably more like 50 to 55%. In some areas of London, it can be up to 80%,”

Another industry official pointed out that many people that had cash to invest were not happy about putting it into savings accounts in the current climate, as with the base rate still at just 0.5 percent they were likely to get little to no return on their cash.

Other investments such as stocks and shares are also viewed as risk by cash investors at present. This has left many deciding that the way to go is to plough their cash into property where they can benefit from a long term investment that will enable them to enjoy healthy returns.

He said: “Putting the money in a bank account may be safe, but you will get a woeful return on it, while stocks and shares look like the two ugly sisters – leaving property as the Cinderella of the investment world,”

The future looks brighter for property builders

Rowena — Wed, 27 Apr 2011 08:29:04 +0000

According to recent reports from one leading property builder the future is starting to look much rosier for house builders in the UK.

The past few years have been extremely turbulent for house builders, with the financial crisis and the recession having taken their toll on the property market.

However, a number of different groups and reports have indicated that there are a range of encouraging signs that suggest that the property market is improving.

Taylor Wimpey, one of the UK’s house building giants, has stated recently that there have been a number of signs that there is improvement in the property market, which should hopefully continue over the course of this year.

The company, like other house builders, has experienced a lot of turbulence over the past couple of years but hope to see continued signs of improvement this year.

The company is the third largest UK house builder based on market capitalization. Officials from the firm said that there had been positive trends in sales rates and prices since the start of this year. It said that this was a further sign of improvement in the domestic housing market.

The house builder said visitor levels since the beginning of this year had been positive. Officials also said that cancellation rates had been low so far. A spokesperson from the company said that so far the order book had increased by 21 percent to 5681 homes.

Last year saw Taylor Wimpey, along with other house builders, feel the impact of measures such as the government’s austerity drive as well as factors such as the terrible weather seen at the end of last year. All of this has taken its toll on the market. However, builder are hoping and expecting to see marked signs of improvement this year.

Improvements in the new property sector will be further boosted by government measures to cut stamp duty on properties that are purchased in bulk, which is likely to attract property investors that are keen to purchase new build homes that are all together on one housing scheme.

How much would you pay for the shell of a flat?

Rowena — Tue, 19 Apr 2011 08:58:00 +0000

Living near Hyde Park in London is something that many people might pay over the odds to be able to do if they had the money. But how much would you pay for an apartment that had no facilities or amenities and was sold as just a shell of a property?

One buyer has put a Hyde Park flat on the map after it was recently revealed that it had been purchased for a staggering £136 million. Despite the fact that the buyer paid such a huge amount for the flat at the prestigious One Hyde Park development it was actually only sold as a shell and has no amenities.

The buyer is therefore said to be looking to spend a further £60 million on doing the place up!

The price of the flat has made it into the most expensive flat in the UK. It is a three storey penthouse apartment on the development. The identity of the buyer has not yet been revealed but many believe that it is an overseas tycoon who purchased the flat because the legalities were dealt with by a lawyer in Ukraine.

The sale is said to have been agreed back in 2007 but the sale has only just been registered with the Land Registry.

As there is no mortgage linked to the flat it is also thought to have been a cash deal. The buyer will now have to shell out millions more to kit out the 25,000 square foot space.

Property developers, Nick and Christian Candy, have enjoy great success with the One Hyde Park development, which has given them cause for celebration despite the problems in the property market that have been seen elsewhere.

In the development around forty five apartments have been sold for a total of £960 million.

For those that have tens of millions of pounds at their disposal there are some flats still available to buy at the development, with around thirty five still available. However, even some of these are now under offer according to reports.

West End of London more popular amongst UK buyers

Rowena — Thu, 14 Apr 2011 09:24:00 +0000

It has been reported that properties in the prestigious West End of London are becoming increasingly popular amongst buyers in the UK, with a sharp increase in the number of people that are buying homes worth £1 million or more in this area.

Whilst the level of family accommodation in the area is limited many people are now flocking to buy homes in the area according to a specialist West End estate agency.

Many people who want to buy property in London have opted for surrounding areas in the past because they are cheaper than the heart of the city, so the figures have come as something of a surprise.

Some people believe that the increase in property sales on homes valued at £1 million or more in this area, which has increased from 30 percent a year ago to 71 percent now, is down to changes in stamp duty.

However, an official from LDG, which specialises in property in the West End, disagreed.

He said: ‘We did not experience a surge in completions from people trying to avoid the stamp duty increase. Instead, I believe the higher number of sales of property in excess of £1 million is because we saw an increase of nearly 20% of people buying their main UK residence in the West End last year and as confidence has returned to the property market here, vendors have been more willing to put their homes on the market, in turn encouraging buyers.’

He also stated: ‘The West End has a very short supply of family properties so those looking to buy their main home here are often willing to pay a premium to secure a property that is right for them. A mixture of people are choosing to have their main UK residence in the West End from families with young children, to professional couples to overseas buyers.’

He said that confidence levels had increased, leading to the rise in property sales in this area amongst UK buyers rather than foreign investors.

However, he added that the area was also very attractive to investors because properties had held their prices in this part of London and were in greater demand amongst people wanting to live in the area.

Fancy buying a property from the ‘Prince of Darkness’?

Rowena — Tue, 12 Apr 2011 08:41:53 +0000

Being the self proclaimed ‘Prince of Darkness’ can’t be a very easy task for rock legend Ozzy Osbourne – for one thing, it makes it very difficult to avoid the pesky taxman who just won’t leave the Osbournes alone because of the small matter of a £1 million tax debt that the couple owes.

In fact, the debt is just over £1 million according to reports, and not wanting to feel left out the couple’s daughter, Kelly, has contributed her own little chunk of tax debt, worth around £26,000, which she is said to have owed since 2009.

With another tax payment due in shortly the Osbournes are now starting to feel the heat from the tax office, with their debt set to soar further if they also miss this up and coming bill. The tax office is said to have put a lien on the family’s home in Hidden Hills, Los Angeles.

Whilst seeing anyone losing their home because of debt is a sad affair the Osbournes are said to have another six or so properties to their names, so the sensible solution would be to sell one of the properties and get the tax bill paid off!

In fact, it is reported that the Osbournes have already put their beachfront Malibu home up for sale for a tidy $10 million. However, there are no guarantees of a sale in the current climate.

Even other celebrities may be exercising caution about buying the property – after all, if the recession has hit the Osbournes to the point where they cannot pay their taxes then it will have hit other celebrities as well.

In fact, as the pressure from the tax office mounts the Black Sabbath front man and his wife and manager, Sharon, may have to consider selling off one of their properties at a knock down price for a quick sale.

So, if you keep your eyes peeled and your ear to the ground you may just be able to pick up a bargain property from the Prince of Darkness himself – and provide him with a helping hand in paying his tax!

Housing shortage could provide investors with greater opportunities

Rowena — Mon, 11 Apr 2011 08:22:30 +0000

According to a recent report the government has been taking careful note of community needs in relation to property as well as to the widening gap between the availability of property and the demand for it.

In fact, it is suggested that the housing shortage could actually prove to be good news for investors because of the changes that the government is making in recognition of the shortage.

Officials from one industry group, Asset Land Inc, said that the government is now looking at different means of encouraging new property investment, which is something that will provide many benefits.

Successful encouragement of new developments will help first time and existing investors, the jobs sector, and the economy as a whole, as well as helping to address the property shortage.

The government is said to be treating reforms in the planning system as a priority in order to address this property shortage, and this forms part of a project called the Big Society.

The government is said to be looking at shifting control with regards to house building from central government authorities to communities and local authorities, which will give councils and residents more control over the way in which their areas are developed rather than them having new housing imposed on them.

It is thought that this will help to encourage more building projects as it will take a lot of the complexity and red tape out of the process. It also means that fairer decisions can be reached with regards to new housing developments, and that councils can work alongside local communities to reach these decisions.

This is all part of the Community Right to Build under the Localism Bill, which was published at the end of last year.

One industry official stated: “This new right removes barriers that have previously prevented local people taking forward development, for the benefit of the community. The housing market has been left standing over recent decades and not kept up with the needs of the UK’s growing population so something radical needed to be done to tackle the problem.

There is an apparent shortage of new homes being built so it’s good news, not only for the construction industry and our investors but also for economic growth as a whole now that the Government has committed to meet Britain’s housing needs.”