Spanish Properties

Fitch Ratings recently released a report revealing that the value of repossessed properties in Spain has fallen by an average of 48%.

This is due to the fact that the majority of mortgages associated with real estate assets had a loan-to-value ratio of 80% or higher.

Juan David Garcia, senior director and head of the company’s structured finance team in Spain, said that property prices are expected to continue falling, due to the recessionary environment and severe dislocation of the Spanish property market.

He goes on to say that the rate at which the price correction occurs will depend on how the banks manage their portfolios of distressed Spanish real estate.

Based on the latest data published by Tinsa, the average property values in the country dropped by 11.5% between March this year and the same month in 2011. The organisation added the price of homes has declined by 28.6% since its peak in December 2007.

Morgan Stanley

Morgan Stanley, the global financial service firm, has successfully taken over an office building worth €165m previously owned by corporate lawyer Brian O’ Donnell and his psychiatrist wife, Dr Mary Patricia O’Donnell after the couple failed to repay the loan that was taken out for the said building.The property is located in London’s prestigious Canary Wharf financial district.

This latest woe definitely comes as a blow to the couple who are currently embroiled in a controversial effort in handing over their 3 properties worth €360m to their four children.

The high-profile couple have been locked in a tense court battle with Bank of Ireland over a €75m debt, during which it was revealed they had transferred properties to their four children and has left the Bank of Ireland spending countless of hours this week in a bid to untangle ownership of the O’Donnells’ property empire which was once worth a massive €1bn.

Morgan Stanley successfully secured it’s takeover bid after appointing it’s mortgage servicing division as a “special servicer” under a securitisation agreement through which the loan was sold on to institutions and investors.

The O’Donnells London empire portfolio consists of – a second Canary Wharf skyscraper and a luxurious five-storey house on Barton Street in Westminster, close to London landmarks Westminster Abbey and Buckingham Palace.

Buy-To-Let

According to Colordarcy, a leading property investment company, the buy-to-let market is experiencing a boom in demand especially in areas such as Clapham, Wimbledon and South West London and the fact that these areas have good transportation link makes it even more attractive to potential buyers and investors both local and foreign alike.

One of the factors that is drawing the interest in investors is the upcoming Olympics as not only is it a prestigious event, it is also a good opportunity for home owners and investors to make back profit during the event and with the buy-to-let sector currently in high demand, those who have been wise to invest in such area will definitely be reaping their rewards.

The other reason as to why renting out homes is becoming more popular is the fact that first time buyers who are having trouble to secure a mortgage will have no other option but to rent for the time being until they are able to finally climb up the property ladder and become home owners themselves.

As London is know as the “safe haven” for investors both localy and abroad, it is little wonder why properties are being snatched up, more so now when the economy is slowly finding it’s way back to stability. Experienced investors knows an opportunity when it is presented and they possess the ability to reap a fortune out of it.

With that being said, London has the ability to attract the attention of international investors, so competition for property in good areas will definitely be heating up. The mortgage market will remain squeezed for the majority of the population and house price recovery is still weak.

As most property investors will say, a strong rental market will help fund a purchase, a hot rental market will pay for it. For now the London buy-to-let is still hot.

According to the annual World Gold Council report,China is in the running to be the largest market for gold in 2012 all thanks to it’s continuous rise in investment purchase of gold & the rising sales in jewellery.

The fastest growth was in sales of gold bars and coins for investment which caused the total investment purchases to rise 69% in 2011 to 258.9 tonnes, worth 84.5-billion yuan (R103.4-billion).

The fact that the government is attempting to tone down the property prices in the country is believed to be the cause as to why many of China’s wealthy citizens are turning to gold, seeing it as a measure of financial security.

According to Marcus Grubb, the council’s managing director for investment, he believes that it is very likely China will emerge as the largest gold market in the world for the first time in 2012.

Worldwide, weak property prices and volatile stock markets have sent investors hurrying to buy gold as a safe haven, pushing gold prices to a record $1895 an ounce on the London PM fix on September 5 last year.

Global gold sales were 4 067.1 tonnes in 2011, worth an estimated $205.5-billion. The report said it was the first time that global demand had exceeded $200-billion and the highest tonnage level since 1997.

Property Prices

There seems to be an increase in demand for London property investments. Such is the fact that owners are said to be willing to invest up to £100,000K in premiums alone!

With London being referred to as a “safe haven” for property investments, it’s no wonder that there is such a rise in demand in the property sector and with the Olympics just around the corner and the market improving in value, investors are believed to be confident in investing in London once more.

Among the location that are highly in demand are Chelsea and South Kensington have seen strong demands for deals, with some property investments having deals negotiated on them within hours of them appearing on the property market.

London Hotel

According to a new study by STR Global and Whitebridge Hospitality, London hotel profitability over the last 11 years has outperformed the rest of the UK seeing the profit gap between London and regional hotels across Britain widen since 2000.

London hotels between this time and 2010 have experienced a real gross operating profit. Having managed to keep up with inflation according to the study, London hotels have performed better than the rest of the UK which has seen profit margins in regional hotels decline by 11.6% since 2000 with a 6.7% drop in the compound annual growth rate for real gross operating profit over the same period.

While Elizabeth Randell, STR Global managing director suggests that the findings ‘highlight the tougher market conditions for regional UK hotels’, the findings display positive news for the capital where occupancy levels at London hotels have risen from about 82% in 2000 to nearly 85% in 2010.

Meanwhile, the average daily rate (ADR) at London’s hotels increased from 140 British Pounds back in 2000 to around 145 British Pounds last year, while by comparison, regional hotels in the UK have experienced a decline in ADR, from 85 British Pounds in 2000 to just 70 British Pounds in 2010.

Ray Withers, Director of property investment experts, Property Frontiers, comments, „The findings from the study show that London is the best performing player.

It is no secret that there is an air of uncertainty surrounding the capital but the overall trend for London has been positive, showing itself as a resilient hotel market while the rest of the UK has found it difficult to manage inflation causing performance losses.

With this in mind, the hotel market in London this year has been forecasted at near double digit growth while 2012 is expected to be a record breaking year for the capital with over 5,000 new rooms opened or re-opened in response to growing demand for accommodation thanks to the 2012 Olympic Games and the Queen’s Diamond Jubilee celebrations for example.

“Indeed as demand in London sky rockets next year numerous hotel brands including Holiday Inn Express have been popping up around the city, particularly in east London, fuelled not only by the new Olympic Park but also but the creation of new Special Enterprise Zones including the Royal Albert Dock, launch of Westfield shopping centre in Stratford and expansion of ExCel exhibition centre and London City Airport.

With tourists spending in excess of 9.3 billion British Pounds a year in the city and a predicted increase in visitor numbers, new hotels in the east of London are a welcome addition with a very rare opportunity having emerged for investors.

Withers explains, „Affording an enhanced hotel experience, we at Property Frontiers are allowing investors from all over the world a rare opportunity to purchase an asset class seldom accessible to individuals.

Holiday Inn Express, London Excel, located at the Royal Albert Dock will allow investors the opportunity to gain affordable entry into the highly sought after, lucrative London market.

Indeed, many investors have been previously put off investing in Hotel rooms due to the lack of a viable exit strategy but with this particular development there is a buyback plan at the end of the investment term.“

Priced at 22% below independent RICS valuations and with VAT paid by the developer, saving investors a considerable 25,000 British Pounds, Holiday Inn Express, London Excel welcomes buyers from all over the world with 50% non-status finance upon completion available.

Set over four floors and consisting of two buildings with 204 en suite rooms, investors can purchase a hotel room on a 199 year leasehold for 125,000 British Pounds and along with an established Holiday Inn Express brand, investors can enjoy a projected 10.5% net incomeby year 5 as well as a defined exit strategy.

Mortgage Statement

Responding to today’s announcement that the temporary first-time buyer stamp duty concession will end on 24 March 2012 as planned, CML director general Paul Smee said: “It is disappointing to see the government withdrawing the stamp duty concession that currently benefits first-time buyers.

“While the concession may not have stimulated additional demand, it was a significant help to home-owners entering the market and its removal runs counter to the themes of the new housing strategy.

“It is likely that we will see a bunching of eligible first-time buyer transactions early next March to beat the expiry date on the concession.”

Wendy Evans-Scott, president of the National Association of Estate Agents, agrees. She said: “We were disappointed to see that the first-time buyer holiday for Stamp Duty Land Tax is not being extended beyond March 2012.

“As such, today’s Autumn Statement fails to provide much comfort to the property market. First-time buyers are the lifeblood of the property market, and our recent data shows the number of first-time buyers getting on to the housing ladder has reached a three-year low.

“With the stamp duty holiday disappearing from next March, the Government will need to do more to help the fragile first-time buyer market.”

Grenville Turner, chief executive of Countrywide, said: “At a time where deposit affordability remains a significant barrier to not only first-time buyers, it is disappointing that the Chancellor did not take the opportunity to extend the Stamp Duty holiday for first-time buyers and has instead added another barrier for first-time buyers to get onto the property ladder.

“A positive antidote to assist the vast majority of homemovers and the resale market would have been a Stamp Duty holiday for all homebuyers up to £250,000

“Whilst the measures announced in the Government’s housing strategy are a step in the right direction, they only scratch the surface of the fundamental issues that have restricted the housing market in recent years – housing supply and the high level of deposits required.

“The prediction that 100,000 families will benefit from the Mortgage Indemnity Scheme may be optimistic, as we are yet to hear the detail of whether it enables lenders to offer cheaper rates.”

Ben Thompson, managing director of the Legal & General Mortgage Club, said: “It is disappointing that the Government did not consider relaxing the prohibitive strain of stamp duty as this may be a way of kick starting movement in a largely stagnant section of the housing market.

“Whilst the Government is obviously limited in its ability to offer huge tax giveaways as the public coffers stand largely empty such a move may have ended up proving beneficial as it would grease the wheels of what has become a vitally important part of the UK economy.

The super-rich are costing the taxpayer up to £1billion a year by exploiting a legal loophole which allows them to avoid paying stamp duty when selling their exclusive homes.

The dodge involves transferring ownership of a property to an off-shore company so when it comes to be sold the buyer purchases the company as a whole assuming de-facto ownership of the property.

Because the deal is classed as a corporate transaction as opposed to a property sale there are no stamp duty obligations involved.

A spokesman for the treasury said the government is committed to ensuring that owners of expensive properties do not avoid paying the fair amount of tax.

However experts believe the tax dodge is costing at least £500million a year with the true figure likely to be around £1billion.

The savings involved can be vast. Someone who purchases a £50million property though an off-shore company would avoid paying the treasury £2.5million.

Most of the transactions involve central London properties which are currently seen by the super-rich as a safe haven.
Flats in the luxurious One Hyde Park development in London’s Knightsbridge cost upwards of £65million each.

Ukraine billionaire Rinat Akemtove recently splashed out £136 million on two which he transformed into a single luxury Penthouse.

While Nick Candy, chief executive of developers Candy & Candy is at pains to point out that stamp duty has been collected for every one of the flats sold for a total cost of £1.4 billion, many were immediately transferred to offshore companies.

Properties transferred into offshore companies include celebrity homes such as Welsh singer Katherine Jenkins’s £4.7 million London residence and reality TV star Tamara Ecclestone’s £10.75m home.

Although there is no suggestion that they have avoided paying stamp duty on purchasing said properties, it would now be possible for them to sell them on as a corporate transaction.

The practise is believed to have become more common since the levy on £1million-plus houses was raised from four to five per cent earlier this year.

It is rumoured that the top rate of stanp duty will rise to six per cent in the Autumn statement next week. In exclusive Cornwall Terace in North London, where the average asking price is £35 million, every single home has been transferred to a company on the Isle of Man.

Now Chancellor George Osborne is coming under increasing pressure to clamp down on the practice. Former Teasury Spokesman Lord Oakeshott of Seagrove Bay told the Times newspaper: ‘George Osborne highlighted the problem in his budget but only ticked it with a feather duster.

‘The City lawyers and accountants know how to dodge stamp duty – it is worth paying one of the millions to tell the Treasury how to stamp out the stamp duty scandal.’

London & Stamford - Property Developers

Veteran developers Raymond Mould and Patrick Vaughan, who lead London & Stamford, plan to take advantage of Treasury proposals set to be announced next month that could allow residential property investors to avoid stamp duty on bulk purchases and capital gains tax if the assets are held in an income-yielding Reit vehicle.

London & Stamford plans to raise the value of its residential portfolio from £170m to £300m and focus on one- and two-bedroom properties which are just outside Central London.

The company believes demand to rent homes is rising as affluent young professionals struggle to afford mortgages to buy a home.

The company is in talks with an unnamed international investor, which is already involved in the London residential market, to help fund the expansion and become a partner in the residential Reit.

London & Stamford already has £700m available to invest in property after Mr Mould and Mr Vaughan raised funds in 2007 to try to acquire distressed properties. The new investor could raise this figure to £1bn,

On Thursday, the property company posted a half-year pre-tax loss of £3.4m, compared to a profit of £23.2m last year, due to a £10.2m downward movement in derivatives and a slowdown in the growth of property values.

Mr Mould, executive chairman, said: “In times such as these, we consider it is necessary to remain cautious and, as a result, we have worked to maintain significant free cash balances to ensure that the business retains its great flexibility and its opportunistic nature.”

However, the company increased its interim dividend, payable on December 21, from 3p to 3.5p after profits excluding property revaluations increased 51pc to £13m.

Mike Slade, chief executive of Helical Bar, said he expects the next two years to be “tough” for the property market but that this will be present opportunities for his commercial property group.

Helical yesterday returned to the black for the six months to September 30 with pre-tax profits of £4m, compared to a loss of £3.2m last year.

Mr Slade has built a significant development pipeline at Helical, including Corby town centre and a 1.5m sq ft scheme at White City in London.

The UK’s biggest listed residential landlord, Grainger, also returned to profit with £26.1m of pre-tax earnings in the year to September 30. Last year it lost £20.8m

Best Mortgage Rates

Homebuyers looking to secure the cheapest mortgage rate should head over to mortgages.co.uk for information, news and guides on mortgages, including remortgages.

The recently relaunched site also features a mortgage calculator for an easy way to find out the true cost of a mortgage.

From first time buyers looking to get their first property and pondering the prospect of shared ownership, to landlords after the best buy to let mortgages, there is information for every situation featured on mortgages.co.uk. Every day the site carries the latest news, views and features on the mortgage market.

Alidad Moghaddam, Head of We Know Money, said: “The housing market has been stagnant for a while now, house prices are even falling in many parts of the country prompting many people to wonder what is going on.

Those looking for answers should visit on mortgages.co.uk where all the latest news on house prices, mortgages rates and new products can be found.”

Liz Phillips, Editor of We Know Money said: “Mortgages.co.uk has a wealth of information written from an unbiased and informed viewpoint by experienced financial journalists.

With fixed mortgage rates recently hitting record lows, homeowners may think now is a good time to lock-in. However, with the base rate remaining at 0.5% those on a tracker mortgage are also getting an extremely good deal.

It’s a tricky choice for many people, if you are wondering what to do, visit the site to help you make a decision.”