Buying and Selling Property – Don’t be the one who holds things up

House Sales

Quick Sales Avoid Chains Collapsing

Check Your House Sale Progress

If you are thinking of buying and selling property in the UK you can help to ensure the process goes smoothly by making sure you are ready and staying on top of the process.

You cannot influence the whole chain but you can keep on top of the process by speaking to everyone involved on a regular basis and asking some searching questions about the status of all the links in the chain. A good agent will do this for you and they will report back to you.

Last year a survey by 1st Property Lawyers revealed that 29 per cent of deals fell through. To avoid your sale or purchase falling down make sure you are doing all you can to speed up the process.

The faster things move, the less likely it is that the sale will fall through.

6 Ways To Speed Up a Property Sale

  1. Get a mortgage approved – speak to a mortgage advisor and chose the mortgage product you want, then get yourselves approved so the mortgage doesn’t slow down the buying process.
  2. Have a solicitor in place to deal with the conveyancing, and provide them with the documents they need before you find your property so they are ready to act immediately.
  3. Respond quickly to all requests for paperwork, signatures and queries from your agent or solicitor as soon as you can.
  4. If you’re selling a property to buy another, make sure you have all guarantees up to date and to hand, if there is building work to do you can identify and price up work to save being held to ransom by a buyers survey report.
  5. If you need building work done on a house you are buying or selling you can use the Government -approved Trustmark register or find reliable, vetted and insured tradesmen through Checkatrade.
  6. Arrange to review the process once a week – your agent should be ringing you, but if they don’t, you should ring or email the agent and your solicitor to make sure everything is moving along as it should.

Quicker House Sales

If you want a quick sale of your property you can speak to your agent about open days, which generate a large amount of interest and prompt buyers to make an offer because they actually see the competition for a property.

Speak to one of our Sales Negotiators about your buying and selling options 0207 394 1160 or email us on sales@rileymarshall.co.uk.

It’s Good News for House Prices in London so Buyers Need to be Ready to Move

London house prices are rising

The London Property Market is Buoyant

Help to Buy Set to End in 2016

The Government’s Help to Buy initiative has been responsible for increasing the number of house sales and housing prices. It has given a valuable helping hand to buyers who would not otherwise have qualified for a mortgage, and it has encouraged developers to build, knowing there is a market once they are completed.

Chief Executive Pete Redfern confirms the Help to Buy scheme has helped Taylor Wimpey start 2014 with a £1.2 billion pipeline of new orders: An increase of 27% year on year.

However the Help to Buy is scheduled to finish at the end of 2016, and while the Chancellor George Osborne has yet to comment on extending the programme the Bank of England opposes any extension of the scheme.

So if you can benefit from Help to Buy make sure you plan to move in the next two years to take advantage of the help on offer.

Housebuilding Initiatives

Market activity has increased dramatically, and with the second phase of the Help to Buy initiative now available to buyers, the issue in many areas is a lack of property for sale.

The Government is well aware of the link between a healthy housing market and economic recovery. The number of homes built in Britain last year was the highest since the start of the economic downturn in 2007. According to figures collected by The National House Building Council (NHBC) 133,670 homes were built in the UK in 2013, which is a 28% increase on 2012.

There have been signs of economic recovery for the UK as a whole, and of the housing market in particular. Mark Carney, Governor of the Bank of England, has recently delivered the Bank’s revised economic forecast. He is projecting growth of 2.8% in 2014.

The latest Land Registry House Price Index figures (published December 2013) show an annual house price increase of 4.4 per cent, which takes the average property value in England and Wales to £167,353.

As a buyer it is often seen to be best to buy on a rising market rather than a falling one, so you do not run the risk of falling into negative equity. This gives you options when you do need to move, as you will be building up equity in your home as the market rises.

Interest Rates linked to Unemployment figures

Chancellor George Osbourne had said that he would not consider raising interest rates until unemployment fell below 7%. Figures released by the ONS, the Office for National Statistics (ONS), show the number of people out of work fell by 167,000 to 2.32 million in the three months to November, which is 7.1%.

The chancellor’s original plan was to leave interest at the current low rate until 2016, and despite the sooner-than-expected drop in unemployment he may not make increases and risk slowing economic growth.

George Osbourne has not confirmed if or when he will raise interest rates, although if he does do so this will have an effect on mortgage payments, unless you have a fixed rate mortgage. Fixing your repayments on a mortgage will mean that your repayments will be higher than a flexible rate mortgage but you will be protected against any interest rate increases for the term of the mortgage rate deal.

Get Yourself Ready to Move

Mortgage approval rates are up 25% on a four year average according to Rightmove. In the nine months between January and September 2013 the rate of approvals increased to nearly 60,000. Rightmove attributes this increase to the Funding for Lending Scheme.

Funding for lending is a joint initiative between the Bank of England and HM Treasury to incentives banks and building societies to boost lending by reducing the cost of borrowing for lenders. Funding for lending was extended in April last year and will now run until January next year, although the focus on lending is moving away from mortgages and towards small businesses.

As a buyer you should take advantage of the increased mortgage approval rates. Seek advice from an independent mortgage advisor and shop around for the deal that will suit your circumstances.

Get your mortgage approved before you start looking for property to buy. That way you can be sure you are looking in the right price range. More importantly you can get the sale moving quickly once you have found the right property.

Search on our website for our range of properties for sale.

See ‘Don’t be the one who holds things up’ next week…

Build to Rent Should Feature Large in the London Housing Market if Property Developers Seize the Opportunity Offered by Government Initiatives

What is Build to Rent?

Build to Rent is a government initiative to encourage the building of more purpose-built rental properties in the UK.

Around 3.8 million households in the UK are in private rented accommodation. That’s about 16.5% of the population. There is no doubt that some people choose to rent for the flexibility it offers, or for financial reasons, or because they do not want the responsibility of owning their own property.

In recognition of the fact that private rented housing is likely to continue to be a growing part of the housing market, the government has been introducing measures to boost this sector as well as the house buying market.

  • Changes to Stamp Duty Land Tax implemented in 2011 mean that large-scale investors pay a typical 1% instead of 5% on large purchases.
  • A £1 billion fund for equity finance for house builders and developers.
  • A debt guarantee scheme to support the building of more private rented housing.

Build to Rent Funding

The Build to Rent Fund assists the new development of these purpose-built rental properties. The developer takes out the funding loan, builds the properties and then passes on the loan to a third party investor. This means less risk to the developer and avoids them having to wait to regain capital from rental payments – which could take many years.

The Government hopes that the first round of developments will provide high profile ‘show case’ developments that will be test-beds to prove the model. The theory is that this will encourage more developers to take up the Build to Rent scheme rather than the more traditional one of selling off the development piecemeal, either off-plan or on completion.

The Build to Rent Fund prospectus was launched on 20 December 2012 under the joint banner of the government and the Homes and Communities Agency, and the first 45 projects were confirmed in April 2013.  About a quarter of this housing will be in London, and in total are projected to support the construction of between 8,000 and 10,000 new private-rented homes.

Debt Guarantees for Developers

The private rented sector housing guarantee scheme provides a direct government guarantee on the debt property developers incur when investing in new privately rented homes.

The Government thinking is that by reducing the property developer’s borrowing costs it should increase the number of homes they can afford to provide.

The government application process for direct guarantees focusses on applications that comply with the government scheme rules. Developers are expected to demonstrate a robust rental demand with a viable exit strategy, a solid management structure, and suitable asset cover,

If you are developer who is interested in the scheme you can find out more on the Homes and Communities website http://www.homesandcommunities.co.uk/ourwork/private-rented-sector or email housingguarantees@communities.gsi.gov.uk to discuss a specific proposal.

Private Rented Sector Taskforce

There is an expert panel to oversee the scheme. The Private Rented Sector Taskforce consists of developers, management bodies and institutional investors, who aim to support the expansion of the build to let sector.

The Taskforce is headed by Andrew Stanford, who is the former Head of Cluttons Residential was MD and founder of property and asset management company Stanford Mallinson.

Other Taskforce members are:

Julian D’Arcy of Kirkby Capital, a former regional chairman and proprietary partner at Knight Frank

Joanna Embling, a property consultant and chartered surveyor, specialising in urban redevelopment and a former equity partner at Cushman Wakefield

Tracey Hartley, a specialist asset manager for large scale residential landlord Grainger plc

Dominic Martin, senior analyst at EC Harris and a qualified surveyor

So 2014 could be an interesting place for property developers who are willing to embrace the scheme. For advice on property investment and the rental market please get in touch with Riley Marshall on 0207 394 1160.

Housing Developers Needed as Property Demand Swells in the UK

Help to Buy Numbers Treble

According to a report from RICS (Royal Institute for Chartered Surveyors) the Help to Buy numbers trebled in the last two months of 2013, so will demand outstrip supply in the UK this year?

A report by the NAEA (National Association of Estate Agents) following their recent member’s survey states that during November its members sold an average of nine homes per estate agency branch, and on average two of those were Help to Buy purchasers.

The Help to Buy initiative launched at the beginning of October 2013 and we dealt with the different Government housing market schemes in our earlier blog post.

Nationally more than 2000 people took advantage of Help to Buy in the first month after launch – by December that figure nearly tripled to 6000. These new mortgages will equate to around £1 billion of new lending to homeowners who may have been deterred or prevented from borrowing because of the need for a lump sum for their deposit before a mortgage company will lend money.

David Cameron Comments on the Increased Demand for Housing

Prime Minister David Cameron hopes many more people will be persuaded to get on the property ladder in the New Year, giving the property market and the wider economy a welcome boost

RBS, HSBC, Lloyd’s, Virgin Money and Aldermore are already offering these mortgages but they will soon be joined by Barclay’s and Santander who plan to introduce their own Help to Buy products this month.

The property market will no doubt continue to heat up as we head towards one of the busiest times of year and Cameron observes:

“. . . too many people have found themselves frozen out of the market in recent years as a result of the size of the deposit required.

That is why as part of our long-term economic plan we introduced the Help to Buy scheme, so hard-working people with sufficient earnings can get on, fulfil their aspirations and enjoy the security of owning their own home.”

UK Economic Growth Relies on a Booming Property Market

The UK economy is so dependent on a raising property market that the Government is always under pressure to find ways to keep the figures rising upwards, but if the market gets too hot it could cause a bubble that would be very painful for our recovering economy if it should burst.

RICS senior economist Josh Miller warns:

“The pace of demand is exceeding that of supply in every part of the country. Clearly the momentum in the market is growing. Help to Buy, funding for lending, and the clear commitment to keep interest rates low for a long time, all three are having an effect.”

Build More Housing to Stabilise Economic Growth

The best way to stabilise the market is to increase supply so that it tracks this increased demand. Providing that buyers can afford to purchase we are unlikely to ever have a situation where available housing stock outstrips demand in London. Therefore building more housing is the answer to increased, gradual and sustainable economic growth in the Capital.

The Shadow Housing Minister Emma Reynolds comments that:

“Any help for first-time buyers struggling to get on the property ladder is to be welcomed.

But rising demand for housing must be matched with rising supply if this scheme is to bring the cost of housing within the reach of low and middle income earners.”

It is certainly true that without a reliable release of new more affordable housing onto the market that the housing ‘bubble’ will stall and even burst, if house prices rise sharply in response to this increased demand. This could spell economic disaster for all of us.

Help to Buy Explained

7003Help to Buy

There are two strands to the Government’s Help to Buy scheme, Equity Loan and Mortgage Guarantee. Both are designed to help people to get on the property ladder, even if they only have access to a limited lump sum for a deposit.

Equity Loan 

The Equity loan scheme was released in April 2013 and applies to new build properties only. It is available to first-time buyers but also to those who are already homeowners and looking to move. The value of the house or apartment must be less than £600,000. While this may seem counter-intuitive it does help the housing market by enabling developers to sell properties of varying sizes and keep the housing market moving.

Buyers are required to raise 5% of the total capital as a deposit, the Government then subsidises up to 20% of the value as a further deposit on top of that raised by the buyer. This means that the buyer has access to a deposit of 25%, which in turn allows them to access better mortgage rates.

The really good part about the deal is the cost of the money that come s from the government. It is provided interest free for the first five years. The following year interest will be charged at 1.7% rising by a further 1% of that amount each year plus inflation every year after that.

Borrowers can repay the loan at any time, without penalty. The idea of this is to encourage buyers to pay off the initial loan and put the money back in the pot for the next wave of buyers.

One cautionary note about the scheme is that if you do not repay the government’s part of the loan before you come to sell the property, then the government retains a percentage stake in the property, equal to the amount of loan outstanding. This is calculated at the current market value of the house

Example

You buy a property for £100,000
You raise £5000 as a deposit
The government pays a 20% deposit of £20,000

You pay nothing back to the government and

Five years later you sell the house for £120,000
he government reclaims £24,000

Obviously if the house were to double in value, then the 20% stake doubles to, so £20,000 becomes £40,000

Not all lenders are participating in the equity scheme but you can find out more about participating Help to Buy lenders here.

Mortgage Guarantee 

This is the second phase of Help to Buy, and it came into effect in October 2013. Buyers will still need to raise 5% of the mortgage value as a deposit. The government then guarantee a further 15% of the value to bring the total deposit up to 20%.

This is designed to give mortgage lenders the confidence to lend money to buyers who would otherwise only have a very small deposit. Apart from Natwest, Halifax and HSBC, most lenders are yet to release their rates for these Help to Buy Mortgages, and are not likely to publish details until early in the New Year.

The major difference for this scheme rather than the equity one above is that this arrangement is available for existing properties and is not restricted to new build. There is still a maximum price ceiling of £6000,000, and you cannot use it for a new home, under a shared ownership scheme or to get yourself an investment property.

The administration of the scheme will be very easy for buyers. Although you will have to sign some paperwork in relation to the scheme, most of the mechanics are dealt with by the lender and the government between themselves.

Anyone wishing to apply for either of these schemes will be subject to the same credit checks as they would with any other mortgage application. So you will have to prove you can afford the repayments and have an acceptable credit record.

­Click here to Find out more about Help To Buy.

Other useful sites include the Governments site: https://www.gov.uk/affordable-home-ownership-schemes

Rightmove also have some really useful information: http://www.rightmove.co.uk/help-to-buy.html

Development Jobs Set to Boost Housing in East London

The Royal Docks is to become home a New Business District - the Biggest UK Development to Date

East London’s Royal Docks have attracted Chinese business Investment to Develop the Area (Image courtesy of the Royal Docks Trust)

The London borough of Newham is set to become the next property hotspot following an announcement by the Mayor Boris Johnson of plans to develop the land north of the Royal Albert dock as a business district set to be worth £6 billion to the UK economy. The site will be developed by ABP China (Holding), a successful commercial developer, who have estimated creation of 20, 000 jobs in this region in what will be the biggest shift east since Canary Wharf was built in the 1990′s.

The development land, which comprises some 35-acres, is situated in the heart of Royal Docks Enterprise Zone and is owned by the Greater London Authority. ABP will be aiming the majority of the business at Chinese and other Asian businesses looking to establish headquarters in our capital as a gateway to Europe. It is the first direct investment by a Chinese developer in London. When it is completed it will provide over 3.2 million square feet of work, retail and leisure space.

Mayor of London, Boris Johnson, said: “For centuries the waterways of east London were the throbbing arteries of UK trade and commerce. This deal symbolises the revival of that great era, continuing the re-invention of this once maligned part of the capital into a 21st century centre of trade and investment.

Creating a third financial district in the capital, this development will act as a beacon for eastern investors looking west, bringing with it tens of thousands of jobs and billions of pounds of investment for the UK economy.”

This will make it the largest UK development of its kind, which is great news for the borough, which has also benefited from the successful and on-going regeneration of Stratford, following the Olympics in 2012. The hope is that the site will boost local employment by some 30% and generate around £23 million in business tax alone, and in addition it is expected to act at a catalyst for further development in the area. It is certainly likely to see an increase in new homes developments to service the area as it grows.

Sir Robin Wales, Mayor of Newham said: “The Royal Docks Enterprise Zone offers an unrivalled investment opportunity and this deal further strengthens Newham’s growing reputation as an ideal destination for international business.

We welcome ABP’s ambitious vision for the Docks which are already home to London City Airport, the University of East London, the Siemens Crystal and the Excel. ABP’s proposals will bring further investment from abroad and unlock future development. It will also create benefits for local people by providing thousands of new jobs and further enhancing the waterfront for people to enjoy.

Newham will work closely with ABP and their UK development partner, Stanhope, to ensure that as many of these jobs as possible are accessible to local residents. Our successful Workplace jobs brokerage scheme is ideally placed to ensure this happens.”

Developers, ABP, have recently completed a large development in Beijing, and they are currently working on a 75 million square foot development in Shenyang in north-eastern China. They will be working with UK developers Stanhope and architects Farrells, and they predict the first occupiers will move in in 2017.
It is the latest in a string of investments in the area including exhibition space at the Siemens Crystal Centre, Emirates Air Line – the UK’s first urban cable car, and new homes development along Great Eastern Quay, and Silvertown Quays. There are also future plans to create the UK’s largest floating village at Royal Victoria Dock. Transport links to the area will be enhanced by the new Crossrail station coming to in 2018.

Chairman of ABP, Mr Xu, said: “I am very pleased and very proud that my company ABP has reached this agreement for the Royal Albert Dock with the Greater London Authority. This project will be hugely significant for both the Chinese and UK economies.

My vision is to develop a world class international business district which will initially target Asian businesses to help them secure a destination in London, which in China is seen as the gateway to both the United Kingdom and the wider European economy.  Our plans aim to strengthen trade between east and west, provide new local jobs and deliver benefits for the wider London and UK economy.”

Tenant Admin Fees Guide for Tenants

Estate Agents fees need to be transparent

Letting Agents Need to Ensure Their Tenant Admin Fees are Transparent

Tenant Admin Fees are a Fair Way to Do Business

Housing Charity Shelter would like to see letting agents fees outlawed in England and Wales having already persuaded the Scottish Parliament to scrap tenants’ fees. We want to explain why this could be a bad thing for tenants.

The job of a letting agent is quite time-consuming and, as we know, time is money. It is expensive to rent property to tenants. There are many costs involved in setting up tenancies, and obviously the majority of these costs are borne by the landlord. However there are costs that link directly to a tenant including references, legal documents, and the time spent with tenants finding just the right property for them. All of these are legitimate reasons that the tenant should bear some of the costs of renting property, and are often charged as tenant admin fees, but perhaps the most relevant one is to ensure that the tenant is fully committed to the process.

Where a tenant does not pay any fees but decides to take a rental property the landlord often suspends marketing the property while the agent takes out references. (Even where marketing continues the agent is accruing costs by keeping that property on the market in terms of advertising and conducting viewings). There is nothing holding that tenant to the property and so in the meantime he finds another property that suits him just a bit better and so off he goes leaving the first landlord and agent high and dry.

Rising Costs Mean Rising Rents

Who should bear the costs of referencing the tenant, and any other legal and administrative work that has been undertaken by the agent? If it is the landlord then he will put his rent up, if it is the agent he will put his fees up, then landlord will then put the rent up.

With no fees charged to them the tenant could switch properties several times before committing himself, with no financial penalty at all. Most landlords will have experienced this problem even where the tenant has had to lose a couple of hundred pounds to move on to another property, so imagine how much worse this will get if there is no financial commitment on his part.

There is a myth that all landlords are rich, that all agents are rolling in money, and that all tenants are honourable people who are taken advantage of by sharks.

Most people are reasonably honest and respectable, and I include landlords, agents and tenants in this generalisation, but of course there is a measure of self-interest driving all of us, so if there is no concrete commitment in place there will be more timewasters costing the industry money, and so overall prices will rise, and this will mean that rents will rise.

In our opinion the only way to deal fairly with this situation is for agents to charge a reasonable fee for the work they do; to be open and transparent with their fees; and for everyone to keep to their side of the bargain.

Guide for tenants

  • Ask your Letting Agent what fees they charge before you view a property.
  • When you have found a property, ask for a written break-down of how much you will pay for the specific property you want to rent.
  • Check if the Agents charge for renewals, check out fees, and any other miscellaneous fees.
  • Make it clear to the Letting Agent that you will not pay for any charges that they do not detail in this initial exchange.
  • Ask for confirmation from the Agent, in writing, of all monies that you will be expected to pay including the rent up front and deposit so you are absolutely clear in your own mind what you will need to pay for.
  • Don’t commit to renting a property unless you intend to move into it.

It will be interesting to see how the Scottish system works out over a period of time, and whether in fact tenants are any better off due to this change in legislation north of the border.

If you want to find out more about becoming a tenant, and avoiding tenancy pitfalls check out the Top 10 things tenants should know, when renting a property on DIY Doctor’s project pages.

You can read more about Protecting yourself from Rogue Agents if you are thinking of renting a property.