Cash rich property bargain hunters push prices down

Cash rich bargain hunters are pushing down property prices in the UK’s hardest hit locations, according to Rightmove.

The latest housing analysis published last week by Rightmove reveals that a three tier market emerging in the UK. It says that home owners in the most economically depressed areas of the country are being forced to sell their houses for less than the current market value, while in the elite parts of London prices are expected to rise by nearly 3% this year, and the third tier is first time buyers who cannot get mortgage funding to buy a property.

Although there is growing competition in the lending to first time buyers, mortgage lenders are only willing to lend to people with at least a 25% deposit. Therefore they are reportedly gearing to chase the minority market of equity heavy to buy to let investors, which means that mortgage funds are being denied to those who need them most.

Bargain hunting bottom feeder’ investors are expected to become more prominent in the second half of the year and will push prices down in the areas worst affected. And while there is evidence of growing competition to lend in this traditional first time buyer market segment, lenders are not looking to support the greater volume of deposit light first time buyers, it says.

‘Agents report that cherry picking lending practices are leading to some dysfunctional and desperate behaviour to solve housing needs,’ said Rightmove director Miles Shipside.

‘Some average sellers of yesteryear are now trading up by letting out their own home and renting the next rung up the ladder as they cannot get a suitable mortgage to sell up and buy a more spacious house. The accidental landlord is now being joined by the deliberate limbo landlord,’ he explained.

‘Meanwhile, professional investors are being funded by lenders to buy starter homes, condemning many of those who would have been first time buyers in the past to be permanent residents of the rented sector,’ he added.

The report also indicates that the number of new properties coming to market remains subdued as a substantial element of the mass market is locked in to their existing homes. Average unsold stock levels per agency branch have now declined for five consecutive months, falling from a peak of 78 properties to the current level of 69.

Unless the government can come to some agreement with lenders to accept a lower deposit, then it looks as though the market will continue to be subdued over the next few months.

Consumer giant Which? calls SRB firms 'shoddy'

Advice on SRBs (sale and rent backs) given to the people most struggling to pay their mortgage, is woefully inadequate according to consumer giant Which?

According to a recent Which? investigation the money advice given by these firms is ‘shoddy’ and they have reported their finds to the Financial Services Authority, the UK’s financial watchdog.

SRB, Sale and Rent Back is usually a last resort for people who are struggling to pay their debts but would prefer not to sell their homes. Most firms offer between 60% to 70% of the market value of a property. FSA rules mean that SRB firms must offer you a short hold tenancy of at least five years, but after the initial rental period they may ask you to leave your property.

In 2010 the FSA introduced new regulations to protect homeowners in debt, which means that all SRB advisors must explain carefully the terms of their policies. Including whether it is an intermediary and, if so, how many companies it deals with and whether those companies are authorised. It should also discuss how much any fees, commissions and charges are likely to be. The firm should explain this verbally, too, and in writing.

However Which’s investigation highlighted that most firms are still not complying to FSA rules. Which? contacted 17 advisers across nine firms, and seven of those advisers failed to discuss whether SRB was the right option for the customer. One advisor gave a quote that would have left their customer enough money to pay off their debts, the very reason why they had contacted the advisor in the first place.

‘It’s simply unacceptable that people are receiving shoddy advice about such a huge financial decision,’ said Which? chief executive, Peter Vicary-Smith.

‘Not only are regulated firms not doing enough to ensure vulnerable consumers make the right choices, some are offering sale-and-rent-back that aren’t authorised to do so. The FSA must tighten the screw on these firms to make sure the rules are followed and consumers are protected,’ he added.

Which? Money said that two companies, Property Locksmith and Rapid Property Group, have both been reported to the FSA.

Shortage of farmland send prices to an all time high

A shortage of farmland, sent prices to an all time high in the last half of 2010, according to RICS, The Royal Institute of Chartered Surveyors.

The RICS report indicated that commercial farmers are currently keen to expand production to capitalise on over inflated commodity prices. This in combination with declining land availability resulted in prices rising to all time highs during the last six months of 2010.

The transaction based measure of prices, which includes residential land, stood at just under £17,000 per hectare, while opinion based, which covers just bare land, approached £14,500 per hectare. Both prices measures rose by roughly 6%, the RICS Rural Land Market Survey which covers England, Wales and Scotland shows.

During the last six months of 2010 all areas of Great Britain experienced rising farmland prices with the exception of Scotland, with prices there falling by 8%. The East Midlands saw the strongest price rises, up 17%, followed by the North West at 12%.

Farmland was most expensive in the North West at £17,300 per hectare, while the cheapest land was in Scotland, priced at £9,100.

Demand continued to strengthen for both types of farmland, but 55% more surveyors reported demand rose rather than fell for commercial farmland, compared to only 6% for residential. This marks the fourth year running where the pace of demand for commercial outperformed residential. Residential farmland demand remains more subdued, as it broadly reflects the national housing picture.

Given the lack of land availability currently available surveyors expect the recent trend in farmland prices to continue over the coming year, with a strong growth in the commercial market but a flatter trend in the residential sector.

First-time buyers average age is now 38

The age of the first-time buyer has increased again from 36 to 38, as borrowing hits an all-time low. First-time buyers are being forced into renting accommodation which can sometimes be more expensive than buying a house. The period of tenancy is also increasing as buyers are forced into a circle of paying rent, which is not enabling them to save up enough money for a deposit.

Borrowing problems tend to arise when first time buyers have less than a 25% deposit to put down as an initial payment, the property market is viewed as unstable at the moment, and banks want to guarantee that they will see a return on their lending.

The showing of ‘how to blow a fortune’ on Panorama, BBC 1 this week, covered the issue of banks easy lending in Ireland - 110% mortgages, landlords borrowing huge amounts of money over the phone, of some clients being sold 40 year mortgages. Light touch regulation of our banking system and access to cheap funding on the wholesale markets fueled the boom in the Irish housing Market. This question remains, so why does the banking system have to go to two extremes when considering who they lend money to?

If you are a first-time buyer and have been affected by any of these issues then please get in touch with one of our branches today and we will be more than happy to discuss your mortgage options.

Hertfordshire

• Bishop’s Stortford
• Sawbridgeworth

Essex

• Braintree
• Chelmsford
• Great Baddow
• Great Dunmow
• Harlow
• Saffron Walden
• South Woodham Ferrers
• Stansted

Yorkshire

• Haxby
• Huddersfield
• Hull
• Morley
• Hebden Bridge
• Cottingham
• Pocklington
• Willerby

Lancashire

• Westhoughton
• Bolton
• Horwich
• Harwood

Nottinghamshire

• Nottingham
• West Bridgford

Staffordshire

• Stafford
• Cannock

Cheshire

• Chester

Buyers rush to beat rise in stamp duty

Buyers are rushing to beat the 6^th of April rise in stamp duty to 5% for properties over £1 million.

A buyer purchasing a house for over £500,000 will have to pay 4% stamp duty, so for example a home costing £1.1m will cost £44,000 in stamp duty.

From the 6^th of April homes over £1m will attract a 5% duty, so that £1.1 million property requires £55,000 duty.

This is expected to impact more expensive homes even harder – for example buying a £2.5m house will currently involve buyers spending £100,000 on stamp duty, and this will go up to £125,000 as from April.

For clients who are concerned about the rise in stamp duty the best advice would be to have a mortgage agreed in principle. If your purchase is subject to the sale of a property, then ensure your buyer is in a full cash position. These questions are necessary in the current market. Then make sure you use a solicitor who has a reputation for pushing transactions through quickly.

Another way to meet the deadline would be to complete before your anticipated move, so for example if the sellers don’t want to move out until the end of April you could complete before the 6^th and you could sign a legal agreement ‘license to occupy’ allowing the vendor to occupy post-completion.

For a seller, the potential problem is if a buyer does not emerge before April. If you are a seller and you do miss the stamp duty deadline then it might be advisable to see whether you can drop your property price just below the thresholds, then ask for a ‘cash payment’ for fixtures and fittings, as long as these are not enormous figures, then HMR might be concerned about tax evasion.

As with all advice, we realise that all of our clients circumstances are individual, so if you would like specific advice on your concerns relating to the stamp duty rise then contact one of our 26 branches in your area for more information:

Hertfordshire

• Bishop’s Stortford
• Sawbridgeworth

Essex

• Braintree
• Chelmsford
• Great Baddow
• Great Dunmow
• Harlow
• Saffron Walden
• South Woodham Ferrers
• Stansted

Yorkshire

• Haxby
• Huddersfield
• Hull
• Morley
• Hebden Bridge
• Cottingham
• Pocklington
• Willerby

Lancashire

• Westhoughton
• Bolton
• Horwich
• Harwood

Nottinghamshire

• Nottingham
• West Bridgford

Staffordshire

• Stafford
• Cannock

Cheshire

• Chester

London property shortages cause prices to increase

Prime London property prices are predicted to see a growth of 2.5 per cent, over 2011, this increase is due to a current shortage of property and a continued strong demand for properties in London.

A combination of this and anticipated improved economic conditions are expected to deliver further positive growth over the medium term.

Until recently the London property market has been dominated by overseas investors, however buyers are starting to be drawn from a broad base, with first time buyers and purchasers, benefiting from a return of bonuses all looking for a place in the City.

However the expected stamp duty increase to 5% for property over £1m is increasingly becoming a factor, especially as the transaction must go through before the 1 April deadline to avoid the higher tax.

As rental prices increase it is often cheaper to buy than to rent an identical property. During the latter part of 2011 we will probably see a further price growth, as signs of an improved economic confidence emerge.

Good News for house hunters as 50% more 90% LTVs are available

Good news for house hunters, especially first time buyers as there are almost 50% more 90% LTV mortgage deals available today, compared to this time last year.

There were only 144, 90% LTV deals in February 2010, and 185 last August compared with 214 today.

There has also been an increase in the availability of 85% LTV deals, with 560 deals on the market today, compared to 310 in February 2010.

Louise Holmes, spokesperson for Moneyfacts.co.uk, says: “Higher loan-to-value mortgages are making a steady return to the mortgage market. This will be welcome news to borrowers with small deposits, particularly first time buyers who have struggled to find products which meet their needs.

“Lenders became risk averse during the height of the credit crunch by withdrawing their higher loan-to-value mortgage products.

“Over recent months some lenders have increased their rates and expanded their number of higher loan-to-value deals, giving indications that the market could be returning to a competitive, rather than risk-based state.”

Source:Mortgage Strategy

Rental market hits record demand

Rental properties are being let five days quicker compared to a year ago, according to new estate agent survey just released. Throughout the UK agents reported a significant lack of property supply with the average number of properties available to let falling by 29%.

In the last quarter of 2010 the number of new tenants registering for rental accommodation increased by 14% year on year.

The rental market hit record demand in 2010, with new tenant registering increasing dramatically in July and September 2010. The growth in the rental market has been mainly due to a large amount of professionals finding it difficult to access finance, or unable to sell their existing properties.

If you are searching for a property to rent then go to :http://www.intercounty.co.uk/

Source:Mortgage Strategy

Mary Porta on C4 accused of "loathsome estate agent bashing'

There has been much talk of Mary Porta's focus on customer service this week, and I think that everyone has got worked up about the sensationalism that is inevitable to make it news worthy, but cut through all that, there was a valid point, like it or not, whether buyers are your clients or not, estate agents need to care and so often they just don't!!

Tips for Landlords and tenants

There is no doubt that rental demand is at an all-time high. So we have compiled a short-guide to make sure that your buy-to-let property will give you maximum return as a landlord and also some advice for tenants over the coming year.

Tips for landlords

It is vital for you to know the market, investigate rent levels and tenant demand in the areas you are thinking of investing in a buy-to-let property. At Intercounty we have 26 branches throughout the UK and we would be able to give you advice on the best possible investments for any portfolio.

From an investment point-of-view it is always advisable to buy properties where you can add value, by improving kitchens or bathrooms, or by adding an extra bedroom, you could potentially increase your investment.

Make sure that you are fully covered by insurance, particularly rent indemnity which will cover you even if your tenant defaults.

Tips for tenants

In today's economic climate make sure that you have carefully considered any decision to terminate your tenancy contract, as you might not find an alternative rental property. News this week revealed that in some areas of London, people are having to put in closed bids to secure rental properties.

Rental prices are expected to increase this year, so you will probably need to budget for an increase when your agreement ends.

You will need to make sure that you have adequate content insurance for your rental property.

It's standard practice for a tenant to provide a Security Deposit of at least one and a half months rent, which is refundable at the end of the tenancy. It is now law that all deposits have to be deposited with one of three officially approved schemes.

Buy-to-let mortgage figures jumped 22% in 2010

It comes as no surprise that the latest figures released by CML (Council of Mortgage Lenders) show that the buy-to-let market increased by 7% in 2010, with the total lending volume rising by 22%.

In the final quarter of 2010, lenders advanced 28,600 new buy-to-let loans worth £3bn. This was a rise of 6% by volume and 7% by value from Q3.

At the end of the year there were an estimated 1.3 million buy-to-let mortgages outstanding, worth £152bn, or 12% of the UK mortgage market by total value or 11.5% by number of the total UK mortgage market.

Between 2009 and 2010, three-month arrears levels dropped slightly from 2.97% to 2.44%. Landlord arrears remain slightly higher than those in the owner-occupied market, where arrears levels also improved from 2.42% in 2009, to 2.16% in 2010.

However, according to CML, the arrears cap has narrowed, with low interest rates helping to lower buy-to-let arrears further than the owner-occupier market. Although, CML director general Michael Coogan said funding remains a key constraint, but demand and performance have improved.

"Looking ahead, loan performance could potentially be adversely affected by rising rent arrears or interest rate rises, but at present there is no indication of these pressures materialising in practice."

As funding becomes more readily available, there will be great opportunities for landlords looking for a long-term investment. Capital Economics estimates that the private rental sector will be home to nearly one in five households by 2015, up from one in seven currently, so it remains crucial that the UK has a vibrant and healthy buy-to-let market.

Home sellers restructure prices

According to the website Zoopla, thirty-seven percent of properties listed on its site had seen at least one price reduction since coming onto the market this year, compared to thirty-six percent in November. The average discount seen across the site to the original asking price stood at 6.9 percent, the equivillant of £18,475, up from £15,879 or 6.1 percent in November.

The company stated that the figures represent ‘a clear indication of buyers becoming more realistic’ in their expectations and ‘will be a welcome sign to buyer’ as it will help to reduce the gap between the asking price and what buyers are willing or able to pay.

Discounts as expected, were largest at the top end of the market. According to Zoopla properties listed for sale at more than £1m, the average discount had climbed to 10 percent off the original asking price, up from 8 percent in November.

At Intercounty we are experts in the property market, we will be able to give you an accurate price for your home, based on the current market value.

FSA proposes interest rate cap

The FSA is proposing a cap on the interest rates lenders can charge for credit-impaired mortgages.

The discussion paper on Product Intervention released last week, the FSA gives the examples of capping risk-based charges such as the level of interest charges on impaired credit mortgages, however they admit that it’s difficult to get it right.

It also proposes capping the amount lenders could charge those in mortgage arrears.

It says: “Price capping may be a means of tackling the most serious cases of mass consumer detriment, where firms are making excess profits by exploiting a lack of consumer sensitivity to, or awareness, prices. In such cases, it may be appropriate and feasible to cap prices.”

But the paper adds: “If we do consider this option in the future, it may be as an interim measure in extreme circumstances, until a more finessed approach, using other regulatory tools, can be formulated.

“This may not necessarily require an extensive exercise to determine the most appropriate price, but a short-term measure to find a price that is sufficient to reduce incentives to help stop a particular problem growing while a permanent solution is put in place.”

The FSA also acknowledges that there are numerous difficulties in enforcing price caps and that it is a blunt tool.

Auction House - moves to London

News that Auction House moved to a central London office hit the press last week. The London Auction room will be run by established and well-respected auctioneer, Andrew Binstock, who will be accompanied by his current team.

The company’s first sale is due to take place on the 8 March, at the Danubius Hotel, in Regent Park.

Auction House Director Roger Lake said, “This is a landmark move for Auction House. The brand is already acknowledged as the fourth largest auctioneer in the country and the biggest outside London. Now we can bring the same level of service to the city as we’ve successfully delivered in the regions.”

Auction House had an impressive 2010, selling over 1,000 properties (1,066) during the year, with a total value of £97m, and at a success rate of 75 per cent - well above the national average.

Andrew Binstock said, “My team and I are delighted to be joining Auction House. The company has experienced a meteoric rise over the past couple of years, gaining an enviable reputation for dynamic marketing and successful selling all over the UK. Now, as part of the Auction House network, we will be able to combine our local knowledge and regional contacts with the strength of a national brand.”

Roger Lake added, “Auction House is already the market-leading property auctioneer in Cumbria, Yorkshire, Lancashire, Cheshire, Lincolnshire, Norfolk and Pembrokeshire. Launching an office in the capital means that we will be able to compete with the specialist auctioneers that service the Greater London market and its population of around 8 million. We’re confident that in Andrew and his team we’ve found the perfect people for the job!”

Cheap, sustainable design could help ease housing crisis

An independent research report, commissioned by RICS, claims that traditional building methods must make room for more cost effective designs if the UK’s growing housing crisis is to be alleviated.

There are approximately 80,000 new homes being built each year, well below the level required to meet a bursting population.

RICS research highlights a series of low-cost housing solutions that could ease national shortages considerably, and ensure that affordable houses are more readily available to both local authorities and first-time buyers.

Low-cost housing would involve making use of off-site construction methods, recycled materials and innovative structural design, which will speed up the build process and have less environmental impact. Many of the designs would be easily segmented and extended, eliminating the need for costly renovation work, and enabling homes to evolve as the needs of the occupiers change.

Case studies

Modular homes are self-contained whole houses with bathroom and kitchen, and can be priced anywhere from around £20,000. These are constructed off-site inside 12 weeks and then transported to the given location.

Homes made from recycled plastic are also available, created using a new material called ‘Thermo Poly Rock’. These homes are built from 18 tones of recycled plastics and minerals that would otherwise have been consigned to landfill.