New Sales Process Launched for Residential Leasehold Properties in the UK

This article by the Property Wire on October 10th, 2013 discusses the introduction of a new sales process welcomed by the British Property Federation.

The British Property Federation has welcomed the introduction of a new property sales process which will reduce leasehold transaction times by five to 10 days and save UK consumers a combined total of over a million days each year.
 
The new process, based on a standardised questionnaire for the industry has been created by the BPF and all the major trade bodies, including The Law Society and the Royal Institution of Chartered Surveyors (RICS), facilitated by Move with Us, and will be available to all parties in the process.

The BPF pointed out that buyers and sellers of leasehold properties have experienced added complications and expensive delays because of differing information requirements from both the buyer’s and seller’s conveyancers meaning the landlord or managing agent has to deal with a different set of enquiries every time a leasehold property is sold.

By creating an approved set of enquiries for leasehold properties both landlords and managing agents can introduce systems to collate the information safe in the knowledge that both the buyer’s and seller’s conveyancers will accept it, saving an estimated five to 10 working days on average. Consumers will also save money as the additional requests for information will only be required where an issue is revealed which requires further investigation.

‘It is great to see that the whole residential leasehold sector pulling together and delivering a benefit to its customers,’ said Ian Fletcher, director of policy at the British Property Federation.

‘The commercial leasehold sector has had standard enquiries for 10 years and seen the advantages flowing from a more efficient conveyancing process. The same will be true of these residential enquiries and we will be promoting them amongst our membership as the standard for the sector,’ he added.

The new industry created and approved Leasehold Property Enquiries, Form LPE1 will be available from 10 October and the overall concept has been approved by the Council of Mortgage Lenders (CML) and The Building Societies Association (BSA).

Landlords, managing agents and conveyancers interested in accessing the new leasehold enquiries form should contact Beth de Montjoie Rudolf at Move with Us.

Article Source: http://www.propertywire.com/news/europe/uk-leaeshold-property-sales-201310108334.html

Mortgages Up By Third as Housing Sales Soar

Sarah O'Grady of Express discusses the banks' approved mortgages is third higher compared to last year as the housing market continues to step up according to this article on 24th August, 2013.

The number of mortgages approved by banks is a third higher than a year ago as the housing market revival continues to gather pace.

Some 37,200 approvals for house purchases worth a total of £5.7billion got the green light in July, the British Bankers’ Association reported.

This was only slightly down on a 17-month high of 37,337 the previous month.

The BBA said the “stronger pattern” seen in the mortgage market since the start of the year has continued into the summer.

Mortgage approvals to home buyers are 31 per cent higher than in the same period last year and re-mortgaging approvals are 40 per cent higher.

However, overall mortgage lending remains “subdued” because homeowners are making high repayments on their loans, the BBA said.

Various Government schemes to boost the housing market mean several mortgage lenders have been offering their lowest ever rates.

With poor returns generally on offer on savings, this has made it more attractive for people to use any spare cash to pay down their mortgage debt.

BBA statistics director David Dooks said: ­“Mortgage activity has strengthened during 2013 with the help of Government schemes. But high ­repayments and redemptions mean that we are not seeing increases in net mortgage borrowing for the high street banks.”

Jonathan Harris, director of mortgage broker Anderson Harris, said that despite the uplift in activity, house sales are still far lower than they were at the height of the boom years.

Article Source: http://www.express.co.uk/news/property/424289/Mortgages-up-by-third-as-housing-sales-soar

Warning of London Housing Bubble as Mortages Soar by 29%

This article was published on London Evening Standard on August 20, 2013, written by Jonathan Prynn stating the increased in mortgage may result in dangerous housing price bubble in London.

A dramatic surge in mortgage lending today sparked fresh fears about a dangerous house price bubble in London.

Banks and building societies advanced home loans worth £16.6 billion last month, up 29 per cent on last year and the biggest rise for seven years.

Property experts said low mortgage rates, the Government’s Help to Buy scheme and growing confidence about the economy contributed to the increase in lending.

But MPs warned that the lending boom could simply “pour petrol” on a market already showing signs of overheating and price more Londoners out of home ownership.

Mark Field, Conservative MP for the Cities of London and Westminster, said: “The London market has never really been in the doldrums. The danger here is that affordability of property prices becomes ever more a fantasy for more and more people.”

Government figures last week showed prices rising at eight per cent to a record average £425,000 in June compared with one per cent outside London and the South-East.

The Council of Mortgage Lenders figures today reveal lending is bouncing rapidly from the depressed levels of around £10 billion to £13 billion a month seen since the  banking crisis five years ago, Last month’s total was the highest since October 2008.

The Treasury’s Funding for Lending scheme, aimed at encouraging bank funding for home buyers and small businesses, and the Help to Buy programme, which has already been taken up by 10,000 new home owners, have contributed to the return of confidence.

Borrowers were further encouraged by Bank of England Governor Mark Carney suggesting that its 0.5 per cent lending rate is unlikely to be increased before 2016.

Fixed-rate mortgage deals are at historic lows, with some lenders offering fixed-rate deals below two per cent, levels described as “quite staggering” by Ed Mead of London estate agents Douglas & Gordon.

There have even been the first signs of the return of interest-only mortgages with lenders such as Clydesdale and Yorskshire offering nought per cent for the first three years on some deals.

But leading property experts called on George Osborne to scrap the second phase of its Help to Buy mortgage scheme in London, due to come into force in January.

Doug Shephard, director at property search website Home.co.uk, warned: “The London property market clearly needs no further stimulus; it’s running too hot already.” Stuart Law of buy-to-let investment firm Assetz said lending conditions are so favourable that he expected “double digit” rises in property prices next year.

Shadow housing minister Jack Dromey warned: “Unless the Government invests in building the homes our capital city badly needs, rapidly rising property prices will put the dream of home ownership beyond the grasp of millions of Londoners.”

The Council of Mortgage Lenders’s market and data analyst Caroline Purdey said: “An improvement in sentiment and activity continues to show in the UK housing and mortgage markets, with a more positive picture also starting to emerge in the economy.

“Our forward estimate of gross mortgage lending in July reinforces a growing evidence base of a strengthening in the housing and mortgage markets.” The CML’s members account for 95 per cent of residential home loans in the UK. There are 11.3 million mortgages in the UK, with loans outstanding worth more than £1.2 trillion. However, with many borrowers still effectively locked out of the market — such as those with impaired credit ratings or negative equity — there is still a long was to go until  lending recovers to the peaks of £30 billion in 2006 and 2007.

Nevertheless leading property figures welcomed the return to more “normal” conditions after so many barren years. Richard Sexton, director of chartered surveyors e.surv, said: “The mortgage market has been the pillar of the economic recovery. The freeze on high loan to value mortgages has thawed, and first-time buyer lending is at its highest since the banking crisis.”

Housing minister Mark Prisk said: “Today’s figures show our Funding for Lending Scheme, and record low interest rates, have led to the highest level of mortgage lending since 2008. But alongside this, we’re also pulling out all the stops to get Britain building, and the increased availability of mortgage finance is boosting confidence in the housing market, and encouraging house builders.

“We’ve also been working with the Mayor to invest billions of pounds to deliver the fastest rate of affordable housebuilding for two decades.”

‘High prices have forced us to look outside capital’

MEG Jorsh and boyfriend Jason Rowbottom have become so demoralised by London prices they have taken their property search away from the capital.

The couple bring home a combined income of about £65,000 and are saving £500 each a month for a deposit — despite the £900 monthly rent for their two-bed flat in Beckenham.
They would like to stay in London but have decided to buy in Manchester.

Journalist Ms Jorsh, 29, whose 30-year-old boyfriend is a manager at the Health and Care Professions Council, said London’s property prices were so high that the help-to-buy schemes would have no impact. “We would love to get on the ladder for the security that it gives you, but we know we are in for a long slog,” said Ms Jorsh.

“We are planning to move to the North so what we can buy will actually be decent.
“Even with a £25,000 deposit here, which seems like so much money, we’d probably only end up with a one-bed flat. It would be wonderful to be able to stay in London, but we just can’t have the kind of lifestyle that we would like.

“The whole thing is really depressing and deeply demoralising.”
The couple expect it will take two to three years to raise a deposit.

Article Source: http://www.standard.co.uk/news/london/warning-of-london-housing-bubble-as-mortages-soar-by-29-8776256.html

A First-Timer’s Guide to Buying in a Bubble

According to Rosamund Urwin of The London Evening Standard, young Londoners are obliged to take the plunge in an overheated housing market because rents are rising as shown on this August 14th, 2013 article.

The bubble is back. In the past year, house prices have jumped by 8.1 per cent in London, hitting another record high. The average home in the capital now costs £425,000. It’s as though Northern Rock, the eurozone crisis and econo-mageddon were just a bad dream.

And it isn’t just affluent foreigners piling in and driving up prices. Even first-time buyers are now returning to the market. The number of Londoners clambering on to the bottom rung of the property ladder almost doubled in the first four months of 2013 compared with a year earlier, many trying to escape rocketing rents. In June, the number of first-time buyers given mortgages across the UK was the highest since 2007.

Hopefully, I’ll soon be one of them. For after a nine-month search — long enough to spawn a book or a baby — I’ve finally found a flat, a small split-level jobbie in Brixton — four rooms of my own. Searching for a first home has been a spirit-sapping affair. I’ve been led on and stood up by a handsome gent (an estate agent). I’ve experienced the spitting hatred that a Foxtons Mini inspires. I’ve traipsed around smoke-clogged Hobbit holes, flats infused with damp and an apartment decorated with wet pants on every radiator. Thus, I have come to pity anyone who has ever searched for a home in London. 

In an ideal world, Generation Rent’s problems would be solved by a boost to the supply side. More homes would be built. But — as the French writer Voltaire would verify — we do not live in the best of all possible worlds. In fact, new figures released today show that the number of properties listed for sale in London for under £500,000 has fallen by 7.5 per cent between April and June compared with the same period last year. Meanwhile, the number over £500,000 has shot up.

And gone are the days when the “3Ds” (debt, death and divorce) offered a property panacea through repossessions and auctions. The developers and speculators cottoned on to those ages ago and they’re likely to be savvier than first-time buyers and to have more experience and deeper pockets.

So how on earth, in this ruinous market, can one find a first place to buy, without either marrying a billionaire or being blessed with a big bounty from the Bank of Mum and Dad?

Location, location, location

Turn Kirstie Allsopp’s mantra on its head. Yes, location is all — but in the sense that you should put aside all postcode prejudices to find a home. Having lived in one area best known for an eponymous spliff (Camberwell), another unfairly famous for crime (Peckham) and a third no one has ever heard of (Nunhead), I’d recommend forgetting all snobby ideas about addresses. Pick somewhere residents refer to as “up-and-coming” (they mean “currently run-down”) or one where they play classical music in the nearest Tube station to try to prevent locals punching each other.

Henry Pryor, a buying agent and housing commentator, advises looking east. But he also says the areas hit by riots two summers ago — Tottenham, Enfield, Peckham — can offer cheaper pickings: “People are snooty and memories linger so values in those places have been reined in. And don’t be shy about commuting either — we do have a good transport network.”

He points to areas around the outskirts, such as Headstone South in Harrow, Morden and Nonsuch in Sutton. Other property watchers suggest Walthamstow and Forest Hill. Or, as one property pessimist suggests: “Look for a place where no one else wants to live.”

Location, location, location part II

Another obvious option (not recommended for light sleepers) is to buy above a shop or on a main road — the noise keeps the cost down. Stockpile ear plugs and accept that it will put many future buyers off (then again, contrary to the attitudes of many Londoners, you’re buying somewhere to live in and not an investment). And there are always ex-council houses. Pryor reckons most new builds — with their typically low ceilings and small rooms — should be avoided, though: “A developer is selling a commodity and so they will need to take their cut. And like a used car losing value as you drive out of the showroom, a new home loses value as soon as you put the kettle on.” It also pays to get to know an area really well.

Negotiate

Pryor recommends “overcoming the British reserve” and haggling: “An asking price is a guide to the vendor’s greed. It does not reflect the actual value of a property.” He points out that asking prices have risen much more than selling prices in the past year. And first-time buyers, not being shackled to another buyer, are popular with sellers. They can capitalise on that and offer less. It pays to be a property stalker too. Find out how long a home has been on the market, how many times the price has been reduced and what similar properties in the area have sold for. The magical interweb is your friend here.

Beware the estate agent

Estate agents, lovely though one per cent may be, represent the seller. Although it’s a good idea to tell them clearly what you are after (otherwise you will have to sift through scores of emails with completely inappropriate options) and probably even to flatter them (they may alert you to new properties coming on the market), don’t tell them how desperate you are to move to a certain area — and don’t give away your life story.

“The shiny-suited estate agent in a branded Mini is not a broker but an agent,” says Pryor. “They will use the information against you. Act as though they have some contagious disease that you wouldn’t want to catch.”

Be proactive

Most properties, even in London, sit on the market for a while but a dream home can sell very swiftly in the current climate. A two-bedroom flat I liked appeared on Rightmove on a Wednesday and buyers had to submit sealed bids by Friday lunchtime. This can turn searching into a social-life-destroying nightmare but it’s worth putting in the hours. You can also take the mission into your own hands. One couple looking for a home in Herne Hill leafleted the area, asking residents if they were interested in selling. This isn’t a bad idea: the vendor benefits from cutting out hefty estate agent fees and a quick sale. However, the couple are yet to hear from a single interested party.

Borrow, beg, team-up, take

In the words of the Evening Standard’s property correspondent Mira Bar-Hillel: “Take as much from the Government as they are stupid enough to give you and extort as much from your family as you can.” For those for whom the vaults at the Bank of Mum and Dad sit empty, George Osborne is here to help.

Yes, the Chancellor’s Help-to-Buy scheme (offering loans to wannabe owners with only a five per cent deposit) has been called “one of the most stupid economic ideas of the past 30 years” by a leading City strategist but when it is extended to all properties in January next year you might as well take advantage of it.

“The Government is clearly determined to ramp up the housing market for the next three to five years but we’re talking about subsidised home ownership here — first-time buyers would be mad not to use it,” says Pryor.

Shared ownership schemes through housing associations are another option but while you get the responsibilities and the liabilities you obviously don’t get full ownership. It can also be difficult to increase your share and difficult to sell on. Another option is to find someone who will buy a percentage of the house as an investment — but this can be legally complicated.

Emily Jupp: SHOULD I PURCHASE A PLOT WITH PALS?

I vacillate constantly about what would make my dream home. In the past month alone, I’ve been fixated on a school conversion in Peckham Rye, which, after doing my sums, I realised that I could afford if I sold a few family members into slavery (I’m sure they’d forgive me once they saw the shine on those lovely polished floorboards).

I was also desperate to buy land in Brockley (I’ve seen those Channel 4 programmes about DIY homes, so I’m going into this with my eyes wide open). Currently, I’m ever so keen to invest in a not-quite-condemned two-bed flat in a not very salubrious area of Zone 2, which estate agents keep telling me I won’t be able to get a mortgage on because it is deemed “unsafe” by the surveyors. Bah. I reckon they’re just trying to put me off because they want to keep that little gem to themselves.

To summarise, house-hunting on a budget is a quagmire of confusion. But there are options. I’ve discovered that buying a tatty, ex-council high-rise near Canada Water would actually be a very good investment and probably not an act of blatant idiocy, by comparing property prices in the area. Zoopla’s heatmaps tool (zoopla.co.uk/heatmaps) tells you the average property prices across the UK. You can drill down to look at one particular borough or street, so you can compare prices.

If you have a decent deposit and cope well with anxiety, buying up land could reap rewards but be warned — land in London is obviously rare and you will be up against property developers who do this for a living. In the course of investigating this possibility, I discovered that anyone can apply for planning permission on land, whether they own it or not. Do this to see whether you can build on it before you take the leap and buy it up.

Finally, last weekend, a friend tentatively offered to buy a place with me. My concerns were that we wouldn’t want the same things and that the stress of being financially tied together might make us hate each other. But on reflection, we’ve lived together before and got on well and it would mean I wouldn’t have to live in a slum. Strangely, though, part of me relishes the challenge of turning a crumbling wreck into something beautiful —  and all mine.

Richard Godwin: WHY I BOUGHT ABOVE A SHOP

When my wife and I started house-hunting a few months ago, we were under few illusions. I figured that although it would be lovely if we could find an affordable, comfortable two-bedroom flat with a garden on a quiet street within five minutes’ walk of a Zone 2 Tube, it was also unlikely. So I was happy to consider all options, including an unpromising-looking place above a shop.

On the minus side, it was actually on Green Lanes, the  busy Harringay high street of Turkish restaurants and thundering buses. On the plus side, it was full of windows, elegantly proportioned in grand Victorian style (it was purpose-built as a flat rather than clumsily converted), in pretty good condition, near the park and the Tube and … drum-roll … had an almost unheard of three bedrooms. We made an offer within a couple of hours and, dull-story short, moved in last Friday.

I still feel that we’ve totally lucked out. I love the extra space — far more than I thought we could afford — and the neighbourhood. The noise disappears when you shut the windows — when they’re open, you just pretend you’re on holiday in Istanbul. And it’s just exciting to be so much in the thick of it. Why else do you live in a city?

Article Source: http://www.standard.co.uk/lifestyle/london-life/a-firsttimers-guide-to-buying-in-a-bubble-8760730.html

Tips to Move Up the Property Investment Ladder

Another interesting article by Michael Yardney published on August 2, 2013 in Property Observer giving helpful tips to property investors to be successful in their property ventures.

Property investment is not something you should enter into lightly. But for some reason, that’s what a lot of people who have dreams of making millions with real estate do.

They think, “I can go out, buy a house somewhere, stick in some tenants to pay the mortgage and make a killing! How hard can it be?”

Fact is most property investor’s fail! The stats show that around 50% of people who buy an investment property sell up in the first five years and of those who stay in the game, 90% never get past owning one or two properties.

So if you’re looking to get into property or move up to the next rung of the property ladder, here are some words of advice:

Knowledge is property investment power!
Firstly, you need to understand what makes a good property investment and recognise that not just any old digs will do.

You can profit from real estate in one of four ways, and if you get the combination right you’ll make money from bricks and mortar. They are:

1. Capital growth – to build yourself a sound asset base your properties will need to appreciate in value at wealth-building rates (in other words, above average capital growth.) This will come from strong demand from owner-occupiers (who push up property values) and tenants (who help you pay your mortgage.)
   
2. Cash flow – in other words your rent.
   
   
3. Tax benefits – while you should never invest solely for this reason; a good tax strategy can help you manage your cash flow, decrease your tax obligations and increase your bottom line.
   
   
4. Accelerated growth – getting your hands a little dirty (metaphorically speaking) by investing in a property that needs a bit of cosmetic TLC through renovations, or a major facelift through property development, is a great way to manufacture capital growth.

Property cycles

While timing the market is not the be-all and end-all, it certainly helps to understand how the property market moves in cycles.

Following the herd and buying when everyone else is on the property bandwagon doesn’t always work. That’s often when the market is near its peak.

On the other hand you have more chance of nabbing a good deal in a buyer’s market, when property is out of favour. That’s why Warren Buffett said, “Be fearful when others are greedy and be greedy when others are fearful.”

Currently many of the property markets in Australia are in the early upturn stage of their cycles, creating good medium-term investment opportunities.

Location

Location can make or break a property investment. But what is the right location?
I look for areas that will have strong ongoing demand from a wealthy demographic of owner-occupiers who can afford to and are prepared to pay a premium to live in good locations. Some of the major drivers of this type of capital growth are:

• Proximity to the city
  
  
• Proximity to the sea
  
  
• Adjacent to a prime suburb
  
  
• Proximity to amenities such as a train station, large shopping centre, within the zone of a highly sought after public high school.
  
  
• Suburbs that contain period style homes e.g. Californian bungalows, Federation, Victorian, Edwardian style homes.
  

I also like buying in areas going through gentrification – a suburb that is relatively cheap now but has the potential for capital growth in the future as a wealthy demographic of people move in.

One way to find this type of location is to drive through the streets and look for some of the obvious indicators that people with money are moving in:

• Are people spending large amounts of money on renovating/extending their homes?
  
  
• Are there small black (or maybe now it’s white – the new black) BMWs and Audis parked in the driveways or are they old Ford Falcons and Holden utes?
  
  
• Is the nature of the shops changing – more cafés and deli and lifestyle shops.
  

Money, money, money

A sound financial strategy is as important as a sound investment strategy when it comes to property.

Without a well-rounded understanding of how to maximise your borrowing power, use equity as a leverage to build your portfolio and maintain a financial buffer to see you through the difficult times that we all ultimately face, you are setting yourself up to fail financially.

It’s important to set aside a cash flow buffer in a facility such as an offset account or line of credit, to cover you for a rainy day.

Financial fluency

While you could make lots of money through property investment, you could also easily lose it.

If you are financially illiterate when it comes to managing money, budgeting and even balancing the books at home, how do you think you’ll go when it comes to a multi-million dollar property portfolio?

You may need to learn the ins and outs of taxation and the financial advantages you can enjoy as an investor, as well as the best structures to own your investments in, such as personal, company and trust set-ups.

Rather than trying to learn it all yourself and wear numerous hats, it’s worth surrounding yourself with a good team of professionals who can guide you with their knowledge and expertise. An independent property strategist, a finance broker and an accountant should all be people you rely on to support you in the journey to real estate riches.

If you’re the smartest person on your team, you’re in trouble!

Some final words of advice (or warning) for investors

1. Formulate a plan – understand what you want to achieve and then make investment decisions accordingly.
   
   
2. Be cautious –you’ll find everyone is happy to give you advice. Rather than listening to well meaning friends, it’s important to only listen to people who have achieved the financial independence you’re looking for and who have maintained it for a period of time.
   
   
3. Understand the difference between a salesperson and an advisor. Many salespeople are cloaked as advisors and suggest they are representing you, the buyer, when in fact they are representing the seller or a property developer.
   
   
4. Be prepared to pay for advice – it’s much cheaper than learning from your mistakes.
   
   
5. Not everything that glistens is gold – often when you start out it can be tempting to see opportunities everywhere. The problem is you don’t yet have the perspective to decide what is a good investment and what is not.
   

Property doesn’t discriminate; it doesn’t care who owns it. Today the residential property market is worth $4.68 trillion, according to RPData, and over the next decade it will increase in value by billions and billions of dollars. If you get it right, you can have your share.

Michael Yardney is a director of Metropole Property Strategists.

Article Source: http://www.propertyobserver.com.au/landlords/tips-to-move-up-the-property-investment-ladder-michael-yardney/2013080163739