Category Archives: Finance

House prices rise

A report into the rise in house prices has revealed that the average price for a property in London has rocketed over 3% in a month, this means that the average price for a property in the capital is more than £500,000. Camden has become part of the “Elite Club” along with the likes of Kensington and Chelsea where the average price for a property is now in excess of £1m.

Elsewhere in the kingdom, house prises have also risen by around 9% since the start of 2013 with the average house price now reaching over £245,000. The strongest start to a year since 2004 has been attributed to cheap mortgage deals and the governments funding for lending scheme.

Home repossessions fall

A report by The Council of Mortgage Lenders (CML) states that the rate of repossessions in the first quarter of the year was down by 17% compared to the same period last year.

Around 8000 properties were repossessed in the first three months of 2013 and The CML report that a fifth of those were buy-to-let properties.

In a separate report by The CML shows that the buy-to-let market is growing, the first quarter accounting for over 13% of the mortgage market.

The rise is being attributed to low interest rates and continued employment with The Bank of England today announcing that it will hold its record low benchmark rate at 0.5pc continued growth is predicted.

Remove pounds to save ££££

The Energy Saving Trust has released the findings of its research into not only how much you can save financially but also save the planet by lightening the load in your van.

It has been estimated that if half of the LGV drivers in the UK removed 75KG from their vans (3 or 4 bags of san/cement) it would save around £50 million a year and 100,000 less tonnes of carbon dioxide.

A difference in fuel consumption of up to 30% has been found between an empty and fully loaded van in some cases, so it pays to think about what’s loaded on your van.

Time to spring clean your van?

Homeownership falls



Government figures released today show for the first time since the mid-80s homeownership has fallen.

Whilst still over 14 million of us are home owners, it is still the lowest proportion at 65% since Margaret Thatchers “Right to buy” proved to be so popular, a scheme where the tenants of council owned properties were encouraged to buy the house they lived in at a discounted rate.

Home ownership peaked in 2003 when the rate had risen to over 70% but that number fell over the following 4 years as credit became harder to obtain and property prices increased which also priced potential buyers out of the market.

This has forced more and more people to enter the rental market which is shown in recent figures showing a higher demand for rental properties. Once in the rental market, renters tend to feel trapped as they are unable to raise the 20% deposit required rather than the typical rate of 10% to get on the property ladder.

There has however been a rise in the number of mortgages approved since the Governments “funding for lending scheme” was rolled out last year and a number of lenders reducing their rates.

Property development funding

The government like many builders and property developers is keen to get Britain building again and has identified a number of large development sites that have stalled simply because of a lack of suitable speculative property development funding. The government is looking to provide some of this much needed funding although the details have not been fully released. The funding shortage will be either in the form of primary funding the usually standard type of development funding currently available on the majority of site at around 55-65% of the loan to value. The second and less secure type is mezzanine funding this is a secondary and more complex type of development funding. It sits on top of the primary development funding and tops up the short fall usually taking care of the percentage difference between the maximum loan to value and a shortfall on the primary development. It is sometimes used to take care of the cash gap between paying the main contractors JCT stage valuations and the sales of the properties. Mezzanine funding often makes the difference between a development taking place and simply not being built out. However this type of development funding is considered risky for the investor as well as being an expensive solution for the site developer. The typical charges are between 25-40% of the investment required and this is usually the first monies to be realised after the primary development funding has been repaid from the sales of the properties. The developer who borrows the mezzanine funding usually also picks up all the soft costs like legal contracts and the mezzanine funder may ask for a directorship or other control of a SPV or special purpose vehicle or limited company used to run the development. It can also be beneficial to the developer because often mezzanine funder will have extensive property development experience and be able to give advice on contractors and with build specifications and off plan sales.

House prices set to rise in 2013

Many property pundits and property professional like to make predictions on the future of the UK property market and house prices. There are also a number of banks and economists that are prepared to put their reputations on the line and estimate where the average UK house price will end up. These projections rarely vary greatly but some have proved far more accurate than other particularly after the last property boom. Amongst one of the best respected and accurate is the Royal Institute of Chartered Surveyors. They do have the advantage of having so many members who have the unenviable task of valuing people’s homes and properties. For the new year of 2013 they are predicting a rise in house prices of around 2 percent which given the economic landscape is a positive and sustainable increase. They are also tipping an increase in transaction volumes with the number of property sales thought to rise by a around the three percent mark edging them tantalisingly closer to the million sales marker. This is still a far cry from the heady days of average number of transactions edging up towards 1.7 million at the height of the property boom in 2006.

Raising a roof

Many home owner look at doing a loft conversion but some properties are less suited to a loft conversion than others. This can often be the case with some bungalows either the pitch is simply to shallow or the ridge of the roof is too low. Even if you can stand up in your loft and the head height is a little tight with the addition of loft insulation bringing the ceilings down and an increase in the thickness of the floor joists it can still be unachievable to convert the loft. However it can still be the best value project for that property so what is the answer? You need to raise the roof this can be done by simply taking the roof off and replacing it with a roof with a stepper pitch and an increased ridge height and therefore more standing room. Or staying with the same pitch and increasing the wall heights to move the whole structure up and give more height or a combination of the two. This usually gives rise to the need for structural steels in the ridge to give the roof more strength and allow for the removal of trusses or other supporting timbers or masonry columns. It will also be likely that you will require steels in to support the new floor structure. This has the advantage of reducing the spans that the floor joists have to make meaning that their depth can be reduced and this again helps with head height. It also makes it easier to get workable stairs and there are various building regulations relating to the depths of the stair risers and the length of stair treads. It is also important to maintain the stairwell ceiling height which is made easier to achieve when these works have been included in the conversion. This does mean more materials and extra work and labour charges but can be well worth while in certain properties particularly those that are set in areas that has high re-sale prices. If you can turn a standard small three bedroom bungalow into a two story house the value of the property can increases dramatically. With all the space down stairs now being able to be utilised as living space you get the added bonus of a large property down stairs. Although this type of building project is too ambitious for most home owners done by the right building contractor they create some amazing houses that command a premium price.

Speculative property development funding available?

This area of bank lending has been one of the least favoured sectors of bank funding in recent years as banks have looked to repair their battered balance sheets and reduce their exposure to property backed lending. A recent survey of European Property Finance trends has seen lenders surveyed increase their likelihood to lend. With three quarters reporting they expect to finance some form of speculative development funding in the next five year period. As always those with the best track records, prime sites and pre-let or sold developments would be their favoured lending targets. Ultimately the banks know that speculative property development can deliver stellar profit gains that allow for developers to pass some of the gross development margin back to their bank financers. So as always in this stage in the property cycle the banks return in search of profits and gentle ease back into an area of the economy that has proven to provide good returns for savvy developers and bankers over many years. It is the speed at which bankers and investors can enjoy their profits and returns, with most speculative building development projects taking between a year and two years to complete. It means that banks and investors can enjoy returns well into double figures quickly with the advantage of a first or second charge of security over a valuable asset. Will this change in attitude now make it easier for builders and property developers to obtain speculative development funding as well as kick starting the property and construction industries?

Will house prices go up?

The property market has been short of good news over the last few years but could 2012 mark the turning point for the housing market? There have been several pieces of encouraging news this week, firstly the base rate has remained the same. Secondly the government has announced a targeted policy for housing and construction. Thirdly the land registry has released data showing a monthly increase in house prices of 0.8 percent. For those who study the property market there has been interesting news from Northern Ireland one of the worst hit areas by the property slump. The top end of the Northern Irish property market is showing signs of recovery. With all this positive news even the most pessimistic of property pundits are being forced to revise their forecasts. This is good news for the construction industry, home owners and property developers. There is pent up demand from many house holders to either buy or sell their homes many wishing to invest in home improvements or house extensions. In previous years when they have seen the price of their main asset dropping and had concerns over the wider economy they have been reluctant to commit to spending on home improvements and house alterations. Now that many home owners feel more confident that UK house prices are set to go up they are looking to improve their homes to get the maximum benefit from the increase in house prices. House extensions can often add more value than they cost to build with house prices increasing these increases in house values are compounded. Considering that the government has relaxed the planning guidance and rules for home extensions. We look set to see an increasing number of skips on our streets and building contractors picking their jobs. The number of builders and trade people in the UK has dropped dramatically as many have left the industry as contracts and building work levels have reduced. So as the construction and property market starts to recover those building contractors who have had the skills to weather the challenging economic conditions will be increasingly busy. Building contractors will also see their workloads increase as the property market recovers. Most home owners carry out building work either prior to selling their home or when they buy a new home. So now is the time to secure those last few property bargains before the market turns and find a good builder before they are booked up.

Changes to planning laws for home extensions

The government plans to let home owners and some business extensions and developments be allow to be built without the need, expense and delays caused by planning permission. The government has gone further as they look to relax the need for social housing on residential development sites. This used to be called a 106 agreement and this could have a profound effect on many new residential developments. It will not only make some residential developments more profitable and therefore more likely to get built. It will also make them easier for speculative development funders to finance. The new planning guidance for home extensions could allow some home owners to build home extensions up to 8m long without the need for planning permission. The new guidance will allow all home owners to build home extensions up to 6m long without planning the current rules only go up to 3m. The 3m rule makes it difficult to add a good sized separate room with the change it will be easy for home owners to add a larger kitchen dinner or family room. They have also announced a raft of other measures designed to kick start the construction industry. This is great news for home owners, the construction industry and the wider economy. It has long been known that money spent on construction has a huge impact on economic recovery so these measures are good news for everyone in the UK. The measures are said to only run for three years so those looking to add a home extension should get the ball rolling before the new planning rules are altered. With home extensions starting from as little as fifteen thousand pounds and now with the added savings of planning fees. Home owners will be able to stretch their home extensions budgets that little bit further to make sure that they can add extra features like bi-folding doors and other contemporary home extension designs.