Stamp Duty Dropped back
The stamp duty threshold dropped back to £125,000 on 1 January, prompting a rush on mortgage approvals and completed home sales in the final months of 2009.
The government concession, which had temporarily pushed the threshold up to £175,000 for just over a year, had been aimed at halting the rapid slump in the property market.
This should not put new buyers off though more and more lenders are offering attractive products with a lower deposit required for a first property. The Bank of England has shown no signs of increasing rates in the near term,so this will help existing and new buyers to keep mortgage costs low.
However be prepared to face tougher scrutiny by lenders and make sure your credit file is up to date.Having a bad credit file will make it more difficult for banks and building societies to lend.It is advisable to start monitoring your file for a period of 6 months before starting to apply, this will give the credit agencies time to correct any mistakes or missing information that they have on you. eg could be an old flat mate gone bankrupt that might show as a financial alias to you.
Share Ownership Schemes
This Government backed scheme, does it really benefit the people who wants to get on the property ladder?
Well I believe that some housing associations are milking it on the rent and the service charge that tenants and leaseholders have to pay.The whole point of this scheme is to have a low rent and a mortgage that will enable the 50% owner to buy the other half on a staircasing basis.
Take for example Sheperd’s Bush Housing Group, on a typical one bedroom flat that cost £300k in Fulham( That is overpriced too), the housing association charges as much rent as the mortgage! Its around £500 a month!! and a mortgage for interest only cost roughly the same.I found it wrong that the rent is so high, most people that buy on the share ownership scheme are key workers or young professionals who try to get on the property ladder, how does the housing association expect those leaseholders to buy the rest of the flat if the rent is so high? And in this current climate civil servants and the rest of the working economy expects only inflation pay rises, so practically impossible to save and buy the rest unless a rich uncle leaves you something behind.
Foxtons with the banks
This’ll bring tears to your eyes: unloved estate agent Foxtons has been taken over by its lenders.
Another indignity for BC Partners, the private equity whizz-kids who took the inspired decision to buy estate agency Foxtons right at the top of the property market: they’ve been forced to cede control of the estate agency to the banks, as part of a restructuring deal to slash its debts. If it wasn’t already clear what a stinker of a deal Foxtons was, it certainly is now. But since these unethical financiers and pushy estate agents are considered to be among the chief culprits for the credit crunch, sympathy will probably be in short supply.
For those whose properties are still managed by Foxtons, the business is still being run as per normal and they need not fear about their properties being mismanaged in anyway. The estate agency business is still thriving but on lower profit margins. BC is still the biggest shareholders of the estate agency.
Mortgage Lenders increase charges by more than £1,000
Homeowners in the UK face rising mortgage rates costing up to £1,400 extra a year despite the Bank of England’s base rate freeze.
Many mortgage lenders have raised their standard variable rate since the base rate was set at 0.5 per cent last March.
Eight building societies have raised their standard variable rate during the freeze.
Mansfield Building Society will become the latest lender to raise its SVR for existing customers, up 0.35 percentage points to 5.59 per cent.
Chief executive Nigel Quinton said part of the blame lay with the difficulty of competing for mortgage and savings customers with banks which have been helped by the taxpayer.
One of the most controversial changes was made by Nationwide which has the best SVR at 2.5 per cent. It changed the rules for customers who have taken out a mortgage with it since April 30 last year.
When their deal ends, they are not allowed to move to the 2.5 per cent rate, but are forced on to one at 3.99 per cent
On another hand, Virgin has made and acquisition of Somerset-based Church House – cleared by the Financial Services Authority – gives it the platform to move into deposits and mortgages and boost the scale of the business through further deals.
Sir Richard Branson, chairman of Virgin Group, said: “The Church House Trust business offers us a strong platform for growth.“Virgin Money aims to bring simplicity to the UK banking market, which has traditionally been a complex sector.”
Virgin has been known to provide a better deal for customers over the years, the moving into the banking sector will hopefully cut down on all the unnecessary stealth charges being offered by the other bands.
Lawrence Ward and Company
Our principal operation is estate agency services and property asset management for residential property within The City of London and adjacent areas.
We have brought together an unrivalled knowledge and understanding of this, one of the world’s great financial service areas, with a wealth of personal and professional experience which allows us to offer an efficient, discreet and comprehensive service.
Our business was formed over 10 years ago, initially to provide management and estate agency services to companies and professional investors. We have since developed to expand our services into the general property market and private client work. Despite our steady growth during this time, we still adhere to our original principles: to offer unbiased, straightforward advice, to listen carefully to clients’ requirements and to follow through to provide optimum results.
Lawrence Ward
45 Aldgate High Street
London
EC3N 1AL
Tel: +44 (0)20 7264 1234
Fax: +44 (0)20 7264 1235
Email: info@lawrenceward.co.uk
2010: Year of the big property freeze?
Let’s get the bad news over first: the build-up to 2010 – rising values and estate agents claiming five buyers for every seller – may prove far better than the year itself.
If you think tales of woe will add to your post-Christmas indigestion, look away now. For almost every analyst, lender and agent warns that while top homes in London and the country may hold their value, most others will experience 2010 price falls of up to 10 per cent.
There will be relatively few sales, too. Top-end purchasers are likely to sit tight until after the May election and some deals, mainly in central London, may collapse if they were relying on City bonuses that are now being taxed or scrapped. “The attack on high-value bonuses has the potential to hit that sector of the housing market hard, at least in the short term,” says Ray Boulger of mortgage broker John Charcol.
At the other end of the scale, the typical first-time buyer, who already has to find a 20 per cent deposit for a home, must now secure an extra £500 thanks to the end of the stamp duty holiday on January 1. In the past year, 132,500 purchasers – more than a quarter of all transactions – took advantage of the break, and most were first timers.
The rest of us, those who buy homes priced £250,000 to £750,000, may well be unlikely to feel like moving, what with a deteriorating economy, growing unemployment, rising taxes, falling public spending and possibly interest-rate rises.
These middle-ranking properties face 10 per cent falls in value next year, easily wiping out their 2009 gains, according to business consultancy Capital Economics.
“Our hunch is that considerable job losses are in the pipeline,” warns Capital Economics spokesman Ed Stansfield. “But even if we’re wrong and the recovery turns out to be stronger than we expect, the housing market looks vulnerable to the increase in interest rates that would be triggered by a strong recovery.”
The reintroduction of full VAT at 17.5 per cent may have an effect. Everything from conveyancing fees and estate agents’ charges to the hire of removals firms will rise in cost from next week. Peter Bolton King of the National Association of Estate Agents says: “There’s a danger that the property slump that hit thousands of families hard over the past 12 months will hit thousands more, harder, in the year ahead.”
Yet it may not be all dreadful. There will be significant regional variations according to Savills’ research team and local agents in each area.
The canny few
Among the few people likely to do well in 2010 are those canny owners who have added value to homes, or those with ”best in class” houses in the country.
Matthew and Rachael Sutton believe they have a house that fits both categories. Their stunningly refurbished home, in part of a large house at Nidd, is in one of the country’s most sought-after locations on the rural edge of Harrogate.
Their hard work, in just seven months, has turned it from a wreck into a classic home. “It was a repossession with period features but everything else in poor condition. We started from scratch, keeping the features, replacing everything else,” says Matthew, 32, a joiner. He and Rachael, 28, a manager, are moving into central Harrogate.
“We didn’t intend to move so quickly but we miss the city. We know the market is unpredictable but we hope our location makes our home desirable,” Matthew says.
The Suttons believe their home (on sale for £550,000 through Savills, 01423 535807, www.savills.com ) is one of those that will tick all the must-have boxes for increasingly demanding buyers.
“Houses that sell well are those without blights near good schools in the traditional areas. Best in class properties will always attract competition, with
peak market figures achieved in some cases,” predicts Philip Selway, of the relocation company The Buying Solution. But he admits those homes are rare – perhaps just a few thousand around the country.
For the rest of us, despite the apparent recovery of recent months, the 2010 housing market may be something we just have to grin and bear – a bit like opening that intriguing-shaped gift on Christmas morning, only to find it was a cardigan disguised as something more interesting.
Remember buy-to-let?
Like Mark Twain’s death, rumours of the demise of buy-to-let have been greatly exaggerated.
Rental demand rose in 2009 and there is no sign yet of a reversal. “Restricted access to mortgage finance means would-be first-time buyers are renting.
Uncertainty over house prices means ”treading water renting is a safer option than risking negative equity”, says Barry Manners of Chard lettings agency in London. He knows shrewd investors buying ex-council flats at low prices and enjoying 13 per cent annual rental yields.
Can anything upset the applecart in 2010? The return of full stamp duty may deter some investors expanding their portfolios but the acid test will be if interest rates rise. That may force highly geared landlords to quit, causing the flood of flats on sale that some pundits expected a year ago. It may be a knife-edge market late in 2010.
South West down 2.8 per cent
“The election may fuel the desperate need for stock by frightening off potential sellers. This could result in a premium for property in popular areas, giving a false sense of security,” says Richard Greetham of Bradleys in Exeter.
South East down 3.1 per cent
This region will see improving transport links to London, such as the 68-mile high-speed railway connecting St Pancras to the Channel tunnel. “Canterbury until now has seemed a vast distance from the capital, but will only be an hour away,” says Philip Harvey of Property Vision.
London down 4.1 per cent in Greater London, flat in prime locations
Prime areas such as the West End, Holland Park and Docklands are different from the normal market. Camilla Dell, of London buying agency Black Brick, tips Mayfair, Knightsbridge and Belgravia to remain strong because of their many foreign buyers.
Wales down 6.8 per cent
“It’s still too difficult for new entrants to the property ladder,” says Nigel Jones of John Francis estate agency. Almost all buyers in Wales need mortgages, so the number of movers may remain low.
Midlands own 4.5 per cent
Prime areas of the Cotswolds will enjoy stable prices but this region is dominated by average and below-average-priced homes with buyers heavily reliant on mortgages. Job losses will rise, too.
Northern England down 7 per cent
Patrick McCutcheon of Yorkshire’s Dacre, Son & Hartley says the future relies on realistic sellers: “If vendors jump on the bandwagon and start increasing their prices it could derail the recovery.”
Scotland down 7.5 per cent
More than 85 per cent of buyers rely on mortgages so the credit crunch still bites hard. Prime Edinburgh homes will stay in good shape. “It’s grown to be a major European financial hub. That reputation hasn’t suffered in the downturn,” says Savills’ Jamie MacNab.
All figures: Savills 2010 Forecast
Dubai & London Property Market
If there is one thing wrong with global economic recovery getting under way so soon, as well that of various property markets around the world, is that too few people have learned from it. Too many people seem way to eager to go back into the way things were before.
Yesterday the big London estate agency’s said they were hoping that banker bonuses would support the housing market recovery in 2010; building another recovery on sand.
Today Dublin based Deluxe Properties has closed a so-called vulture fund, which will now spend ?£10m of private investor’s money on property in Dubai priced between 30 and 50% lower than its original price. The news comes despite the fact that analysts are forecasts a further 20-30% fall in prices next year, and the fact that the consensus of indices tells us prices fell nearly 50% in the first quarter of this year alone.
I’ve said it before and I’ll say it again, just because something is cheap does not make it a bargain, and something needs to change drastically in Dubai if property is ever going to have any true worth again, or certainly any time soon.
Just like the estate agents were going to be perfectly happy lining their own pockets in the kind of banker fuelled market that makes a correction inevitable, Dubai looks happy to fall back into the inevitably doomed cycle of foreign investors selling to foreign investors selling to foreign investors, leaving itself wide open to another dramatic crash should foreigners disappear again.
I have also been seeing a lot of developers and agents offering rental paid finance on their properties overseas, while some of these offers can’t fail to do what they suggest many people came unstuck buying into similar dreams in 2007. It seems that we have learned nothing from the crash at all.
That said: according to reports from agents, those currently buying overseas property as private individuals are conducting a far greater degree of research (due-diligence) than ever before. So perhaps it is just institutional investors and estate agents that haven’t learned, in which case it is potentially more a case of being set in their ways, and hard headed rather than failure to learn a lesson they should already have known.
By Liam Bailey
London Bankers Property Relapse
Estate agents are predicting a wave of instructions to sell homes in London from bankers looking to leave the UK in the wake of the new bonus “super-tax”.
Ed Mead, director of the estate agency Douglas & Gordon, said that the single biggest topic of discussion among his finance-based clients was when they can get out and when it would make most sense to do so.
“I have had two very colourful hedge fund partners, both getting me round to look at their large and architecturally unusual houses and talking explicitly about selling because of what is happening. Both were willing to sell for a bit less than they might have liked to ‘get in ahead of the rush’ as they put it, even though they are not directly affected by the tax.”
One banker, a client of the mortgage broker John Charcol, recently relocated to Geneva as a direct response to Labour’s stance on taxation. He said: “Geneva is far closer to my ski chalet and my villa in Provence, and I reduce my carbon footprint by taking fewer flights. I’m struggling to find a downside and probably need to thank Darling for given me the reason for relocating; without him I would probably never have done it.”
Trevor Abrahmsohn, head of the agency Glentree International, said: “I have seen a number of people I know – who are all staunch British entrepreneurs – going to Monte Carlo, Geneva and Zurich. The real estate agents in these places are having a field day. People are worried about where it will stop.”
Savills, the property consultancy, estimates that buyers from the financial and business services sector account for about half of total demand in the prime London markets. It said the strength of demand from “bonus buyers” was reflected in the fact that those employed in financial investment markets accounted for 33 per cent of all cash buyers on average.
While some agents report that buyers are having second thoughts if they are relying on a bonus payment next year, the impact is expected to be limited owing to the already pessimistic view on bonuses. Demand for prime housing is also seen as more broad, particularly given the prevalence of overseas buyers.
Lindsay Cuthill, of Savills, was showing homes to a banker subject to the bonus tax yesterday. “As yet he is unsure how this will impact – but he was still out there and still likely to make an offer on a house at £2.25m,” she said.
James Hyman, partner for residential sales at Cluttons, the property consultants, said: “It is a little bit early to tell what the impact of the bank bonus tax will be on buyers; however, we are already noticing that vendors are now taking a second look at any offers which may have been slightly below the asking price as the anticipation of selling at a premium to bonus buyers is less likely.”
There are still fears that the nascent recovery in the prime London market could be impacted by the pre-Budget proposals. Mr Hyman said: “The changes to banks bonuses will have severe repercussions for the property market. This could greatly reduce the liquidity in the bonus market and leave many bankers . . with a potential shortfall in earnings.”
Copyright The Financial Times Limited 2009
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Highest Level of Mortgages
The number of mortgages approved for house purchase rose to its highest level for nearly two years during October as buyers continued to return to the market, figures showed today.
Around 42,238 loans were approved for people buying a property during the month, nearly double the number seen in October last year and the highest level since January 2008, according to the British Bankers’ Association.
Net lending, which strips out redemptions and repayments, also held firm at £3.1 billion.
But unsecured lending remained subdued as consumers instead focused on paying down their debts and building up savings.
David Dooks, BBA statistics director, said: ‘The longer it takes to emerge from recession, the longer we will see households and businesses continue to borrow with caution.
‘The banks’ mortgage lending, still growing by more than 4 per cent a year, shows one aspect of consumer behaviour but unsecured borrowing is subdued and people are building up deposits.’
Both spending and repayments on credit cards was unchanged from the previous month at £5.7billion and £6billion respectively.
But once interest and charges were taken into account, outstanding credit card debt rose by £199million – double the average rise seen during the previous six months.
Demand for personal loans and overdrafts remained depressed, leading to an overall fall in unsecured lending of £325million – the 12th month in a row during which it has contracted.
The BBA said demand for personal loans was particularly weak, with outstanding loan debt dropping by £2.9billion during the first nine months of 2009.
Remortgaging levels also remained subdued during the month, as low interest rates mean many people are better off staying on their lender’s standard variable rate when their existing deal comes to an end.
Only 20,685 loans were approved for people switching to a new deal, the lowest figure since November 1999, and just a third of the level seen during October last year.
The low levels of remortgaging meant total mortgage advances also remained depressed during October at £9billion, slightly ahead of the previous month’s figure but still 20 per cent lower than a year ago.
But consumers continued to save during the month, with people setting aside £3.2billion, contributing to a £17billion increase in deposit levels since the beginning of the year.
Ed Stansfield, property economist at Capital Economics, said: ‘Over the past three months, BBA data show that there has been a distinct easing in the pace at which mortgage demand is rising.
‘The surge in pent-up demand among cash-rich buyers, released in the early stages of 2009, appears to be fading.
‘Still-tight lending criteria coupled with a weak economic outlook suggest there is little prospect of a marked rise in mortgage demand next year.’
Simon Rubinsohn, chief economist at the Royal Institution of Chartered Surveyors, said: ‘The lack of supply of property coming on to the market is proving to be an increasingly important obstacle to a more meaningful pick-up in transaction levels.
‘Inevitably, the number of new instructions will remain fairly subdued into the year-end but it is crucial that more fresh stock is placed with agents in the early part of 2010 to give the market a further boost.
‘More importantly, this is critical to preventing a further sharp upward move in house prices.’
