Mortgage lending falls
The value of home loans granted by banks and building societies fell by 58 per cent in the year to May as homeowners shunned re-mortgaging deals.
Gross mortgage lending totalled an estimated £10.3 billion in May, down 2 per cent compared to £10.5 billion in April and down 58 per cent from May 2008, according to figures published today by the Council of Mortgage Lenders (CML).
There have been signs recently that more home-buyers are returning to the market, with estate agents reporting higher transactions volumes and record rises in buyer interest.
But the CML said that the rise in buyer activity could be being offset by a decline in the number of homeowners taking out new mortgage deals when their fixed-term deal comes to an end. A more detailed breakdown of the figures will be published in two weeks time.
Buy to let landlords
Buy-to-let-landlords are under siege. Rents are falling, the value of their asset has been shrinking, mortgage deals have become scarce, and they are being hit with a raft of regulations. Now Britain’s army of property investors face a new menace: the tenant farmer. Thousands of buy-to-let properties have been rented for cultivating cannabis in.
As National Tackling Drugs Week draws to a close, police warn that the problem is becoming more severe.
Cannabis cultivation can wreck a home within days and it can be hard, if not impossible, to claim on insurance. Cannabis farmers move in fertiliser, high-intensity lighting and other equipment. When they quit, they leave electrical wiring in a dangerous condition, walls knocked down for heating ducts, as well as the debris of intensive farming. Some booby-trap properties with doorknobs wired to mains electricity and spikes under window sills.
And that’s to say nothing of the impact on communities. Crimestoppers says cannabis cultivation can fuel a range of organised crimes including people trafficking, firearms possession and money laundering.
The Association of Chief Police Officers defines a cannabis farm as a property where there are 100 or more plants. In 2007-08, the latest period for which there are records, police raided more than 3,000 farms countrywide. These statistics ignore smaller-scale cultivation. “Of those premises, 94% were domestic dwellings – mostly buy-to-let properties,” says Detective Inspector Dave Boon of Greater Manchester Police. “Nationally, 501,905 plants were seized in that year. They would have resulted in 20 tonnes of cannabis with a street value of £60m. But we know cultivation is under-reported and often undetected. I discovered there was a farm within very near distance of my home not many days ago.”
A 300-plant “farm” or “factory” produces around 50kg of “skunk” worth £150,000 (at £3,000 a kilogram).
The police say it is a growing problem – and that it is being fuelled by landlords desperate to rent out their properties.
“The initial approach,” says Boon’s colleague DI Bob Collier, “is for a respectable couple or a single female, often middle-aged, to approach a letting agent with the offer of six or 12 months’ rent up front, often in cash. They may have forged references but really rely on how loudly cash talks, especially in the present economic climate. Of course, these people disappear once they get the keys.”
They know agents are less likely than owners to inspect properties as long as there are no complaints. Cannabis farmers often go for properties in cul-de-sacs, because it means fewer passers-by who might wonder why the curtains are always closed or the windows covered over.
One landlord told Guardian Money how, late last year, she discovered her buy-to-let property in Edgware, north London, was being used as a cannabis factory. She has spent £10,000 so far on putting things right. “It happened because I wasn’t around,” says the solicitor, who did not wish to give her name. “It’s been a learning curve.” She says that, with hindsight, she should have guessed something was amiss. “I never thought they’d be growing drugs,” she says. It has not put her off being a buy-to-let landlord, however. Her advice to others? “You just have to check and keep your wits about you.”
Nowadays local newspapers and regional television news bulletins seem to constantly be running items about cannabis factories.
In the past few days alone, police have discovered factories in locations from Sunderland, Wolverhampton, Nottingham and Middlesbrough to Aylsham in Norfolk, Waltham Abbey in Essex, and Wembley and Hendon in London.
Collier says the damage cannabis farming causes to a home can run into tens of thousands of pounds.
“The first thing they do is rig the electricity and bypass the meter so they don’t have to pay for power. United Utilities estimates it would cost £30,000 in heat and light for a year on the meter,” he says.
“There’s so much power used we can detect farms from helicopters using infrared technology. Then they knock down walls for heating ducts. And when they leave after a year, landlords have to clear up what’s left from up to four harvests,” he says.
Insurers often refuse to pay claims for cleaning up the mess. They offer a variety of reasons, from landlords not taking sufficient care of their property to the house being used for commercial purposes.
And – a key factor in many landlords keeping quiet – a cannabis farm claim, whether successful or not, will push up premiums substantially.
“For landlords, it is once the police have cleared the property that the real challenge starts. Assessing the damage and trying to find the cash to make the property fit to rent again is a horrible experience,” says David Salusbury, chairman of the National Landlords Association, which this week issued its own warning about the problem.
It says that many owners are simply too frightened to go public, highlighting the example of a landlord silenced by “threats from the local triads”.
How to spot cannabis tenants
• Be wary of cash up front – no matter how respectable the potential tenants may seem.
• Take time to check references. Ideally, they should come from a former employer and previous landlords. It’s better to lose a tenant than have a drug factory on your property.
• Check your property at least once a month and get to know the neighbours, who will hopefully keep an eye out for anything suspicious. Don’t rely on agents unless you get inspection reports in writing. If you live too far away to visit, be willing to pay a neighbour to keep an eye on the property.
• Permanently shuttered or covered windows can be a sign of a cannabis factory.
• Don’t be put off by tenants’ excuses such as: “We work shift patterns so we can’t let you in as we’ll be asleep.” If you have suspicions, never confront tenants – they may be dangerous. Call Crimestoppers on 0800 555 111.
Barnard Marcus
Barnard Marcus Estate Agency offering properties to buy and rent in the London areas. Barnard Marcus is one of the largest estate agency networks in the London area with 37 offices within the M25.
Barnard Marcus, West Kensington
66-68 Shepherds Bush Road
W6 7PH
T: 0207 603 0000 (lettings)
T: 0207 6031384 (residential)
F: 0207 3714284
E: westkensington@sequencehome.co.uk
Not only that, we have over 20 letting offices in London offering properties to rent, we have our own specialist land & new homes division and Barnard Marcus is also one of the UK’s leading residential property auctioneers.
the London area with over 40 offices within the M25.
Not only that, we have over 20 letting offices in London, we have our own specialist land & new homes division and Barnard Marcus is also one of the UK’s leading residential property auctioneers.
This great name has been built by our brilliant team. As the recent focus of Channel 5’s prime-time recruitment programme ‘Selling Yourself’ we aim to bring in the best quality staff to provide outstanding service to our customers in a market with very high expectations.
It was at the prestigious Estate Agency of the Year awards that our service was recognised when we picked up four gold awards including overall winners for best estate agency.
So, if you want professional help and advice on any property matter, why go anywhere else
HSBC Mortgages
We have a range of mortgages (see below), with and without booking fees. Please speak to us if you need more information or if you need advice.
0800 169 6333 (textphone 18001 0800 028 0126) 8am to 10pm every day (except for Christmas Day, Boxing Day and New Year’s Day).
From outside the UK, please call us on +44 2380 298 818.
Your home may be repossessed if you do not keep up repayments on your mortgage
We can’t help you find your dream home but we can promise to make the financial side of home buying as smooth and hassle-free as possible. We will answer any questions you have and we can take you through the process of buying your home, step by step. We can also help you understand the costs involved, so give us a call.
You can buy your new home with up to three friends and you can choose from a fixed, discount or tracker rate. We offer two Pricing packages on our fixed and tracker rate mortgages – with or without upfront fees.
Your home may be repossessed if you do not keep up repayments on your mortgage.
What you get with this mortgage
•Loans are based on your individual circumstances and what you can afford
•Loan to Valuation (LTV) – The maximum LTV we will lend will depend on your individual situation, the property, the loan you choose and the amount you borrow.
•Choice of fixed or tracker rate with no extended tie-ins on any of our mortgages. Also check out our Mortgage Specials.
•For repaying your mortgage, we offer Capital repayment and interest only repayment methods.
•For fixed or discount rate mortgages, an Early Repayment Charge applies if you increase your standard monthly payment by more than 20% or repay, by any other method, the whole or any part of the mortgage, over and above your standard monthly payment, during a fixed or discount rate period.
Bargain property in London: flats for less than £175,000
With the overused mantra, “location, location, location” ringing in my ears, and in the hope that property prices in central London have finally reached rock-bottom, I set my sights on finding a pint-size, super cheap property in the capital under the £175,000 stamp-duty bar.
The estate agents I speak to are keen to reassure me that even the tiniest 30 sq m studio with a de sirable, central London postcode could rake in as much as £1,000 a month in rent.
“Rental yields have clearly improved as prices have fallen,” Lucian Cook, director of Savills research department, tells me. “The decision as to whether or not to buy depends on whether we are at the bottom of the market. We have seen an increase in activity, and investors who feel that we are not quite there are taking a five or 10-year view.”
Cook emphasises the importance of looking for properties that would be easy to rent with few void periods, which makes central London a good bet.
On the downside, it can be tricky to find buy-to-let mortgages on studio flats.
“There is oversupply in some city centre locations, where flats have fallen in price more steeply than other types of property,” says Bernard Clarke of the Council of Mortgage Lenders. But this is not true of all flats, as I am about to discover.
A quick browse online revealed plenty of apparent bargains in this sector, notably by auction. However, asking prices can be misleading. Having observed a studio in Hereford Road, Bayswater, advertised with a guide price of £160,000, going under the hammer for £258,000 I decide to leave the auction-house option to seasoned investors and head into town, where I discover a variety of studios for sale, from virtual walk-in cupboards to comfortable spaces with plenty of light. I also discover that, despite the downturn, they are selling like hot cakes.
You might think twice before viewing a studio with a very short lease. But if it happens to be a quick jog from Regent’s Park or within walking distance from Marylebone High Street and Oxford Circus, it is worth a look. A Thirties block at 105 Hallam Street, W1, has an elegant foyer and is popular with students at nearby Westminster University. It also houses more than a sprinkling of owner-occupiers and pied-à-terre part-timers.
The 25 sq m (269 sq ft) studio itself is a bright room on the sixth floor that offers comfortable living space even with double bed, sofa and furniture in situ. Storage space includes a built-in wardrobe and wall-to-wall vanity unit in the bathroom. A refrigerator, two-ring hob and a wall-mounted microwave and extractor hood are squeezed into the lobby area. Apart from a few distant treetops, the vista is of the backs of other buildings; not quite the “side views to Regent’s Park” promised in the details, with an asking price of £165,000 for an 18-year-lease.
Even so, agent Shirley Foster of Helen Watson Properties says she has little difficulty in selling these studios because of their W1 postcode. “Some investors will take a gamble on the short-term rent,” she says.
“It needs somebody with nerves of steel and yet I recently had an investor who spent £160,000 on a property with a 16-year lease on the basis that his money was earning so little in the bank that he might as well take a risk and get some income from rent.”
There was more breathing space on the lease of a studio available in a white, stucco-fronted house in Belgrave Road, SW1, within range of Westminster’s division bell. Briefly on the market for £159,950, it had 41 years remaining on the lease. It has since been withdrawn; these studio flats are proving elusive. This is a shame, because it’s the kind of flat that would make a good investment: Julian Cotton, of estate agents Winkworth, in Pimlico, says that extending a lease could cost between £30,000 and £35,000, but adds: “The key is location: two minutes from Victoria and 10 minutes from Sloane Square or Westminster. Everything is on your doorstep.”
The property details for a third-floor studio in Orme Court, W2, just off Bayswater Road, look more promising. At £145,000 and 12.77 sq m (137 sq ft), it must be the cheapest and dinkiest home you’ll find so near to Kensington Gardens. Sunlight streams in from the sash windows, while white walls, kitchen and bathroom and stripped floorboards create an airy feel.
I wait a week, and make further inquiries, only to find it, too, has gone under offer. They’re being snapped up faster than you can say Julia Roberts.
Undeterred, I go south, through Kensington, to a ground-floor 16 sq m (175 sq ft) studio in Chelsea Cloisters, SW3, priced at £179,950. The carpeted foyer of this 24-hour portered block, just off the Kings Road, has the faded style of a three-star hotel. The studio, though the cheapest in Chelsea Cloisters, is a little claustrophobic. Eager to convince, six-feet tall Tom Dogger, of Winkworth Knightsbridge, paced out how a double-bed could just about fit by the window.
Oddly, the fitted kitchen has no base units – the idea is to give the new owner carte blanche over the placing of appliances. It is a bit of a shoebox but tenants will, it seems, pay as much as £250 a week for similar studios here. “When the market is very uncertain, you want to go for the best area you can afford,” says Dogger.
“Chelsea appeals to the international market, to people with other currencies who are buying in on the weak pound.”
Rather more central, if lacking the sophistication of Chelsea, is Storrington, in Regent Square, WC1. This ground-floor studio in a multi-storey, Camden council-owned block is somewhat frayed around the edges, but it is close to Russell Square and the Brunswick Centre, containing the Renoir Cinema, Waitrose and stylish shops.
At £172,500 for a relatively capacious 33 sq m (350 sq ft) pied-à-terre, this cosy home looks out on a garden square and is just 10 minutes from St Pancras International. Too good to be true? Sadly, yes. I phone the agents, only to discover it’s just gone under offer.
Will I have more success with a Camden Bus estate agency basement studio in Crowndale Road, NW1? It offers 30sq m (323 sq ft) of space, it’s painted a tasteful white, the floors and blinds are wooden. The slightly grubby communal hallway of this Georgian terrace house is covered in magnolia woodchip; but where else within strolling distance of Kings Cross, Euston and trendy Camden Lock can you sit out on your own private patio surrounded by roses and still get change from £170,000? It’s gritty, scruffy, noisy, but what a location. When I call, it’s still for sale. Maybe my search has finally come to an end.
STUDIO VIEWS
Orme Court Bayswater, W2
Now sold, with an asking price of £145,000 (98-year lease; approx £1,300 service charge)
Plus A leafy walk away from Kensington Gardens
Minus Minuscule; but sold quickly through Foxtons estate agents, which shows that right price, right location shifts flats
Hallam Street W1
£165,000 (Lease expires 2027; £2,400)
Plus Enviable West End address; well laid out
Minus Short lease; disappointing views
Value for money 2/5
Helen Watson Properties, 020 7580 6275; www.hwatson.co.uk
Crowndale Road NW1
£170,000 (119-year lease)
Plus Strolling distance from Camden Lock and Kings Cross.
Minus Slightly grubby communal hallway
Value for money 4/5
Camden Bus 020 7485 7485, www.camdenbus.co.uk
Storrington Regent Square, WC1
£172,500 (114-year lease; £1,600, under offer)
Plus Walk to Paris (via St Pancras!)
Minus Needs a new kitchen
Value for money 4/5
Frank Harris & Co, 020 7387 0077; www.frankharris.co.uk
Chelsea Cloisters SW3
£179,950 (101-year lease; approx £2,000)
Plus Within strutting distance of the Kings Road
Minus High service charges; lacks character
Value for money 3/5
Winkworth, 020 7589 6616; www.winkworth.co.uk
Property tycoon loses his £21m home in Britain’s biggest ever repossession
A property tycoon has had his multi-million pound home taken off him in what is thought to be Britain’s biggest ever repossession.
Cevdet Caner bought the seven-bedroom home in Mayfair, London two years ago for £16million and spent £5million refurbishing it.
But last week bailiffs took the house after his Monaco-based property investment company Level One went into administration with debts of £1.2billion after it was badly hit in the economic slump.
The firm, which acquires low-cost homes and social housing Germany, collapsed last year and the house was put on the market in December, but did not sell.
However Mr Caner, who moved out of the house two weeks ago, claims he tried to prevent the repossession by offering to repay lenders Credit Suisse what he owed them but that they refused to accept his money.
He said: ‘The house was bought with a £16million mortgage.
‘I have offered to repay this amount back – most recently, through my lawyers, three weeks ago, but the lenders refused.
‘Instead they put the company into receivership, sent in bailiffs to repossess it and have not instructed agents to find a buyer.
‘I can’t understand why they are doing this, other than to humiliate me and damange my reputation.’
Hamptons International, joint agent for the house with Sotheby’s, will market the house this week for £20million.
If the house sells for more than £16million, than the money will be refunded to Mr Caner.
And if it sells for £21million or more than he will make a profit.
He said he will be keeping a ‘very close eye’ to ensure the lenders do not try to undersell the property.
Mortgage Rate Rise
Nationwide Building Society, Britain’s third biggest lender, is planning to raise interest rates on its most popular mortgage deals, in a move expected to force rivals to follow suit.
Homeowners are being urged to lock into a deal as soon as possible after mortgage experts warned that the size of the Nationwide’s increases will force other lenders to react by hiking their own interest rates.
From Friday, the UK’s biggest mutual is set to increase its five-year fixes by up to 0.86 percentage points, its two-year fixed by up to 0.61 per cent and raise its three-year fixed-rate deals by 0.26 percentage points.
Ray Boulger, of John Charcol, the broker, said: “The size of these increases suggest that Nationwide wants to reduce the amount it is lending and that will put pressure on other lenders.”
Nationwide has refused to comment.
Mortgage brokers suggested that a sharp rise in borrowing costs could hit the recovery in the housing market. Melanie Bien, director of Savills Private Finance, the broker, said: “One of the things that has kept the housing market going is affordabilty. House prices have fallen and mortgages have been cheap. If mortgage costs rise it could act as a deterant.”
West Bromwich, Yorkshire and Chelsea building societies have all increased rates on longer-term deals in the last week in response to a sharp rise in the cost of wholesale borrowing on moneymarkets.
Swap rates – the moneymarkets which dictate the cost of fixed-rate mortgage lending – have been climbing steepily, with two-year swaps jumping from 1.92 per cent to 2.38 per cent in the last fortnight. Over the same period, five-year swaps have also jumped, from 3.24 per cent to 3.66 per cent yesterday.
Nationwide was praised at the beginning of this week for unveiling an expanded range of mortgages for existing borrowers which are available up to 95 per cent LTV.
From today it is offering a two-year fixed-rate deal with an interest rate of 2.79 per cent for loans up to £150,000 for customers with just a 5 per cent equity stake in their home. It has a fee of £2,499, although deals with smaller fees or larger loan amounts carry higher rates of interest.
NatWest Bank Mortgage Lender
NatWest Bank – UK Mortgage Lender
The NatWest Bank’s antecedents date back to the 1650s via the National Provincial Bank, founded in 1833 and the Westminster Bank, founded in 1836. These two banks merged in 1968 to form the National Westminster Bank. National Westminster Home Loans was set up in 1980. In 2000, the Royal Bank of Scotland took over NatWest, which, at the time, was the largest takeover in British banking history.
The NatWest Bank has around 2,600 branches throughout the UK.
Mortgage Products
Fixed Rate Mortgages: 2 year, 3 year and 5 year fixed rate mortgages and remortgages.
Tracker Mortgages: 2 year base rate tracker mortgages and remortgages.
Standard Variable Rate Mortgage: a variable rate mortgage where monthly repayments go up and down in line with the lender’s base rate.
Buy to Let Mortgages: 2 year and 5 year fixed rate mortgages and remortgages; 3 year and lifetime base rate tracker mortgages and remortgages.
Equity Release Mortgages: lifetime fixed rate mortgages are available for over 60s wishing to release capital from their homes.
As one of the large high street banks, NatWest has the advantage of being able to offer an extensive range of products and ease of communication. As well as the traditional mortgage offerings there are also 100% mortgages, buy to let mortgages and life time mortgages. Overseas investors are also catered for with mortgages available for properties in Spain.
Other products include current accounts, personal loans and credit cards. Investment products are also extensive including several funds and bonds which can be taken out independently of mortgages.
Robert Irving Burns
RIB has been established for over 40 years and is an independent partnership, enjoying an enviable reputation, providing an extensive local knowledge, specialising in the Fitzrovia, Soho, Marylebone, Oxford Circus, City and West End fringes.
Our centrally located ground floor offices, minutes from Oxford Circus offer an ideal marketing base for your property.
Established in 1962, we are able to provide a wealth of experience across the full range of property services for a wide circle of both personal and corporate clients.
The practice is structured with each partner having a specific area of experience and responsibility.
With our emphasis on service, you can be assured of receiving the personal attention of a partner or senior member of staff. Our objective is to provide all our clients with a rapid and positive response to their needs.
Robert Irving Burns
23-4 Margaret Street,
London,
W1W 8LF
Tel: 020 7637 0821
Fax: 020 7637 8827
Email: damien@rib.co.uk
London sees return of gazumping
London sees return of gazumping
By Daniel Thomas and Sharlene Goff
Published: May 29 2009 23:31 | Last updated: May 29 2009 23:31
Gazumping has returned to the top end of London’s property market, estate agents say, as the number of buyers starts to outstrip houses in some of the capital’s most sought-after areas.
Sealed bids, which estate agents use in periods of high demand to extract the best price from competing buyers, have also been seen for the first time in 18 months.
EDITOR’S CHOICE
House prices see highest jump since 2006 – May-29Video: Chris Giles on continued uncertainty over house prices – May-29Evidence mounts to suggest worst is over – May-29In depth: UK house prices – Jan-09Video: Nationwide results not as bad as they sound, says Adam Jones – May-27Lombard: No shield for Nationwide – May-27Furthermore, the number of cash buyers has risen to unusually high levels, agents have reported.
One branch of Chesterton Humberts in central London said 17 out of 18 sales this year had been made in cash. Knight Frank said 45 per cent of sales over £5m in London were made in cash in April, compared with a third typically.
Savills, meanwhile, said the average number of cash buyers climbed to 42 per cent in March, compared with 24 per cent in 2006 and 2007.
Liam Bailey, head of residential research at Knight Frank, said: “There is no question that purely in terms of sales activity, the central London market is unrecognisable from where it was six months ago.”
He said that “after a noticeable absence” there was evidence of gazumping again and the need for sealed bids.
According to the Nationwide house price index for May, prices rose 1.2 per cent rise from April, sending a signal that appears consistent with other surveys showing improving sentiment.
However, Martin Gabhauer, chief economist at Nationwide, warned that the data did not mean prices had bottomed out.
