Archive for July, 2009

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Desperate to Sell House?

July 31st, 2009

There have been many reports saying that the decline in property prices has come to a halt and may now be starting to rise.  There seems to be some evidence pointing to this.  But equally we have still to see the effects of higher unemployment with the jobless total expected to rise to 3.2 million in 2010.  The increase in unemployment may well force prices down again but we think the recover will start later in 2010.

But what if you are desperate to sell your house today?  How do you find a buyer that can complete? The problem is that many buyers are struggling to get a mortgage, or at least sufficient deposit to go with their mortgage.  It can take months just to get one or two viewings, much depends on the type of property you are selling, the property location and the local economy.

There is a solution, that is to sell your house to a property investor, they will not pay the top price for your house but they will be able to purchase quickly freeing you up to move on.  At RepayMortgage they specialise in finding private property investors and at any one time have over 450 active investors throughout the UK who can make an offer and complete the purchase within a few weeks.  To find out more just give them a call on 0800 8200 285 or 020 8366 8211.

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Posted in Fast House Sales

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Are house prices now on their way up?

July 30th, 2009

There has been some good news reported recently regarding data on increasing house prices.  Firstly Land Registry recorded an increase in June of 0.1% (England and Wales average), only a small increase but this is very positive news considering the previous months where Land Registry recorded decreases.

This was followed by a report from RightMove that property asking prices were increasing, and notably in London where they recorded an increase of over 1% in the average asking prices, however there were also reports that the increases were due to lack of properties for sale to satisfy the modest level of buyer demand.

We decided to carry out a small survey ourselves, to hear first hand what estate agents think about current house prices, our survey was small (6 companies in North London) but we had a 100% consensus.  Every estate agent we spoke to said the same thing, there is a shortage of properties on the market which is pushing up asking prices or at least the vendors reluctant to drop.  The estate agents were also reporting a lower level of completions, so for them the property market still has a long way to go.

It was an interesting survey, only a small sample but it did support the general view on house prices at the moment – asking prices generally going up.  But, there is a clear underlying view that we that picked up, asking prices are only increasing due to lack of properties for sale, this is not a normal buying and selling market so caution still applies.

This last point is picked up when we look at mortgage lending.  Banks are still not providing sufficient mortgages to meet buyer demand.  Skiption Building Society’s recent report captures this, mortgage lending for the first 6 months of 2009 totalled £218 million, for the first 6 months of 2008 they provided £922 million in mortgages.  That is a massive reduction of over 75% in mortgages provided.  Skipton commented that raising funds for mortgages was challenging in the current market and this had affected their ability to lend.

So to sum all of this up….

There is now sufficient evidence to show that house prices are increasing.  But they key underlying factor seems to be a lower level of sales.  As long as would-be sellers do not rush to put their properties on the market we will maintain the supply-demand balance for house price stability.  Equally if lenders start to increase the number of mortgages provided this will underpin the market and potentially help prices to start increasing again.  Our view is that house prices will ease back again during the winter months, but we expect to see increases in  average house prices during 2010.

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Posted in UK House Prices

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Bank Bad Debt Write Off

July 29th, 2009

Bad news today = good news tomorrow?

On Tuesday 28 July the Deutsche Bank made provisions for bad debt of €1bn, the write-off being against loans including homeowner mortgages.  Now the focus is on the UK high street banks; Barclays, Lloyds, HSNC, etc to see what their write down for loans will be.

It is interesting to stand back and see what is happening here.  The banks are effectively “clearing their books” of “potential” bad debt, whilst this hits short term profits it significantly improves the bank’s remaining loan book, in effect improving the bank’s risk rating. 

This is of particular significance when taken together with the UK banks’ approach of only taking on very low risk loans, e.g. where a mortgage is given agaisnt a property at a LTV (loan to value ratio) of 70% (buy-to-let) or a maximum of 85% to 90% (homeowner).  The overall effect, in combination with the write downs of riskier loans, creates a very robust loan book for the banks.

Overall this is good news for the economy in the longer-term as once the banks have more robust loan books their risk rating as perceived in the money markets will be much improved.  The improved risk rating will allows banks to obtain finance at a more competitive interest rate, which in turn (hopefully) will be passed onto the property buyers and business through their mortgage and loan applications.

So, maybe this is good news for “tomorrow”.

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Posted in UK Economy

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Mortgages direct from lender

July 28th, 2009

The credit crunch has taken its toll on the number of mortgage products (in particular for buy-to-let) and naturally on the number of mortgage brokers. We have found out first hand the advantages of approaching a bank directly … read on.

In 2007/2008 there were 1000+ mortgage products, buy-to-let landlords and home buyers could obtain mortgages with ease using a self-certification income. Today the number of mortgage products has dropped significantly, and some banks are now offering products direct, not via a mortgage broker. The upshot is that many mortgage brokers will not be able to get you the best deal, you now need to do some more research yourself.

Whilst we believe mortgage brokers are a key resource for property buyers you should not rely on them exclusively, here is our case study:

  • Buy-to-let property mortgaged with the same bank for 10 years. An equity release was required to build up a fund to buy other properties.
  • A reputable mortgage broker was appointed to find a product. The offer was a tracker at BBR + 3% for 2 years, then revert to the lender’s SVR. There were admin fees and a 3% arrangement fee to pay. After 4 weeks the mortgage failed to complete due to a small technicality about the property freehold – banks often look for excuses not to lend.
  • Next approach was to the existing mortgage lender (should have done this first). They offered the same SVR interest rate for a remortgage equity release, and best of all only £255 in admin and legal fees. Note that this bank was no longer offering products through mortgage brokers, the advantage we had was the existing bank relationship and a known low-risk profile.

 Clearly this example does not apply to everyone, however it does support the view that approaching an existing bank with whom you have a proven history of mortgage borrowing could save you time and a lot of money in fees!

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Posted in Mortgages

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Why UK banks struggle to lend money

July 27th, 2009

We recently blogged about overseas banks such as Leumi of Israel and the Bank of China entering the UK market to undercut the traditional UK banks.  Today Alistair Darling, the Chancellor of the Exchequer is to meet the main UK banks to discuss their inability to lend. But maybe the Chancellor really knows why the banks are not lending, or at least he should know!

At a meeting with a senior manager of Lloyds we were told that they were struggling to lend because of the criteria placed on them by the UK Government.  The main issue was that Lloyds, as with other UK banks, had to increase its cash reserve.  This had a knock-on effect, subsequently we were informed that HSBC was to call in £1billion of commercial lending in the UK during 2009. it very much appeared that that our UK banks were all taking a similar action, that was to increase their cash reserves to meet Government regulation.

So, going back to Alistair Darling’s meeting with the banks today, maybe what is needed is to relax the criteria (to a degree) allowing banks to operate under less strict cash reserves.  Such action will allow the banks to increase lending.  It is all about balance of risk here, allow the banks to reduce cash reserves too far and they could risk failure, but placing too higher (short term) target to increase cash reserves could change what is a substantial recession into a depression. 

The overall conjecture here is that if overseas banks are entering the UK market and undercutting the UK banks then there must be a market for profitable and relatively secure lending.  So there has to be a reason other than market forces which prevents the UK banks from lending at more attractive rates.  And that reason must lay with the UK’s tripartite regulation; Bank of England, FSA and UK Government, reviewing the regulation could have a positive impact on lending within the UK economy.

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Posted in UK Economy

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Handelsbanken and Leumi Mortgages

July 26th, 2009

More foreign banks are joining the influx of banks to provide mortgages on UK residential property.  Yesterday we reported the Bank of China had entered the UK market, now we have learnt that Handelsbanken of Sweden and Leumi Bank of Israel are also now providing mortgages in the UK.

This is fantastic news for anyone seeking to buy UK property, especially for buy-to-let investors who are currently getting very poor deals from the British banks.  Here are some examples of what we understand is available from the non-UK banks:

Buy-to-let 3% over base rate tracker mortgages with 25% deposit

Lower arrangement fees, typically from £995

Buy-to-let mortgages based on 100% rental cover (most UK banks require 125% cover)

Leumi bank we understand is offering a tracker mortgage at just 1.625% above 3-month LIBOR, that is a current rate of around 2.56%.  This compares with the best UK bank rate of 2.95% from HSBC.

The fact that foreign banks are entering the UK market suggests that they now see it as very profitable to lend here, and maybe they see that property prices are at or nearing the bottom of the market – so for them, their loans are secure.

As to getting access to these loans you need to find an approved broker.  So far we have found the following can access the Bank of China mortgages:

  • Savills – 0870 900 7762
  • Legal & General Mortgage Club – 01226 230504
  • LargeMortgageLoansUK – 020 7519 4900

Maybe the tide has finally turned and we will soon see the big name banks on the UK high street offering mortgages at more reasonable rates.

Buy-to-Let investor looking for BMV Properties at discounts to todays valuation? << click here

Do you want to check tenant backround for financial risk? << click here

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Posted in Buy-to-Let, Mortgages

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Bank of China Mortgage

July 25th, 2009

We’ve been used to the proliferation of Chinese restaurants, now almost on every high street, then Chinese imports as their economy flourishes.  Now Bank of China Mortgages are here, maybe they see the UK as a great opportunity?

There has been much publicity regarding UK banks and the higher mortgages costs, lack of availability, etc, and we have blogged about them here.  but maybe, just maybe, the Bank of China could start to change the banking market for the better by introducing much needed competition and more cash.

The Bank of China will offer mortgages to both Buy-To-Let investors and homeowners, with mortgages starting at around 2.5% over BBR (which is an effective rate of 3% as at July 2009).  As yet we do not have details on the all-important loan-to-value (LTV) they will be offering, but it cannot be any worse then the UK banks are currently offering, and hopefully much better.

But dint think it is just a simple process of going to your current mortgage broker as they may not be able to access the Bank of China, it is understood that the mortgages will initially be brokered through Savills, and the Legal & General Mortgage Club.  Other brokers are expected to be appointed by the Bank, but it seems not all brokers will have access. 

Lets hope this move the the Chinese Bank will provide a much-needed shake up of the UK banking system and kick-start the mortgage lending to help with the recovery of our battered property market.

Here are some contact details of brokers providing access to mortgages with non-UK banks….

  • Savills – 0870 900 7762
  • Legal & General Mortgage Club – 01226 230504
  • LargeMortgageLoansUK – 020 7519 4900

Looking for buy-to-let properties?  BMV Properties at discounts to todays valuation? << click here

Before letting don’t forget to check tenant backround for financial risk? << click here

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Posted in Fast House Sales, Mortgages

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Tenant Reference

July 25th, 2009

As a new private buy-to-let investor having made your first property purchase it can be a daunting time dealing with the (initially) complex task of letting your property. One of the key requirements for most landlords is an appropriate tenant reference. Think of it this way, if you are about to let a property with a rent of £750 pcm (£9,000 per year) that is a lot of trust you are placing in a tenant. 

Some new landlords may think it is not such a problem, as soon as they miss a rental payment you will ‘kick them out’ of your property.  The reality is you cannot do this without applying to the courts for eviction, the process can take months, and in the mean time the tenant could pack their bags and move out having been in the property “rent free” for several months  Worse still they may have left you with damages and other debts.

So ask yourself these questions:

  • Do I know the identity of this tenant,is it genuine so that I could later trace them if they let with debts owing?
  • Is the tenant I am about to let to encumbered with large unpaid debts and being pursued by a  third party for County Court Judgements?
  • And how can I assess what the overall risk factor is for the tenant about to take on my property?

These are just some of the questions that can be addressed with an appropriate tenant reference.  Companies such as Credit Check Services will provide a tenant reference from just £8.95 (as at July 2009) for a CCJ / Bankruptcy check based on a full linked address search. For just £18.95 (Gold report option – as at July 2009) they will provide a report including a tenant risk rating and additional identity checks.

Don;’t get caught out, make sure you get an appropriate tenant reference before letting your property.

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Posted in Buy-to-Let

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GDP falls and the impact on house prices

July 24th, 2009

Today it was announced that UK GDP fell by 0.8% after a fall of 2.4% in the first quarter of 2009. But what does this mean for the green shoots of recovery some have referred to and how does it affect house prices?

The previous comments of “green shoots” have been somewhat speculative, there is too much uncertainty to talk of green shoots with any confidence. One of the key factors, which has yet to have its full impact on the UK economy, is the rising unemployment. No one can forecast with certainty but there seems to be a degree of consensus that unemployment will reach its peak of around 3.2m during the second quarter of 2010 – so we have around 9 to 10 months of increasing unemployment to come. Clearly as more people lose their jobs it is going to have a negative effect on the economy.

The next point to consider is how the GDP figures is derived, for example not all parts of the UK economy are affected in the same way. The data that particularly stands out is the sharp contraction in construction which reportedly contracted by 2.2.%, much more than the overall 0.8% for the wider economy. This contraction in the construction sector reflects what is still being experienced in the property market – falling house prices.

So what about the future of house prices? The best estimate for the next 6 months is that we will not see any recovery in prices, and we may not see any recovery for another 12 months until after we have reach the peak in unemployment.

Looking further forward becomes more speculative, as previously reported in our blog, some analysts are suggesting it will be at least 2015 before house prices recover to their 2007 peak. But, there is another factor to consider, as the building of new homes has sharply reduced it will take some time for capacity to increase again, it is possible this will contribute to a supply-demand imbalance as the economy starts to recover further in 2011 and 2012, so we could see some house price recovery a little earlier than 2015. Only time will tell.

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Posted in UK Economy

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Urgent House Sale

July 24th, 2009

Need an urgent house sale?  Then read more.  It is a sign of the times that many vendors simply cannot find a property buyer for a quick house sale … never mind an urgent house sale.  Properties are listed with agents, sometimes at very attractive discounted prices, but still no buyers can be found.

The reality is however the fast property buyers, often with cash resources, do exist and are able to complete a very fast property purchase, but you just need to find them.  So how do you find a fast property buyer?

The simple answer is to go to a specialist fast property buyer company. Such companies purchase properties for their own portfolios and also on behalf of other affiliated private investors. And it really is possible for them to complete a purchase in 7 days, amazing but true.

If you are in a situation where you need to sell fast then you can click on the link to the right (quick house sale) or call 0800 8600 285. If you refer anyone selling a property you can also get a commission if the sale goes through.

One last point to note. When selling a property in this way to a private investor or company you do not pay any fees, no need for a HIP, it is a straight forward sale processed through solicitors with no other agents involved.

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Posted in Fast House Sales

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