Buying into a lease can be very tricky, especially if you are not a real estate professional. Even professionals make some mistakes when buying leasehold properties for their clients. After taking a look at this issue, it becomes obvious that most people just buy ‘available’ properties without due consultations or asking the right questions. Let’s take a look at some of these mistakes and how to avoid them.

1. Buying a leased property with a short lease lifespan.

• This is perhaps the most common of the mistakes. Any leased property with less than 60 years left is not a good buy except you are able to secure a lease extension. Mortgage companies in the U.K generally resent such deals but if you insist, you are sure to get a more expensive lease extension. This in turn would shoot up your own rental fee and therefore make the whole deal unattractive.

2. Not taking note of additional charges.

• Most times, the euphoria of sealing the deal as it is makes most people forget to inquire if there are any other hidden charges  – popularly called ‘disbursements’, (there are in almost all cases). Make sure to ask for these before signing on the dotted line… not even the court can save you here.

3. Buying without surveying.

• Most property buyers are ‘penny-wise, pounds-foolish’. It is a very common mistake to not check the property thoroughly before buying. That small fee you will pay a surveyor to take a good look at the property could save you thousands of pounds at the long run.

4. Inadequate termination clauses.

• If you don’t make sure of it, the termination clause can come back to haunt you. Most managing agents require three months’ termination notice, and many also charge a termination fee equivalent to three months’ agent fees. In the worst cases, agents insist upon as much as twelve months’ notice.

5. Who pays for the upkeep of the building?

• Leaseholders generally pay service charges for the building’s upkeep; on the other hand, freeholders contract their own workmen to take care of the building. You must be very sure of where your contract places you so you don’t fall a victim of excess charges.

My advice: hire the services of a property consultant that has experience in this stuff; it would cost you a little, but at the end you would have saved yourself from all kinds of legal disputes.

With all the noise about ‘greening’ and climate change, more and more industries and stakeholders are beginning to see reasons why sustaining the earth is a viable and serious business. I think this is a good development and the rewards would come in fast in the nearest future.

A recent report from a study conducted on 600 real estate industry experts shows that ‘greening’ has become an unavoidable and very important factor for attracting financial investments in real estate. After going through the report – Emerging Trends in Real Estate, published by PwC and the Urban Land Institute (ULI), I cannot but agree more that ‘sustainability issues’ should form a basis for real estate financing.

Indeed there are several other viable alternatives to erecting buildings in whatever terrain, but the traditional lust for cheap but dying resources like timber is still limiting our capacity to explore or put these available substitutes into use. The same can be seen in the motor industry and many others.

Even though real estate developers, government organizations, shareholders, and eventual users are more open to sustainability, fund managers interviewed remain skeptical over the prospect of financial rewards from higher up front sustainable property costs.

It is this kind of ‘clash of interest’ that remains the bane of mankind from moving forward. Although it is true that ‘green’ buildings may not be attractive to financiers at the moment, the recent trend shows that there is a shift in ‘ideas’ and ‘focus’ in that respect.

Obviously, it is the real estate financier with a vision for long term profits that can see the benefits and tap into this new idea and lay a claim as ‘the first arrival’ when the time comes.

My recommendation is simple: government in the U.K and every other country should give meaningful incentives to developers opting for ‘green technology’ before and after constructing. I am aware that these kinds of gestures are already being offered in other sectors; the real estate industry should not be left out if we are to see a significant reduction in the dearth of forests and other environmentally endangered building materials.

What happens when people have the funds to buy their dream houses and the market – or government just cannot provide these houses? Chaos! The recovery of nations from the global economic meltdown presents a new challenge for the housing market in the U.K. I am not saying everybody would have ready funds or mortgage facilities to buy, but the deficit in new houses being constructed each year is quite alarming.

I stumbled on a recent report by the Royal Institution of Chartered Surveyors which shows that there is a shortage of 80,000+ houses yearly. Now consider these facts: many people are opting for buying instead of letting; many others want to be landlords – at least for the first time; the U.K is becoming a choice destination for business and leisure; influx of foreigners into U.K universities; relaxed mortgage regime; and of course the coming of the Olympic Games in 2012.

Place all these pieces together and you’ll easily see why people are in a rush to get their own homes as soon as possible. There are indeed several options proffered by all kinds of experts as the true solution to this problem.

As far as I am concerned, ingenuity and a deliberate attempt to stem the tides of traditional housing problems that plague the U.K is the way to go. Some of these problems are: long term shortage of housing, volatile prices – booms and busts in prices, and shortage of mortgage lending among many others.

Modern methods of building using recycled materials and innovative structural design not only save time, it drastically reduces cost and improves efficiency and the general lifespan and flexibility of the house.

The U.K Town Planning department must shift its focus from “just supplying” accommodation to providing functional, cost-effective, and durable housing units for the crowd waiting to open the doors to their newly acquired homes.

To do so, the challenges identified in the delivery of housing of quality, quantity, environmental sustainability and affordability must be tackled head-on. To avoid the imminent chaos and loss of valuable tax income to the government, the time to start is right now!

Selling a house can bring about all kinds of memories of the time spent there – from the happy to the sad, and even bizarre; U.K residents generally find it nostalgic to move into new homes no matter the reason. The traditional spring market for selling off properties seems to be shifting gradually, and statistics from property agents show that January has finally become more preferable to March when selling is being contemplated.

Owing to a lot of reasons, I can tell you that people now prefer to sell their house to the early birds right at the start of the year. Zoopla, a very famous property portal used by industry watchers to gauge the health of the housing market, recently reported that the number of inquiries for available houses has tripled compared to 2010’s figure. With more than a million searches for available property in the first four days of January (more than double the whole of last year’s early tally), we can say for sure say that the tide has changed.

Even though the U.K housing market doesn’t generally go into hibernation, January is a better time to place your house on the market. For one, you get more competition in the buying process giving you more room to get away with the price tag you have placed; most of the early birds are more committed and serious about buying when compared to the March/April/May callers who might have spent so much on other important family and career matters.

City bonuses are also important reasons why selling in January is more viable. City councils generally give bonuses to sellers during this period and you sure would not like to miss out – trust me they are worth it.

It is still not too late to put up that sale, make some extra bucks and move on with your life. From the crew here, we say happy selling!

Several years ago, it would have been unbelievable that a normal working class professional would be able to have enough ‘dough’ to purchase a property worth £1 million or above. Indeed we have found many buying such in recent times even without having any connection with the ‘Lords’ or ‘Royals’ – or perhaps filthy rich politicians from foreign lands.

I have read many times of sports personalities, movie and music celebrities, and other high profiled professionals buying houses worth £1 million plus, even as much as £5 million. In the 90’s it was almost becoming fashionable – and I am sure a point of discussion at parties where these people meet, to see many ‘so-called stars’ boasting about a new  multi-pounds property purchase in Buckinghamshire or London, and other choice areas.

The story is however not the same for a few years now – and is getting worse by the day. Research by Investec Specialist Private Bank conducted with estate agents, developers and mortgage brokers operating in the U.K housing market show that competition for properties worth £1 million in the U.K has fallen over the last two years, with just five buyers for each compared with eight previously. These aren’t good times I tell you.

This phenomenon has been attributed to three major factors: serious lack of finance, lack of stock, and the fear of a ‘double dip’ recession (which generally hampers consumer confidence in the U.K).

Mortgage banks and other such financial institutions are being very careful as regards providing mortgage to candidates seeking more than a million pounds for choice properties. This should not come as a surprise; lessons learnt from the American housing market during and after the 2008-2010 financial crises are still very fresh in the public memory.

I wait to see how the U.K housing market will get out of this mentality and embrace the good old days when £1 million plus houses were stiffly competed for. Surely, those were ‘the good old days!’ 

As you walk from one spot to another or busy with your head buried on that computer you keep trying to decide: is 2011 the year to buy that house, should I wait a little more and see if prices would fall further? The figures are a little too fuzzy at the moment to really make a sound choice.

Figures readily available show that houses are at their lowest prices in seven years in the U.K as in many other parts of the world; this is owed to low interest rates and drastically falling house prices (see http://www.citywire.co.uk/money/house-prices-fell-in-snowy-december-surveyors-report/a463745). The uncertainty lurking around is not whether the prices would rise anytime soon, it’s a question of how much lower can they get?

The contraction in the economy of 0.5% in the fourth quarter of 2010 was a surprise to many following the release of GDP figures (see http://citywire.co.uk/money/gdp-shock-scotches-early-rise-in-interest-rates/a465629?ref=citywire-money-latest-news-list). These figures don’t look like they would change this first quarter of 2011, but another three months of negative growth would officially welcome a double dip recession.

If you ask me, I’ll say the U.K government would do everything possible to avoid that. So where does that leave us? If you buy before the new figures are published in April you might be smiling to the bank when prices go back up, otherwise you might spank yourself for not holding on long enough to benefit from further price crash.

So the choice is yours – a bit risky I must say. Even speculators and forecasters are at a loss here as per what might happen in the housing market in the next few months. My candid advice – a little wait won’t do you too much harm! 

Sequel to my assertion last November (follow link here: Tenant Demand Hits Record High) that the demand for rental property is hitting a new high, reports just coming in this year confirms that there are indeed far more people willing to rent than buy properties.The global economic crunch and its slow recovery is really telling on people relocating for business, family, or academic reasons.

Landlords in the U.K are seriously taking advantage of this trend by hiking rents astronomically. The fear for tenants – or prospective tenants is not to fall victim to letting scams.It is common knowledge that when demand for residential or commercial properties is as high as it is now, some people that parade themselves as agents take advantage of the unsuspecting but desperate public.

This time would not be different unfortunately!The Association of Residential Letting Agents (ARLA) have taken note of this trend and are currently advising all prospective tenants in all U.K counties to be on their guard.

A little search on the prospective landlord is a good way to start off your rental search.Tenants are also advised to contract the services of a letting agent who is vast and well experienced in property search.

Considering the peace of mind you’ll get to enjoy eventually, the small fee you would pay this agent would definitely be worth the while.

Winning the rental bid would take a lot more than your money in this circumstance, so you need to be fully prepared in terms of your references, appearance, and other such pre-rental requirements. I wish you happy hunting and good luck on your quest!

According to the Royal Institution of Chartered Surveyors (RICS), 2011 may just be the turning point in the U.K housing market. RICS spokesperson Jeremy Leaf and others in the know believe that springtime would usher in this relief or turnaround.

According to him, ‘although bad weather hit the housing market during December 2010, sales levels have remained stable. While lack of supply, and more importantly demand continues to impact heavily, surveyor sentiment does appear more positive for the coming months’

The West has maintained its leading position in the world thanks to the ability of statisticians and forecasters to use past and present situations to correctly analyze the future. Governments in this part of the world rely heavily on these forecasts to plan and design their policies.

The National Association of Estate Agents (NAEA) is the leading center for all Estate Agents in the UK and a recent publication of this body shows that 59% of agents polled agree that there are more tenants seeking rent in the first two weeks of 2011 than would normally have been seen before.

Of the 700 polled, about 26% said the level remains the same while a minute 14% say it is worse than before. Added to that, a huge 45% of NAEA members are also reporting an increase in the level of inquiries from potential property sellers.

These are important improvements over the last few years and indeed show strong confidence in the rebound of the housing market.

Economists, statisticians, and forecasters are being vindicated again and again after predictions of hard times for citizens living in urban cities during the end of the recession. Everybody seems to be affected one way or the other; even landlords with high valued properties are not insulated from this trend.

Problem 1: More tenants are offsetting rent with credit cards. More and more tenants are finding it difficult to put food on the table, pay their kids’ school fees, and pay the rent at the same time. A clever method is now to use credit card funds to settle the rent. This is quite dangerous and leaves the landlord at a disadvantage. Tenants under stringent financial pressure are more or less using one form of debt to cover another putting the landlord at risk when the time to settle the mortgage arrives.

Suggested Course of Action: Landlords should take precautionary measures to protect their business interests by reducing the likelihood of being exposed to arrears by referencing prospective tenants and consider additional protection via a rent guarantee policy to safeguard them in the event that their tenant loses their job or suffers any other major change in their financial circumstances

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