Streetwise Property Alert 9th June 2014

Welcome to today’s email – a property market and mortgages review by our ‘Mr Mortgages’, Peter Faulkner…

UK mortgage approvals fell more than expected in April to their lowest level in nine months, adding to the signs that new rules on bank lending have taken some of the heat out of the housing market. The Bank of England said on Monday that mortgage approvals numbered 62,918 in April, down from 66,563 in March, marking the third consecutive monthly
slowdown. Mortgage completions are down to the lowest level for 10 months. 48 per cent of new mortgages were taken up by first time buyers (FTBs), up from 38 per cent last year with only 4 per cent of FTB mortgages completed in the London area.

Managing expectations is the mantra now amongst agents. Potential clients often tell me that the comparison websites tell them they can have such and such a mortgage at very low rate with very low costs. These headline mortgage products do exist, but most people will not fit them. This reminds me of a customer in a shop I owned many years ago
saying the item is too expensive, ‘it is much cheaper down the road’ to which I suggested he should go down the road. He shouted, ‘But they are closed’. I replied, ‘All our products are cheaper when we are closed’.

Lenders have de-skilled many staff levels and now rely heavily on computer software to filter applications. (Forget the old days when valuations could be appealed and lender’s business development managers or bank managers could help; they often cannot as they no longer have a mandate. More than ever people are experiencing, the Little Britain line ‘…computer says no’. By this time, the client has lost money on searches, valuations and booking fees, had a record placed on their credit file and lost the property because the delays have caused the chain to collapse.

Another comment I often hear is, ‘I don’t want to pay broker fees’ The good news is you don’t have to, just do it all yourself and good luck with that. A broker has to cover costs of regulation and compliance and indemnity insurance and continual professional development and training and office overheads and wages, before they open the door. FCA, Office of Fair Trading and insurance costs have all increased heavily above inflation and someone needs to pay for this. A good broker provides an added value service that protects the customer with access to the entire UK lending market and succeeds in getting the most appropriate mortgage.

Be aware that (as with other services) with independent mortgage brokers, you often get what you pay for. It is not just about a mortgage product in isolation, the client’s aims and objectives need to be married with their situation and other commitments now and into the future, which is why the broker/lender needs a great deal of personal and financial information. With a broker, all this needs to be assessed before approaching the right lender. These days, clients should ask not ‘can I get the cheapest deal’. They should start with ‘can I get a mortgage?’ Being an independent mortgage broker, I would say all the above, wouldn’t I? I agree that I do have a degree of bias.

UK average house prices have risen by over 11 per cent but this does not reflect the wide variances around the country and is year-on-year. Reports are coming in that the rate of growth has dipped in the last two months. Over the last year, London and the South East have soared by over 17 per cent with some hotspots recording above this level. Northern Ireland comes in second with 11 per cent growth, Yorkshire, Midlands and South West averaging between 5 per cent and 8 per cent, Wales 5 per cent and Scotland with no growth. These are averages with some parts of the country within these regions showing negative growth. It seems a contradiction with lending down and prices up. The concern is the policy decision makers are looking to see if the new MMR rules will feed in to cool the market and, if not, what measures may be taken to slow the housing market down. Headline proposals like reducing H2B available from maximum house price of £600k to £300k for FTBs will not have much impact.

The question on everyone’s lips is will the Bank of England Monetary Policy Committee vote for an increase in interest rates in the near future? Pressure is mounting to start making regular ‘baby step’ increases against more rapid increases expected in 2016/17. Experts predict a small increase as early as February next year, three months before the election. The driver for this is the latest economic figures showing the UK having the strongest GDP growth of all western economies at 3.4 per cent last month and that there is increasing pressure to improve the situation for savers. The BoE is suggesting tighter controls on mortgage lending to slow own house inflation.

Our view from all the research and reports we have seen is that the BoE rates will get up to around 3 per cent by the end of 2017. Those on tracker rates now at 2.15 per cent over BoE base rate paying now at interest rate of 2.65 per cent could see their interest rate rise to 5.15 per cent, an increase of nearly two times present payments and possibly trapped if they have an interest only mortgage as, under new affordability rules, capital repayment and interest only mortgage products will be available and their own income situation may not have recovered from the recession. For example, if present mortgage interest only payments are £552 per month on a £250,000 mortgage, this will become £1,076 if rates go up by 2.5 per cent. Mortgage holders need to prepare for this.

Student loans are now being taken into account by lenders for MMR affordability calculations. Universities and student loan bodies and the government have said in the past this would not be the case. However, FCA guidelines are demanding that lenders take student loan debts into account. At present student loan balances and payment history does not appear on credit files but clients will be required to declare their student loans and how much they pay at application.

To fix or not to fix is of serious concern to most clients on variable or tracker rates. There are some excellent five year and 15 year fixed deals available. Payments would be higher than tracker or variable rates for the next 12 to 18 months or so, with break even and potential saving over the remaining years. Considering that rates have been at an historic low for seven years, most feel the only way longer term is for rates to rise.

Best value deals that are suitable for many that fit include:

B2L (purchase and re-mortgage) at 75 per cent LTV (interest only) at 3.55 per cent variable for term of the mortgage, Lender fee £999.

Residential purchase at 85 per cent LTV (capital and Interest) at 3.39 per cent variable for life of the mortgage, less a loyalty discount after five years of 0.24 per cent, lender fee £999.

Best 10 years fixed rate residential available is at 10 year term at 3.89 per cent on 70 per cent loan to value.

As ever, good advice from Mr Mortgages, Peter Faulkner. Email back if you’d like to talk to Peter by email or by ‘phone.

admin@streetwisenews.com

Streetwise Property Alert 6th June 2014

Welcome to today’s email of UK news and views…

Renr Rises – Think Carefully

I worked, freelance, for a while for a big UK publisher in the
finance/investment field. From the day I joined to the day I left, they wanted me to ‘spin’ my copy to encourage readers to, well, buy something from them. I didn’t last that long as, frankly, it wasn’t something I was comfortable with.

What I did learn from them was that most people are driven by ‘greed’ and ‘fear’. There’s an element of truth in this. So, instead of a heading such as ‘You Could Make Money From Such-And-Such’, you had to pitch it as, say, ‘You Could Make £23.479 From A Single Deal’(the sum being, at the time, more than most people earned in a year) and/or ‘But Hurry, Only Seven Places Left!’ (creating the fear that they may miss out). Generally, working to ‘greed’ and ‘fear’ principles proved effective (although, of course, you’re not supposed to tell anyone you work to these principles as few people like to think of themselves as greedy or fearful although they recognise it in everyone else).

I still see greed and fear all around me – at present, my eldest son and his wife are trying to buy their first place. They’ve saved a fair bit and we are chipping in with about half of the deposit. As each month passes, our half seems to go up and up for much the same type of property – sellers are getting greedy see, they’re adding on that bit extra. As often as not, it backfires when it comes to surveys as the surveyor pulls down the price and kills the deal.

And so we come, eventually, to the news that a new study by Online Letting Agents reveals that 90 per cent of landlords are going to put up rents in the next year. For many, it seems to be a knee-jerk reaction – prices are going up, so is demand, and so on – so I’ll put another £50 on the rent. Easy! Maybe – but I would urge you to at least do an assessment of the local micro-market and your property and would-be tenants before jumping on the bandwagon. Remember, if you have an extra void month whilst going for that £550 instead of £500 a month rent, you’ve pretty much wiped out a year of extra money straightaway.

Value – Adding Reminder

Interested to note that the latest West One Broker Sentiment Survey reveals that ‘property refurbishment projects in the UK have seen funding more than double in the last 12 months’. In effect, more and more money is being borrowed to refurbish and improve properties.

We will update our ‘value adding’ article again shortly – we try to remind members that the secret of adding value above and beyond cost is to add space but without losing any perceived plus points – a loft conversion tends to more than pay for itself if access is, say, above an existing staircase rather than via (and by losing part of) an existing bedroom.

Other key points? Consider the specific property – there is little point in adding parking space, so in-demand in big cities, if there is plenty of free parking nearby. Avoid over-personalising. Too many people assume they have great taste – no-one would admit to having poor taste any more than they would say they were greedy – but tastes differ. Remember the ‘ceiling’ – do what you like to a three-bed semi but it is still a three-bed semi and needs to be priced in line with comparable properties.

London – Where To Look

We still receive replies for members asking for those ‘sub £130k’ properties in London – long gone I’m afraid and demand is such that we no longer put London deals out to the general membership as it simply puts 200 more replies into the mix which we have to work through (I want £25k off…can I buy without a deposit…if it’s such a great deal why won’t you lend me the money etc).

Even so, we continue to offer pointers and note that Savills is saying that London needs 50,000 new homes a year to keep pace with demand (it won’t happen) and that over 80 per cent of that need is for properties up to £700 per square foot.

Fact is, an average of just under 35,000 new homes a year are expected to be built over the next five years. And Savills says ‘the shape of the development pipeline does not match the shape of demand. A shortfall of 15,000 homes a year will remain, increasingly concentrated in the lower tiers of the market, beyond zones 1 and 2.’ There we are then – your hotspots.

All for now, see you again soon.



Streetwise Property Alert 4th June 2014

The first of our new series of Wednesday articles? Over to Peter Faulkner, Mr Mortgages, who talks about various borrowings for landlords…

Second Charge Finance

With property values increasing rapidly, especially in London and the South East, investors are enjoying increased equity levels. However, the rental yield is not increasing as fast, locking this wealth in as investors find it difficult to release any of this capital for improvements or to fund deposits for further acquisitions.

Many have existing Residential and B2L mortgages on excellent low tracker rates and so it makes sense not to disturb these. In addition, the relative rental yield percentage is lower and so refinance would be difficult anyway for rental cover calculations. Perhaps the solution for some would be second charge lending.

For example, one of our clients had a B2L property in Greater London that had gone up to £380,000 in value with a £198,000 tracker mortgage with monthly payments at £496 (3 per cent interest rate) and a rental yield of £1,300. He wanted to release £50,000 to do some property repairs and to use as a deposit for another property in the North. The second charge interest only loan is at £447 per month. He plans to redeem this second charge B2L loan in five years. The ability to service the loan was based on the rental income, not his personal income and he was over 65 years of age at the time. For now, the total monthly payments are £943. If he had managed to get a full long term re-mortgage for £248,000 his monthly payments would have been £1,031 (interest only at 4.99 per cent) and the client got the £50,000 in two weeks.

Secured loans are more relevant than ever before, a few key points below on when to use this type of product:

On low SVR or base rate tracker mortgages which are too competitive to re-mortgage away from to raise additional funds.

On interest only (residential), if re-mortgage done then entire mortgage has to be changed to capital and interest raising payment to unaffordable level.

Recently self-employed, need to work off projected figures or need to work from last 12 months’ business bank statements to prove income.

Slight adverse in the last 12 – 24 months meaning they are declined on score for a re-mortgage may be accepted.

Client wanting to raise money and secure on buy to let property.

Funds raised can be for any purposes (consolidation, business purposes, tax bills etc).

BTL repayment can be covered by personal income as well as rental income.

Products available:

Rates from 5.4 per cent for second charge loan secured on residential property.

Combined LTV up to 95 per cent.

BTL rates from 9.49 per cent.

Combined LTVs to 80 per cent for second charge loan secured on B2L property.

Loan amounts from £10,000 – £2.5m.

Cases outside criteria, we are able to take a ‘view’ and advise.

Secured loans would be on capital repayment with interest basis over a 10 year period with ability to make overpayments or early repayment without penalty. (Interest only, for the right proposition).

Auction Finance

We have access to funding products which are available and fast.

Example: Clients saw an attractive investment property in an auction catalogue. It needed some work but in advance of the auction they needed to know how much they could afford to bid. We arranged a flexible facility by the lender taking a charge on an existing property to provide them with the auction deposit and a credit limit with which to bid at the auction. The clients were prepared and put their hands up to bid with the confidence required!

100 per cent of purchase price and refurbishment works available – with additional security.

Advances from £10,000 to £1,000,000.

Terms up to 12 months.

England Wales and Scotland.

No upfront fees payable to the lender.

Payment options available.

After eight months the clients re-mortgaged to a buy to let lender at 75 percentage of the improved value (after renovating and renting out for six months) getting their capital back out and is now looking to buy another auction property.

Senior Landlord Lending

I have a number of clients in this position, myself included!

Many B2L investors started some years ago and now face limitations in getting mortgage finance for better deals, to release equity or to buy more. The difficulty is they have aged and are now in their mid-fifties or older with lenders placing age limits and portfolio limits in their lending criteria.

A research of B2L lenders at 75 per cent loan to value shows the following;

1 lender will allow term of mortgage to end by age 90 with no maximum present portfolio.

1 lender will allow term of mortgage to end by age 85 with no maximum present portfolio.

1 lender will allow term of mortgage to end by age 80 with no maximum present portfolio.

4 lenders will allow term of mortgage to end by age 75 with no maximum present portfolio.

Basically, only seven B2L lenders have an appetite for the older and experienced B2L investor.

Rates are competitive, but all have lender arrangement fees from £995 up to 2.5 per cent of the finance.

For example, a client aged 63 with 16 let properties could get 75 per cent interest only loan to value mortgage for a term of 26 years at an interest rate fixed for 5 years at 4.49 per cent followed by a variable rate, currently at 4.99 per cent subject to status and rental yield.

Most investors want to keep control of the properties well into old age as part of their retirement planning and building significant inheritance for the family.

Yield & Capital Growth

Much depends on long term strategy, flexibility, control of assets and exit planning. Property investment is a long term investment (unless, buying BMV to improve, develop, add value and sell on or ‘trading’ in HMRC terms),

What is the end game? If income in retirement is wanted, then perhaps best options are properties outside South East as they will provide the better taxable income in retirement in relation to value.

For example, one of our clients has 12 properties; average rent per property is £6,600 per year. He aims via a combination of making overpayments and selling to end up with six properties with no finance and have a gross rental income of some £39,600 (in addition to his other incomes (state and company pensions).

If capital growth for a lump sum in the future is wanted, then perhaps properties with the potential for stronger capital growth are needed, exit via sale with proceeds (after potential CGT liabilities) invested.

Perhaps a mixture is better with a spread of property types and locations to mitigate potential risks. Concentrating on one location for example, could be risky in that, what will the area be like in 20 years’ time? (It may have become an area out of favour).

As an example of putting eggs in one basket (or location) is the two chaps that have been business partners for over 30 years and have built up a substantial portfolio in what was a desirable area at the time and believed this location would continue to be desirable. Over time this location declined in value to become an area of high unemployment and, sadly a bit of a dump, with property values 40 per cent less than other locations within 30 miles. Food for thought.

All for now – email back if you’d like to chat to Peter about
mortgages, portfolios and ‘what next’.


admin@streetwisenews.com

 

Streetwise Property Alert 3rd June 2014

Welcome to the latest email of overseas property news and views…

Brazil Get-Togethers

Lots of you are looking at the latest Brazil introduction; the due diligence on that should be ready in about 10 days (although as we always stress, ‘you are an adult, it’s your money, so please take responsibility for doing your own due diligence and employing your own lawyer’). We can also offer get-togethers with the developer on various weekdays in London in June. Let us know if this interests you and we can set something up over the next two weeks.

Barcelona Update

The last time I was in Barcelona I took a hired, new, top-of-the range, Mercedes into an underground car park in the city centre and managed to prang both sides of it down there before trying to leave via the entrance. I am back there in early July with a group of would-be investors – a free report is coming – and will be using the metro this time.

Anyhow, I digress! According to the latest figures available from the National Institute of Statistics (INE), sales in Catalonia are up 43.4 per cent year-on-year and Barcelona makes up 65.7 per cent of those sales. Sales Director at uv10.com explains, ‘After seven or eight years in the doldrums, life is being breathed back into the Spanish property market with affluent, attractive, accessible places such as Barcelona leading the way. Prices here are as low as they are ever going to be, throwing up some great investment opportunities in one of, if not the best, cities in the Mediterranean.’

‘Barcelona attracts around one quarter of all foreign investment into Spain, largely because of its warm climate and culture, wonderful combination of urban and coastal life, thriving fashion scene and striking architecture. It also helps that Barcelona is well connected to the rest of the continent via motorway and high-speed rail links, as well as boasting excellent flight connections to northern Europe via an airport that is just 15 minutes from the city centre. From luxury million euro plus loft living in El Born to rental apartments in Eixample, Barcelona has an investment and lifestyle opportunity to suit every strategy and wallet.’ Want to know more? Serious, would-be buyers should email for a report of my visit.

Grenada – One To Watch

The latest World Travel and Tourism Council (WTTC) report, in association with Oxford Economics, reports that ‘travel and tourism’ is the fastest-growing sector in the world and draws particular attention to Grenada in the Caribbean. ‘In Grenada, the predicted (travel and tourism) figures are up to a higher-than-average 4.5 per cent per year, representing a significant 55 per cent ten year growth. Grenada also continues to be forecast as the third fastest developing country in the Caribbean for tourism, behind St. Lucia and St. Kitts & Nevis. Grenada is expected to attract 120,000 international tourists in 2014, with this figure rising to 175,000 by 2024.’

‘The island of Grenada is definitely attracting an increasing amount of interest, from investors and the travel and tourism sector alike. In addition to its stunning, internationally acclaimed, beaches (including Grand Anse, Petite Anse, Morne Rouge Bay, La Sagesse and Gouyave Bay to name but a few), the Isle of Spice is fast becoming a hotspot for sporting events. Already well regarded as a world class sailing destination (Island Water World Grenada Sailing Week), Grenada has now been named host to the Caribbean Premier League opener for cricket. The Guyana Amazon Warriors and Antigua Hawksbills will contend the opening fixture of this year’s Caribbean Premier League at the National Cricket Stadium in Grenada on 11th July.’ Let us know if this interests you and you would like to know more.

More On Istanbul

Istanbul has achieved the fastest growth in passenger numbers of all its competitors in Europe according to the latest statistics released on London, Frankfurt, Amsterdam and Paris. As a result, Istanbul’s emerging status as a global air travel hub will provide a boost to Istanbul’s growing property market for years to come according to property investment consultants Universal21.

Adil Yaman, investment director of Universal21.com – do take a look – comments, ‘Now that the plans have been approved for the new airport, development to the west of the city will gather pace. Previously unfashionable districts of Istanbul will benefit hugely from growth in business and trade while the Black Sea coast will see increasing numbers of tourists. Transport links to the area where the third airport will be built are excellent and don’t suffer from the congestion found in central areas of Istanbul. This makes property in districts like Beylikdüzü even more attractive to investors.’ More to come

France & Spain News

Just been trawling our BMV databases for France and Spain – some cracking deals in them! If you are a serious, would-be buyer in either of these two countries, do drop us a line. We can probably arrange for known-to-be-serious investors to have a look through themselves. If not, we can – if you submit your specifics – offer a matching service.

We are now at work on the June PDFs – these should be out in about a fortnight. More on those soon!

 

Streetwise Property Alert 2nd June 2014

Welcome to the latest email of news and views – we’ll start with a stunning offer we’ve been waiting to put out for two years…

BMV, No-Money-Down BTL Deals

100 per cent finance options available on a buy to let!

Here is a great way to buy property!

This is one of more than 15 properties like this a month we can now source, package and offer to members!

We have a three-bedroom, semi-detached property in Lanark, Scotland for just £34,000. This property is currently valued at £50,000. That’s an INCREDIBLE 30 per cent + discount.

The property is in excellent condition and comprises: spacious lounge, modern integrated fitted kitchen, three double bedrooms and bathroom. Externally, there is a lawn garden to the front, driveway and garage to the side and large garden to the rear. This would make a great buy-to-let investment or family home.

FULLY REFURBISHED

NEW KITCHEN

NEW BATHROOM

FULLY REDECORATED

To buy – using our unique system – you must have access to £5,000 – £7,500 for the front-end ‘enabling fee’ and have equity in a buy-to-let property or residential property. Please note there is also a broker and legal fees payable on completion of circa £1,000.

You will make most of these fees back in monthly cash flow in the FIRST 12 MONTHS as you will be collecting the full rent (£550 minus 10 per cent letting agent fee = £495) with no monthly loan/mortgage payment, that’s 12 x £495 = £5,940.

Our new system to buy property means you pay 0 per cent deposit and 0 per cent monthly interest on the money you borrow to buy the property. All you pay is a fee in month 12 that comes from the mortgage loan we will arrange for you.

At the front-end our business associates lend you the full £34,000 you require (via a charge on a property you own) and in 12 months’ time you remortgage the property you bought at 75 per cent LTV giving you a mortgage of £37,500.

After the Remortgage

Estimated Valuation £50,000

75 per cent LTV remortgage £37,500

Monthly interest £125 PCM

Monthly Rent £550

Letting Agent 10 per cent £55

Monthly NET cash flow of £370 PCM

You then pay back the £34,000 you borrowed plus a 5 per cent fee (£1,700).

You are then left with a NET Cash-back in your hand of £1,800.

If you decide to repay the initial loan after a 12 month period the repayment commission will be higher than the £1,700 and it will be based on how much your property has gone up in value. So it’s better to follow our suggestions and make the repayment within the first 12 months.

This opportunity to repay the loan in the first 12 months only works on our discounted properties so make sure you buy them while you can.

So, what are you waiting for? Don’t wait to buy property… Buy property then wait! Email back!

admin@streetwisenews.com

London Accreditation News

We note, in London, that Boris Johnson has launched the capital’s first ever rental standard, a city-wide badge of accreditation, ‘to help millions of Londoners rent with confidence and to give the city’s 300,000 landlords peace of mind that they are complying with the law and doing the right thing.’

The London Rental Standard brings together seven landlord accreditation schemes which will operate under a single framework. The badge will be awarded to all landlords and letting agents who meet a set of significant core commitments set by the mayor. These outline a minimum level of service that renters should expect including transparent fees, better property conditions, better communication between landlords and tenants, improved response times for repairs and maintenance, and protected deposits.’ The full London Rental Standard can be downloaded at: london.gov.uk/landlords and london.gov.uk/tenants

London – Still An Investors’ Hotspot

Strutt & Parker reports am increase in investors in London since 2012. As an example, more than 25 per cent of buyers in Chelsea are purchasing for investment compared with under 5 per cent back in 2012. ‘The rental landscape in prime central London is fast changing. Investors are no longer fixed on chasing high rental yields and are happy to invest for the capital growth alone. Consequently, investors
are incorporating larger family accommodation into their portfolios, resulting in more family houses coming to the market.’

‘With discerning, long-term renters now the norm, more and more landlords are comprehensively refurbishing their properties in order to attract the best tenants and this is also having an impact on pricing and the type of property most in demand. We are finding that there is no longer such as obsession with home ownership amongst our younger tenants. The majority of our tenants are in their 20s and 30s and very used to renting. Singles or couples in their 20s tend to favour one and two bedroom flats, whilst married or cohabiting couples in their thirties, sometimes with one baby, usually prefer three or four bedroom mid-size houses or large lateral apartments.’ Food for thought – and more to come as we are visiting again with investors next week.

All for today, but do hurry to reply if you want those BMV, no-money-down BTL deals – we will take the first 50 responses to form a group of would-be investors who will receive exclusive offers.

 

Streetwise Property Alert 30th May 2014

Welcome to today’s email alert…

France & Europe – What’s Next?

Ambrose Evans-Pritchard, The Telegraph’s International Business Editor in London, offers an outlook. ‘Be careful if you are planning to buy a house in France. The EU stress test for banks just released expects French property to fall 1.6 per cent this year and another 1 per cent in 2015 even if things go well.’

‘An adverse scenario is a cumulative drop of 31 per cent by the end of 2016. This reflects the worries of French regulators who fed the data to the European Banking Authority. Romania competes for horror. Italians deem their country less volatile. Spain falls 4.3 per cent this year, then starts to recover. The worst case is a 10.4 per cent drop over the next two years with rebound by 2016 even in a crisis. The Spanish regulators are delightfully optimistic as usual, seemingly living in a parallel universe.’

Student Landlord? Heads Up!

Accommodationforstudents.com, AFS, cautions landlords that the student exam season is almost over and will be swiftly followed by a mass exodus of students from their rented accommodation as they return home for the summer. ‘Organising a professional company to produce an inventory at the beginning of the tenancy and a pre-checkout meeting with students a couple of weeks in advance of them moving out could be the answer to avoiding a dispute altogether. It helps landlords maintain a positive reputation and gives students, who are often renting a home for the first time, a better chance to receive their deposit back.’

‘It’s an opportunity for landlords to resolve any problems in advance, or at minimum, ensure that an independent third party explains what the potential issues are so that the students are clear about grievances that may arise. In particular, if items are damaged or missing, it gives students a chance to source and replace them, as well as carry out any necessary works (cleaning, fixing etc), instead of it being deducted from the deposit or attempting to resolve discrepancies on leaving day.’

‘Student landlords should expect scuffs and scrapes, but not burns in the carpet or holes in the walls. The term is not explained in law and is very much a case of considering the merits of each incident – this is very much where a reputable, independent third party can be of enormous benefit. A pre-check out meeting also gives students time to discuss house matters with their house-mates, sharing any potential costs and responsibility before they head home for the summer, hundreds of miles away from each other.’ Food for thought.

Spain – A Quick Update

Growing interest in Spain amongst members so we have been looking at the new findings from the General Council of Spanish Notaries. Have to say, it’s more positive than it has been in some time. Key findings? Q1 2014 sales are up 45 per cent compared to Q1 2013. Mortgage loans are up 48.3 per cent over the same period. Note, of course, that we are
starting from low bases here. Interestingly, for those who focus on price per square metre, the average price over the year to the end of March 2014 is down 4.8 per cent to €1,248.

As mentioned previously, Chris Mercer of Mercers in Murcia suggests ‘mortgages’ are the issue that are restraining a real recovery. ‘If the Spanish government really wants to give its economy a shot in the arm, the banks should relax their lending criteria. The maximum loan-to-value for non-residents in Spain today is around 60 per cent. However, the purchaser also needs to pay up to 15 per cent of the purchase price in taxes and fees so, unless you’re buying a bank repossession where they may lend up to 100 per cent or more, you really need easy access to around half the money to buy a Spanish property. This debars a large number of people who require larger loans.’ Meantime, there are big opportunities here for those with cash.

All for now, see you soon.

 

Streetwise Property Alert 29th May 2014

Welcome to today’s email. If you have missed Pure FX’s weekly or monthly currencies reviews, they are here for you. Email back. Meantime… admin@streetwisenews.com

Turkey – ‘New’ Airport

It’s common knowledge – I hope – that a new airport coming in, or well-publicised, significant improvements to an existing one, help property prices in the area. How far do you want to drive once you’ve landed on holiday? 30 minutes? 45? That’s the area of impact.

We note this week that there are plans to upgrade Gazipasa Airport which is located 30 minutes east of Alanya in Turkey – improved infrastructure, more flights etc. As such, there may – may – be some knock-on effects. This is just a heads-up, we are taking a closer look not only at Alanya but also at the nearby resorts of Side and Belek. We welcome feedback if you are active here.

London – Still Upwards

I spent a pleasant afternoon in London this week with five investors who are looking to buy there; we visited hotspots and one or two projects. There is still upside here in the short-term. According to estate agents Haart, the average London property price has now reached £501,056.

‘London home owners will be forgiven for being astonished that they have seen an average £100,000 increase in equity over the last 12 months. In spite of London property prices breaking new records of over £500,000, up 9.4 per cent annually, buyers are still coming to the market in numbers greater than last year.’

‘The way to put the brakes on price growth is to increase supply, but in London we have only seen new property instructions rise 0.2 per cent annually and new properties for sale across the UK as a whole are down 1.7 per cent. Home owners can help break this cycle by putting their property for sale before finding somewhere themselves thus freeing up supply.’ We have another get-together in London next month; that’s already full (we only take six at a time) but we can offer feedback to members and there will be another in July and then September (I am in the US for August).

Singapore – Malaysia Trigger?

Our friends at OPP Connect report that a new HSR rail link from Singapore to Malaysia will ‘boost property values near the route of the line.’ The High-Speed Rail (HSR) line is due to complete in 2020 and cut the journey time from Singapore to Kuala Lumpur from six hours to 90 minutes.

Having done some due diligence on this, it’s fair to state that it – or at least the exact route – is not yet finalised so it is something of a ‘one to watch’ right now. We are keeping an eye on developments. Do let us know if you are interested in these markets; we have a relatively strong set of contacts there.

All for today, see you on Friday.

Streetwise Property Alert 28th March 2014

any of you are interested in buying off-plan property overseas. Here, to end the week, are some words of advice from Peter Esders…

Research the development, the surrounding areas and the town itself.

It’s easy to do some initial desk research towards your due diligence. There is plenty of official and unofficial information out there for you to read from your computer at home. You can Google.com and Yahoo.com for the nearest town to source official and other websites. From these, you can uncover estate agents and letting agents and tourist offices etc. Wherever you are buying, the developer and their agents will usually say something like “prices here are going up by xx per cent a year”. See if local contacts agree; and particularly those who do not have a vested interest in saying so. If you are buying into a development, visit it rather than buying sight unseen. You should not really buy anything without seeing it. Even if the website, brochure and specifications all look good, you need to see the area for yourself. You may find, for example, that there is a huge patch of land between ‘your’ development and the sea. That’s likely to be filled in by the time the development is completed.

Looking for fast profits from capital growth?

Make sure you Can sell the property onwards at completion. A developer or agent will often tell you that it is easy to sell the property on or around completion to someone else so that you only ever have to pay out for the deposit. This may be true – but equally, it may not be the case. Your solicitor – always employ a solicitor before signing anything – should check the contract to see that it is assignable as and when you want; and that there are no hidden-away restrictions. You should also research to see that the property will actually be in increasing demand on or around completion. There are always various ifs, buts and maybes than can occur between now and then. There may be many similar units coming to market at the same time. The development may be incomplete. The expected infrastructure may not have been completed. The low-cost airline may have stopped its regular flights. Work through the possible ‘what if?’ scenarios and be sure you can
handle the worst case situation.

Do some due diligence on the developer and their agents.

Most are perfectly respectable and honest, although you should always bear in mind that they are trying to sell to you. So you can expect them to highlight the positives. You cannot expect them to showcase any negatives. But you should not have to listen to lies and half-truths. You can start by making various checks to see if they are well-known and established, are registered in the UK (so they are covered by UK legislation) and don’t generate any negative comments when you Google.com and Yahoo.com for them. You should also talk to them and follow through on what they say. Some common comments that often turn out to be incorrect are as follows. “There is no problem getting a non status mortgage” is often stated, but not put in writing, prior to you paying a deposit. Read the small print early on. “A new golf course/marina/other major attraction is to be built close by soon” is a favourite – but the development never gets built and the expected wave of tourists never arrives. Visit the local town hall!

Seeking long-term lettings and capital appreciation?

Be sure you can rent the property out after completion. The developer and their agents will tell you that you can easily rent that property out for most of the year. Few will put that in writing though or make any sort of guarantee. Of course the developer and the agent are selling the property so you need to check what they are saying is correct. If an estate agent in the UK told you you’d let a property easily, you’d check with local letting agents first. You need to do the same in an overseas market. If you are holding on beyond completion, number-crunch your finances as it may take several months to find a tenant. That’s especially likely if the development and infrastructure are incomplete or, vice versa, the development is complete and many similar units are available to rent. With a holiday let, you will do well to get a 60 per cent occupancy rate over the year. Number crunch your finances with three, four and five void months and/or 60, 50 and 40 per cent occupancy. Talk to other investors with comparable properties to see what they achieve.

Always get your own independent, professional advice.

Increasingly, developers offer you a complete package; a mortgage broker, a surveyor, a solicitor, and so on. All you have to do is to pay the deposit! Everything else is done for you and you can sell on completion and recoup your deposit and more besides. If only it were that straightforward and easy! If you bought a property in the UK, you would source your own mortgage via a broker anD would have your own survey and valuation done. You would not rely on the seller of the property to provide this information. Nor should you overseas. Similarly, you would not use the seller’s solicitor (especially if they put 100’s of deals via the solicitor and you are only doing the one). You may hear comments such as “No, you don’t need an independent lawyer – everyone uses ours. It’s quicker and easier.” Your own English-speaking solicitor who is close to hand is a must. The developer or agents will tell you, for example, “Of course the property has planning permission”. Your solicitor will check!

More to come on off-plan buying and other ‘hot’ topics such as fractional ownership shortly. Do also let us know what topics most interest you, which countries, and so on.

Streetwise Property Alert 27th March 2014

Welcome to today’s email…

Licences – More News

We don’t know how long it will take but we are pretty sure that the BTL/HMO licence issue is going to run and run, with more and more councils setting up schemes. There will come a day, not too far off, when you will have to get a licence from your local council when letting – and if you have, say, 12 BTLs across the county, you will need up to 12 licences.

Milton Keynes looks set to be amongst the next area to introduce licences according to local press reports. Let’s quote, ‘Licencing of the private housing sector could help Milton Keynes Council track landlords not doing their job properly. Councillors said that licencing would put HMOS not up to scratch more accountable and they felt landlords could easily afford it themselves without passing the fees on
to residents.’ More to come. Much more.

Value-Adders!

A good article has come over from MortgageIntroducer.com – good site, pay a visit – on increasing the value of property.

Space Is Key

Converting a loft can add instant value to a house. It may seem like a large project to take on but the returns for a conversion can take a property from a two bed to a three bed, which is a strong move. Dependent on property type and location this can cost anywhere between £15,000 – £80,000. This type of conversion has the potential to increase the value of a home by 10 – 20 per cent.

Central Heating

A home must be fit for purpose when it’s sold. Adding or updating the central heating system will add more to the value of a property than it costs. It will be considered a crucial selling point by most buyers.

A Lighter, Bigger Space

People who are looking to build a conservatory have the right idea about increasing the living area in their household in order to increase its value. The cost of a conservatory will set a client back between £3,800 and £10,000; averaging at around £6,236.

A Lick Of Paint

Getting potential buyers through the front door is a key factor. To give the outside a few coats of paint could cost anything from £100 to £1,000 (size dependent) but has the potential to provide a 400 per cent return on the initial investment. Painting the inside rooms a neutral colour will create a minimal clean feel, while giving the potential home owners a blank canvas to build an image of ‘their new home’.

Window Of Opportunity

Changing the windows can also be a solid way to guarantee value increase. However, bear in mind the windows must match the general aesthetic of the property. This visual aspect should factor into the decision process in this case. New windows have the advantage of insulation and contemporary design, however if the age and originality of the property requires a certain style of window your clients should be wary of jumping straight in as they could end up with a warmer yet uglier home.

A Lighter, Bigger Space

People who are looking to build a conservatory have the right idea about increasing the living area in their household in order to increase its value. The cost of a conservatory will set a client back between £3,800 and £10,000; averaging at around £6,236.

The Kitchen

As a showpiece this is a priority room. For many people the kitchen has evolved into the family room where most time is spent. The typical spend on a new kitchen is £8,000 but a good quality kitchen can be achieved on a much smaller budget. If money is tight and a full refit is not in their budget, suggest they consider changing certain elements of the kitchen such as cabinets and furnishings to give it a fresh new look.

First Impressions

It’s good advice to touch up the paint work and the flooring in the main reception room. Whether that is the corridor leading through to the house or the just the first room buyers step into. Sellers should de-clutter and create a tidy and presentable first impression for visitors. Many buyers are looking to move into a house that is ready and functional with little refurbishment necessary.

Knock Knock!

It’s amazing what people notice when they are viewing a property. The front door should tell them what they need to know about the interior of the house. It can make a big difference for your seller clients just by buying a new doorknob, letterbox or stainless steel house number.

This article came from Mortgage Introducer.com. Do check out the site now.

London – Some Figures

A five year outlook from Savills makes interesting reading; it suggests inner London boroughs will see 23.1 per cent price rises whilst other London locations will rise by 22.7 per cent. ‘The gap between prime central London and its prime commuter markets has probably peaked and wealth has finally begun to flow out of the capital. We have already seen the predominantly domestic markets of outer prime London out-performing prime central London over the past year and anticipate that 2014 will be the year when the value gap between London and the lead suburbs and prime inner commuter belt finally begins to narrow. ‘

‘A number of risks to the prime London markets, most particularly around Eurozone default, have receded over the past two years. But because the taxation of high value property is likely to be a contentious policy issue in the run-up to the 2015 general election, a lull in price growth in the period prior to polling day is expected.’

That’s it, see you on Friday.

Streetwise Property Alert 26th March 2014

Many of you are interested in buying off-plan property overseas. Here, to end the week, are some words of advice from Peter Esders…

Research the development, the surrounding areas and the town itself.

It’s easy to do some initial desk research towards your due diligence. There is plenty of official and unofficial information out there for you to read from your computer at home. You can Google.com and Yahoo.com for the nearest town to source official and other websites. From these, you can uncover estate agents and letting agents and tourist offices etc. Wherever you are buying, the developer and their agents will usually say something like “prices here are going up by xx per cent a year”. See if local contacts agree; and particularly those who do not have a vested interest in saying so. If you are buying into a development, visit it rather than buying sight unseen. You should not really buy anything without seeing it. Even if the website, brochure and specifications all look good, you need to see the area for yourself. You may find, for example, that there is a huge patch of land between ‘your’ development and the sea. That’s likely to be filled in by the time the development is completed.

Looking for fast profits from capital growth?

Make sure you can sell the property onwards at completion. A developer or agent will often tell you that it is easy to sell the property on or around completion to someone else so that you only ever have to pay out for the deposit. This may be true – but equally, it may not be the case. Your solicitor – always employ a solicitor before signing anything – should check the contract to see that it is assignable as and when you want; and that there are no hidden-away restrictions. You should also research to see that the property will actually be in increasing demand on or around completion. There are always various ifs, buts and maybes than can occur between now and then. There may be many similar units coming to market at the same time. The development may be incomplete. The expected infrastructure may not have been completed. The low-cost airline may have stopped its regular flights. Work through the possible ‘what if?’ scenarios and be sure you can handle the worst case situation.

Do some due diligence on the developer and their agents.

Most are perfectly respectable and honest, although you should always bear in mind that they are trying to sell to you. So you can expect them to highlight the positives. You cannot expect them to showcase any negatives. But you should not have to listen to lies and half-truths. You can start by making various checks to see if they are well-known and established, are registered in the UK (so they are covered by UK legislation) and don’t generate any negative comments when you Google.com and Yahoo.com for them. You should also talk to them and follow through on what they say. Some common comments that often turn out to be incorrect are as follows. “There is no problem getting a non status mortgage” is often stated, but not put in writing, prior to you paying a deposit. Read the small print early on. “A new golf course/marina/other major attraction is to be built close by soon” is a favourite – but the development never gets built and the expected wave of tourists never arrives. Visit the local town hall!

Seeking long-term lettings and capital appreciation?

Be sure you can rent the property out after completion. The developer and their agents will tell you that you can easily rent that property out for most of the year. Few will put that in writing though or make any sort of guarantee. Of course the developer and the agent are selling the property so you need to check what they are saying is correct. If an estate agent in the UK told you you’d let a property easily, you’d check with local letting agents first. You need to do the same in an overseas market. If you are holding on beyond completion, number-crunch your finances as it may take several months to find a tenant. That’s especially likely if the development and infrastructure are incomplete or, vice versa, the development is complete and many similar units are available to rent. With a holiday let, you will do well to get a 60 per cent occupancy rate over the year. Number crunch your finances with three, four and five void months and/or 60, 50 and 40 per cent occupancy. Talk to other investors with comparable properties to see what they achieve.

Always get your own independent, professional advice.

Increasingly, developers offer you a complete package; a mortgage broker, a surveyor, a solicitor, and so on. All you have to do is to pay the deposit! Everything else is done for you and you can sell on completion and recoup your deposit and more besides. If only it were that straightforward and easy! If you bought a property in the UK, you would source your own mortgage via a broker and would have your own survey and valuation done. You would not rely on the seller of the property to provide this information. Nor should you overseas. Similarly, you would not use the seller’s solicitor (especially if they put 100’s of deals via the solicitor and you are only doing the one). You may hear comments such as “No, you don’t need an independent lawyer – everyone uses ours. It’s quicker and easier.” Your own English-speaking solicitor who is close to hand is a must. The developer or agents will tell you, for example, “Of course the property has planning permission”. Your solicitor will check!

More to come on off-plan buying and other ‘hot’ topics such as fractional ownership shortly. Do also let us know what topics most interest you, which countries, and so on.