Jones Lang Le Salle has forecast that the UK property market recovery will begin in 2011. Some domestic pundits predict it could even be earlier than that.

To be honest I don’t think anybody knows when prices will recover. We all have an opinion and this is their opinion.

Citing the effort the government is putting into making mortgages available and affordable and the increase in buyer activity these people are saying there could be as much as a 5-7% property price growth by the end of 2010.

These people seem to think that the problem in the market at the moment is a slight gap between what buyers are willing to pay and sellers are willing to accept.

They think this gap is sure to close as people who have been forced into the landlord business get sick of the demands on their time and lower their price expectations.

Also people who have waited and waited for the fall to bottom out may decide to bite the bullet and take what is on offer. If this was to happen it would spark a growth. Continue reading →

New figures have confirmed something we have been discussing on this blog for a while; there is a glut in the rental market caused by home sellers unwilling to accept the dire low prices on offer.

This clearly has a knock on effect as the glut of properties forces the rental prices lower and lower in line with the law of supply and demand.

The Findaproperty.com Rental Index reports that a surge in supply has pushed UK rental asking prices down by 1.2% over the month and 4.8% over the year.

It is interesting to note that this effect is worse in areas that rely on City workers for their rental demand. These areas experience very high rental price falls with drops of up to 11.7% which in real terms works out to £220 a month.

Places where the rent was not so high in the first place are managing to resist the trend more robustly.
Continue reading →

The latest figures from the National Landlords Association show that 74% of their advice line calls are about tenants not paying their rent.

This is hardly surprising in these tough times but it’s something the wider community doesn’t seem to think about. This dire situation gets nowhere near the attention of the plight of the mortgage lenders but the figures are just as frightening.

The NLA has received over 30,000 individual telephone calls in the past 12 months, an average of 2,500 a month of which 74% are from landlords seeking advice on how to deal with tenants who are no longer paying their rent. An income the landlord obviously relies on to met his/her commitments. Continue reading →

When it was announced that the newly nationalised Northern Rock would resume lending with permission to lend as much as 90% on mortgages, many assumed they would specifically target first time buyers.

Not so says Gary Hoffman, chief executive of Northern Rock in an article for the Financial Times, he said: “We hope to do some first-time buyer lending but it is not going to be targeted at first-time buyers.”

This will surprise some as having been assured that Northern Rock was going to be filling the gap left by the withdrawal of foreign lenders and stimulating the market, many thought this would revitalise the first time buyer market.

Hoffman, however, is keen to stress that the bank is likely to mainly be lending to people with a 20% deposit.

Melanie Bien, director of London-based mortgage adviser Savills Private Finance, hopes that the bank will start to offer the 90% mortgages as she thinks it will be necessary to entice first time buyers into the market.

She said: “There is a realisation certainly from the government now that to get first-time buyers back in the market you are going to have to offer something more than 75 per cent loan-to-value.

“There is obviously risk involved and that is why there is a premium to pay but there is no other way around it. If you ask first-time buyers to put down a 25 per cent deposit they are just not going to be able to do it”
Continue reading →

This is interesting on the back of the news last week about Northern Rocks plans to provide 90% mortgages in some cases.

According to an article in the Telegraph at the weekend homebuyers could be required to have deposits of 15% before they can get a mortgage under a tightening of rules being considered by the City regulator.

And it seems likely that deposits will not be the only thing that comes under this kind of scrutiny. The amount you can borrow per multiple of your income is also coming under review.

The telegraph reminds us that Gordon Brown recently suggested that 100% mortgages should be banned altogether.

Lord Turner seems to think that a more important question is one of income multiples. In evidence to the Treasury Select Committee, Lord Turner said: “We can certainly see a strong argument for us getting more involved in product regulation than we have in the past.”
Continue reading →

Landlords may be leaving fixing old boilers longer than is necessary due in part to some confusion over tax laws.

The specific law in question is the one the government has expects to encourage landlords to bring their properties up-to-date in the heating and environmental stakes. But it seems very unclear at the moment whether they are eligible to apply for the 10% tax allowance if they replace old boilers.

David Lawrenson of LettingFocus.com has been very vocal about the fact that replacing old boilers should fall into the UK’s Landlord Energy saving Allowance.

This seems very sensible to me, in fact you would have thought it was the very essence of the spirit of that law. Clearly new boilers are going to be more energy efficient and that is the whole point.
Continue reading →

After Northern Rock collapsed it was obvious that something needed to be done to stabilize things. New powers were granted to the Bank of England on a temporary basis.

Since then things have gotten worse in the financial world and now these laws have been made permanent in an attempt to help manage the state of flux we are in.

According to an article on the BBC website the new legislation has received mixed reactions. On the face it seems to be a very good thing for the majority of us. If nothing else it allows for savers to receive compensation within one week if a bank is to go bust.

I know that would be a huge relief to many savers, some of whom ended up in the frightening position of not having enough funds to cover their outgoings while they waited for previous disasters to be addressed.

The major objective though is to try to make things a little more stable and to therefore increase confidence.

Peter Thal-Larsen, banking editor of the Financial Times, told the BBC’s Working Lunch programme “The idea is that, if there is a bank that gets into trouble, to insulate it and make the wider impact of that less”. Continue reading →

It is clear that repossessions are on the rise at the moment and that is, unfortunately, to be expected in the present climate.

Buy to Let mortgages are at the forefront of this rise. The number of buy-to-let landlords unable to keep up payments on their mortgages more than doubled during the second half of last year, hitting record highs for almost 27,000.

People are being urged not to panic if they do get into difficulty.

The government has recently introduced new laws that put pressure on lenders to take it easy on borrowers that fall behind and to resort to repossession only as a last measure.

This is actually believed to be having a positive effect.

The Liberal Democrats are, however, not satisfied with these measures and have urged the government to do even more.

Lib Dem leader Nick Clegg has been quoted as saying “If the Government was serious about stemming the tide of repossessions, it would give courts the power to ensure repossession is the absolute last resort and remove the barriers to allow councils to invest in social housing.”
Continue reading →

The Council Of Mortgage Lenders (CML) has stated that the number of homes repossessed in the UK rose 54% last year to a figure of 40,000 according to a report by the BBC. As dire as that sounds it is not as high as they had predicted.

The lower than expected figure is a credit to the strenuous efforts being made by lenders to make sure repossessions were the last thing on their agenda according to the CML.

They do, however, expect this figure to continue to rise with a predicted 75,000 repossessions this year. They urge homeowners to investigate the possibilities before they take the drastic step of handing in their keys.

“We strongly urge borrowers to contact their lender and work with them before taking this step, as there may be other solutions,” said the CML’s director general Michael Coogan.
Continue reading →

The Council of Mortgage Lenders has indicated that new buy-to let mortgages have fallen to a five year low.

Figures just out show that 37,000 buy to let loans were taken out in the fourth quarter of last year, worth a combined total of 3.9bn pounds, this represents a drop of nearly one fifth in value while volume was down twelve percent.

It is believed that this has occurred at least in part because of a rise in the excess supply of rental properties.

This is also believed to be the cause of the rising number of payment problems with some landlords faced with long periods where their properties are without tenants. The number of properties that are more than three months in arrears has risen from 1.88 percent to 2.3 in the last quarter.
Continue reading →