Sharp fall in mortgages for house purchases

The government’s efforts for the revival of the housing market have not encouraged first-time buyers to avail mortgages for house purchases. According to data from the Council of Mortgage Lender’s (CML), only 35,000 loans were approved during September.

The number of new loans for first time home buyers was down by 15% in September compared with that in August. The figures were almost 50% less than September 2007, when 80,000 deals were approved by lenders.

The CML data also reveals that average value of first-time buyer loans dropped from £108,000 in August to £104,500 in September 2008, much below last year’s price of £119,250.

In the last three months to September, total number of first-time buyers went down to 44,500 against 164,400 during same period in 2001 at the market peak.

Government has tried to help aspirants of house ownership by raising limits for stamp duty payments to £175,000. 51% of buyers availed of this benefit in September 2008 compared with 22% who were exempt from payment of any stamp duty in September 2007.

CML also noted that in September only 62,000 borrowers applied for remortgage deals against 74,000 in August, amounting to 15% fall. The figures are reflecting lenders’ tactics to reduce risks.

According to the CML, limited availability of funds is making it difficult for the building societies and banks to support homeowners despite their eagerness to help them.

UK landlords urged to ensure proper upkeep of gas and heating equipment

Authorities in the UK are urging all landlords to ensure that heating systems and gas appliances in their rental properties be maintained in proper working condition to avoid loss of lives from gas leakages and fires.

As numbers of people die needlessly each year in Britain, it has become major safety issue for the authorities. Landlords are also hard pressed with the provision that failure to comply with strict gas regulations would be penalised with very hefty fines. In a recent case of failure a landlord was ordered to pay whopping £4,000 for not carrying out improvements in gas appliances of her property. A serious problem with this landlord was that tenants used to sleep in the room where gas appliances were installed. This is a serious violation of safety norms under the UK safety regulations. The landlord had ignored earlier warnings from the authorities and did not comply with their recommendations.

At the time of final inspection, authorities discovered total of 10 defects, three of which were considered to pose serious threat to the safety of tenants.

According to government inspector, Stephen Manley, if landlords would ensure regular inspection and upkeep of gas appliances several precious lives could be saved from fatal accidents.

Fewer private sector firms expanding property portfolios

The latest real estate survey by CBI/GVA Grimley Corporate Real Estate shows that many private sector firms were refraining from expanding their property portfolios.

The survey, which involved private sector firms of all sizes and from different regions, highlighted that 24% of the firms are planning to cut their portfolios in coming 6 months.

The survey also revealed that balance +3% increased their holdings in last 6 months which is much slower rate for growth compared to previous +15%.

Retail, leisure, manufacturing and financial services showed wide differences. Retailers’ property holdings rose in last 6 months but no change is expected in the next half, while leisure sector’s modest growth in property holdings is likely to shrink sharply over next 6 months. Financial services and manufacturing services are going to intensify reduction.

80% of the firms which participated in the survey stated that economy downturn and credit squeeze had adverse impact on property holdings.

Half of the respondents to survey informed that surplus holdings had become an issue for them. Retail has 66% surplus, manufacturing 61%, chemicals, extraction and utilities 90% and leisure 64%.

GVA Grimley informed that trend in reducing property holdings is accelerating amid apprehension of significant fall in demand over next 6 months.

Survey also revealed that businesses of half of the firms were affected due to payment of vacant rates, the most affected being engineering and transport firms. 20% of the respondents were considering demolition of vacant properties while 40% were advancing surrender of leases to landlords.

Goodman likely to lower rent to attract tenants for Leicester office scheme

The international property group, Goodman, owner, developer and manager of industrial space and offices, launched final phase of regeneration project, worth £25m in Leicester.

Two Colton Square with 55,040 sq ft would have high quality offices and leisure space on four floors. Colton Square, located in the New Business Quarter would be first A Grade office development in Leicester’s centre regeneration in more than a decade.

High profile businesses Freeth Cartwright and Cooper Parry are among the tenants from the first phase of development to occupy One Colton Square in May 2007. But nearly half of the 50,000 sq ft. space is still unoccupied.

The development of Two Colton Square on Charles Street involved restoration and retaining of original features of the Grade II listed building.

Goodman’s UK development director, James Raven is negotiating with potential tenants. He said that Goodman would adopt pragmatic approach to the aspiring tenants.

Goodman might consider lowering of office rental price from £16.50 sq ft to nearly £13 sq ft to attract tenants to the second phase of development.

Colton Square is being developed as part of Arlingto Business Parks Partnership fund. Other Goodman’s schemes include Eastside Locks in Birmingham City Centre and Birmingham Business Park.

Higher income properties are more popular with buy-to-let investors

Property investors are acting wise. They have started re-evaluating their portfolios and opting for cash positive, high income property, according to property investment specialist Assetz.

As costly mortgages started affecting returns on investment, investors were finding their buy-to-let property cash negative. This made higher income properties like hotel rooms, holiday homes and student accommodations more popular.

According to Chief Executive of Assertz, Stuart Law, investors were always advised to supplement capital growth property with good income rental income property, but they relied more on speculative property and lost in the market. This situation and increasing mortgage costs have compelled investors to re-evaluate their portfolios and attain balance by acquiring higher income property or sell cash-negative units as last option.

This should be the approach of investors even if a property lends capital growth over the years, advised Stuart Law. The property should be cash positive or investors should invest in high income property for balancing cash-flows out,

He further added that UK holiday homes, student and hotel rooms were top resources for reliable rental income along with capital growth.

According to Stuart Law, demand for hotel rooms and student accommodation has been high. They are secure investments for high returns and rental yields to the tune of 8%. UK holiday lets are giving high yields at low entry costs, he added.

Huge number of homes lying unoccupied in England

The findings of the fifth annual survey of Empty Homes in England conducted by Halifax revealed that more than 2.5 million properties in the country were unoccupied.

According to the survey data, reduction in number of empty private homes was near about 9%, from 308,438 in 2003 to 279,281 in April 2007.

Halifax’s chief economist, Martin Ellis, was happy to see the fall in numbers. He commented that reduction of nearly a tenth in the empty houses in England over four years was highly encouraging.

But for him it was a matter of great concern that number of areas, particularly in the north of England were having significant number of homes unoccupied. In some areas the proportion of unoccupied homes was double the national average, Ellis added.

The alarming results, at a time when people were unable to get accommodation or buy property due to acute credit crunch, speaks volumes on gloom in the property market and economy.

The findings of the survey have been announced before commencement of Empty Homes National Week of Action in this month from 24 November to 28th.

Halifax urged extension of 5% rate of VAT for restoration of UK property for all homes which remain empty for more than 6 months.

Mortgage adviser proposing new bank for buy-to-let owners

Struggling landlords who are unable to remortgage are likely to benefit from new schemes being proposed by the mortgage advisers.

The Bank of England, in its Financial Stability Report had stated that buy-to-let borrowers failing in mortgage repayment would be forced to sell at prices much lower than their purchase value as lending was becoming much tighter.

In the midst of warnings of increasing repossessions in private rented sector, caused by the collapse of buy-to-let lenders and housing market slump, there is a ray of hope for the landlords.

Mortgage adviser, Egerton Partners, is working on creation of bank of investors who might be willing to provide capital for buy-to-let owners whose property portfolios fall in the £5 million to £30 million range.

A partnership agreement between the investors and landlords would allow landlords to retain portfolio ownership while investors would benefit from return on properties up to a fixed limit. This type of arrangement would enable landlords to avoid sale of property at loss during market slump and may offer rise in rental income, if it goes beyond partnership agreement.

More schemes of this nature which will help the struggling buy-to-let sector and minimise repossessions are likely to emerge in the coming months, feel the experts.

Nationwide’s survey reveals 15% fall in house prices

According to the Nationwide Building Society, the unabated slump in the UK house prices continued for the 12th consecutive month.

The latest survey by the Nationwide, points out that prices went down by 1.4% in September, taking early rate of fall to 14.6% from 12.4%. This fall has wiped off £27,000 from property value taking average cost of property to £158,872.

Nationwide reported that number of completed housing sales had touched lowest level since 1974. According to its chief economist Fionnuala Earley, number of purchase transactions completed as proportion of total mortgages stock was at lowest level since beginning of the series 34 years ago.

She stated that housing and mortgage markets were bound to be impacted by financial instability and recession and as a result house price recovery would move at much slower pace.

The Centre for Economics and Business Research (CEBR) has predicted 25% fall in house prices from peak of last summer. It believes that until 2013, house prices would not recover to the peak it reached in 2007. As per this forecast, 2.5 million homeowners are likely to go into negative equity.

According to Standard & Poor’s, 60,000 homeowners were getting pushed into negative equity each month on account of price slump.

Now it is house rents turn to plunge

While everything else in the housing market and other businesses has been going down, it is the turn of house rents to plunge now, but for great relief to the renters in the UK.

A flood of unsold homes onto the letting market is making rental prices plunge, said Jessie Hewitson.

When people and businesses have been talking of cost increases and losses, renters are happy that they would be able to save something in rents during the acute cash crunch.

A large number of homeowners, unable to find buyers, are compelled to let their homes instead. This has caused spurt in number of houses in rental market, leading to rents going down.

According to a property-search website report there was steep increase of 13.8% in to rent properties in June, by July it was further up 0.8% and 4.65% in August. This led to falls in rent. The UK rent average in June was £950 which dropped to £850 in July and to £835 in August.

The fall in rent in Durham during June to September was 11.2%, 7.3% in Edinburgh, 4.2% in Leeds and 4% in Newcastle.

According to Hamptons International rents went down 5.5% in London compared with 4.2 across the UK in the past 3 months. It also reported that rental stocks in London’s St. John’s Wood and Knightsbridge areas had doubled compared to those during same period last year.

Emilie Dawes, letting director of Marsh & Parsons, described oversupply of homes leading to reduction in rent, as huge surprise to landlords.

Property owners advised to seek consultants’ help for improving saleability

The UK property owners have been advised to seek help of experts in making home improvements to improve saleability of their properties.

Renowned property expert, Phil Spencer, has called owners, intending to sale their houses with expectation of good returns at a time when house prices are falling sharply, to consult experts in making their houses more attractive to potential buyers.

He encouraged homeowners to obtain professional advice on all matters related to property since it would save them lot of money in the long run.

Phil Spencer explained that some of the decisions that owners take including whether to improve or move, and if they decide to improve, the next question arises what should be improved to get more returns with minimum investment, are very important and require deep thinking.

Spencer suggested that improvements such as insulating hot water tank, which are relatively cheap and small, could result in handsome returns.

A research involving property owners as respondents, commissioned by Lloyds TBS in October, revealed that 73% owners in London believed that improvement of kitchen was the best thing to do for making property more sellable.

The research also showed that nearly 50% of estate agents in London reported substantial increase in number of properties being taken off the market for improvements.