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Property Investors Given False Hope

By Misleading Property Information

Property Investors Need To Do Thorough Due Diligence

Property Investors Need To Do Thorough Due Diligence

The importance of conducting thorough Due Diligence has again been highlighted, this time  by the British Property Federation (BPF) who have recently said that the lack of official data relating to the UK Buy To Let industry and the UK PRS rental markets as a whole may be giving landlords in some areas a false view of the potential profits they could make.

According to the BPF most of the survey and research data being broadcast on the internet is not representative of the UK property investment industry as a whole, and any potential landlords reading it could be led to believe figures that don’t apply to their local areas.

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Take That To The Bank

Guest post by Bobby Gill

Ever been frustrated or felt ripped off by your bank?

Yep thought so.

Maybe this letter will make you feel better and give you some ideas next time you contact them… shortly before closing your account and banking with a Co-Operative Bank instead!

Read more of Bobby’s thoughts and musing here – http://bobby-gill.blogspot.co.uk

Dear Sir:

I am writing to thank you for bouncing my cheque with which I endeavoured to pay my plumber last month.

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UK residential mortgage lending made a dramatic recovery in May 2012 after the sharp decline caused by the end of the stamp duty concession at the end of March.

The Council for Mortgage Lenders (CML) claimed that the amount of residential mortgage loans advanced to property buyers increased by 33% from in April 2012 to 48,300 in May 2012 resulting in overall mortgage lending being 25% higher than at the same point in 2011

The CML put the rise in first-time buyer activity down to the market bouncing back from the temporary slump that came with the reintroduction of 1% stamp duty at the end of March 2012.

CML’s Director General, Paul Smee, said: “The slump following the end of the stamp duty concession seems to have been short-lived. Lending is similar to late 2011 levels and showing a healthy improvement on the same time last year.”

Despite some 18,100 first-time buyer mortgage loans worth £2.3 Billion (GBP) increasing by more than 20% compared with May 2011.

Mr Smee urged caution amid the ongoing Eurozone crisis stating “Economic uncertainty could affect both the supply of mortgage lending and consumer confidence and we still anticipate a challenging lending environment for the rest of the year.”

The Royal Institution of Chartered Surveyors (RICS) have delivered a stinging attack on the coalition Government’s NewBuy mortgage scheme, suggesting it could wreck the entire housing market.

RICS are also calling for the regulation of all letting and property management agents, and the introduction of a single, UK regulation and redress scheme to be set up within 3 years.

The RICS says that NewBuy, which offers purchasers of new-build property 95% mortgages underwritten by taxpayers and developers, could reduce demand for ‘second-hand’ property and play havoc with lenders’ affordability calculations.

The RICS says that the NewBuy scheme may not even help first-time buyers when they come to buy second-hand properties because without stimulating the second-hand market as well as new-build, purchasing chains and overall transaction levels will begin to stagnate.

The institute is to include specific guidance to the valuers of new homes, to ensure that they understand the impact of NewBuy and make sure it ‘does not adversely impact the market’.

But while the RICS is calling on the Government to help local authorities introduce more Lend a Hand schemes, where buyers put down deposits of at least 5% and local authorities provide an indemnity of up to 20%, the organisation says the ‘dire state’ of local government finances makes this unlikely.

The RICS are also calling on the Government to amend the Estate Agents Act to bring all property letting and management agents within its scope, in terms of the need to have client money protection professional indemnity insurance and redress mechanisms.

The RICS says it will work with other bodies to establish by 2015 a single industry-wide regulation and independent redress scheme for the whole sector.

It also wants to see the Government encourage more investment in the private rented sector, including encouragement of ‘build to rent’ schemes, and for private tenants to be offered longer tenancies.

Elsewhere in its new housing policy, the RICS calls for VAT on all home repair, maintenance and improvement work to be cut to 5%, and for Stamp Duty to be reformed.

The RICS produced its new housing policy after consulting its members and will now lobby the Government.

Peter Bolton King, RICS global residential director, said: “To deliver real influence in the corridors of power, RICS needs to have clear residential policy. In putting this landmark work together, we met with our members and firms of all sizes from right across the country. What came across loud and clear is the desperate need to reform sections of the market and generate growth right across the UK. We will now take these recommendations to the Government with the aim of helping them to improve the residential property sector for those operating within the industry and the public as a whole. Change needs to happen if we are to see an economically viable and professionally driven residential sector, and I stand ready to work with members, government, other industry bodies and consumer organisations to achieve this.”

Gross mortgage lending declined to an estimated £10.2 Billion (GBP) in April 2012.

Mortgage lending fell by 19% from £12.6 Billion (GBP) in March 2012 but was 2% higher than the total of £10.0 Billion (GBP) in April 2011, according to the Council of Mortgage Lenders.

CML chief economist Bob Pannell comments:“Mortgage lending activity has been relatively buoyant in recent months, with stronger lending for house purchase underpinning the more upbeat lending picture. The underlying picture is likely to be a bit stronger than the April figure suggests, because some first-time buyers are likely to have brought forward their transactions to March 2012 to take advantage of the stamp duty concession that was coming to an end in March 2012. Eurozone developments remain highly uncertain and have the potential to undermine UK economic prospects and conditions in our housing and mortgage markets. The underlying picture is likely to be one of easing momentum in the housing market, but with potential for a sharper downwards correction on bad Eurozone news.”

New figures released by the Council of Mortgage Lenders (CML), show that the number of residential property repossessions remained relatively stable in the first quarter of this year.

According to the CML, some 9,600 residential property repossessions were recorded in the first three months of 2012, approximately the same amount recorded in the same quarter in 2011, although repossession statistics are up by 10% on the fourth quarter of 2011.

The CML have stated that the results of their findings correspond with a typical seasonal trend in UK property.

As a direct result of its findings for the first quarter of the year, the council of mortgage lenders may have to revise the repossession forecast for 2012 downwards from the expected 45,000 repossessions.

However, in a statement, the organisation added: “Continuing pressures on household finances, changes to welfare benefits and an upward drift in mortgage rates all have the potential to disrupt the current stable picture.”

The CML also indicated that the first quarter of 2012 saw a drop in the number of mortgages with arrears of 2.5% or more of their outstanding balance, dropping from 160,300 to 157,800 on a quarterly basis.

Institutional Investment is needed in UK Buy To Let Sector

Institutional Investment is needed in UK Buy To Let Sector

The Council of Mortgage Lenders, (CML), think the coalition Government’s Chancellor of the Exchequer, George Osborne should be doing more to encourage institutional investors to take a stake in Buy To Let property in the upcoming Budget.

The Council of Mortgage Lenders are the trade body for all the UK’s major bank and building society residential mortgage lenders.

The CML claim encouraging pension funds and corporate investors is a neglected policy that could provide the cash for more UK homes that can be made available to rent.

The suggestion is part of a wide-ranging Budget review aimed at influencing the Chancellor to ease the mortgage market. The submission also criticises current housing policies, including:

• Stamp duty holidays for first time buyers, which the CML claims creates a boom and bust market around deadline dates
• Paying housing benefits direct to claimants may damage landlord cash flows and lead to unnecessary mortgage arrears and repossessions
• Making better use of housing stock as, the CML states, most of the homes available over the next 20 years have already been built

The CML has told the Chancellor that given the vulnerabilities and uncertainties, it is important to make sure that all avenues, for strengthening and diversifying funding structures, have been explored.

The CML have also noted that the government continues to explore the obstacles to greater institutional investment in the supply of private rental property, but, strangely, the further scope for promoting domestic institutional investor interest in mortgage assets seems to be a neglected area of policy.

The Budget report also points out that UK banks and building societies rely heavily on raising funds from wholesale markets which are currently challenged by the Eurozone debt problems.

“Funding costs remain higher than a year ago, and the UK remains vulnerable to future eurozone developments. Given that current market conditions are somewhat fragile, it is very important that other government policies do not undermine housing market sentiment more generally. We believe that there are a few areas where policies are not as well aligned as they could be.” says the CML.

The CML’s calls echo the sentiment of many existing UK landlords who have had to search for a variety of additional landlord services such as insurance, tenant referencing and tenant eviction services from private sector specialist suppliers, in order to remain in a profitable situation.

With institutional investment into the UK private rented sector (PRS) specialist products and services for landlords will be enhanced for the corporate market and derivatives would be more affordable and even more readily available.

Buy-To-Let is Booming in the UK

Buy-To-Let property is Booming in the UK

The Council of Mortgage Lenders (CML), have revealed that the UK is in the grip of a Buy-To-Let boom that shows no signs of stopping, as property investors snap up UK property worth £160 Billion (GBP).

The CML state that there are a record 1.4 Million Landlord loans, valued at almost £160 Billion (GBP), currently invested into UK Private Rented Sector (PRS), residential properties.

It appears that property investors have been keen to cash in on the soaring PRS rental demand and have been snapping up large quantities of residential properties.

The rental demand exists because many people still feel that they can’t afford to buy a home of their own and those who want to buy, are forced to rent whilst saving huge cash amounts required for the deposit for a property purchase.

With income from savings wiped out by low interest rates, mortgage repayments have become cheaper and landlord numbers have increased.

With Private Rented Sector (PRS), rents close to all-time highs across the country, there has never been a better time to get into Buy-To-Let!

Owning a residential property that is suitable for buy-to-let (BTL), that produces a regular rental income can be a real money-spinner for both amateur and professional landlords.

In London the average rent is approximately £1000 pcm, however in the rest of the UK, the average rent is only £711 per month.

According to the CML, in 2001, when the UK Buy-To-Let market was still in its infancy, landlords had obtained 185,000 loans to invest in rental properties.

Today, landlords have taken out 1.39 Million loans, worth about £160 Billion (GBP), to spend on their property empires, with an estimated 84,000 homes bought using specialist Buy-To-Let mortgages last year alone.

Critics have claimed that the UK buy-to-let market has forced property prices up to levels which many first-time buyers cannot afford.

Although buy-to-let loan numbers have ballooned, the number of mortgages to first-time buyers has taken a dramatic nose-dive.

Last year, according to lettings agent Countrywide, about 275,000 new tenants registered their interest in private rental accommodation – a 24 per cent increase on the previous year.

It said that a typical tenant is a couple under the age of 35, although the number of families is rising.

During the past ten years, the number of young people getting on the property ladder has collapsed from about 500,000 each year to just 200,000 and the lack of available finance, high deposits and employment stability being blamed for the fall in applicants .

Read the full Daily Mail article here

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UK property repossessions increase

UK Property Repossessions are forecast to increase 22% in 2012

UK Property Repossessions are forecast to increase 22% in 2012

Economists expect the recession and rising unemployment to squeeze the already stretched household finances of thousands of struggling families this year and are warning UK homeowners and landlords of a sharp rise in residential property repossessions.

Record low Bank of England (BoE) interest rates and lower than expected unemployment figures kept property repossessions to relatively small numbers through the worst days of the first half of the recession and they eased again as the country struggled into a tepid recovery.

However, with a double dip recession inevitably looming, workers incomes failing to cover spiralling household costs, the Government’s economic cutbacks and welfare reforms starting to bite whilst the beleaguered private sector fails to replace jobs lost in the public sector, economists are fearing the worst.

The Council of Mortgage Lenders (CML) had already forecast a 22% rise in UK property repossessions for 2012 increasing the annual property repossession figures to around 45,000.

The property repossession figures include private residential properties where mortgage payments have lapsed and Buy-To-Let properties where landlords did not have <a title=”Landlord Insurance” href=”http://www.legal4landlords.com/rent-guarantee/” target=”_blank”>Rent Guarantee Insurance</a> and have been unable to keep up with their buy-to-let mortgage repayments due to their tenants not paying the rent.

Read the full article here

According to the Council of Mortgage Lenders, (CML) gross mortgage lending in December 2011 was an estimated £11.7 Billion (GBP).

That is still 12% short of the £13.2 Billion (GBP) recorded in November 2011 but is actually up 12% when viewed on a year-on-year basis.

In fact UK mortgage lending increased to around £140 Billion (GBP) in 2011, compared with £136 Billion in 2010 and December 2011 was the fifth month in a row to show annual growth in mortgage lending, with 2011′s fourth quarter total of £37.3 Billion (GBP) up 11% on the final 3 months of 2010.

However, the CML expects the UK housing market to experience a weak first half of 2012 and warns that the increase is from a low base with challenging economic prospects,.

The Eurozone crisis, higher funding costs for lenders and the troubled state of household finances are all likely to impact on the UK housing market.

Bob Pannell, CML’s Chief Economist, said “There is a glimmer of light ahead for households in that real incomes could stabilise and perhaps even start rising by the end of the year. But, continuing Eurozone problems mean that mortgage funding prospects are uncertain, so overall UK mortgage market conditions for the year ahead remain difficult to call.”

There Will Never Be A Better Time To Invest In Property

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