Saturday, 26 March 2011
Thursday, 24 March 2011
Shortage of new homes attracts attention - Times Online
A spat between two politicians — both with very nice houses and both unlikely to sell off chunks of their gardens to developers — has excited public interest in the supply of new homes for everyone else. This is an excellent turn of events, even if you do not like adversarial politics.
The new planning rules will allow communities to make many more decisions about what is built in their areas. But if all homeowners do not inform themselves about these deliberations, there is a risk that even fewer new homes will be built — construction is at its lowest since 1924 — or that dwellings arise that are a design blight on the neighbourhood.
But back to that fracas. On the Today programme on Radio 4 Zac Goldsmith, MP for Richmond Park, clashed with John Prescott over garden grabbing, the disposal of a slice of a surburban plot to a developer. Prescott was a believer, thinking it provided more homes in cities. Goldsmith, meanwhile, said that former commercial sites should be used instead.
The end of garden grabbing is part of a wider reform: central Government will no longer dictate how many homes should be put up in a city or a village. This will be a matter for locals. But the effect of this announcement has been the downing of tools on some sites because housebuilders are apprehensive about other aspects of the new planning rules. These give much more scope for homeowners — and even rival developers — to object to schemes. Some construction bosses fear that the cost of dealing with such disputes could reduce housebuilding further. Why? The developers claim that this extra expense will slim their margins. As a result, they will want to pay less for land, so deterring owners from selling. This reluctance could even affect the Government itself, which controls 45 per cent of the former hospital and other such sites deemed suitable for development.
I could elaborate on the consequences of the new planning regime. But the set-to between Prescott and Goldmsith should already have set you thinking that you need to get involved if you care about your area, the value of your house and the ability of first-time buyers to climb on to the housing ladder.
Damned statistics
House-price surveys: bad statistics or useful guides to the market’s direction? Yes, the argument is raging again. But for the moment, at least, its focus is not the survey from the Your Move estate agency, indicating that there will be a surge in activity after the World Cup. This analysis is based on past transaction figures from HMRC, which show an average rise of 8 per cent in home sales in the month after the tournament.
Will fans rise from their sofas to play a blinder in the property game? Or will the austerity Budget persuade them to stay put? Some commentators say that Halifax’s May index — prices down by 0.4 per cent — suggests that the slowdown is already here. Others, such as Stuart Law, of Assetz, the property investment company, are sceptical. “Halifax and Nationwide lend to customers with incomes at the lower end,” he says. “They buy the sorts of homes whose values are still languishing.”
Mr Law forecasts that the market will grow by 5 per cent this year, thanks to the recovery in prices of homes being bought by better-off southerners. As we report on page 4, in many parts of the South East, prices are 8 per cent below their peak in 2007. In parts of the North they stand at about 18 per cent below this level. Some locations defy this trend. Prices in the borough of Trafford, near Manchester, are 7.4 per cent lower than in the summer of 2007, but this area takes in “Gold Trafford”, the enclaves of Altrincham and Hale — popular with footballers.
This example illustrates the inadequacies of the Halifax and Nationwide indices, which are both compiled from their customers’ mortgage valuations. Despite these imperfections, we cannot afford to ignore either index. For footballers — and others in the high-earnings league — the pursuit of houses will continue to be the beautiful game, however tough the Budget. Halifax’s index sends a message that workers on average earnings suspect they should play it safe.
Shopping al desko
The ladies who lunch are one retail demographic. Far more numerous, however, are the ladies who never lunch because they have no time to leave their offices, though they do shop al desko.
Now these women are cited as the reason for the boom in online decor and furniture sites, such as Achica.com, a new entrant to the sector. Thinking of home, it seems, is a cushion against reality, even when you are not there.
Property investment clubs return - Times Online
Become a property millionaire!” screamed the advertisements, inviting investors to seminars to “find out how you too can retire early”. Fast-forward two years and those ads have disappeared, vanishing as house prices fell.
The property investment clubs and their founders have kept a low profile since then, but renewed confidence in the housing market and the prospect of future returns has brought some out of the woodwork. Among those who have reappeared are Jim Moore and Tony McKay, the founders of Inside Track — the most high profile of the property investment clubs, which met an ignominious end in 2008 as the buy-to-let market crashed. They recently set up IAP Global, a new company that promises to “secure the best distressed property deals” with discounts of 25 per cent on offer.
They are not alone. Encouraged by signs that the bottom of the market has been reached and evidence that there are bargains in repossessed and distressed property sales to be had, investment clubs are making a comeback.
The sales patter has changed, but the claims are as bold as ever, according to experts, with some even offering free DVDs to entice prospective landlords to their seminars. But the approach is now more low-key, with most opting for a more targeted marketing strategy.
“The clubs are trying to restore credibility and at the same time, thanks to the market recovery, gullibility is returning. They are targeting the already converted — people already on property investment databases, rather than advertising to everyone,” says Kate Faulkner, of Designs on Property, the property advice business. “The seminars used to be £200; now they are free. The marketing has changed, but the product is the same.”
Before the downturn, “no money down” deals were used to lure investors. These involved someone buying a property with a 100 per cent mortgage, for example, for £100,000, remortgaging for £120,000 several months later following a rise in prices, taking £20,000 in cash and buying another property.
Sales pitches now are more likely to be tailored to the post-downturn bargain-hunters, with the most popular offer being “below-market-value deals”. This assumes that there will be desperate sellers — people trying to avoid repossession, who will sell their home for less than it is worth.
“The problem here,” Faulkner says, “is that the amount of stock for sale has fallen and so has the number of repossessions, but prices are rising, so these so-called ‘BMV’ deals have not materialised.
“There is also a difficulty in a market where there is so little for sale that it is impossible to know what the value really is, and, therefore, you won’t know if you are really getting it below market value.”
The damage done by these deals is already in evidence. Landlord Action, a buy-to-let investor support network, says that inquiries relating to debt recovery of sourcing fees rose by 50 per cent last year. “Investors ran out of patience, recession hit, funding ran out and people became more desperate to reclaim deposits and funds,” Paul Shamplina, the group’s director, says.
Sensing the danger of a return to ill-advised property speculation, calls are growing louder for the property investment industry to be regulated, like financial services. The Council of Mortgage Lenders has suggested that this would be a better mechanism to protect homebuyers and sellers than the Financial Services Authority’s proposed regulation of buy-to-let lending.
In the meantime, there are ways to tell if a club is bona fide. “There are actually some good property companies that share the risk, do well, and have figures to back up,” Faulkner says. “The problem is that because there is no regulation, they sit alongside the dodgier companies at the investor shows.”
First, be alert to any company that quotes the wisdom of celebrity property experts or well-known economists — “the chances are they do not have their permission”, says Shamplina. IAP Global has been criticised for using comments made by Phil Spencer, from the Channel 4 programme Location, Location, Location, that “now is the best time to buy since 1991” — a quotation that Spencer reportedly does not recall making.
You should also be alert to advice not to seek advice. “Some will tell you not to speak to an adviser and will not allow you to use your own solicitor or mortgage broker,” Faulkner says. “If anyone says this, walk away immediately. They should be telling you that you should seek independent advice.” Clubs should also encourage investors to see the property they are buying on their behalf, and should refund deposits if they cannot find a suitable property. “Some take money for non-existent property,” Faulkner says.
“If you want to invest, now could indeed be a great time, but forget the ‘no money down’ or ‘properties for £1’ — you need a decent pot of money to afford a deposit of at least 25 per cent to get a decent mortgage rate,” he says. “And the rental income must stack up now or in the future. You need a yield of between 5 and 10 per cent to cope with potential interest-rate rises and increased taxation in future.”
Wednesday, 23 March 2011
Tuesday, 22 March 2011
Property Letting, Property Investment Advice, Buy to Let Expert & Landlords Information - Letting Focus
Welcome to LettingFocus.com - home of unbiased, independent property investment consultancy and advice. We help organisations and landlords make a success of their business in the private rented sector.
Click Here for Our Blog - the blog is the part of our site that changes weekly. At the blog, you can select Categories such as "Housing Benefit and Local Housing Allowance" for more information on a topic.
I'm David Lawrenson, author of the UK's top selling book on property and an expert on buy to let. I'm also a speaker and media commentator on property as an investment, as well as being a blogger and consultant on all landlord, property letting and buy to let issues in the private rented sector.
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