Strong Start for Help to Buy, say Lenders

This article by BBC News Business on November 11th, 2013 reveals that house prices in the UK have returned to their pre-crisis levels.

 

House prices in the UK have returned to their pre-crisis levels according to some figures

 

Two major lenders have reported a strong uptake in the first month of the government's extended Help to Buy mortgage guarantee scheme.

Royal Bank of Scotland (RBS) and Halifax said they had received a total of 2,384 applications, potentially worth £365m in mortgages.

The scheme is designed to encourage lenders to offer mortgages with deposits as low as 5%.

But critics are concerned it could help to create a UK housing bubble.

RBS and its subsidiary NatWest, and Halifax - owned by Lloyds Banking Group - are among the few lenders to offer mortgages under the government's extended scheme.

The first phase of Help to Buy was launched in April, but only provided help to first-time buyers buying new-build homes. The extended scheme applies to all buyers and all types of homes.

RBS said it had so-far approved 169 of its 1,075 applications, and five customers had already completed their purchases.

It said the majority of applications had come from young couples with a joint salary of less than £50,000. The average price of the property being bought was £167,565.

Halifax said more than 80% of its applications under the scheme were from first-time buyers.

It said the majority of applications had come from outside London and the south-east of England, where property prices are rising fastest.

It also said that five purchases had so-far been completed.

Bubble worries

  The government welcomed the figures, saying that the scheme was supporting "responsible lending", helping borrowers would can afford mortgage repayments, but not a large deposit.

"Four weeks in and its clear that Help to Buy is already delivering," said Prime Minister David Cameron.

"Most Help to Buy applicants are first-time buyers, young and have a roughly average household income. This is all about helping hardworking people get on the first rung of the property ladder."

But critics have expressed concern that the scheme could create a bubble in the housing market, making home affordability an even bigger problem.


The latest figures from the Office for National Statistics suggest average house prices in the UK have now recovered from the slump seen during the recession.


Figures from Halifax suggest house prices have yet to hit their 2007 peak, but have risen steadily for the last nine consecutive months.

Nationwide Building Society says prices are currently 5.8% higher than a year ago.

But estate agents argue that much of those price rises are seen in London and the south-east of England, while prices in other parts of the country are rising more slowly, or in some cases actually falling.

Article Source: http://www.bbc.co.uk/news/business-24892649

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Countryside Living Means Paying a Premium for Property in the UK

This article by Property Wire on October 22nd, 2013 reveals a new research country homes command a significant price premium compared to those in towns and cities.

Homes in the country command a significant price premium compared to properties in towns and cities across the UK, according to new research.
 
This premium ranges from £86,218 in the South East of England to £11,570 in the North East of the country, the research from the Halifax has found.

But when it comes to value rural house prices have underperformed those in urban areas since 2009. In the past four years, the average price of a home in the countryside has risen by 2% compared with an average 10% increase in urban areas.

While prices have risen more rapidly in urban areas in most regions since 2009, a key factor behind the bigger increase in urban house prices has been the relative strength of prices in Greater London.  Excluding London, urban prices have risen by 6%.

The research report says that the recent outperformance of house prices in urban areas may also partly reflect the overall increase in the number of first time buyers since 2010 as they represent a larger proportion of the market in urban areas.

Over the same period, there has been a modest decline in the number of those moving home; a group that is more important in rural property markets.

‘There is a significant premium on property in the countryside across Great Britain. Country living remains a widespread aspiration, but relatively high prices put rural homes out of the reach for many,’ said Martin Ellis, housing economist at the Halifax.

‘Potential first time buyers are particularly affected by high property prices, and consequently they account for a smaller proportion of home buyers in the countryside than in urban areas,’ he explained.

The research also found that the average house price in the countryside is equivalent to 6.3 times gross annual average earnings. The comparable ratio for urban areas is 4.9.

There are only five rural areas where the ratio of prices to earnings is below the historical long-term average of 4.0; Copeland in Cumbria at 2.7, Stirling at 3.4, East Ayrshire at 3.5, the Western Isles at 3.7, and Pendle in Lancashire at 3.9, so are the most affordable rural areas in the country.

The Cotswold is the least affordable rural area in Britain measured by the house price to earnings ratio with an average house price that is 9.4 times local gross annual average earnings. Six of the 10 least affordable rural areas in the country are in the South West.

Chiltern is the most expensive rural area in Britain with an average house price of £407,012. This is more than four times higher than in the least expensive rural area of East Ayrshire where the average price is £100,119.

First time buyers account for 40% of all mortgage financed purchases in rural areas, significantly lower than in urban areas where first time buyers account for 52% of such purchases.

Getting on the rural property ladder is at its most challenging for first time buyers in southern England. First time buyers account for only a quarter of all purchases in Cotswold and East Hampshire. In contrast, first time buyers account for over half of all purchases in Copeland, St Edmundsbury, Pendle, the Western Isles, Fenland, Moray, North Warwickshire and Carmarthenshire.

Article Source: http://www.propertywire.com/news/europe/uk-rural-property-premium-201310228374.html

Cash Buyers Helping to Drive Forward Property Market Recovery in UK

This article by the Property Wire on October 9th, 2013 reveals the large part of cash buyers in driving the recovery in the UK's property market.

Cash buyers are driving a large part of the property market recovery in the UK, much more than buyers with a mortgage, according to new research from residential property services company Hamptons International.
 
In the first half of this year, more than a third, 35%, of house sales in England and Wales were made by cash buyers. This represents an increase of 11% compared with the same period in 2012 and the number of people buying with cash today is at its highest point since 2008.

At a time when mortgage availability is improving and confidence in the property market is returning, Hamptons International’s research suggests that the number of cash buyers in 2013 has grown at a much faster rate than mortgages.

Of the additional 20,000 property sales in the first half of 2013 compared with the same time last year, Hamptons International estimates that 70% can be attributed to cash buyers with a 13,600 or 11% increase in cash sales and just 6,300 or 3% increase in mortgaged sales.

‘Contrary to popular belief, much of the recovery in house sales in recent months has been driven by increased cash buyer activity rather than simply increases to mortgage lending,’ said Johnny Morris, head of research at Hamptons International.

‘While there is no doubt that increased mortgage activity helps to improve sentiment and increase liquidity in the market, the growth of cash buyers in the market has overtaken that of mortgage buyers,’ he added.

The South West has the highest proportion of cash buyers at 39% in the last 12 months compared with an average of 33% across England and Wales. By contrast, London on average has the smallest proportion at just 24% although this figure rises to 60% in Prime Central London.  The average price of a house in the South West is £173,000, in London is £386,000 and in prime central London is £935,000.

‘Many cash buyers are downsizers planning to take advantage of the capital locked away in their properties. The South West has both the highest rate of owner occupation in England and the highest proportion of older age groups in its population,’ explained Morris.

‘London on the other hand, has the highest property values in the country and while cash transactions in prime central London are more commonplace than anywhere else in the country, less than seven per cent of London sales over the last 12 months happened in this market,’ he added.

Article Source: http://www.propertywire.com/news/europe/uk-property-cash-buyers-201310098328.html

Tips for Buyers to Survive Estate Agent's Tricks

This article by Henry Pryor of theguardian on October 6th, 2013 reveals the guidelines that buyers should follow when dealing with estate agents.

Estate agents are not your friends. They work for the seller and are paid by the seller to get the best deal for the seller.

You wouldn't play poker with all your cards face up on the table, so don't be tempted to explain why you're moving, how much you have to spend (say "we hope that we won't have to spend more than X"), or that you need to be in by January. These will all be used against you when you fall in love with the right home. The agent will know how far he can push you, how little time you have to find something, or that you have already lost out on five other houses and you've threatened divorce if you don't get this one. Don't be panicked into buying and most of all, don't be afraid to make an offer.

Here are my tips for buyers:

■ Agents get paid when deals are done. They are therefore keen to find a buyer who is serious. To make sure you are the first to be called when a new property becomes available, make sure the agent knows you are ready to go. Cash in the bank is better than someone who needs a mortgage. Someone in rented accommodation can move faster than someone with a property to sell.

■ Ignore tempting discounts or incentives to buy a new-build property. If someone is paying your stamp duty or moving costs then it's in the price and you will pay for it over the next 25 years of your mortgage.
■ Confirm every conversation you have with an agent. Viewing appointments, offers made, bids rejected together with the terms of any offer. Agents like people who know what they're doing and you will look like you have bought and sold before.

■ Ignore invitations to rush to see a property or to be panicked into bidding. Fewer than 10% of homes for sale in any one month sell. Proceed in your own time – there are 24m other homes in the UK.

■ Don't get your finance from the selling agent's financial services company. Get a quote, but then discuss it with your own mortgage adviser.

■ Don't assume that the guide price is anything more than an indication of the owner's greed or the agent's enthusiasm to get the job. Be confident and make an offer. A house is worth what you and the seller agree, not what the agent thinks it's worth.

■ Double-check everything you are told. Is it quiet on a Friday or Saturday night? Are there neighbours from hell? Is the road a rat-run and does the roof leak?

■ Don't be fooled into thinking that a bank valuation is for your benefit. It's for the lender and you have no comeback on the surveyor.

■ Don't expect an agent to send you new properties when they are available. Keep in touch, go and see possible properties and look serious. You'll be amazed how much you will learn from frequent contact.

Article Source: http://www.theguardian.com/money/2013/oct/06/tips-buyers-estate-agent-tricks

Home Loans Rocket to a 5-Year High

This article by the Express on October 1st, 2013 shows the confirmation from the Bank of England regarding the rise of mortgage approvals as property market strengthens.

 

Mortgage approvals soared to a five-year high in August as the property market recovery goes from strength to strength, the Bank of England confirmed yesterday.

Lenders approved 62,226 mortgages – up from 60,914 in July and the highest since February 2008.

Remortgages approved also rose to 36,225 – the highest level since February 2011.

Jonathan Hopper, managing director of property search consultants Garrington, said: “The mortgage market is out of the infirmary and running, not walking, back to health.

“The resurgent property market is matching it step for step.

Average prices are on the up in every region for the first time in a long time

Jonathan Hopper, managing director of Garrington property search consultants

“It’s telling that the Nationwide House Price Index is now showing average prices are on the up in every region for the first time in a long time.”

 Article Source: http://www.express.co.uk/news/property/433443/Home-loans-rocket-to-a-5-year-high

Good News – Foreigners are Buying Up Britain

This article by Jeremy Warner of The Telegraph on September 26th, 2013 shows that the majority of UK's property housing market are foreign-owned.

Part of the anger many consumers feel about rising energy bills – opportunistically tapped into by the Labour leadership this week – is that foreigners are partly responsible. Since privatisation, Britain’s gas and electricity supply industry has become substantially foreign-owned. To the bogeyman of supposed profiteering can therefore be added a further demon – that of remote foreign ownership with no loyalty to these shores or interest in their economic wellbeing.

Twenty years ago, less than a fifth of the UK stock market was foreign-owned; new figures published by the Office for National Statistics show that the proportion has risen to 53.2 per cent, up nearly 10 percentage points in just three years. For the first time in history, UK plc is majority‑owned by foreigners.

What with the Asian invasion of London’s housing market, it sometimes seems the entire country is under the hammer. The recent Chinese purchase of the iconic Lloyd’s of London building in the City, and the Sunseeker yacht business in Poole, is further evidence of this mass sale of national silverware.

On one level, these trends should be viewed positively, for they demonstrate an economy of almost unparalleled openness and welcome. The rule of law, economic and political stability, and a still relatively competitive tax system make Britain attractive to foreign investment. It was these virtues that Labour’s Ed Miliband put at risk this week with his ill-thought-out wealth grab.

Yet there is also a more negative side to the story, for burgeoning foreign ownership is only the flip side of a persistent current account deficit – Britain ran a deficit of a massive 5.5 per cent of GDP in the first quarter of this year. So much for the economic recovery; it’s happening all right, but it is also based as much on a continued propensity to live well beyond our means as it is on the solid foundations of rising productivity and enhanced competitiveness.

A current account deficit – which occurs when a country is absorbing more than it is producing – has to be paid for somehow or other. This is achieved either by selling domestically owned foreign assets, or by selling domestic assets to foreigners. In Britain, both trends are observed. We are progressively mortgaging both past and future to sustain our current spending.

Blame does not lie entirely with our own fecklessness. Another way of looking at the problem is that deficit countries are required to keep spending to support the surpluses – partially maintained through currency manipulation – of major exporters such as China and Germany. In so doing, the surplus nations build up an ever-increasing claim against us. One measure of these claims is foreign exchange reserves. At the last count, China’s were an astonishing $3.5 trillion. Traditionally, these have been invested in foreign debt, but increasingly also in companies and property.

High levels of foreign ownership are the price you pay for running a large current account deficit over many years. Those flogging you the goods end up owning you: look what’s happened in the eurozone, where the periphery has become a ward of the German core. Debtor nations must dance to the tune of their creditors.

Trade is natural and good, but when it becomes unbalanced, it can also be highly divisive, ending in economic crisis. None the less, globalisation was generally welcomed as a net positive for advanced economies when it first established itself, in that it seemed to offer a virtuous circle of ever cheaper goods for hungry consumers. This soon changed. These days, the process tends to be seen in a more negative light: as a primary cause of Western wage stagnation and the hollowing out of many traditional industries. Our intellectual property has been widely copied, or stolen, and then delivered at a much cheaper price.

Governments have compensated for the jobs lost to emerging market competition by spending more than they can afford and encouraging their citizenry to do the same. This solution has proved unsustainable; globalisation seems to have turned decisively against its Western promoters.

Whether this is just a transitional difficulty, or the beginning of a fatal end game, is a question that has yet to be answered. Protectionism is strongly on the rise almost everywhere. I don’t mean of the crude, tariff-based variety, though this too is increasing.

Today’s protectionism tends to be more subtle – state aid, product discrimination, currency manipulation, and so on. Miliband’s economically illiterate tilt at landowners and energy companies is another manifestation of the same thing.

Yet there is reason for hope. Emerging markets are getting steadily richer, and as they do so, wage differentials with the West are narrowing. Analysis by the economics team at PwC predicts that by 2030, average Chinese wages will be around 45 per cent of the UK’s – against just 15 per cent in 2011 – with living standards approaching the level we have in Britain today. Over time, this narrowing of differentials will undermine the incentive for offshoring, making output more local again. Emerging-market wealth is also creating new markets for our goods and services, helping to make trade less of a one-way street.

The present phase of globalisation is proving painful and divisive for the West. Yet it has already enabled swathes of the world’s population to rise above the daily grind of subsistence. Provided we don’t let the wrecking ball of populist state interventionism get in the way, we will eventually reap the dividends.

Article Source: http://www.telegraph.co.uk/comment/10336888/Good-news-foreigners-are-buying-up-Britain.html

Ten Top Tips for Buying Abroad

This article by Just Do Property on September 24th, 2013 provides some helpful tips to investors who thought of buying property abroad.

1.    Give Your Dream Region The Twice Over: Visit a region at least twice, in the high season and during the off-peak months, to get a feel for attractions to keep you coming back for more.  Get an ‘insider view’ from UK property owners in the region – or research back home through rental websites such as www.homeaway.co.uk.

2.     Remove The Rose Tinted Glasses: In reality, few properties are flexible enough to sustain your long-term needs and interests. The lakeside retreat that’s perfect for a childless couple may prove too hazardous for a toddler, while teenagers may love a lively beach resort, but you may find it too crowded in retirement. Before you commit, think about the alternatives, as sometimes renting is more rewarding than buying.

3.     Old Or New – Decide What Works For You: An older house for the long term is attractive due to scarcity value and character, but can be a drain on resources, so you might be better off culling your period fantasy and settling for a younger, lower-maintenance model. New builds have advantages such as quality construction, energy efficiency, and contemporary styling, but bear in mind the higher price per square foot than the equivalent resale home of similar size.

4.     Check The Price Is Right: Has the property been quoted in ‘local’ or ‘foreign’ pricing? Many countries maintain a ‘two-tier’ system and for good reason. With new build property UK agents can earn hefty commissions for marketing overseas projects, with those fees recouped in price mark ups. But you won’t know about it until you start speaking to trusted local agents, visiting properties and seeing what else is on offer. A further ‘hidden’ profit margin unlikely to be flagged up in the sales pitch, is resort fees. Often listed as administration or transaction costs, this charge can be over and above the annual maintenance fees set by the resort for your property. If the figure seems artificially high compared to other developments – challenge the developer.

5.     Get Clued Up On Currencies: Avoid playing currency roulette by either tapping into existing savings or taking out a second mortgage on your UK property, but bear in mind currency conversion costs for deposits. Those changing pounds to foreign currency have two main options: a high street bank, or specialist brokers such as www.currencysolutions.com  www.halofinancial.com or www.caxtonfx.com. Brokers invariably offer a better deal: more competitive rates, lower (if any) transfer fees and no commission charges.

6.     Make Your Bolthole Pay Its Way: If you’re only spending a few weeks a year at your property, it makes sense to get some rental mileage out of it, to help pay towards its upkeep. Second home rental income is subject to UK income tax based on your marginal rate. You can, however, claim for certain expenses such as repairs, utility bills, insurance and letting admin fees and if you have a second home mortgage, you can also claim relief against the interest paid on the loan.

7.     Take Guaranteed Returns With A Pinch Of Salt: To woo buyers, developers often offer guaranteed rental returns (GRR) of say 5-7% per annum for a three-year period. Some developers finance this GRR offer by striking deals with tour operators to block book a quota of apartments for the season. Others will simply add a sneaky 5% to the asking price and return the money to the buyer in the form of ‘guaranteed’ rent. Even if their flat lies empty for that year, it won’t have cost the developer a penny.

8.     After The Honeymoon Period – Longer-term Rental Strategies: Think ahead to when any ‘guaranteed period’ ends, particularly if buying in an up-and-coming area where competition may be stiff. If regular rental income is a priority, consider merging with a hotel brand as they’ll work hard to bring the clients in. The contract may however impose restrictions on your own use of the property in peak seasons.

9.     Plan Your Exit Strategy: Savvy investors always plan their escape route when buying a holiday home.  Make sure what you buy has a unique advantage over the competition, such as a fabulous view, or beachfront access. Research historical price trends but also look to an area’s future too, before committing to any purchase. Think of it as working in reverse – then you can enjoy the journey.

10.  Get a feel for how buoyant your resale market is: Count the number of distinct buyer groups. If you’ve three or more, including local, national, and overseas, you’ve got a healthy base to work from. As long as you aren’t overly reliant on one single investment stream, you won’t be left exposed if it dries up.

Article Source: http://www.propertysecrets.net/blogs/just_do_property/ten_top_tips_for_buying_abroad/post-1157.html

Is It Still Possible to Get on the Property Ladder?

This article by hip-consultant.co.uk on September 23th, 2013 shows the process and steps on how to start getting into the property ladder.

Getting on the property ladder can be a daunting prospect especially due to the fact that it is a huge financial commitment. However, owning your own property is a way of investing in your future, and the future of your family, as well as giving you more stability. If you are a first time buyer you need to be aware of all of your options and choose the scheme that is right for you and your financial situation. This blog gives advice on how to get on the property ladder and the processes you will go through to get the keys to your new home.

Buying your first property can be a time-consuming and frustrating experience but so long as you know all the correct information the process can run much smoother. Owning your own home is very rewarding so it will be worth it in the end.

Money, money, money

First and foremost you need to be realistic about money and what you can afford. You need to consider what property you can afford and how much it will cost a month. You will need to look at how much money you (and anyone buying the house with you) have for a deposit. It is more than likely that a deposit will cost you 10% or more of the cost of the house. On average in the UK this is around 26k mark. If you can put more money down for your deposit then your interest rates overall will drop.

Hidden extras

Buying a home will cost you more than you think. There are many hidden costs that you need to be ready for because they aren’t cheap. For instance, your lender can add over a grand to your costs or percentage-of-loan charges. You will then have to pay for building insurance, life insurance, contents insurance, bills, council tax, water, ground rent and even a service charge. This isn’t even including Stamp Duty and VAT.

Finding your first home

When viewing properties you need to be looking at the state of the vital amenities, such as the kitchen and bathroom. Décor can be adjusted at a fairly reasonable price, a new kitchen or bathroom cannot. Every home should come with an information pack educating you on the council tax, title deeds, leasehold information and home energy assessment. Make sure you ask for this so you are completely aware of all the costs associated with the property.

The first offer

Your opening offer is critical. You need to decide how much you can afford before you start and bid below that amount. For example, if the house you want is selling for 120,000 and you can only afford 110,000, bid 100,000 first. If this bid is knocked back raise the price by 1,000 each time until you reach an agreement.

What the gazump?

Once you have come to an agreement with the seller, you want to request that the house is taken off the market. This means that you won’t get gazumped by another buyer swooping in with a higher bid.

Signing the contract

Once you sign the contract and pay the deposit you lose a lot of your bargaining power so make sure you have everything in order before. You want to ensure you have everything you want and that you can get a mortgage. Your deposit at this stage will be around 1,000 and this amount is non-refundable.

Finding a mortgage

There are many mortgage lenders available through your bank or online. You can usually agree on a mortgage over the phone these days, or on the Internet. There will be fees to set up your mortgage of around 500 and this can go up depending on the rates you are getting for the loan.

Conveyancing

You will need to employ a solicitor to check the legal elements of the sale and make sure the house isn’t currently under any land disputes, owed to another person and that the owner has the legal right to sell the property.

Survey

Your mortgage company will require a basic survey confirming the value of the property. There are three types of surveys:

• Mortgage Valuation: This is the cheapest and will basically confirm to the lender that the property has worth and could be sold if you default on your payments. It will not spot any huge faults.
• Homebuyer’s Survey: This costs more but will be a lot more thorough, revealing any serious issues. One in four people renegotiate after this survey and reduce the overall cost of the property.
• Full Building Survey: This is the most expensive and goes into greater detail, looking at the condition of your property. This is usually recommended for older properties or homes with a rare design.

Completion date

Once all the negotiating is complete and the contracts are exchanged you will set a completion date. This basically means the day you get the keys, move in and pop a bottle of champagne. This is usually two weeks after the exchange of contracts.

Article Source: http://www.hip-consultant.co.uk/blog/is-it-still-possible-to-get-on-property-ladder-123/

New Fund Hopes to Ease Housing Shortage

This interesting article by Dewsbury Reporter on September 6th, 2013 discusses a new plan that could finally make England's empty homes be brought back in to use.

An innovative new scheme aimed at bringing some of England’s 710,000 empty homes back into use began this week.

In a joint initiative between the charity Empty Homes, Ecology Building Society, central government and 39 participating local authorities, the scheme will provide loans of up to £15,000 to owners of empty properties to help bring them back into affordable use.
The aim is to ease the current homes shortage.

The fund was one of the demands of last year’s Great British Property Scandal campaign led by architect and broadcaster George Clarke. Currently, owners of empty homes are often unable to access funds to bring the properties back into use, creating a vicious cycle of decline in areas with high numbers of empty properties.

The National Empty Homes Loan Fund, will enable access to secured loans at a fixed five per cent interest rate, and will enable owners to renovate the property to Decent Homes standard.

It has been funded by a grant of £3m from central government and is being administered by Ecology Building Society, a specialist mortgage lender that supports sustainable communities.

It should provide funding for hundreds of properties and is available to individuals aged 18 and over who own a property that has been empty for six months or more.
You can apply through participating councils or the Ecology Building Society. For full details go to www.emptyhomes.co.uk.

Mr Clarke said: “I care passionately about getting England’s empty homes back into use for people who need them. This scheme provides real help to property owners to help achieve that.”

Article Source: http://www.dewsburyreporter.co.uk/lifestyle/property-news/new-fund-hopes-to-ease-housing-shortage-1-6020554

The Hidden Dangers of Shared Ownership

Shared ownership is said to be the easier way to get onto the housing ladder, but is currently presents some legal flaws for the buyer as revealed on this recent article by Giles Peaker of TheGuardian on September 3rd, 2013.

It's touted as an easier way onto the housing ladder, but shared ownership is mired in worrying legal flaws for buyers.

Shared ownership is being positioned by housing charity Shelter and others as the future of home ownership for low- and middle-income households, and as a means to encourage investment in home building. However, shared ownership currently presents some significant legal flaws for the purchaser – not the least being that there is actually no 'shared ownership' at all.

As a solicitor who works in leasehold litigation, I am concerned that the significance of a case called Richardson v Midland Heart, from 2007, is not more widely known. Rebecca Richardson had purchased a 50% share of a property with housing association Midland Heart for £29,950 in 1995. The arrangement, a typical one, was that she paid rent on the other 50%. There was the usual staircasing option, by which Richardson could opt to pay more for a greater share, up to owning outright with 100%, but, again not uncommonly, she had not exercised this.

Unfortunately, Richardson got into arrears on the rent. Despite agreeing to allow the property to be sold, Midland Heart quickly brought possession proceedings under Housing Act 1988. Midland Heart used a ground where if there are eight weeks of rent arrears when a notice is served and also at the date of the court hearing, the court must order possession, with no discretion to do otherwise.

The court found, reluctantly, that what Richardson had was an assured tenancy for 99 years (the length of the lease). She did not have a lease that could be protected, as it was not for the whole of the property. What is more, she had no right to the return of the £29,950 she had paid. The court made a possession order and Richardson lost the property.

In practice, this means that shared ownership is just a tenancy, with an expensive downpayment for an option to buy the whole property at a later date. The landlord or housing association remains the owner of the property up to the point of the 100% buyout and the tenant can be evicted for rent arrears regardless of how much of the property they supposedly own – and without being recompensed for that payment. A case this year suggested there may be a human rights claim for the return of that money, but this is untested.

Richardson paid for her 50% share up front, but if it were a mortgage the lender would almost certainly step in to pay off the rent arrears, adding the arrears and additional charges to the mortgage loan, to preserve its security and avoid the shared-ownership tenant being evicted. But the legal position remains the same.

There are other problems that, though not unique to shared ownership properties, occur more often with them. For example, frequently the housing association will itself only lease a number of flats in a block built by a developer, which it then sub-leases to people on a shared ownership basis. In this situation, the shared ownership leaseholder will often find that they have no way to enforce repairs to the building, as the housing association will have no responsibility for its condition. The shared ownership leaseholder may well face leaks, heating problems, or defective windows but be unable to make the landlord or freeholder carry out repairs, or be compensated, where a social tenant would at least be able to get compensation from their landlord.

These are major problems for the shared ownership model. The Richardson v Midland Heart problem will almost certainly need legislation to change. While shared ownership may well be the most promising route into home ownership for many, there are substantial risks for those taking that route.

Article Source: http://www.theguardian.com/housing-network/2013/sep/03/hidden-dangers-shared-ownership

Renting Cheaper Than Buying in London, the South East and Scotland

According to this interesting article by Nicole Blackmore of The Telegraph on August 31st, 2013 renting is cheaper for first-time buyers in London especially in South East and Scotland than buying property.

Inflated house prices mean mortgages are less affordable than renting for many, even with a 20pc deposit. 

It is cheaper for potential first-time buyers in London, the South East and Scotland to continue renting than to purchase property thanks to rapidly rising prices.  

New research from mortgage lender Santander shows inflated house prices in London mean potential first-time buyers would need to find an additional £478 a month to buy, sparking fears that more people will be priced out of the market.

The average monthly mortgage repayment for first-time buyers in the capital is £1,342, compared to the average monthly rent of £864.

Data released by the Council of Mortgage Lenders this week showed first-time buyers in London are having to stump up a record £64,000 average deposit just to get on to the property ladder.

In the South East the average first-time buyer would have to pay £56 more a month to buy a property than rent, with this figure rising to £84 in Scotland.

However, renters living outside these three areas who have a 20pc deposit could save an average of £1,740 a year if they buy their own property.

The average monthly rent in the UK, excluding London, the South East and Scotland, is currently around £480 compared to monthly repayments of £335 for the average first-time buyer – a saving for homeowners of £145 a month.

The research into typical first-time buyer properties found the average price across the country, outside of London, South East and Scotland, is £85,955. This means that a first-time buyer applying for an 80pc loan-to-value mortgage would require a deposit of £17,191.

Phil Cliff, director of mortgage marketing at Santander UK, said: “When we first conducted this research in 2010, London was the only UK location where it was cheaper to rent than buy. Now, a demand for housing and rising house prices has seen both the South East and Scotland join its ranks.” 

Article Source: http://www.telegraph.co.uk/finance/personalfinance/borrowing/mortgages/10274296/Renting-cheaper-than-buying-in-London-the-South-East-and-Scotland.html

Charlie Bean: UK Housing Market is not Heading Towards Property Bubble

According to the Deputy Governor of the Bank of England, Charlie Bean he does not see that the housing market in UK will lead to another rise in property prices as stated in this article by Sikhanyisiwe Ncube of Newspoint Africa on 27th August, 2013.

Charlie Bean, the Deputy Governor of the Bank of England said that he does not believe that the UK's housing market is heading for another property bubble.

Bean said, "We wouldn't want to see a house price boom emerging which would have potential problems further down the road. I can't say we see signs of that at the moment. At this stage, you certainly wouldn't say there's a problem."

Bean said during a Federal Reserve Bank of Kansas City conference in Jackson Hole, Wyoming that the central bank is expecting an increase in housing transactions and pointed out that the housing prices are rising in line with the inflation in the country. A home value indicator compiled by the Royal Institution of Chartered Surveyors increased to its highest level in seven years.

Politicians in the UK have said that the government's schemes to help stabilise the housing market will not result in a housing market bubble, as suggested by some in the previous few days. Experts dismissed suggestions of a housing market bubble and said that package of measures to boost housing market is working towards increasing house building and housing supply in the country. UK's largest house builders, who have always claimed that the lack of mortgage availability has restricted recovery in the property market, have backed the claims by the government.

Article Source: http://newspoint.co.za/story/413/4042-uk-housing-market-not-heading-towards-property-bubble-bean

Only 32% of Sellers Drop Price of House

In order to draw a buyer to buy their property some house sellers cut down their original asking price as revealed in this article by Jack Hatton of Express on August 21, 2013.

The number of house sellers slashing their original asking price to attract a buyer is at a record low as confidence flows back into the market.

Under a third (32 per cent) of current sellers had reduced their asking price, according to property website Zoopla.

It was the lowest figure for the summer quarter since the website’s records began in 2010.

This time last year 37 per cent had been forced into a price cut in a bid to find a buyer.

Zoopla spokesman Lawrence Hall said: “It suggests sellers are feeling more confident and happy to wait it out to achieve their target asking price.”

But seller confidence remains patchy, indicating a regional divide.

Two in five current sellers in the Yorkshire towns of Barnsley, Rotherham and Wakefield have cut their asking prices, compared with one in four in London or Edinburgh.

On average sellers reduced by 6.3 per cent compared with 7.6 per cent a year ago.

However, the figure was currently almost 10 per cent in Poole, Dorset.

The summer holiday season usually sees a surge in price cuts as the market traditionally gets quieter.

But demand from buyers has been gathering pace in recent months after Government initiatives such as the mortgage scheme Funding For Lending.

The Council of Mortgage Lenders reported that last month business was at its strongest since 2008.

Article Source:  http://www.express.co.uk/news/property/423626/Only-32-of-sellers-drop-price-of-house

UK North/South House Price Divide Widens

According to new research, house price split rise between north and south of UK as revealed on 20th August, 2013 article published on propertycommunity.com by Ray Clancy.

The gap in home values in the UK between London and the South East and the rest of the country is widening, according to new research. The strong property market recovery evident in London and the South East has not been mirrored in other regions as the relative value of homes across the UK has changed radically over the last five years.

In stark contrast to the prosperous South, house prices across the North are still below their 2008 levels and markets remain lacklustre. Moreover, the gap in home values is widening and this trend is effectively further centralising the bulk of the UK’s property wealth in London and the South East. The research from online property firm Home.co.uk says that a huge surge in London property prices is well underway and shows no signs of slowing down. The average asking price for a property within Greater London now stands at £389,025, a rise of 6.8% in the last six months alone.

Such growth and further relentless demand all point towards an overheating market. Despite this, the UK government and Bank of England are continuing their support for mortgage lending and loose monetary policies. In August 2013, an average London property is priced 60% higher than the average for England and Wales. The South East, South West and East Anglia also record above average prices whilst the rest of the country, Wales and Scotland fall below the average of £242,541.

Quote from ExpatForum.com : “One in four brokers in the UK claim that the Bank of England’s flagship Funding for Lending Scheme aimed at helping to boost the property market has failed expectations to date.”

Property prices in London are higher than ever before and the market in the capital bears little resemblance to the rest of the country. Property in the surrounding South East has performed reasonably well, yet the price differential is still dwarfed by London’s super premium pricing. Given the pressure on prices in the North and Scotland, the gap with these regions has actually widened over the past five years. For example, an average property in the North East now costs £153,160 which is 6% lower than in 2008. This, in turn, has widened the average price differential from 33% to 37%. The situation in Wales, the Midlands, the North and Scotland is the same: average property price differential has actually grown in the past five years.

‘The London property market is a law unto itself. Relentless demand from both domestic and foreign buyers is creating a market that is seemingly isolated from the grim economic challenges that face the rest of the country. Slower sales and slower price recovery, or even deflation, in other areas serve only to highlight the unique performance of the capital’s property market,’ said the firm’s director Doug Shephard. ‘The North-South divide has evolved to the point where financial policy makers need to treat London differently to the rest of the country. The London property market clearly needs no further stimulus; it’s running too hot already. Only time will tell if the market will overheat and actually realign prices in the process,’ he pointed out.

‘However, the concern is that, if the capital’s property bubble does burst, it may well shake the confidence of the wider market, and financial sector, and make no difference to the price differential. Given the government policies and a wealth of buyers favouring the capital, the property gap between London and the rest of the country is likely to grow further in the immediate future,’ he added.

Article Source: http://www.propertyforum.com/property-in-the-uk/uk-northsouth-house-price-divide-widens.html

House Builds Up 'But More Needed'

This recent article Shelina Begum of Manchester Evening News on 16th of August, 2013 shows the growth of new house builds and how it is gathering pace.

House builders in England are starting more new properties than at any other time in the past three years, in further evidence that the market revival is gathering pace.

House builders in England are starting more new properties than at any other time in the past three years, in further evidence that the market revival is gathering pace.

But despite the recent pick-up, housing charity Shelter warned that the country is still building less than half the number of new houses it needs each year to tackle the "chronic shortage of homes".

Around 29,510 new homes were started between April and June, marking the highest quarterly total seen since 2010, Department for Communities and Local Government (DCLG) figures showed.

The number of new house builds begun has jumped by one third year-on-year, with particularly strong areas of growth seen along the M5 from Devon up to Worcestershire, as well as Buckinghamshire, Bedfordshire and Cambridgeshire, the report said.

Growth was not confined to the South, with housing starts also strong in Cumbria, South Yorkshire and Lancashire.

The number of housing starts was found to be weaker in a band running from Birmingham to Manchester and spreading across to North Yorkshire.

The figures also showed that 106,820 house builds have been completed over the last year, which is still less than half of the 250,000 annual total Shelter believes is required to meet demand.

A string of reports have pointed to the housing market bursting back into life in recent months, amid a sharp increase in mortgage availability and rising home buyer and seller confidence.

The Royal Institution of Chartered Surveyors (Rics) reported on Monday that house prices are rising at their fastest rate since 2006, while mortgage lenders said that first-time buyer numbers have soared to their highest levels since 2007.

Today's figures have been boosted by Government measures to give home buyers a helping hand including its Help to Buy scheme, which allows both home movers and first-time buyers to purchase a new-build home with a 5% deposit. More than 10,000 reservations for homes were made in the first four months of the initiative
.
Another scheme called Funding for Lending, which was introduced a year ago, has also been credited with generally increasing housing market activity as lenders have slashed their mortgage rates.

Communities minister Brandon Lewis said the figures "clearly show Government action bringing confidence back into the housing market and getting Britain building again".

Housing starts are now 73% higher than a trough seen in spring 2009, although they are still 40% below a peak of activity seen just before the economic downturn.

Kay Boycott, Shelter's director of communications, policy and campaigns, said: "While the Government may trumpet these figures as a growth story, what they really show is that we are still building less than half of the 250,000 homes we need each year to meet demand.

"In an overheating market, house prices are rising at their fastest rate since 2006, yet today's figures show that we're building just over half of the number of homes we were then.

"Unless we see radical action from the Government to tackle our chronic shortage of homes, house prices and rents will quickly rise even further out of reach for millions of people across the country struggling to find a stable home of their own."

Article Source:  http://www.manchestereveningnews.co.uk/business/property/house-builds-up-but-more-5737690

Greater London House Prices Set to Grow Almost 7% this Year

This August 7, 2013 article by the Property Wire claimed that house prices in greater London are set to grow by 6.9% this year with annualised rate of 3.2% over the next five years.

The growth will come as the UK government’s Help to Buy scheme is extended to all home buyers from next year bringing more financed buyers to the market without an equivalent increase in stock, according to real estate firm Cluttons.

In its third quarter Residential Property Forecasts report it points out that the consequence of this pace of uplift in house prices will push ownership in and around London out of reach of yet more households.

Even in London where earnings tend to grow slightly ahead of the national average, it is unlikely that average earnings will keep pace with this rate of house price growth over the next two years as the economy struggles back to strength.

The position is more acute in prime central London where Cluttons has revised its forecast of 5% house price growth to 8.4% this year with an annualised average of around 4% to the end of 2018.

Credit ratings agency Fitch has also warned that Help to Buy could artificially push up house prices without increasing the number of homes built, which corroborates Cluttons' expectations of affordability re-emerging as the central issue for buyers given that mortgage lending has improved.

The upturn in prices has caused a return of bidding wars in the capital which has tempered the capacity of first time buyers to enter the market. Greater acceptance of buy to let mortgages for those wishing to rent and buy or rent further from London has further reduced the availability of stock traditionally available to first time buyers.

‘Improved consumer confidence, an easing in mortgage credit and the raft of government policy intervention measures to bolster new buyer demand will drive further capital growth and this has led us to revise our forecast to 8.4% price growth this year,’ said Sue Foxley, head of research at Cluttons.

‘The prospect of rising base rates over the medium term proffers a further concern with the ratio of residential values to gross earnings already over seven in London. With few signs of a dramatic increase in supply that would have the potential to change the balance of this equation, the rental market will inevitably move up the agenda for London’s households and policy makers,’ she explained.

Cluttons also reports that rental demand in Central London remains strong but individual and corporate rental budgets are subdued which is translating into RPI, nil or slightly negative rental growth.

Cluttons forecasts London rents to grow by 3% this year, with an annualised average of 4% per annum to the end of 2018 which is in line with long term average earnings growth for London.

Article Source: http://www.propertywire.com/news/europe/greater-london-house-prices-201308078090.html

House Prices Hit Three-Year High

This article by Sarah O'Grady of the Express can be alarming to new home buyers because house prices are much higher than a year ago and have elevated year on year.

HOUSE prices are steaming ahead at their strongest annual growth rate in three years.

Values this month are 1.3 per cent higher than they were a year ago and have increased, year on year, for the sixth month in a row.

Depending on how far the market picks up again this autumn, 2013 could see the highest rise in prices since the economic downturn, according to property analyst Hometrack.

It says prices rose 0.3 per cent month-on-month in the traditionally slow month of July, down from rises of 0.4 per cent recorded in both May and June.

But across England and Wales, 29 per cent of postcode districts registered hikes over the month, falling back only slightly from 31 per cent in June which had been the biggest uplift recorded in almost six years.

Richard Donnell, director of research at Hometrack, said: “The year has got off to a strong start.”

Other indicators of the “health” of the market are still improving on the back of rising prices and sales.

Sellers are achieving 94.4 per cent of the asking price on average, equalling 2007 levels. Homes are taking just over eight weeks to sell, marking the shortest sales period in six years.

Also, the number of first-time buyers is on the up, said Britain’s biggest mortgage lender, Halifax. It estimates that there were 120,000 first-time buyers in the first six months of 2013.

This shows an increase of almost one fifth year-on-year and marking the biggest number since there were 181,500 buyers from this sector in the first half of 2007.

Prices increased more strongly during the first half of this year than many experts had predicted, boosted by Government schemes such as the £80billion Funding for Lending and Help To Buy.

Lenders report that their “risk appetite” is returning and have slashed mortgage rates on the back of the schemes. But some experts fear that these schemes could simply help to create another property bubble that is bound to burst.

Article Source: http://www.express.co.uk/news/property/418221/House-prices-hit-three-year-high

 

West Midlands: Where Help to Buy is Booming

This article by TheGuardian on 23th July, 2013 can benefit first-time buyers in procuring newly-built homes.

Regeneration-led developments at former car factories contribute to success of scheme for acquiring newly-built homes

More than a quarter of demand for homes under the Help to Buy scheme for acquiring newly built homes has been in the West Midlands. The area has accounted for 1,873 out of 6,899 reservations across England. Mark Evans, head of new homes in central England at estate agent Knight Frank, says Help to Buy has opened up the lower end of the market, where people most struggle to raise deposits: "It has had a lot of PR, it has had such a lot of profile and it has helped unlock the marketplace to a certain extent."

Help to Buy has also taken off in this region because the Midlands has plenty of regeneration-led developments at former car factories, according to Margaret Snook of Orbit, the country's largest Help to Buy agent, which operates in the West Midlands and East Anglia. "There doesn't seem to be a shortage of properties in most areas," she says. "In Birmingham, the Black Country, Coventry, there are big [development] sites."

The mortgage guarantee scheme has universal appeal, she adds. "It is not a particular income bracket or type of person. It is families, it is single people, it is couples; people on lower incomes, people on higher incomes." Her impression is that the scheme is heavily weighted in favour of first-time buyers, although there is a strong pull for existing homeowners, who are keen to move. "It is helping people to be more mobile."

This means that aAverage property prices of £130,432 in Wolverhampton look set to rise, but Snook says it is not yet possible to judge whether Help to Buy is driving up prices. "Whether that is directly linked to Help to Buy or rising confidence, it is too early to say."

Author: Jennifer Rankin

Article Source: http://www.guardian.co.uk/money/2013/jul/23/west-midlands-help-to-buy-property

Britain Fleshes Out Contested Mortgage Guarantee Scheme

This recent article of Yahoo News discuss the details of the help-to-buy plan by the government to help first time home buyers.

LONDON (Reuters) - Chancellor George Osborne will meet lenders and house builders on Tuesday to flesh out how a state-backed scheme to guarantee mortgages for risky borrowers will work when it comes into force in January.

The Help-to-Buy scheme, unveiled in the government's March budget, is designed to help people purchase their first home with as little as a five percent deposit.

The first phase of the scheme, which offers buyers of new-build properties a 20 percent equity loan interest-free for five years, kicked off in April; but the more important second phase, which offers 12 billion pounds, of mortgage guarantees does not come into force until January.

With house prices already rising faster than inflation, critics have questioned the wisdom of encouraging risky borrowers to jump on the property ladder.

The International Monetary Fund and the Office for Budget Responsibility have both warned that prices are likely to be pumped up more than supply, making it harder, not easier, for first-time buyers.

Bank of England policymakers have expressed concern about state intervention in the market and what will happen to prices when the mortgage guarantee scheme ends in three years' time.

The government said on Monday borrowers would need to have a good credit history, provide proof of income and satisfy the affordability "stress tests" set out in the Financial Conduct Authority's Mortgage Market Review.

The government also said taxpayer guarantees could not be used by wealthy people wanting to purchase second homes. Mortgage lenders, it added, would be required to collect a declaration stating that the borrower had no other property.

Details of the commercial fees charged to lenders have yet to be announced. The government said the fee structure would depend on loan-to-value bands and would be finalised following discussion with the banks and building societies.

"It will be set to encourage as many lenders as possible to participate in the scheme, while protecting the taxpayer," the finance ministry said.

(Reporting by Christina Fincher; Editing by Andrew Heavens)

Article Source:  http://uk.news.yahoo.com/britain-fleshes-contested-mortgage-guarantee-scheme-003610732.html#a7heI4c