Abu Dhabi Islamic Bank Arranges Islamic Financing Deal for London Property

This article by WAM of gulfnews.com on October 30th, 2013 reveals the deal that marks ADIB's debut in London's real estate market.

Abu Dhabi: Abu Dhabi Islamic Bank (ADIB) has arranged a £20 million (Dh118.02 million) structured Islamic financing transaction to fund the development of Westbourne House, a prime 1980s commercial property in central London, combining office and retail space.

The deal marks ADIB’s debut in London’s real estate market at a time when the British government is promoting the city as a centre for Islamic finance. British Prime Minister David Cameron told a gathering of political and business leaders on Tuesday that he wanted London to “stand alongside Dubai and Kuala Lumpur as one of the great capitals of Islamic finance anywhere in the world.”

ADIB’s financing package for Westbourne House was specifically tailored to meet the investors’ aims of acquiring, refurbishing and reselling high-value luxury properties to overseas buyers.

Arif Usmani, global head of wholesale banking at ADIB, said: “ADIB welcomes the increasingly high profile role being played by the UK’s financial services sector to encourage the global acceptance and growth of Islamic finance products and services. Resilient demand from international buyers for prime residential real estate has underpinned the performance of London’s property market which has outpaced most other markets in recent years. ADIB appreciates the value of building strategic partnerships with investors in international markets, which enable us to extend our global reach and to identify similar opportunities in London and other key international locations for our clients.”

Article Source: http://gulfnews.com/business/general/abu-dhabi-islamic-bank-arranges-islamic-financing-deal-for-london-property-1.1249375

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89% 'Expect House Prices to Rise'

This article by the Express on October 15th, 2013 reveals that 9 in 10 homeowners confident that house prices to rise to highest level in four years.

Nine in 10 home owners expect house prices to rise in the coming months as market confidence surges to its highest level in at least four years, research has found.

Confidence in the housing market has surged to its highest level in four years, research suggests [PA]
 

Some 89% of more than 9,000 home owners surveyed by property search website Zoopla predict further house price hikes in the next six months, marking the highest proportion seen since its records began in 2009.

Just 4% of home owners across Britain believe prices will drop, down from 17% this time a year ago. People typically expect prices to rise by 5.7% between now and next spring, with London home owners predicting particularly strong growth at 8.3%.

Some 97% of Londoners surveyed expect to see values increase. Separate research by another website, Rightmove, published earlier this week showed that house sellers' asking prices in London have jumped by 10% in the space of just one month to reach a new high of over £544,000.

Two-thirds (66%) of those across the survey who think property prices are on the up said the level of property sales they have already seen in their local area is their main reason for believing this.

Despite home owner confidence remaining higher in the South than the rest of Britain, every region recorded an increase in the proportion of people who think prices in their area are rising. Even in areas of the North and Wales, where confidence was at its lowest, 84% of home owners believe prices are rising.

The West Midlands and Yorkshire and the Humber recorded the biggest jumps in home owner confidence over the last quarter. The proportion of owners predicting price rises has risen from 78% to 90% in the West Midlands, while Yorkshire and the Humber has seen a jump from 72% to 84%.

The low point for home owner confidence recorded by the study was in winter 2010, when just over half (54%) of home owners were expecting price increases.

The Zoopla research was conducted between the end of September and the start of October - just after Prime Minister David Cameron announced that the launch of new phase of the Government's flagship Help to Buy scheme offering state-backed low-deposit mortgages was being brought forward by three months.

Mr Cameron has rejected fears that the UK is heading for a house price bubble, with borrowers being encouraged to over-stretch themselves in a market where the number of houses for sale is in relatively short supply, which is putting an upward pressure on house prices. He has said the market is generally still recovering from a low base.

State-backed lenders Royal Bank of Scotland (RBS), NatWest, Halifax and Bank of Scotland all started offering loans to first-time buyers and home-movers with 5% deposits under the new phase of the Help to Buy scheme from this month. Other major lenders including Santander, HSBC and Barclays have confirmed plans to join the scheme at a later date.

Lawrence Hall, spokesman for Zoopla, said the new phase of the Help to Buy should boost confidence further "across the country" and not just in London, which has continued to attract wealthy overseas buyers looking for a safe haven to place their cash.

Office for National Statistics recently showed that even before the new phase of Help to Buy was launched, UK house prices reached a record high of £247,000 in August and the British Bankers' Association (BBA) reported this week that mortgage approvals to home buyers are at a four-year high.

The Government's Funding for Lending scheme, which was launched in 2012 and has given lenders access to cheap finance to help borrowers, has already had a major impact on the housing market, with the choice of mortgages rapidly increasing and lenders dropping their rates to ultra-low levels.

Here is the proportion of home owners predicting house prices will rise over the next six months by region, according to Zoopla:

:: Yorkshire and the Humber, 84%

:: West Midlands, 90%

:: Wales, 84%

:: South-west England, 90%

:: South-east England, 95%

:: Scotland, 85%

:: North-west England, 84%

:: North-east England, 84%

:: London, 97%

:: East of England, 92%

:: East Midlands, 88%

Article Source: http://www.express.co.uk/news/uk/439012/89-expect-house-prices-to-rise

Mortgage Approvals Rise Ahead of ‘Help to Buy’

This engaging article by Lucy Tesseras of Marketing Week on October 24th, 2013 tells us that Help to Buy scheme could open doors to brands but could damaged consumer trust.

A rivival in the property market thanks to government schemes such as Help to Buy could open new doors for brands, but damaged consumer trust and squeezed disposable incomes requires a fresh marketing approach. 

 

Above: Furniture company BoConcept is tapping into the market where people can’t afford to move and so need to use the space they do have more effectively. It has seen a huge uptake of its free interior design service it launched to raise its brand profile

Signs that the property market is recovering may feel like a boon to businesses related to the sector, but brands must meet this potential mini-boom with new strategies, according to marketers from companies including Santander, retailer Furniture Village and estate agent Savills.

Mortgage lending, house prices and transactions are beginning to bounce back thanks in part to government incentives including the Help to Buy scheme, which means marketers will have to adapt quickly. House building was up 6 per cent in the second quarter of the year, while mortgage debt dropped by £15.4bn, according to the Bank of England. This will greatly affect industries beyond those that deal solely with the buying and selling of houses.

The £12bn Help to Buy scheme continues to be the cause of much debate both inside and outside government. Some parties expect it to fuel recovery and open up the market for first-time buyers, while others are against it, fearing it could create another pricing bubble.

Despite a Bloomberg survey of 31 economists finding that two-thirds believe it is a “bad” move, there is interest from consumers. The Royal Bank of Scotland is offering loans under the scheme and booked 5,000 mortgage appointments within three hours of the scheme being launched on 8 October; appointments doubled to 10,000 after four days – twice the number it typically expects.

Either way, there is movement in the sector so a level of adjustment is necessary in the way brands communicate with consumers.

Santander, which will begin offering mortgages under the scheme in the new year, has embarked on a big marketing push for its existing mortgage products. The ads are fronted by Formula One champion Jenson Button and their tone is very different from previous ones.

“The market has realised that price is not the be-all and end-all,” says Keith Moor, director of brand and communications. “Consumers are much more savvy. It’s a value judgement now. They understand that going with the cheapest doesn’t necessarily mean going with the best.

It’s still a competitive market and you have to be priced in the game to play it but companies are increasingly realising that leading on that one dimension is not wise. Banks have a big job to do to rebuild trust and part of that is not forcing people to make big decisions based solely on price.”

This year, Ikea launched its ’Make small spaces big’ campaign in the UK and Ireland after finding that homes here are 15 per cent smaller than in Europe

Santander’s approach this time is based on insight about how consumers feel about mortgages. As they are a long-term investment, people fear it will be a noose around their neck.

“To answer that concern we have launched a range of mortgages that give people more freedom. People are free to overpay within the mortgage, but people are also free to leave whenever they want. It’s tapping into insight rather than the commoditised approach based on price,” says Moor.

Other banks are taking a similar tack. Lloyds Bank kicked off a £30m marketing campaign following its rebrand from Lloyds TSB in September, which focuses on the ‘moments that matter’. One example is an ad that tells the story of a 31-year-old man who is relieved of the frustrations of having to live with his parents after getting a mortgage through the bank. Barclays has based its proposition around listening to customers’ ideas, while TSB has relaunched with the message: ‘welcome back to local banking’.

Signs of initial recovery in the housing market have sparked renewed interest from investors too, encouraging estate agents Foxtons and Countrywide, as well as housebuilder Crest Nicholson, to float on the stock exchange. There has also been speculation that property website Zoopla is contemplating an IPO after it appointed Credit Suisse to explore “strategic opportunities”, though the Daily Mail and General Trust-owned business has downplayed such talk.

Zoopla estimates that the second phase of Help to Buy could reduce mortgage debt by £22.1bn. Its research finds there are 665,000 eligible homes on the market with an average price of £222,168. Under the mortgage guarantee scheme, the deposit needed to buy a property has dropped by two-thirds to £11,108.

As a result, property searches are going to be at an all-time high over the next year, according to the company, so it will be investing heavily to tap into consumer interest.
“First-time buyers are arguably the most important segment of the property market, as they allow those further up the chain to move, which creates supply and fluidity in the market,” says Charlotte Harper, marketing director of Zoopla Property Group. The company also owns PrimeLocation and has acquired four property portals from Trinity Mirror to compete with market leader Rightmove.

People spend more on their homes in the first 6 months than in the next 5 years so any growth in the property market is good news for us

Although the government schemes will not affect Zoopla’s marketing activity directly, says Harper, it is likely to influence some of the content it produces to ensure consumers have up-to-date information and understand the likely consequences of being involved in such a scheme (see Q&A).

The company became a sponsor of Premier League team West Bromwich Albion last season, which has helped it widen its reach and profile in the UK. It also launched its largest marketing campaign to date at the beginning of September, which incorporates outdoor ads for the first

time in addition to a major TV push. The multi-million pound ‘Smart’ campaign illustrates key features of the website’s property search, such as data about proximity to local schools and transport links.

“With the property market beginning to turn, consumers are looking for guidance and information in order to help them make better property-related decisions,” she says. “Our Smart campaign seeks to own the rational side of home-buying and help people to make confident and informed choices within that process.”

While some analysts have predicted the Help to Buy mortgage guarantee initiative will lead to another property boom, specialists at Savills and Knight Frank believe that idea might be premature.

Yolande Barnes, director of residential research at Savills, said in the firm’s Q3 market analysis: “Despite all the talk of an artificially induced housing boom, resulting from Help to Buy and other government measures, this infant housing market is far from performing like the previous housing cycle did [in 2006/2007]. We are still far from a housing market boom, although the next three years may look like a mini boom in relation to the past five.”

Knight Frank associate John Waters has a similar view but nonetheless is positive about the market.

“I don’t think it is likely to cause a pricing bubble,” he says. “Central London has been quite solid for the past few years in terms of pricing, but outside of London it is a very different story. As the broader economy improves, prices will begin to rise outside of the capital a lot more than they have done for a long time. I think it will help the market to recover and it will certainly help many people outside of London that are in negative equity to get back to where they were.”

Santander will offer mortgages under the Help to Buy scheme from early next year

Lynda Clark, editor of First Time Buyer magazine, which hosts the First Time Buyer Home Show in London, confirms that consumer’s interest is on the increase as both registrations and exhibitor numbers are “markedly up”.

“Help to Buy is making the prospect of owning a home more affordable for people, even in central London where prices are much higher than elsewhere in the country. I know there’s lots of controversy about it, but anything that helps somebody buy their own home, which will be one of the biggest purchases of their life, has got to be a good thing,” she says.

An uplift in the property market will benefit home retailers too. Charlie Harrison, marketing and ecommerce director at Furniture Village, says: “We know that people spend more on their homes in the first six months [after moving in] than in the next 5 years, so any growth in the property market is good news for furniture retailers.”

He expects to see many more first-time buyers entering the market following the launch of the second stage of Help to Buy and has been scaling up accordingly.

“We have been increasing our range of fast delivery items and introduced more lines that are available to take home the same day, such as vacuum packed mattresses that fit into a car. Furniture Village offers an interest-free credit option, which is also popular with customers furnishing their first home, and we will continue to include this as a key promotional message.”

While budgets might be tight, Capital Economics property economist Matthew Pointon does expect the fortunes of home retailers to bounce back if the housing market improves.

“When the number of transactions rise you tend to get an increase in spending on things such as white goods and home improvements as people do up their homes. I’m not sure we’ve seen much evidence of that occurring just yet but it is certainly what I would expect to happen if transactions really take off,” he says.

However, he is doubtful the mortgage guarantee aspect of Help to Buy will help to fuel the industry as much as the government believes, since the monthly payments on a 95 per cent mortgage could make it more expensive than renting.

“We’re not convinced it’s going to lead to a huge increase in buyers. Even though you can get a mortgage with a 5 per cent deposit, you still need to pass strict affordability checks in order to obtain them. Concerns that there is going to be a stampede of demand are exaggerated,” he adds.

Retailers may have another crack at the whip though, because over the past year while transactions have been down, people have turned their attention to renovating existing homes by building extensions, redecorating and generally improving their home environment.

Furniture Village, Ikea and BoConcept have all tapped into the idea of making better use of space in the realisation that not everyone has been in a position to move up the property ladder.

Harrison says: “As a result of the ‘don’t move, improve’ trend, Furniture Village has expanded its range of items that help homeowners make the most of their existing space. Products with hidden storage, such as ottoman beds, are proving popular and we have also seen an increase in sales of compact kitchen dining.”

Likewise, Ikea launched its ‘Make Small Spaces Big’ campaign in the UK and Ireland this summer after learning that homes in Britain are 15 per cent smaller than in Europe. Its global sales jumped 3.1 per cent to €27.9bn in the year to the end of August, although it does not separate UK figures.

BoConcept has seen a “huge increase” in the uptake of its free interior design service in the UK, according to country manager Zoe Shields.

“A trained member of the BoConcept sales team visits the customer’s home, measures the space and works with them to find the best possible solutions,” she says. They are then invited back to the store where they are presented with “mood boards, 3D design drawings and a set-up to reflect the products they have selected”.

As the market picks up, BoConcept will be looking to partner with local estate agents to offer the service to their clients and will also promote options such as deferred payment.
In June, B&Q launched a campaign urging homeowners to turn their attention to ‘unloved’ rooms. The retailer struggled in the early part of the year, blaming bad weather for the poor sales. But B&Q owner Kingfisher was more positive at the half-way point with a 4.3 per cent rise in group sales.

”With the property market beginning to turn, consumers are looking for guidance and information in order to help make better decisions.” - Charlotte Harper, managing director, Zoopla Property Group

Group chief executive Ian Cheshire says: “We remain ready to capitalise on any improvement in conditions or opportunities as they arise, including the potential pick-up in the UK housing market.”

However, Sainsbury’s chief executive Justin King is not so positive. He believes UK consumers are likely to have less disposable income this time next year as inflation will be around 3 per cent, while average wages will increase by 1 per cent. Despite the bleak outlook, the retailer has posted a 4.4 per cent lift in total sales for the first half of 2013.

“Although we are starting to see encouraging signs in key economic indicators, our customers’ approach to savvy shopping, which started at the beginning of the downturn, has persisted and continues,” he said in a statement.

The economic downturn has made consumers more cautious, which means companies need to be smarter in their communication.

“Whether there is a boom or not, I don’t think we will see organisations promoting in the same way,” says Santander’s Moor. “It is incumbent on us all to be responsible in the way that we lend and the conversations that we have with customers. Everyone is much more responsible than they used to be and that’s partly because consumers are more cautious but also because organisations need to address some of the concerns, fears and trust issues that people have, particularly with banks.”

Article Source: http://www.marketingweek.co.uk/trends/propertys-path-of-potential/4008241.article

Home Owners Across the UK Confident About Property Price Rises

This article by Property Wire on October 22nd, 2013 reveals that UK homeowners are confident that property price rises over the next 12 months.

Households in every region across the UK expect the value of their property to increase over the next 12 months, with those in London the most confident about price growth followed by those in the South East.

The latest House Price Sentiment Index (HPSI) from Knight Frank and Markit, which reflects the opinions of 1,500 households across the country, illustrates the localised nature of the market at present, with households in the North East and Wales expecting more modest rises in values.

October’s survey is the first taken since the government brought forward the second phase of its Help to Buy scheme and, while the jump in price perceptions since September was relatively muted, the overall level of confidence about house price gains remains at unprecedented levels in the survey history.

Only one in 14 households expect the value of their home to decline over next 12 months and mortgage borrowers and those who own their home outright anticipate the largest rise in the value of their home in the next year.

Overall it is the seventh month in a row that the index has increased and more than 23% of the home owners surveyed said that the value of their home had risen over the last month, up from 6.3% in October last year. Only 5% of households said the value of their home had fallen over the last month, giving a HPSI reading of 59.1. Any figure under 50 indicates that prices are falling, and the lower the figure, the steeper the decline. Any figure over 50 indicates that prices are rising.

This is up from last month’s record reading of 57.9 and marks the highest reading since the index began in February 2009. This is the most sustained period of upward price movements in three years.

The future HPSI, which measures what households think will happen to the value of their property over the next year, rose to a new high in October at 71.1, up from 69.6, in September. On a smoother three month average basis, the future HPSI reading was 68.8, up from 68.2 in the previous three month period.

‘The momentum in house price expectations gained over the past few months continued this month, with households across the country expecting the value of their home to rise over the next 12 months,’ said Gráinne Gilmore, head of UK residential research at Knight Frank.
‘This is the latest evidence of increased confidence in the market, which has been boosted by the Government’s Help to Buy mortgage guarantee scheme, introduced at the start of the month,’ she explained.

‘The difference in the rate of growth expected in the regions is quite pronounced however, reflecting the localised nature of the housing market at present. Households in London and the South East expect the largest rise in prices over the next year, an indication of the strength of the housing market in the capital and in surrounding areas within easy commuting distance,’ she added.

Tim Moore, senior economist at Markit, said the outlook is positive. ‘Looking ahead, only one in 14 households forecast a decline in their property value over the next 12 months. In London, the number of respondents expecting a price fall between now and October 2014 stands at around one in 30 households, and across the wider South East this proportion has reached just one in 20,’ he pointed out.

Article Source: http://www.propertywire.com/news/europe/uk-property-price-outlook-201310228373.html

Bank of England Signals Caution Over Help to Buy

This article by Hilary Osborne of theguardian on October 16th, 2013 reveals BoE's concern on the impact of Help to Buy that cause housing prices to rise.

Concern at the Bank of England about the impact of the government's Help to Buy mortgage scheme came to light on Tuesday as official figures showed the British property market has exceeded its 2008 peak.

Martin Weale, one of nine members of the Bank's rate-setting monetary policy committtee (MPC), warned that the scheme to underwrite home loans could push up prices.

Admitting that house prices were already rising "appreciably more rapidly" than had been expected, Weale said there was a risk that "if the mortgage-guarantee element of Help to Buy is not priced satisfactorily, it will add to demand while supply is weak, leading to increased pressure on prices".

The British property market hit a record high in August, according to the latest figures from the Office for National Statistics (ONS), which showed the average cost of a home is now almost £250,000.

The ONS data showed that even before the launch of the second phase of the mortgage-guarantee scheme, house price growth was gathering pace.

Its main index, which measures the price paid in purchases financed with mortgages over the month, surpassed its previous peak by 0.3% to hit 186 in August. That was its highest level since its launch in 1968. It put the average price of a home in Britain at £247,000.

In written evidence to the Treasury select committee, Weale said a booming property market could distort the economy. "Rising house prices may make people feel cheerful and more prosperous, thereby supporting household spending," he warned.

"But rising house prices impose a burden on those who do not yet own houses but aspire to in the future. Like government borrowing, rising house prices can crowd out productive investment."

Weale's submission was published 24 hours after the incoming deputy governor of the Bank, Sir Jon Cunliffe, said Threadneedle Street would keep a "very firm eye" on lenders as Help to Buy was rolled out.

However, Cunliffe said it was "too early to say we are entering into a bubble".

The second part of the Help to Buy scheme, which offers lenders a taxpayer-backed guarantee to encourage them to offer loans to borrowers with small deposits, launched last week and has already prompted a flurry of mortgage applications from homebuyers.

Royal Bank of Scotland, which was the first lender to offer 95% mortgages through the latest phase of the scheme, reported that it had booked 5,000 appointments with prospective borrowers in the first three hours after the launch and taken 10,000 calls in the first four days – double its usual volume. It has extended branch opening hours to cope with demand.

According to the ONS figures, the rate of house price inflation increased through the summer, with the year-on-year increase reaching 3.8% in August, up from 3.3% in July.

However, the growth figures harboured wide regional disparities: the year-on-year increase reflected growth of 4.1% in England, 1.1% in Northern Ireland and 1.0% in Wales, in contrast to a fall of 0.7% in Scotland.

The ONS noted that the capital remains a strong outlier in the property market.
It said that while "house price growth remains stable across most of the UK … prices in London are increasing faster than the UK average".

Its index showed prices in London rose by 8.7% in the 12 months to August and that, when figures for the capital and the rest of the south-east were stripped out, UK house prices were up by 2.1% over the 12 months.

Only in London and the south-east were prices higher than at their previous peak. However, the east of England and the south-west were coming close to that level, the ONS said. The ONS data showed that new entrants to the housing market have seen a steeper rise in prices than homemovers, with prices paid by first-time buyers up 4.9% on August 2012's figure, compared with a 3.3% rise for movers.

In August 2013, the average price paid for a house by a first-time buyer was £185,000, while existing owners paid an average of £283,000.

Despite the headline figures suggesting that prices are running away, economists said activity was still well below the levels recorded before the financial crisis began, and only London was giving real cause for concern.

Howard Archer, chief UK economist at IHS Global Insight, said: "While the strength of house price rises in London is becoming an increasing concern and pushing up the overall national increase in house prices, the ONS data support the view that we are currently a long way off from an overall housing market bubble emerging.

He added: "In fact, in many areas house prices are still well below their 2007 peak levels and rising only modestly at the moment." Housing eceonomists at Capital Economics said the ONS figures were "weighted towards high-value homes and therefore the very strong London market. On most measures, prices are still 10% to 15% below their previous peak."

However, they ackowledged that price rises had outstripped their expectations and that in the short term Help to Buy could give a "significant boost" to the number of buyers.

"While we suspect many will fail the affordability tests, it will put some upward pressure on prices," they said.

"There is a risk that expectations of a new house price boom will become self-fulfilling, even if Help to Buy supports only a few buyers. In that case, the Bank of England is likely to step in to calm the market."

Article Source: http://www.theguardian.com/money/2013/oct/15/house-prices-hit-record-high

Help To Buy Lending Scheme Launch Sparks Homes Frenzy

This article by Sarah O'Grady of the Express on October 9th, 2013 tells us the launching of the 2nd version of the Help to Buy scheme swept up Britain's housing market in frenzy.

Borrowers leapt on the new Government initiative which will allow them to buy homes with 95 per mortgages and slash average deposit amounts.

As details emerged of the deals available from lenders, David Cameron said the project would unlock the housing market and help young people without rich parents get their own home.

HSBC became the first major bank outside state-backed Royal Bank of Scotland and Lloyds to announce it was joining the £12billion scheme.

Britain’s biggest mortgage lender Halifax also ann­ounced details of the home loans it would be offering.

Homes valued at up to £600,000 will be eligible with some estimates suggesting 180,000 loans could be taken out – despite fears that the scheme could spark a housing price bubble.

Taxpayers will guarantee up to 15 per cent of a property’s value, in return for a fee charged to lenders, allowing homebuyers to purchase with deposits as low as five per cent.

As the scheme was laun­ched, Mr Cameron visited a three-bedroom show home in Weston Favell, Northampton and met first-time buyers Kayleigh Groom, 28, and her partner Chris Day, 29, from Kettering.

The couple, who have been renting for five years, told him that Help To Buy would enable them to get on the property ladder.

Mr Cameron said: “What we’re doing is making sure that the typical family can buy the typical home.

“The couple I’ve just been with. They’ve both got good jobs. They’ve both got good prospects. They can afford mortgage payments but because they haven’t got a rich mum and dad they can’t get a mortgage. That isn’t fair. That isn’t right.

“So the Help To Buy scheme will help them to get a mortgage and make them homeowners.”

RBS and its NatWest subsidiary said they expect to sign up 25,500 first and next-time buyers over the three-year scheme. The two lenders are extending opening hours at 740 branches to cope with the demand.

Paul Smith, of haart estate agent, predicted Help To Buy will boost property deals by 10-15 per cent in the next 12 months and cut first-time buyers’ average deposit from £33,948 to £7,218.

He said: “We have seen a frenzy of activity with our branches overwhelmed by enquiries in the wake of the launch of Help To Buy.

“We have had the best first week of October for nine years. Last year we had 3,800 buyers registering in that first week, this year it was 7,281 – that’s a staggering 92 per cent increase.”

Article Source: http://www.express.co.uk/news/property/435438/Help-To-Buy-lending-scheme-launch-sparks-homes-frenzy

 

David Cameron: There is No Housing Bubble

This article and video by The Telegraph on September 29th, 2013 shows David Cameron's explanation why government is launching help-to-buy three months early during his speaking engagement on BBC (Andrew Marr Show).

To watch the video click here.

Prospective homeowners will be able to use the Government’s subsidised mortgage scheme from as early as next week after the Coalition decided to bring the launch date forward by three months.

On the even of the Conservative party conference in Manchester, David Cameron revealed that the state-backed lenders, Royal Bank of Scotland and Lloyds Banking Group, would be offering deals under the Help-to-Buy scheme from next week instead of January.

It will initially be available under the Nat West, RBS and Halifax brands. A Tory spokesman said that other banks are expected to take part over time.

The second phase of the controversial scheme will help people buy a home worth up to £600,000 with just a 5pc deposit. The Government will guarantee the next 15pc of the loan for a fee, reducing the banks’ risk of loss so they can offer cheaper mortgages to higher-risk customers.

The scheme will be available for three years on up to £130bn of mortgage lending.

Critics have warned that the guarantees will inflate a dangerous housing bubble at a time when the property market is already showing signs of recovery. Citing analysis by the Bank of England, the Prime Minister countered on BBC’s Andrew Marr show that the market was only recovering and there was no sign of a bubble.

Mr Cameron added that if he didn't introduce the scheme, then "it will only be people with rich parents who can help then with the deposit who can help them on the housing ladder. That's not fair, it's not right, it's not the sort of country I want to live in and that's why it's important we bring this forward."

Video courtesy BBC One's The Andrew Marr Show

Article Source: http://www.telegraph.co.uk/news/politics/david-cameron/10342400/David-Cameron-there-is-no-housing-bubble.html 

Landlords - Are You Ready for the Winter?

This article by Stride on September 4th, 2013 covers how landlords should be ready for winter and check if their properties are still in good state and repair in the col weather.

Autumn is upon us with the temperatures cooling down and evenings closing in, it's the ideal time for landlords to check their properties are ready for the winter months.

Properties need to be in a good state of repair and able to cope with the rigours of the cold weather, while tenants may start to look elsewhere for somewhere to live if they find the house an unpleasantly cold one to live in, or too expensive to heat if bills are not included in the rent.

There are several steps that a landlord can take to ensure the home is ready for the colder weeks and months ahead, both on the inside and out.

Guttering is one area that needs looking at, not least as wind, rain and falling autumn leaves can turn a gutter or downpipe into a disaster area. Overflowing can cause water to seep into brickwork and stone, damaging this and causing damp. So these channels should be checked to ensure they are in good order and not blocked. In addition to this, check if any of the mortar is cracked, as this will only widen in the cold and wet.

Other outdoor problems can include blockages with rubbish, which can cause flooding, along with potential plant damage. This can include small things like moss growing in cracks. This needs removing and the cracks filling in, as the process of freeze-thaw can widen these through the natural effects of expansion and contraction.

Larger vegetation problems can include trees, where it is important to check that there are no branches that might fall in inclement weather. Not only do these pose a threat to life, limb and property, but they may also be a visual irritant to neighbours. Root problems should also be dealt with, although only in an emergency should the tree be felled.

Alongside the risk of damp, cold is a key issue that will drive tenants away and put prospective new ones off. It is important to ensure the roof tiles are all in place and loft insulation is a good way of keeping heat in. On snowy days it is easy to tell which homes have this. While some have white roofs, others are clear of the stuff and may have birds perching on them to keep their feet warm.

Insulation is also something that should be fitted in cavity walls, unless the house lacks these. Insulating a home is not expensive and will help slash energy bills.

Draughts are another issue too. It is no use having insulation to stop heat escaping through the walls or roof if it has an easy way out through a gap at the bottom of the door, or a loose window fitting.

Having a home that is warm and well-insulated means less chance of burst water pipes, cold homes and those living within suffering from poor health. By keeping a home snug and warm, it will instead offer tenants a haven they will enjoy retreating to in winter and prevent expensive repair bills that could have been avoided with better preparation.

Article Source: http://www.stride.co.uk/insurance-news-and-articles/commercial-insurance-articles/property-insurance/landlords-are-you-ready-for-the-winter-/176/

Adult Children Live with Their Parents at Home as Rents and House Prices Rise

This alarming article by Tanya Powley of Financial Times on September 6th, 2013 reveals grown-up children are still living at home with their parents because getting on to the property ladder is increasingly difficult as rents and house prices rise.

“Empty nest” syndrome has become a problem of the past for millions of parents who have adult children in their twenties and early thirties still living at home.

The trend of young adults returning to live in the parental home – generation boomerang as they have been called – has grown in recent years, as rents and house prices have risen further out of the reach of would-be homeowners.

Three in ten parents have at least one child aged between 21 and 40 living at home, according to a survey published by the National Housing Federation on Friday. Two-thirds of these parents said their child could not afford to move out.

The poll, which surveyed more than 1,100 parents, highlighted the emotional and financial burden parents face and why the returning offspring have been given another nickname: Kippers – kids in parents’ pockets eroding retirement savings.

One in five said having a grown-up child at home had caused them stress, while a further fifth said it had given rise to family arguments.

“Moving out and setting up a family home of your own is a normal rite of passage,” said David Orr, chief executive at the National Housing Federation. “Yet as rents, mortgages and deposits continue to soar out of reach, it is no longer an option for many.”

Official figures show the number of young adults living at home has jumped by 20 per cent since 1997. According to the Office for National Statistics, almost 3m Britons between the age of 20 and 34 now live at home – of which 1.8m are men.

Amanda Lightstone, a 57-year-old dental nurse, has her youngest son, Andrew, 25, living with her in her three-bedroom house in Edgware, northwest London. She has already lent more than £100,000 to her older sons to help them buy their homes and said she will do the same for her youngest.

“How will he save for a deposit if he starts renting? He will live at home for quite a few years – he’ll be more than 30 when he can afford to buy his own place. I will just have to delay my retirement plans, you can’t have everything!” said Ms Lightstone.

Ann Berrington, professor of demography at the University of Southampton, said the percentage of young adults in their twenties living with their parents has increased since the recession.

Her analysis of the 2008 and 2012 UK Labour Force Surveys found the percentage of women aged between 21 and 22 living at the parental home rose from 46.4 per cent to 55.6 in the four years to 2012.

“The lack of affordable housing is clearly a factor as well as having to raise bigger deposits, but there are other factors at play,” said Professor Berrington.

While research published on Friday showed that in July the number of first-time buyers was at its highest since November 2007, according to LSL Property Services, transaction levels are still significantly lower than at the peak of the housing market.

Local government department figures published on Thursday showed that the government’s housing schemes, which aim to make it easier for people to buy a home with just a 5 per cent deposit, have made little headway.

According to the government, 3,749 people have bought a home through its NewBuy scheme launched in March 2012. This equates to less than 5 per cent of its 100,000 target. The second part of the scheme has had a bigger impact, with 3,000 sales and 10,000 reservations since April 2013.

Paula Higgins, chief executive of the HomeOwners Alliance, said: “We haven’t been building enough houses for 30 years and this is a real embedded crisis that’s not going to go away.”

Article Source:  http://www.ft.com/intl/cms/s/0/eb71071c-163e-11e3-a57d-00144feabdc0.html#axzz2e596ach1

Almost 2 Million UK Would Be Homeowners Can’t Get on Property Ladder

New research suggests that almost two million would be homeowners in the UK, mostly families, can't get on the property ladder because they can't afford to save for the deposit needed, according to this September 4th, 2013 recent article by the Property Wire.

According to housing charity Shelter around 1.8 million families face a life time of renting a home with three quarter priced out of the market and even with the government’s flagship Help to Buy scheme some 78% are unable to afford the repayments on a family sized home.

In contrast, the report finds that mortgage repayments on a shared ownership home would be affordable for 95% of families on low or middle incomes.

The charity is calling for a major new house building programme of shared ownership homes to revolutionise ownership for what is describes as ‘forgotten families’. This would allow families to find an affordable home of their own, and provide a real alternative to the confusing postcode lottery of existing small scale schemes, or the overheated private rental market.

The report says that investing £12 billion, less than 1% of GDP, could build 600,000 new shared ownership homes which would be enough to give almost half of England’s private renting families the chance to own their own home. 

‘We need to see a new generation of shared ownership for the ordinary families priced out of home ownership. The reality is that soaring house prices mean that the traditional market is no longer working for ordinary people,’ said Kay Boycott, director of campaigns and policy at Shelter.

‘Building the new shared ownership homes we desperately need is the only way to give thousands of families a stake in the stable home they want at a price they can afford,’ she added.

But the government says it is doing more to help families onto the housing ladder. As well as schemes like Help to Buy and Funding for Lending, both credited with boosting the number of first time buyers, it points to the fact that it has also launched a new scheme to bring back empty homes into the housing stock.

It is working with the public and private sector through the National Empty Homes Loan Fund (NEHLF) to give borrowers access to a secured loan at a fixed 5% interest to renovate some of the 710,000 empty homes in England.

A joint £3 million initiative has been launched with the charity Empty Homes, the Ecology Building Society and 39 participating local authorities to help home owners who cannot afford to bring the property up to a useable standard.

The Ecology Building Society, a specialist mortgage lender that supports sustainable communities, said that it should provide funding for hundreds of properties and is available to individuals aged 18 and over who own a property that has been empty for six months or more. 

‘We know that many homes are empty because it is difficult for owners to raise the money that is required to bring them back up to a habitable standard. This initiative will kick start efforts to tackle this. This scheme is a first in England and is a great example of central government working together with the public and private sector to try and reduce the number of empty homes in the UK,’ said David Ireland, chief executive of Empty Homes.

Paul Ellis, chief executive of the Ecology Building Society, said that at a time when there is increasing demand for homes but an acute lack of supply it makes sense to bring new life to existing but neglected properties.

Article Source:  http://www.propertywire.com/news/europe/uk-property-ladder-families-201309048193.html

Deposits Fall and Home Affordability in the UK Improves

According to the new research from Lloyds TBS, the average deposit put down by home owners in the UK in 2013 was £70,540, just 6% higher than a decade ago as as shown on this September 2nd, 2013 article by the Property Wire.
 
The research report says that the average age of a home mover is 40 and affordability for second steppers, that is those moving to their second home, has improved over the last year but fallen over the last decade.

The research also shows that since 2008, the average price paid by a home mover has fallen by 10% from £235,078 to £212,586 in 2013. Nationally, home mover property prices grew by 3% in the past year.

Not surprisingly home movers in London, where prices have been rising faster than in the rest of the country, put down the largest average deposit at £126,528 or 34% of the average property value. This is close to three and half times the average deposit put down by home movers in Northern Ireland at £36,912 and the lowest in the country.

The average mortgage advance for a new home mover is £142,046, a quarter higher than a decade ago when it was £101,472.

With the average age of a home mover now at 40 years old, this has increased three years since 2002 when it was 37 in 2002. Most of the increase in buyer age has occurred since 2007.

Typical mortgage payments for a home mover, that is those already in the housing market, stood at 31% average gross disposable earnings in the second quarter of 2013. This has come down sharply from an all time peak of 52% in 2007. This improvement has been due to a reduction in both mortgage rates and house prices.

Housing affordability for second steppers, calculated as the average price of a typical second stepper home less their current equity position, stood at 4.4 times gross annual average earnings in June 2013 compared with a ratio of 4.9 in June 2012.

A typical second stepper's current equity position accounts for 13% or £21,200 of the price of an average second stepper home, a rise from 1% in 2012.

Although the position has improved for those looking to put down a deposit on a new home, for some potential second home movers this may still not be sufficient to put towards a deposit when also taking the cost of moving into account.

‘Housing affordability for the typical second stepper has improved in the past year.

Nonetheless, there are many potential second steppers who are still in their first home which they bought in the run up to and at the peak in house prices in 2007. Many of these home owners may still be unable to move due to having either very low, or negative, equity in their homes,’ explained Nitesh Patel, housing economist at Lloyds TSB.

‘The lack of equity for many home owners in their existing home largely explains why the number of home movers in the first six months of 2013 was broadly unchanged compared with a year earlier in sharp contrast to the number of first time buyers growing by close to 20% over the period,’ Patel added.

The report also reveals a considerable variation in housing affordability between regions, with northern regions more affordable than southern regions for second steppers. This is largely a reflection of the lower prices for second stepper properties in the north. The West Midlands and East Midlands both at 3.1, are the most affordable regions for those in their first home looking to take their next step on the property ladder. While London at 5.7, the South West at 4.6 and the  East at 4.5 are the least affordable.

Article Source: http://www.propertywire.com/news/europe/uk-property-deposits-afford-201309028183.html

Buying a Holiday Home is a Huge Waste of Money

This engaging article was posted in Yahoo Finance UK and Ireland on August 30th, 2013 suggests reasons not to consider buying a holiday home because it is the biggest waste of money ever.

As millions of us come back from holiday, many will dream of owning a home in the sun - crazy property-struck fools that we are.

Right now, 5.4 million Britons are considering buying abroad, according to HSBC, even more than before the financial crisis. Have we learned nothing?

Spain and the Balearic Islands are the top dream destination, attracting 30% of buyers, followed by France at 16%. Italy, Portugal, Greece, Cyprus, the Caribbean, Florida and Turkey are also dream home hotspots.

If you've been seduced by dreams of a place in the sun, here's a measured word of warning. You've lost your mind, because buying a holiday home is the biggest waste of money ever.

Twice yearly, really

Before you protest, you happy holiday homeowners, here's the proof. The average owner visits their holiday or second home just twice a year, according to new research from household insurer Schofields.

They didn't plan it that way. Two-thirds expected to visit their bolthole far more when they originally bought it, but never get round to it.

Work, family commitments and lack of cash were the main reason people leave their holiday homes empty and forlorn, although an entrepreneurial 17% said they did so to maximise guest bookings.

Sun-baked and half-baked
 

A holiday home is an alluring dream. I regularly find myself browsing Spanish property websites to see how far prices have fallen, and whether they have fallen enough for my budget.

Prices are lower, skies are bluer. What's not to like?

But like most dreams, it eventually bangs its head against hard reality. The truth is, you've got too many other things to do.

Curse those jobs and families.

Bills, not thrills

You won't get to that holiday property as often as you like, but you will keep paying for it. 

First, there's the purchase price. Yes, Spanish holiday home prices have fallen more than 30% in the last five years, but you're paying in sterling, which is also down 20% against the euro.

Then there are local property taxes, legal fees, mortgage administration charges, and that's only the beginning. Your expenses don't stop when you exchange contracts, they're just getting started

You have to furnish your exotic new financial liability. Do it up. Pay for insurance. Carry out maintenance and repairs. Cover utility bills. Pay local taxes. You may have to hire a cleaner or stump up a monthly service charge.

And that's before you factor in the cost of actually getting to your property (although that won't be so expensive, as you're only going to visit twice a year).

X-rated expat tales

Plus there's always the chance you will end up buying the holiday home from hell, and lose everything. I recently spoke to British expats whose Andalusian retirement dreams were destroyed in an instant when the local police called to explain, not very politely, that they were the proud owners of an illegal home.

Nobody told them, not even their lawyer, that the developer hadn't got planning permission. 

Some lost hundreds of thousands of pounds. Several in the Valencia region saw their home torn down before their very eyes, without compensation. Others are stranded in the deserts of Murcia, with no running water or electricity.

Expat pain isn't restricted to Spain. Thousands of British homeowners in Cyprus risk losing both their holiday home and their UK property, in a vicious legal dispute over mis-sold mortgages.

I asked one couple, who were waiting to hear if their home in Almeria would be torn down, what advice they would give to the current generation of Spanish property buyers.

Their answer was succinct: "Forget it. Stay at home or go elsewhere."

Oh, I give up

Well, I've tried. I've done my best to make you see sense. It won't work. You still dream of a place in the sun, and in my dafter moments, so do I. So how do we make it match up to reality?

Before you go any further, ask yourself these questions:

1. Do you really want to go to the same place on holiday, year after year? Can you afford the flights? Do you have the time? Don't you want to see the rest of the world?
2. Even if you do want to go to the same place, wouldn't it be easier and cheaper to rent a holiday home instead, or stay in a hotel?
3. Can you afford all the costs of running a holiday home, including mortgage, insurance, maintenance, repairs, service charges and taxes, not to mention those twice-a-year flights?
4. Have you done your research? Do you know what similar properties are selling for? Is the local council planning to build a municipal waste incinerator in your backyard?
5. Is that bargain property really a bargain? Cheap isn't always cheerful, especially if you're stranded in a half-built complex a mile from the nearest communal water pump, or squeezed between the autoroute and municipal tip. Location, location, location are key words in any language.
6. Have you taken the right advice? You must appoint an experienced English-speaking lawyer, with no connections to your seller, estate agent or property developer, to avoid conflicts of interest.
7. Is your property legal? Your lawyer must confirm you have got all the necessary planning permission, licenses and consent. You must also pay for an independent valuation, even if buying in cash.
8. Is your mortgage in the right currency? If you earn your income in pounds, but your mortgage is in euros, you are at the mercy of currency swings, as many expats discovered when the pound collapsed after the financial crisis.
9. Are prices still in freefall? Spanish house prices could still plunge another 25%, according to newsletter Spanish Property Insight.
10. Do you plan to retire there? Visiting your property twice a year makes a lot more sense if you plan to stay for six months each time.

So what do you think? Do you still want a place in the sun?

Article Source: http://uk.finance.yahoo.com/news/buying-holiday-home-huge-waste-082409006.html