Auctions
Many consumers in the UK now see property as a good thing to invest in, people believe homes and buy-to-let residences will help to fund their retirement years.
Figures gathered by the National Association of Pension Funds, found that only 34 per cent of individuals polled were confident that their pensions will leave them with enough money for life after work. Flagging confidence in work savings means more Britons are being encouraged to put money into other things. Many people have switched to investments such as buy-to-lets.
This trend was certainly borne out at our March auction where a hundred percent of our lots sold at full prices. Competition between investors was strong as they bid to secure properties to either add to their rental portfolios or refurbish and sell on.
Sales market
People seeking to invest in real estate, can secure property at its most affordable price since 2003. This is according to new figures from Zoopla.co.uk, which show that the average worker can now afford 58 per cent of homes in the UK. This is an increase on the 34 per cent recorded in 2007. However it is our opinion that whichever government gets into power at the next election they will still need to do more to increase housing affordability for first-time buyers. Among the measures needed we think are sensible lending policies and the increase of new home building.
In Southend the supply of new properties slowed towards the end of February and into the first part of March. However this trend seems to be changing as over the last week considerably more properties came onto the market. As more choice becomes available it is inevitable that properties will take longer to sell. There is also currently a tendency to put homes on the market considerably higher than the current market value. This again is delaying the sale of property while either sales are negotiated or sellers are forced to reduce their prices if they are serious about moving. Another effect of this market is to see that those properties that have been on the market for longer are being sold as they represent better value.
With the launch of Tudor’ distinctive homes service we are seeing the upper end of the local market performing well.
Rental market
The rental market remains strong with supply and demand being more or less equal. Houses are in the highest demand especially larger properties and flats need to be competitively priced if they are going to be taken. Properties that are not presented well are seeing rents reduced so taking a little time to redecorate or clean a home after occupation can reap dividends.
Mortgages
The Financial Services Authority (FSA) has revealed that mortgage lending to those going through the conveyancing process to purchase homes is rising in the UK.
According to the organisation, finance for property buying "continues to represent an increasing share of new lending". It noted that such activity accounted for 62 per cent of new advances and 63 per cent of new commitments in the latest quarter.
There is also greater innovation being shown in the mortgage market by lenders such as Mortgage Works a subsidiary of Nationwide Building Society who have introduced a loan that could provide a useful way for first-time buyers to secure a property.
Unlike existing guarantor mortgages, it accepts that parents have "commitments of their own". The product was launched earlier this month and it operates on a 75 per cent loan-to-value basis on a two-year fixed-rate mortgage. It comes with a rate of 4.99 per cent and guarantors need to agree to cover 30 per cent of the loan.
The other good news is that the Bank of England figures, revealed the average cost of a two-year fixed-rate mortgage is at its lowest level since the summer of 2003.The typical deal had a rate of 3.88 per cent last month, which was a fall from 4.35 per cent during the same time last year, the organisation noted.
Summary
Public opinion for investing in housing appears to be growing but has not been fully seen in market activity yet. Property is more affordable now than any time since 2003and mortgage supply and rates have improved every month so far in 2010.
Alan Kirkman FNAEA
Director
Tudor Estates
18th March 2010
For further information on the property market go to www.trustintudor.co.uk
Monday 22 March 2010
Friday 19 March 2010
Can you tell me something about shared equity schemes, and how they work?
These days, it is frequently one of the conditions of planning permission being granted for new residential developments (under what is called a Section 106 Agreement) that they must include a certain percentage of units designated for social housing. While some of these will be set aside to meet general social needs, a proportion is usually earmarked for purchase on preferential terms – either specifically for the benefit of key workers such as nurses or policemen, or for those on low incomes and lacking the hefty deposits which lenders now generally demand. Shared equity is the preferred mechanism for helping the latter group – people who for one reason or another wouldn’t otherwise be able to afford home ownership.
As the name implies, shared equity basically allows someone to purchase a percentage share in a property, while paying rent on the remainder – usually to a housing association. In most cases only a very small deposit will be required, if any at all.
How does it work? Well, to keep the sums simple, let’s look at a property valued at £100,000. The buyer takes out, let us say, a £50,000 mortgage to purchase half of the equity, and pays rent on the remaining half. If this sounds more expensive than repaying a full £100,000 mortgage, it’s worth remembering that the rent payable in these cases is not based on normal market rates, but on the prevailing rate for social housing in the area concerned, which is naturally a lot lower.
But what happens if or when you want to move, and you only own half of your current home? Well, the answer is that you sell your half pretty much in the normal way – except for the fact that the purchaser must be acceptable to the housing association.
A variation on this basic model exists whereby you may be able to buy a bigger and bigger share of the property as your own income level increases. This is known as “stair-casing.”
As the name implies, shared equity basically allows someone to purchase a percentage share in a property, while paying rent on the remainder – usually to a housing association. In most cases only a very small deposit will be required, if any at all.
How does it work? Well, to keep the sums simple, let’s look at a property valued at £100,000. The buyer takes out, let us say, a £50,000 mortgage to purchase half of the equity, and pays rent on the remaining half. If this sounds more expensive than repaying a full £100,000 mortgage, it’s worth remembering that the rent payable in these cases is not based on normal market rates, but on the prevailing rate for social housing in the area concerned, which is naturally a lot lower.
But what happens if or when you want to move, and you only own half of your current home? Well, the answer is that you sell your half pretty much in the normal way – except for the fact that the purchaser must be acceptable to the housing association.
A variation on this basic model exists whereby you may be able to buy a bigger and bigger share of the property as your own income level increases. This is known as “stair-casing.”
Monday 15 March 2010
What is a flying freehold ?
A flying freehold applies where part of one property – for example an upper room or loft space – physically extends over another. This means that the owner of a flying freehold does not actually own the structure which supports that part of his or her property. They are therefore entirely dependent upon the goodwill of the owner of the adjoining property for its upkeep and structural integrity. A flying freehold can also exist where part of a property sits over a communal access area, like an archway.
Of course, this sort of thing happens all the time with houses that have been converted into separate flats, or purpose-built apartment blocks. The difference is that these are invariably leasehold, so there is always a freeholder somewhere who retains the power to compel each leaseholder to maintain their part of the communal fabric.
By contrast, no-one can compel a freeholder to do anything!
This may sound drastic, but in practice most flying freeholds have been around for donkeys’ years without causing anyone any trouble. However – precisely because they are a departure from the norm, and something of an anomaly - solicitors quite rightly tend to be rather wary of them. Banks and building societies even more so. Fortunately, they’re relatively rare in most parts of the country these days. Nevertheless, they do persist in some areas, particularly with older properties.
So…what happens if you’re a cash buyer, and the home of your dreams turns out to have a flying freehold? What then?
Well, while it’s undeniable that it can complicate matters, and your solicitor will certainly want to check it out very thoroughly indeed, the fact is that most of the difficulties associated with flying freeholds are easily surmountable – for example, by taking out indemnity insurance.
So, if you’re faced with a flying freehold on a property that you really can’t resist, my advice would be to grit your teeth and go for it.
Of course, this sort of thing happens all the time with houses that have been converted into separate flats, or purpose-built apartment blocks. The difference is that these are invariably leasehold, so there is always a freeholder somewhere who retains the power to compel each leaseholder to maintain their part of the communal fabric.
By contrast, no-one can compel a freeholder to do anything!
This may sound drastic, but in practice most flying freeholds have been around for donkeys’ years without causing anyone any trouble. However – precisely because they are a departure from the norm, and something of an anomaly - solicitors quite rightly tend to be rather wary of them. Banks and building societies even more so. Fortunately, they’re relatively rare in most parts of the country these days. Nevertheless, they do persist in some areas, particularly with older properties.
So…what happens if you’re a cash buyer, and the home of your dreams turns out to have a flying freehold? What then?
Well, while it’s undeniable that it can complicate matters, and your solicitor will certainly want to check it out very thoroughly indeed, the fact is that most of the difficulties associated with flying freeholds are easily surmountable – for example, by taking out indemnity insurance.
So, if you’re faced with a flying freehold on a property that you really can’t resist, my advice would be to grit your teeth and go for it.
Friday 12 March 2010
Do for sale boards fulfil any useful purpose?
Very much so. In fact, even in the internet age, agents’ boards are still generally acknowledged to be one of the most effective marketing tools in the estate agent’s locker. People really do notice them. What’s more, enquiries that result from someone seeing a board outside your home are often likely to be more valuable that those received via the internet, or from newspaper advertising, since they imply that the would-be buyers have already seen the property and like what they saw. By definition, it also means that they like the location. So, if the price is right, such enquiries will normally turn into viewings.
In the case of vacant properties, boards can also act as a useful deterrent to sneak thieves, squatters and the like, since they will never know when an agent might turn up for a viewing.
Ironically, the most common objection to having an agent’s board outside a property is that the homeowner doesn’t want his or her neighbours to know they are selling. Bizarre, when you think about it. For one thing, the neighbours would have to be pretty slow on the uptake not to notice agents turning up to value the place – often in branded vehicles – or walking around taking measurements and photographs. Then there’s the succession of complete strangers wandering about, very obviously checking the property out - as often as not while clutching copies of the particulars. Not forgetting, of course, the agent’s press ads and window cards…
All in all, trying to keep the sale a secret is something of a tall order. But in any case, why on earth would you want to? After all, you’re trying to sell the place, aren’t you? And particularly in this kind of market, you need all the exposure you can get. Indeed, your neighbours may well know someone who would love to move into the area!
So, in short, I would strongly advise you to have a board. Even if it’s not one of ours!
In the case of vacant properties, boards can also act as a useful deterrent to sneak thieves, squatters and the like, since they will never know when an agent might turn up for a viewing.
Ironically, the most common objection to having an agent’s board outside a property is that the homeowner doesn’t want his or her neighbours to know they are selling. Bizarre, when you think about it. For one thing, the neighbours would have to be pretty slow on the uptake not to notice agents turning up to value the place – often in branded vehicles – or walking around taking measurements and photographs. Then there’s the succession of complete strangers wandering about, very obviously checking the property out - as often as not while clutching copies of the particulars. Not forgetting, of course, the agent’s press ads and window cards…
All in all, trying to keep the sale a secret is something of a tall order. But in any case, why on earth would you want to? After all, you’re trying to sell the place, aren’t you? And particularly in this kind of market, you need all the exposure you can get. Indeed, your neighbours may well know someone who would love to move into the area!
So, in short, I would strongly advise you to have a board. Even if it’s not one of ours!
Monday 8 March 2010
Is it worth installing solar panels?
If you’re asking about value for money, then the short answer is probably “no” – particularly if you are planning to move any time soon.
If that sounds a bit blunt, let me explain. Of course, it can be argued that anything which helps cut fuel bills will enhance the saleability of a home, and all other things being equal that may well be true. However, as with any other expensive home improvement, you will never recoup the full cost of a solar installation - as much as £20,000 for an electricity-generating photovoltaic (pv) system - when you sell.
But what if you are planning to stay put for a while? On solar water-heating, opinion is pretty evenly split between those who swear by it, and claim that their systems will pay for themselves within as little as 4 or 5 years, and those who claim the opposite. The Royal Institution of Chartered Surveyors, for example, published an energy efficiency report in 2008 which maintained that it could take anything up to 100 years to recoup the initial outlay – with systems which only have a useful lifespan of 30 years in the first place! Although this report caused a great deal of controversy, I think it’s only fair to say that the jury is therefore still out as far as the economics of solar water heating is concerned.
Meanwhile, when it comes to pv systems, the economic case seems to be much weaker - even allowing for the generous unit price your local power company will be obliged to pay for any daytime surplus electricity you generate. After all, pv technology may work well in places like Southern California or Arizona, where they average 9 hours sun every day, but here in rainy Britain it’s a very different story.
Of course, many people believe that the importance of doing your bit to save the planet far outweighs any considerations of value for money. If you’re one of them, and if you can afford it, then by all means install solar panels. At the very least, they’ll make you feel good.
But, if you main concern is to find ways to reduce your dependence on increasingly expensive bought-in energy, then you’ll find that things like decent loft insulation will probably achieve far more, at much lower cost.
If that sounds a bit blunt, let me explain. Of course, it can be argued that anything which helps cut fuel bills will enhance the saleability of a home, and all other things being equal that may well be true. However, as with any other expensive home improvement, you will never recoup the full cost of a solar installation - as much as £20,000 for an electricity-generating photovoltaic (pv) system - when you sell.
But what if you are planning to stay put for a while? On solar water-heating, opinion is pretty evenly split between those who swear by it, and claim that their systems will pay for themselves within as little as 4 or 5 years, and those who claim the opposite. The Royal Institution of Chartered Surveyors, for example, published an energy efficiency report in 2008 which maintained that it could take anything up to 100 years to recoup the initial outlay – with systems which only have a useful lifespan of 30 years in the first place! Although this report caused a great deal of controversy, I think it’s only fair to say that the jury is therefore still out as far as the economics of solar water heating is concerned.
Meanwhile, when it comes to pv systems, the economic case seems to be much weaker - even allowing for the generous unit price your local power company will be obliged to pay for any daytime surplus electricity you generate. After all, pv technology may work well in places like Southern California or Arizona, where they average 9 hours sun every day, but here in rainy Britain it’s a very different story.
Of course, many people believe that the importance of doing your bit to save the planet far outweighs any considerations of value for money. If you’re one of them, and if you can afford it, then by all means install solar panels. At the very least, they’ll make you feel good.
But, if you main concern is to find ways to reduce your dependence on increasingly expensive bought-in energy, then you’ll find that things like decent loft insulation will probably achieve far more, at much lower cost.
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