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Millions Regret Not Buying Property In 2012

Millions Regret Not Buying Property In 2012

A significant number of UK adults regret not buying property last year, new research by First Direct has shown.

Around 1.5 million people have responded to a banking and mortgage survey stating that they regret the fact they did not buy property in 2012.

The study revealed 3.6% of adults in the UK feel this way, which represents more than 1.5 million individuals.

Among the 25 to 34-year-olds, this proportion rose to 8%- the equivalent of almost 600,000 people.

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A CHEAP mortgage bonanza could revive the housing market as lenders roll out exceptional deals.

Cheaper Mortgages On Way For UK

Cheaper Mortgages On Way For UK

The number of record-low mortgages have boomed since Christmas 2012, with several major  lenders launching fixed-rate products with an interest rate below two per cent.

Aaron Strutt, mortgage broker at Trinity Financial, said: “It’s been a great start to 2013 with lenders launching fantastically cheap rates. Many are once-in-a-lifetime deals.”

HSBC is the latest major lender to launch a fixed-rate deal below two per cent.

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UK Property Prices Increase

UK Property Prices Increase

According to one of the UK’s leading mortgage lenders, residential property prices in the UK rose by more than economists had expected in January putting a halt to the annual decline.

Nationwide say that residential property prices in the UK actually increased by 0.5% in January 2013, a further sign that the two years of static residential property prices and historically low property sales across the UK may soon be coming to an end.

Nationwide have published data that states that the average residential property price in the UK is now £162,245 (GBP).

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Council of Mortgage Lenders Give Reasons For Optimism In 2013

CML Give Reasons To Stay Positive About UK Property Market In 2013

CML Give Reasons To Stay Positive About UK Property Market In 2013

The UK Council of Mortgage Lenders (CML) are more positive about the UK housing market and the wider economy than they were a year ago, despite economic headwinds and downside risks.

A key reason is that mortgage lenders currently face few funding pressures, in part reflecting the governments funding for lending scheme.

Property purchasing activity was more robust than expected in the last quarter of 2012, on the back of better mortgage availability and more realistic property pricing, and the CML expect this to continue over the coming months.

2013 started on a more positive note than a year ago, even though the UK economy has barely grown.

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Bank of England's Funding For Lending Scheme Beginning To Have Effect

Bank of England’s Funding For Lending Scheme Beginning To Have Effect

The £80 Billion (GBP) Funding for Lending Scheme (FLS), launched in August by the Bank of England (BoE) and HM Treasury, is starting to show signs of having a positive effect.

The multi Billion pound scheme designed to unclog the flow of credit to the UK’s residential homebuyers is having the desired impact as official figures show an upturn in mortgage approvals.

The Funding for Lending Scheme (FLS) makes money available to banks on the condition they pass it on to businesses and households in the form of cheaper loans and mortgages.

The Bank of England have stated that the number of loans approved for residential property purchases rose by 2,103 to 50,024 in September 2012 and the number of loans approved for re-mortgaging increased by 1,860 to 28,343.

Meanwhile, unsecured consumer credit has also increased by £1.2 Billion (GBP) in September 2012, the sharpest rise since February 2008, including an increase of £307 Million (GBP) in credit card borrowing while the remaining £900 Million (GBP) came from overdrafts and unsecured personal loans.

Borrowers have faced even tougher times trying to take out a mortgage in recent months as lenders tightened their lending criteria even further, causing a drop in the proportion of mortgages approved.

The average interest rate on new mortgages also fell slightly, from 3.84% to 3.77%, offering some hope that the recent rise in borrowing costs may also be starting to ease.

Governor of the Bank of England, Sir Mervyn King, said that “More than 20 banking groups, including the five largest lenders in the UK, have signed up to the Funding for Lending Scheme, while funding costs have fallen by around one percentage point”.

However, Sir Mervyn warned the initiative was temporary and lenders would have to accept further losses if normal banking services are ever to make a return.

The reductions in borrowing rates have primarily been aimed at households taking out mortgages with low Loan-To-Value (LTV) mortgages. So they may not help first-time buyers (FTBs) much.

As mentioned last week, borrowers are still faced with some degree of uncertainty when looking for mortgages or credit as despite all the positive noises made by the BoE and the Government, banks are still fairly reluctant to lend.
Read last week’s top story here.

The simplest solution may be to become your own bank!

Rent Guarantee Insurance Protects UK Landlords Income

Rent Guarantee Insurance Protects UK Landlords Income

The latest news from the Royal Institute of Chartered Surveyors (RICS) made great reading for landlords with the report that PRS rents had risen over the past year. However, the report could be really bad news for tenants and their finances as rental rates are set to increase again over the next 12 months.

Tenants without Rent Guarantee Insurance could face having their finances stretched even further as PRS rental rates are predicted to rise by almost 4% over the next 12 months, according to the latest RICS residential lettings survey.

The latest RICS survey revealed that Private Rented Sector (PRS) rental prices had risen by 4.3% over the last 12 months and that the upward trend appears to be somewhat sustainable due to the lack of realistic mortgage finance and high deposits required for First Time Buyers (FTBs) and a lack of suitable residential properties available for rent by tenants on the market.

The RICS residential lettings survey predicts that, over the next year, UK PRS rents could be set for an average rise of 3.9% across the whole country.

Tenants in the North West of England saw the biggest increase over the last 12 months, with rents rising by an average of 6.9%, while PRS rents in Wales failed to increase during the same period.

Landlords are urged to protect their income and provide their tenants with a little peace of mind using Rent Guarantee Insurance. A simple and affordable insurance policy that can make a great deal of difference, for both tenant and landlord finances.

Statistics from the Council of Mortgage Lenders (CML) have also shown that in the UK, over the last 12 months, Buy-To-Let mortgage lending increased by almost 20%.

Professional landlords and property investors, who are able to obtain finance, are snapping up as many suitable residential properties that they can afford, in order to profit from some of the best rental yields earned from UK rental property for a good few years.

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.”

Residential property prices across the UK slumped in April, according to the latest Royal Institute of Chartered Surveyors (RICS) housing market survey.

Across the UK, 19% more chartered surveyors reported property valuation falls rather than rises in house prices.

Expectations for future residential property prices also reached their lowest point with a net balance of 17% more respondents predicting further drops.

Demand from potential buyers was relatively flat during April 2012 as 5% more surveyors reported increases rather than decreases in new buyer enquiries (from +10% in March).

Meanwhile new instructions were stable as 1% more respondents reported falls rather than rises in new residential properties coming up for sale. Whilst the trend may appear flat, the level of supply has not seen any significant drops since July 2011.

April’s property transaction levels entered negative territory for the first time since September 2011, as 6% more RICS surveyors across the UK reported decreases rather than increases in transaction levels.

London was the only part of the UK to observe a residential property prices rise, while the West Midlands and Wales saw the most significant declines.

Whilst the RICS predictions for future property prices saw a notable dip, expectations for transaction levels once again remained positive with a net balance of +15% more respondents expecting sales to rise over the coming three months.

Global Director for Residential Property at RICS, Peter Bolton King, says: “With the recent surge in activity brought on by March’s stamp duty holiday coming to an end, it is unsurprising to see that prices across much of the country are continuing to fall. Renewed concerns over the economy and talk of a double dip recession dominating the headlines in recent weeks may well have served to undermine consumer confidence. What’s more, the continuing lack of affordable mortgage finance is still hindering many first time buyers who cannot afford to get a foot on the property ladder.”

New research from the Centre for Economics and Business Research (CEBR) shows UK property prices rising by 0.8% in 2012.

CEBR confirm a view that has remained fairly consistent for the last 3 years, that low interest rates and an increasing availability of mortgage products suitable for First Time Buyers (FTB’s), next time buyers and Buy To Let Landlords will help UK residential property prices creep up over the 2012-2016 period, reaching pre-recession levels in the second quarter of 2016.

The CEBR based its forecasts on a mix of micro and macro factors.

  • The key micro factor is the shortage of housing relative to potential household formation.
  • The key new micro issue is the changes in the planning regulations re-announced in the Budget.

These are likely gradually to boost the supply of housing and will constrain the gentle rise in house prices.

The key macro factors are

  • Affordability
  • Employment
  • Mortgage availability

The first of these will be slightly positive, the second slightly negative and the third increasingly positive.

The CEBR expect the mortgage famine to ease gradually as further quantitative easing flows through the economy and as banks recapitalise themselves.

“House prices have been pretty stable over the past two years” says Shehan Mohamed, main author of this report “Lending for housing was £74.5 billion in 2011 and we forecast that this will rise to £109.9 billion by 2016”.

CEBR’s regional house price analysis, also included in the report, shows house prices are likely to continue to rise more quickly in the London and the South East, though the gap in house price inflation with the rest of the country is likely to close because of the 7% stamp duty and the heavy taxation on corporate home ownership announced in the Budget and because of the non-recurrence of special factors like the Arab Spring and the euro crisis which boosted the London market in 2011.

The UK rental market has seen a great deal of activity in recent months as the cost of purchasing properties has increased.

First time buyers are still struggling to get mortgages and afford the deposit needed to get on the property ladder which has meant that they now are looking at renting instead.

As a result there has been a big increase in demand for people wanting to rent properties.

In some areas this has led to rent gazumping from landlords due to high demand for renting and so what this means is that properties are being let for far more than the official asking price and in affect renting is becoming more and more unaffordable.

The average rental price has shot up this year, snapshots of the market in May 2011 show an increase of around £30 across the UK, compared to May 2010.

With increasing living & transport costs and rising inflation it will be even more difficult for first time buyers to afford properties in the future.

There are only 2 regions of England and Wales that have not shown an increase in the average rent compared to last year. London has sharpest increase with 7.8% in just 12 months.

The general value of property is lower than in 2010 however because of the increase in the rent landlords are charging they are still good investments for them and are seeing healthy returns.

The current situation is fantastic for long term investments for landlords if the market continues to follow this trend.

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