Monthly Archives: October 2011

Tenants set to spend a third of take home pay on their rent by 2020

The average tenant in the UK is currently spending nearly 22 percent of their take home pay on their rent but this figure looks to rise dramatically over the next few years. With flat share rents in London increasing at around an annual inflation rate of 5 percent the London market is of particular concern. Rental inflation simply reflects the increasing demand in the rental market against a limited supply of suitable private rented housing stock. The average first time buyer simply cannot afford the deposit require to get onto the housing market so they are trapped with ever increasing rents. While only the core of professional landlords expand their property portfolios as many amateur landlords fear the future of UK house prices.

Buyers strike hits highest level?

The National Association of Estate Agents has reported the level of unsold stock on agent’s books running at its highest level in the last quarter. Agents have an average of 72 unsold properties compared with 65 previously. Agents are only agreeing around 2 sales a week as transaction levels languish at very low levels. The lack of mortgage funding is the biggest underlying issue until people can easily obtain 90precent loan to value mortgages at reasonable rates the market will continue to stay locked. The mortgage market is improving but large deposits hold back first time buyers. First time buyers fuel the chain of sales without this first spark the number of chains therefore transactions will remain at painfully low levels.

Agent predicts 5% drop in UK residential house prices in 2012

House prices have remained relatively static in the last few years and there looks to be ups and downs to come unfortunate mainly downs. With prices expected to drop by 5% next year with prices pausing not expected to match 2007 peak levels until 2018. Property prices rise and fall along the property cycle but this would mean that the full circle has taken eleven years. This is longer than previous cycles so what is the difference? Simply money supply, house prices have been rising dramatically since the seventies along with the supply of money hitting the mortgage markets. Interestingly central London is expected to continue booming even though they have already outstripped previous highs of 2007. Why does the London property market always rise? Foreign money, foreign investors looking for a perceived safe haven for their funds?

One billion in London property loans sold for 20% discount by Bank of Ireland

The Bank of Ireland has off loaded a billion pounds worth of UK property loans both commercial and residential office, retail and apartments mainly placed on London property stock. These loan agreements are being traded and purchased by other financial institutions and canny investors. They look to profit by selecting the areas they specialise in and seeing the loan periods out. Banks looking to improve the look of their balance sheets and tidy up their books are motivated to make such discounted sales. Once the darlings of the development funding and more exotic end of the property backed loan market many of the Irish banks are now conspicuous in their absence from this sector.

Cash rich to make a killing on brownfield sites?

The capital values of many residential development sites has plummeted over the last few years as the banks appetite for lending on residential land and land banks has reduced. The prime residential sites are still selling well and for good prices where the demand and competition is high. The latest quarter’s figures show the first falls in residential land values since 2009. The impact has yet to be felt of the governments offer to carry out joint ventures on development land where they defer payment for the land until the final properties are sold. The supply of sites has risen sharply as many site owners have put off sales hoping the market will improve. Many are now looking to minimise their exposure to residential land prices and improve their liquidity by realising the capital tied up in their sites. Sites going to market are up 9percent where demand has only risen by 3percent. Many sites simply no longer stack up or are viable as their GDV (gross development values) have fallen in line with falls in UK house prices. The only positive is that predictions show that land values will remain stable for the next 12months. So many site owners are looking to construction companies for joint venture proposals.

How to choose a builder for my home extension?

Many home owners are bombarded with sales letters when their planning application is passed. This is because building companies check on line and send out a standard letter asking to be considered to price up the home extension. The best way to find a reputable builder is through word of mouth from someone who has experienced their work. So what do you do if you cannot find a good builder for your house extension through word of mouth? Well it is easy to find a builder and easy to get them to price up the work. The most important thing on your wish list should be quality you are about to embark on a once in a life time project to your most valuable asset, your home. After you have paid the final bill the most important consideration is that you will have to live with the finish and quality forever. So ask your builder to provide you with photographs of home extension projects they completed. Ask for references from previous customers and industry professional. Good home extension builders will have good working relationships with structural engineers, surveyors and architects. These professionals are careful of who they recommend and will give you their honest opinion of a contractors performance.

Adverse structural survey scuppering your property sale or purchase?

Have you found your dream home only to find out it has some structural issues? Frightened by structural problems? Worried about underpinning? There are many issues that can affect properties but those affecting the structural integrity of a house or business premises are the ones that concern buyers and sellers the most. So what is the best course of action if the survey comes back with structural issues? There are two positive steps that can be taken dependant on the issues concerned. If it is a simple defect like a defective lintel most competent building contractors should be capable of pricing up a sensible structural solution. If the problems are more serious you need a good structural engineer who will be able to provide recommendations and the best value solutions. For just a couple of hundred pounds you could save thousands by avoiding unnecessary work or missing out on your dream property. Many people are very concerned about structural issues that can often be resolved for less than a year’s mortgage payments. Interestingly many people go ahead with property purchases only to find out later that structural problems exist that have been concealed. How often have we heard “we did not know anything about it until we took the render or plaster off”. Whatever the structural issue it is without a doubt sensible to get an expert opinion. Often there can be temporary fixes that might not last but can save thousands in the long term.

Sentiment, perception and reality what’s really happening to UK house prices?

A homeowner survey has revealed that nearly 25% of home owners surveyed believed the value of their own home had fallen. More staggering was that only 7% believed that the value of their home had increased. Those with the most negative perception of house prices where public sector workers they expected bigger falls in house prices than the unemployed or private sector workers. It seems that your income also affects your house price positivity. Those earning between 15-20,000 per annum expected the largest falls where those earning over 58,000 expected to see prices rising. The House Price Sentiment Index is a very interesting read it is complied purely on public opinion but has been a very good indicator of future house price movements.

Affordable residential property hits 15 year high

The levels of affordable homes available in England have reached the highest levels for 15 years. The Department for Communities and Local Government has released date showing that over 60,000 affordable homes have been supplied to market in the 2010/2011 period. This has risen by 5% from 2009/2010 which in turn was the highest supply year since the mid nineties. There are a few different reasons for this increase, one of the main reasons is the development of sites for social housing up 18 percent.

Nearly a quarter of all mortgage applications are buy to let

Data released from Paragon the buy to let specialists reported that nearly a quarter of all mortgages passed through intermediaries where for buy to let property investment. This figure has jumped by over 4 percent in the last quarter and is the highest figure since they started recording this data in 2007. This is not surprising with increases in private rents as it shows a clear demand for rented properties. The government statistics show that the vast majority of the private rented sector is held by just over ten percent of landlords. The good news for mortgage brokers is that professional landlords represent a good opportunity for repeat business.