Stamp duty has always been very controversial. Most people believe that it causes havoc in the market by distorting it at the thresholds.

Every year the Council of Mortgage Lenders calls for reform to what must surely be seen as a flawed tax, but to date their calls have fallen on deaf ears. The government seems determined to keep the tax and therefore the revenue it brings them. This is despite other voices joining the call for reform.

Mortgage intermediary garoup the AMI point out that with reduced amounts of house sales this would be an ideal time to make change to this law. Considering the economic situation the government is in though, they are highly unlikely to relinquish their hold on the revenue that stamp duty tax brings them.

One suggestion that has been made that would both encourage new buyers into the market and allow the government to maintain their grip on the tax money they are so desperate for, is to change who pays the tax. If stamp duty was payable by sellers instead of buyers it would be revenue neutral but still encourage new people into the market. Continue reading →

With many people enjoying an unprecedented low mortgage rate this may sound like madness but according to a report in the Telegraph over the weekend the smart people may be ready to fix.

People who have come out of a fixed rate recently will be unable to believe their luck with the bank rate so low and many standard variable rates set at 3%. It is impossible to find a fixed rate deal that low so why on earth would you want to change?

Two reasons, according to the Telegraph. One your loan to value rate may soon be looking a lot worse if house prices continue to drop. This is a problem because lenders increase interest rates depending on your LTV rate. So if dropping house prices force you into say the 90% bracket, when you come to fix a mortgage you will be paying higher interest.
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Selling a house has always been a big and often stressful job but in the present market it is proving to be even more so.

Most people who want to buy are having trouble finding funding as banks crack down on who they will consider giving a mortgage to. Those people who can get funding are finding themselves in a position to be fussy about price and quality as sellers compete for their business.

Experts are suggesting that those people who want to be successful in shifting their house need to work out what its value was in 2007 and mark the price down roughly 25%.

Once that is done there are a few other things you can do to make your property stand out from the hoards of competition.
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Numis Securities, a city investment bank, has released figures that paint a very bleak picture for the housing market. They predict that the housing market which has already fallen 20% in the last 12 months could be set to plummet another 55%.

They put this dramatic predicted fall down to the fact that a lot of people who got into the buy-to-let market when it looked like a sure thing are now starting to panic as their investment loses them money. These people may flood the market and drag prices down even further.

Numis said: “It is the action of these amateur investors over the next few months which we are most concerned about,” the report says. “We expect some to begin panic selling their portfolios, with the peak volume as is almost always the case with private investors, being at the market trough.”

They are also very critical of the governments plan to force the banks to lend again at high levels. They cite the fact that huge level of debt appears to be one of the factors that drove this recession in the first place.

They save their most scathing criticism for the Prime Minister himself “Gordon Brown’s fingerprints are all over this economic wreckage and he should now have the decency to at least apologies for his mistakes.” Continue reading →

There is not a lot of good news on the house selling front this week. An article on the BBC website reported on Tuesday that the countries surveyors recorded the lowest house sales in 31 years.

The article does point out that in the last four consecutive months there has been a significant rise in people enquiring about buying into the property market. This is said to be because the public are starting to view houses as more affordable, unfortunately that does not seem to have translated into actual sales or at least not yet.

In more bad news the article reports that house builders are expecting to hit an 88 year low in actual construction of new houses. A 50% drop to 70 000 this financial year is certainly a kick in the pants for the already beleaguered building industry.

“After years of boom, the housebuilding industry is lurching towards bust,” said Ruth Davison, director of the National Housing Federation.
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This week Linton Chiswick in an article titled Buy-to-let is not dead, came to the interesting conclusion that ‘Buy-to-let’s not dead… it’s just in a funny shape.’. The article puts this down to the contradictory information that is available to evaluate the state of the market at the moment.

Some information indicates that tenants are now in the strongest position with market flooded with accidental landlords desperate to rent out their properties to cover their expenses.

Other statistics seem to show that with a huge fall in interest rates some landlords are in a stronger position than ever. It seems to me that it is a little hard to judge the state of things accurately at the moment. There is however another question the article posed which I believe is far more interesting.

Will this crisis mean that our attitudes to the desirability of owning our own homes will be changed forever? In the Western World we have been having what could be described as a love affair with property for some time now. Will the huge crash and the impact it has had on people put a stop to that? Continue reading →

Guarantors are a concept we are more used to hearing about in the banking sector but in these poor economic times they are a way of landlords getting a bit of peace of mind and tenants that do not look terribly reliable on paper getting, somewhere to live.

Another name for what we often refer to as guarantors is a surety agreement and the idea is quite a simple one. If the prospective tenant, for whatever reason does not come across very well on paper then they can have a friend or relative agree to back them financially if they are unable to pay their rent.

In practice this means that if the tenant does not pay any sum owed the landlord in a timely fashion then the landlord can pursue the guarantor for the money.

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The rental sector has experienced a large amount of activity during these difficult market conditions.  “Discount Letting has seen a 20% increase in tenant enquiries with only a 15% increase in rental property stock offered by landlords across the UK” says Managing Director Daniel Burgess. Increasing tenant demand coupled with falling interest rates is positioning 2009 to be a good year for landlords.

But it’s not all good news, with unemployment rising and the UK in the grip of a recession many tenants are struggling with their rental commitments whilst new tenants to the rental market are finding that some rental prices are out of their reach. Daniel advises landlords to be sensible when setting rental values for their investment properties in the current climate. Setting a realistic rental valuation and looking to the longer term is essential in this potentially difficult market.

Although there are many opportunities for landlords in today’s market, landlords must look after and maintain their current portfolio if they are to push forward through this potentially difficult time.  Many landlords will be looking to reduce their costs by managing their own portfolio or changing their Letting Agent. Continue reading →

Michael White of The Guardian pointed out in a recent article that the lat week of February  saw an awful lot of record lows and bad financial news. House-building was reported at its lowest point since 1980; repossessions were running at a 12-year high and buy-to-let mortgages at a five-year low, since this free-fall began barely a day goes by without some sort of negative news.

White discusses briefly the concept that I covered in yesterday’s blog, the fact that renting on a long term basis is seen as some sort of failure here in Britain, something that does not have the same sort of connotations in other parts of Europe.

His reason for discussing this was to point out that successive governments had put a lot of money into trying to create affordable housing for people to purchase. A lot of these schemes are now in trouble.

White’s main point seems to be that in order to arrest this frightening fall there is really only one way forward. The government needs to do anything it can to get banks lending again. that is the only way forward.

Boomerang children is a term used to describe kids that had managed to get out of the family home and get a bit of independence only to find themselves having to move back in with their parents in their twenties or even thirties. Clearly the current economic situation has provided perfect conditions for this to happen and according to a recent article in the Telegraph, Britain now has twice the number of these types of arrangements than any other country in Europe.

“The increase in boomerang families began when house prices reached new highs in 2007 and saw not only grown-up children returning home but also three-generational families under one roof,” comments Jonathan Haward, MD of County Homesearch.

Many couples begin to start thinking of downsizing and even maybe heading off around Europe in a camper van once all their children have flown the nest but Haward thinks this could be a grave error. In fact, rather than cutting back on space, Haward suggests some parents might want to look at a loft conversion or something to accommodate their boomerang children.

On the other hand if you buy the camper van quickly enough your children may not be able to locate you to suggest moving back in. Just a thought.