Buying, selling and letting - Wednesday, June 02, 2004

A record number of people are buying residential property to rent out to private tenants. Your Mortgage magazine reveals the steps buy-to-let investors can take to ensure success.

Buying a property to let is still increasing in popularity. As other investments continue to look shaky in comparison, the rude health of the property market continues to convince us that bricks and mortar is the best investment we can make. In fact, 43 per cent of homes put up for rent between February and April this year belonged to new landlords, according to the Royal Institution of Chartered Surveyors – up from an already high 41 per cent in late 2003. But while buying an investment property has never been easier – and the choice of lenders who will help finance your purchase has never been as wide – there are still a few things to consider if you want to make your investment pay off.

Choose the right property

Above all else location, location, location is key when it comes to buy-to-let so make sure that your property is in an area that is well suited to letting. Always consult local estate agents to determine the supply and demand of rental properties in the area first. The Association of Residential Letting Agents (ARLA) will give you details of ARLA-registered agents in your area and can also offer help and advice on regulations and rent levels. Contact ARLA on 01923 896555.

Choose the right mortgage

With more than 40 lenders offering hundreds of buy-to-let mortgage deals choosing the right one can appear daunting, but it needn’t be. Check with your lender to see how much you can borrow. As a rule most will only allow you to borrow around 80 per cent of the value of the property. Almost all lenders will take the expected rental income from the property into account when deciding how much to lend. As a guide your rental income should, at the very least, cover 125 per cent of your monthly mortgage payment.

Work out costs and income

Work out how much your monthly mortgage repayment will be and whether the expected rental income will exceed this. By checking out the rental prices of similar types and sizes of property advertised in your area you will get an indication of whether this is a possibility. Also look at whether you could afford your mortgage if interest rates shot up and the property is unoccupied for, say, three months.

Consider the ‘hidden’ costs

You’ll have to pay for solicitor’s fees (approximately £900 for a £100,000 property), estate agent’s fees, buildings insurance, mortgage arrangement fees, stamp duty and possibly service charges and ground rent.

Budget for ongoing costs

You are responsible for the cost of repairing or replacing fixtures and fittings and ensuring that the property meets necessary health and safety standards. Local authorities require that you comply with fire regulations, which could mean you have to put in fire doors and smoke detectors. The Department of Trade and Industry publishes a useful guide, Furniture and Furnishings Fire & Safety Regulations. Telephone 0870 150 2500 to receive a copy.

Choose a professional letting agent

You might consider using a professional letting agent. They will find tenants, collect the deposit and rent and arrange the inventory and tenancy agreements. But they don’t come cheap. Expect to be charged anything between ten and 17.5 per cent of the gross rental income that you receive.

Ensure you have the right insurance

As the owner you are responsible for insuring the structure o your property, which includes any permanent fixtures and fittings. It is vital that you check your policy as many buildings insurance policies exclude buy-to-let.

Sort out your tax position

You have to pay income tax on any rental income you receive, although you can deduct some expenses, and you will be liable for capital gains tax when you sell. Always consult an accountant before entering the market.

Get a fully flexible mortgage

This type of mortgage can be ideal for buy-to-let as you can fluctuate your payments in line with rental income.

View buy-to-let as a long-term investment

Don’t expect to make a quick profit on rental income and equity gain the property. The forecast should be for medium- to long-term returns – five to ten years at least.

Prices up again …

House prices increased by 0.6 per cent in May, with average house prices reaching £151,800 and London’s average rising above £250,000 for the first time, according to the latest Hometrack survey.
The research reveals a 0.6 per cent increase in average national house prices, bringing the total increase this year to 3.2 per cent. The number of transactions also continued to increase, with house sales up 2.7 per cent, buyers up two per cent and discounts on asking prices diminishing.
Average sales price achieved as a percentage of asking price is 96.4 per cent. While this is the same as last month, it is the highest percentage recorded since November 2002. This again points to further upward pressure on house prices for the rest of the year. The average length of time taken to sell a property has fallen to 4.0 weeks (4.2 in April’s survey). There is currently an average of 10.1 viewings before a sale is achieved.

… and the first rung is higher than ever

It takes first-time buyers a year longer to save for a house deposit than a decade ago, according to National Savings and Investments (NS&I). The research revealed that since 1994 the time it takes to save for a five per cent deposit on a first home has increased from two years nine months to three years nine months. In the South East, first time buyers face having to save for 48 months.
With increases across the UK of between three and 15 months for the average first-time buyer to save for a deposit, it is harder than ever for those who want to get a foothold on the property ladder. The extra time taken is down to the fact that income increases (68 per cent) have not matched increases in house prices (142 per cent) over the past ten years.
Gill Cattanach, marketing director at National Savings and Investments, said: ‘The growing gap between increases in house prices and incomes means that those thinking about buying homes for the first time need to start saving earlier.’

Pensions for property policy welcomed

Shrewd investors are set to benefit from new government proposals allowing them to make tax-efficient investments in the buy-to-let property market using their pension funds. The proposals, which are planned to come into effect in April 2006, will mean that more people can acquire property by converting their pension scheme to a self-invested personal pension and take advantage of the associated tax benefits.
Clive Gawthorpe, partner at the Manchester office of national accountancy group UHY Hacker Young, said: ‘These proposals should be welcomed by shrewd investors who can get tax relief on their pension contributions. The pension fund will not be liable for tax on the rental income received, nor will it have to pay tax if the property increases in value.
‘The announcement follows the government's proposals to cut tax-free investment in ISAs from £3,000 to just £1,000 per annum next year, and has been welcomed by those keen to exploit methods of tax-efficient investment.

‘The buy-to-let property market is a booming industry in the UK and this announcement is expected to fuel house sales in areas favoured by renters.’
The main drawback for those hoping to take advantage of the new law is that their funds must remain locked in the scheme until retirement and access to funds is heavily restricted. The government is also proposing to cap the size of pension funds to £1.5 million, rising to £1.8 million by 2010.
Gawthorpe warned: ‘Prospective investors should realise that this is still only proposed legislation and that people should seek professional advice before setting up a pension fund with the sole purpose of investing in property.
‘The legislation was originally planned for April 2005 before this year's budget postponed it for another year. It is important that the government does not shelve these plans or postpone them again after pulling its support of tax-free savings in ISAs.’

Mortgage lending hits new high

Mortgage lending has notched up its highest monthly rise yet, countering recent reports of a slowdown in the housing market according to recent figures from the British Bankers' Association (BBA).
Home loans rose by £6.4 billion in April, compared with a previous six-month average of £5.6 billion, the BBA said. April's lending had been expected to remain buoyant because of the higher volumes of approvals granted in recent months and resulting in above-trend growth.
The Council of Mortgage Lenders (CML), which also released lending figures recently, backed up the BBA's data, putting April's mortgage lending total at £25 billion – 25 per cent higher than during the same month last year and one per cent up on March.
House purchase loans accounted for 51 per cent of gross lending at £12.8 billion, matching last October's record, the CML said.

Changes you make to your home, whether large or small, can have a big effect on the price you achieve when it comes time to sell, says Tim James. We take a look at the value hot spots in your home

If you've got money to invest in home improvements you'll want to spend it wisely. The improvements you make to your home will depend on what's already there, but knowing which changes hold value and desirability will help you sift out the maybes from the musts.

Location, location, location

The site of your home is the first penny in the pot of value. It isn't just about the neighbourhood you live in, but also the region or area.

Kitchen

Show favouritism to your kitchen. Improving this area will not only add value to your home, it will make it easier to sell. If you're planning a complete makeover then keep it simple – elaborate or out of place redesigns can kill a sale.

Bathroom

We've all got one, but those with two are worth more. A second bathroom in a family home can add as much as nine per cent to the value of a property.

Bedroom

Although the number of bedrooms adds value, the real worth is in adding floor space. Enlarging the floor area by approximately 100 sq ft to create a bedroom can increase value by around eight per cent. Remember, if you increase the number of bedrooms in a property, you may need a second bathroom.

Conservatory

A conservatory can add value to a house if it blends with the style of the property and doesn't look out of place. Remember that planning permission is required for areas over 270 sq ft.

Central heating

Central heating is money well spent. Slap on an extra seven to 15 per cent in value for a complete and well-maintained system.

Loft conversion

Loft conversions should be a final resort in the fight for space as they can cost as much as the value they add to a property. Remember that planning permission is required.

Garage

A single garage will add more than five per cent in value to your home, although this could be more in city areas such as London where land is limited.

Gardens

An enhanced recreational area can add value, but resist the temptation to be ambitious. Many buyers will be shy of any extra maintenance involved.

Pool

Although a pool has connotations of luxury and ease, it is in fact a maximum deterrent to potential home buyers with small children. Pools and other large water features are a maybe, not a must, for those with cash to spare.

The number of mortgage types on offer today is almost infinite, with capped, cash back, flexible, CAM and offset among the options. However, discounted and fixed rate are still the most popular. Your Mortgage magazine clears up some confusion.

A cut below

If you are a dedicated bargain hunter then a discounted rate mortgage could be the deal for you. This type of mortgage, as the name suggests, gives you a discount off the lender's standard variable rate (SVR) for a set period of time – usually between two and five years. Every lender has an SVR, which tends to go up and down in line with the Bank of England base rate.
With the base rate currently at a low 4.25 per cent, most lenders' SVRs are also low. So discounts off these low SVRs are currently more attractive than they have ever been and there are real bargains to be had. A key advantage of discount deals is that you can get the benefit of a low mortgage rate when you most need it, leaving you with more money for the other expenses associated with buying a home, such as solicitor's fees, stamp duty and furnishings.
There is, however, a risk attached to discounted rate mortgages. If your lender's SVR should go up during the period of your deal, then so will the rate you are paying. And although mortgage rates are still very low they are on the up, taking lenders’ SVRs with them and pushing more mortgage borrowers towards fixed rates.

Fixed up

So are fixed-rate mortgages a safer bet? The main advantage of fixed-rate mortgages is that you know exactly what your payments will be for a set period of time. Whatever happens to the base rate you have the peace of mind of knowing your mortgage payments will not change. The most popular fixed-rate mortgages run in duration from two to five years (and are often charged at a similar rate to the initial pay rate on a discounted rate over the same term), but there are also deals fixing from six months through to 25 years.
However, lenders protect themselves against unexpected interest rate increases, and long-term fixed rate mortgages may be priced higher than their current SVR. Opting for a fixed-rate mortgage also means you will miss out on any falls in the base rate or the SVR, and you could be left paying an uncompetitive rate.
However, if you take out a fixed-rate repayment mortgage you should bear in mind that you will have to arrange separate life insurance. You also have to begin a new mortgage term each time you move house, whereas you can continue your existing term with an interest-only deal.

Two sides

So should you fix or is a discount more your style? Andy Homer, spokesperson for Alliance & Leicester, believes that whether customers should opt for a fixed- or discount-rate mortgage depends largely on their view of the economy, attitude to risk and personal circumstances.
‘There are some very good deals on both sides,’ he says. ‘Borrowers who are more risk-averse should consider a fixed rate, as there are some very competitive deals out there. However, if you believe that the economy is stable and you want to take advantage of possible interest rate cuts, then a discount could be more suitable, although borrowers should remember that with discounts there is the risk that rates could go up,’ he adds.

The right one

There is no right or wrong when it comes to choosing the best mortgage. What may be the perfect deal for your neighbour may not suit you. If you are uncertain it may be worth choosing a short-term deal, say a two-year fixed or a one-year discount rate mortgage, remortgaging to a different loan at a later date if necessary.
Homer says, ‘We are seeing a growing number of people going for short-term deals, reflecting widespread confusion and uncertainty about the state of the economy.’
Whichever mortgage deal you opt for, just make sure that you have first considered your needs and the market carefully.

You no longer have to choose a fully flexible mortgage to get the benefits of many of the features associated with them. What Mortgage magazine helps you find the sort of flexibility you really need.

The word ‘flexible’ is one that seems to have only positive connotations, so it’s little wonder that many of us are attracted to flexible mortgages. We’re told we can make overpayments to clear the debt early, take payment holidays or make underpayments when financial pressures come to bear, and even borrow extra cash if we need to make a substantial purchase further down the line. But not everyone will use all the features, so – as it’s no longer necessary to restrict yourself to a fully flexible deal to get some of the benefits – it’s worth considering what you want from your mortgage and then shopping around to find it at the best price

Overpayments

What are they? A lender will tell you how much you need to pay monthly in order to clear your mortgage by the end of your chosen term. Where an overpayment facility is available, you can make larger payments each month and pay off lump sums from time to time.

Why would I want to? ‘By making overpayments you are killing two birds with one stone,’ says Alan Dring, head of sales at Standard Life Bank. ‘You’re potentially reducing the period of your mortgage and you’re saving money.’ The sums don’t have to be big to have an impact on the overall cost of your loan. According to Skipton Building Society, on a repayment mortgage with a rate of 5.50 per cent, originally arranged over 25 years, increasing your monthly payment by just £50 to £665 would cut the cost of your mortgage by £13,960, thus reducing the repayment term by three years and eight months. Rather than overpaying to clear your mortgage early, if you choose a deal with underpayment and drawdown facilities you can overpay and buy yourself breathing space when money is tight.

Where can I find them? ‘The majority of lenders now allow overpayments to a certain extent on many of their products,’ says Rob Clifford, managing director of broker Mortgageforce. Nationwide Building Society, for example, allows borrowers to overpay by up to £500 a month on its fixed-rate and discount deals and offers unlimited payments on its fully flexible loan. Meanwhile, HSBC allows all borrowers to make overpayments of up to 20 per cent of their regular repayments.

How do I use them? Your lender may help you arrange overpayments at the outset. This is the case at Yorkshire Bank, says marketing manager Martin Allton. ‘At the initial interview the adviser will discuss what you are comfortable with overpaying each month,’ he says. This is reviewed each year but, in common with most lenders, the bank will let you increase your overpayments any time you want. Lump-sum payments can be made at any time: by post, in a branch or sometimes even online. Some lenders add the extra payments to your mortgage account, while some hold them in a separate account. Standard Life calls this your Prepayment Reserve, while Bristol & West directs the money to an offset account. Dominic Toller, spokesman of Bristol & West, explains: ‘Overpayments are put in your offset account and labelled differently so you can see how much you can borrow back.’

Underpayments and holidays

What is it? Flexibility means being able to reduce the amount you pay each month or to take a break from monthly repayments. This is where the terms and conditions applied by lenders tend to differ.
Why would I want them? Perhaps you foresee a period when you will have less money. ‘If people indicate that they are planning a baby-break or may experience regular income interruptions – for example they’re contract workers or freelancers – the adviser would look at these features,’ says Rob Clifford. The features could also be useful on a buy-to-let mortgage where borrowers might experience void periods.

Where can I find them? These facilities are less common than overpayment facilities and may only be offered on a lender’s flagged-up flexible mortgage. Even on a fully flexible loan they may be restricted.
How do I use them? You will have to give your lender notice that you intend to take a break or underpay; otherwise it will assume you have defaulted on your mortgage. Whether the lender agrees the holiday or underpayment will often depend on your history of payments. Martin Allton explains: ‘The minimum criterion is that the mortgage cannot run beyond the 25-year term or the end of the agreed term.’ In effect, this means you can only take a break or underpay if you have overpaid in the past.
There are mortgages, however, that allow breaks without overpayments. Standard Life Bank, for instance, will allow you to take up to two months off each year as long as you have made six consecutive payments. Bristol & West permits breaks from day one as long as you have a further loan facility agreed. See ‘Drawdown’ (below) for more on this option.

Drawdown

What is it? On some mortgages you can borrow back any money you have overpaid on the deal; on some you can apply for extra borrowing up to a limit agreed when you took out your loan. Bristol & West’s Dominic Toller explains: ‘If you borrow £75,000 but you’re good for £100,000, from day one you have a further loan facility of £25,000. Any time you want to borrow any of that money you can give us a call.’ At Standard Life Bank this fund is called a Cash Reserve.
Why would I want it? If you expect to make an expensive purchase in the period while you have the mortgage, this may prove more cost-effective than using a personal loan. You may not want this facility enough to apply for a mortgage on the basis of it, but if the loan you want has this facility you have nothing to lose. While the money sits there unused you don’t pay for it, and when you draw it down you usually get it at your mortgage rate.
Where can I find it? This kind of facility doesn’t tend to be available on standard mortgage deals, but many lenders do allow extra borrowing. On a fully flexible deal this facility will only be available if you don’t borrow the maximum available to you at the outset, or build up equity through overpayments.
How do I use it? The reserve will be set up when you apply for the mortgage. To use it you need to contact your lender. The extra amount you have borrowed will be scheduled over the remaining term of your mortgage, unless you request otherwise.

Daily interest

What is it? Interest on your mortgage is calculated daily rather than annually as in the past.
Why would I want it? There’s little point making monthly overpayments on your mortgage if they don’t reduce your balance until the end of the year, and this is what happens if interest is only calculated once a year. If interest is calculated daily, overpayments have a greater effect on the total cost of your debt – which means, of course, you immediately start paying for any extra borrowing through drawdown.

Where can I find it? Pretty much everywhere these days.
How do I use it? You just make your monthly repayments and let the lender get on with it.

whatmortgageonline.co.uk

Hotproperty offers those looking to buy jointly some legal tips to ensure an easy ride. By Anna Bowden

Previously associated with married couples or partners setting up home together, joint ownership is now becoming popular with other segments of society who have been priced out of the market and can no longer buy a property alone or who want to maximise the amount they can borrow.
The Council of Mortgage Lenders says as many as four friends can have a joint mortgage, but there aren’t that many lenders who will actually give a mortgage based on multiples of three or four individual incomes — most will only offer up to three times the highest income plus the sum of all the others. There are two legal forms of joint purchase – joint tenancy and tenancy in common. These are explained below.

Joint tenants

This applies to two people only with each paying 50 per cent of mortgage and household costs. Neither party can sell his/her share without the consent of the other person, and when the property is sold 50 per cent of the profit (or loss) is taken by each partner. Should one die, his/her share passes to the survivor. This type of agreement is usually undertaken by couples when they buy together.

Tenants in common

This is the most usual type of contract for friends or family buying together and is usually defined by the different proportions paid by each partner. For example, 60 per cent of the deposit and mortgage payments might be made by one person and 40 per cent by the other. If the property is resold, the profit or loss is distributed according to the established proportions, and if one person dies his/her share goes to the next of kin rather than the surviving tenant(s).
This type of contract is a great idea for those struggling to get onto the property ladder, but can be more problematic in the event of a death as the deceased’s next of kin may want to realise their inheritance in the form of a cash sum instead of a share in a property. A clear will or formal contract setting out what will happen in the event of a death will help to resolve the situation should it ever occur.

For both types of contract it is worth remembering that if one mortgage borrower disappears or defaults, the lender is entitled to and will pursue the other(s) for the full amount, so make sure you are protected with the right insurance.

According to the Knight Frank London property index, London’s top priced property has risen to an all-time high, meaning that London now has the most expensive residential properties in the world. The index indicates that the London prime property market is recovering strongly – it rose by 0.3 per cent in April, bringing the capital value increase to 2.8 per cent in the first four months of 2004 and contrasting strongly with the fall of 1.9 per cent in 2003. On an annualised basis, price growth in the first four months of 2004 equates to an increase of 8.6 per cent.

Prices at the very top end of the market are showing the strongest gains, with properties worth £3 million and above rising by 0.6 per cent in April and properties between £2 million and £3 million rising by 0.5 per cent. Overall, London prime property prices rose by 0.3 per cent.
These rising value changes must, however, be seen in the context of higher-than-average falls experienced during 2003.

Liam Bailey, head of residential research at Knight Frank, comments: ‘The London prime property market continues to recover, following a period of weakness in 2003. The shortage of stock remains a feature of the market and underpins recent price growth. It is also self-perpetuating, however, as potential purchasers are wary of putting their own property on the market before they find a new home. Despite the acute shortage of stock, vendors must remain realistic when setting the asking price as only high-quality property attracts premium prices.

‘Whilst price growth nationally is set to slow over the next two years, the trend in the prime central London market is likely to be upward as the City employment market recovers. As buyer confidence continues to increase, our forecast of six per cent price growth for 2004 may be revised upwards when we consider the issue in our London Residential Review in the summer.’
Noel Flint, partner at Knight Frank’s Sloane Avenue office, says: ‘The supply of prime central London houses and apartments is still restricted, which has resulted in many purchasers chasing similar properties. There is an increasing amount of sealed bids and, generally, asking prices are being achieved or exceeded. Prime central London continues to be a top destination for overseas purchasers from around the world, attracted by the cosmopolitan lifestyle, security and the City.’

First-timers buying new

Research by SmartNewHomes.com, the UK’s leading online new homes specialist, has shown that new homes are proving increasingly popular with first time buyers who are taking advantage of price discounts and other incentives to help them get onto the property ladder.
As house prices continued to increase to an average of £165,838 at the end of 2003, the average person is now not buying their first home until the age of 33 and the number of under 25s buying a home has fallen to a low of 10.5 per cent.
The percentage of total sales to first time buyers was an average of 16 per cent in 2003. However according to SmartNewHomes, the percentage of sales of new homes to first time buyers was 29 per cent, indicating that new homes are proving an attractive option for buyers taking their first steps on the property ladder.

With interest rates at a half-century low, more and more borrowers are considering switching their deals. If you’re one of them what should you do next? What Mortgage offers a rough guide

The popularity of switching mortgages has been staggering in the past few years as home owners have taken advantage of low interest rates. Although a surprising number are staying with their current lender, others are driving what continues to be a huge growth sector in the home loan industry.

Why remortgage?

Remortgaging is a good way to escape high variable or fixed rates and take advantage of some of the current fixed-rate or discount mortgages, which have much lower rates. It is also a way to raise funds for an expensive purchase. If you have owned your property for a few years it could be worth much more than your outstanding debt. By taking out a new, larger mortgage you can release money to spend as you choose.
Remortgaging may also appeal if you are on a variable-rate mortgage and believe interest rates are about to rise. You can move to a fixed rate deal before this happens.

The costs

Remortgaging costs money, and before applying for a new deal you should find out just how expensive it is going to be. Common expenses are:
·    Arrangement and administration fees for the new mortgage. Most fixed-rate mortgages have arrangement fees between £150 and £300
·    A mortgage valuation fee, which tends to be between £130 and £300 depending on your chosen lender and the value of your property
·    Any early redemption penalty on the existing mortgage. This can be from three to six months’ additional interest payments if you redeem the mortgage within a certain period of time after taking it out
·    The mortgage indemnity premium. If the amount you are borrowing is more than 75 per cent of the property’s value (loan to value or LTV) you may have to pay a one-off mortgage indemnity guarantee (MIG) premium on the new mortgage
·    Solicitors’ fees
·    Land Registry and local search fees
·    If you have negative equity in the property, you will have to find the additional money that you owe on your old mortgage when you take out a new one. If this is the case, don’t remortgage unless you really have to


Five-point plan

Still unsure if remortgaging is right for you? This five-point plan can help you make up your mind

1 Write to your existing lender and ask for a written redemption statement. This will indicate the exact outstanding balance of your loan and will show any penalties or fees to be charged for redeeming your mortgage

2 Calculate what the legal fees involved will be. These will vary according to the value of the property and the solicitor used

3 Look at the new mortgage offer, including the small print, and ask for a written statement of what your new repayments will be, showing any discounts and all the costs that will be incurred such as the MIG premium and arrangement fee

4 Work out how much you will save each month by subtracting the repayment for the new loan from the old repayment – don’t forget to take the standard variable rate that the new loan will revert to into consideration as well, particularly if the discounted or fixed rate applies only for a brief period

5 To judge whether or not remortgaging is worthwhile, compare the costs with the savings – but don’t forget that the costs will be payable upfront while the savings will accrue over a period of time

whatmortgageonline.co.uk

New homes market given good bill of health

The new homes market in the UK is going from strength to strength, according to figures released today by the UK’s online new homes specialist SmartNewHomes.com. The average price home buyers were willing to pay for a new property rose by 1.3 per cent to £216,115 last month, an increase of 4.8 per cent from the same time last year, indicating that buyers are still finding the means to fund more expensive homes.

Hot spots cool off

Last year’s property hot spots in the North and West Midlands were, along with London, the only regions to see new home prices fall over the last twelve months, dipping an average of three per cent from the high prices these regions commanded last summer.  

Houses rule the roost

The survey also noted a shift in the types of home sought by buyers. Last month detached and semi-detached homes regained the ground they lost to the recent trend for apartment living, accounting for over 52 per cent of new home searches compared to 40 per cent for apartments and penthouses. At their peak towards the end of last year, 47 per cent of home buyers were specifically searching for apartments, but their popularity has decreased as the number of households searching for a city dwelling declines.

Positive for 2004

David Bexon, chief executive of SmartNewHomes, commented: ‘This month’s Demand Index once again demonstrates the strength of the UK housing market in 2004. We are seeing no sign of a decline or reluctance to move, in spite of negative reports or interest rate increases, and more people are finding the resources to buy new homes.

‘The index is also showing the increasing number of people hunting out a different pace of life by moving out of the city and into the countryside, with the consequence that prices in these regions are rising.’
On the recent decision by the monetary policy committee (MPC) of the Bank of England to raise interest rates by 0.25 per cent, Bexon adds, ‘Although no one really wants to pay more for their mortgage, I think that the 0.25 per cent rise could be a good thing – it will suppress house price inflation, which is starting to hit worrying levels. In addition, if new homes supply is increased, as recommended in the Barker report, then we should see a more normal market, which will help affordability at all levels. On the basis that the longer the binge, the worse the hangover, we should see this as the black coffee.’
SmartNewHomes.com