Buying, selling and letting - Wednesday, December 08, 2004

Colder weather brings with it a whole new set of home safety concerns. However, by following these simple guidelines from the experts at gas-elec you can have a safe winter.

Winter requires heat and light that just aren’t necessary at other times of the year. This means dealing with open flames, boilers and heaters that you do without in summer. With the cold with us once again it’s a good time to remind ourselves of the basic rules of keeping you and your family safe during the freezing season.

Love your boiler

By servicing your boiler on an annual basis – before the deep winter sets in – you will not only reduce the likelihood of a breakdown but may actually increase the working life of your boiler by up to five years. A pre-winter service carried out by a CORGI-registered engineer may also make your boiler run more efficiently, helping you reduce those dreaded January bills.
If the worst happens and your boiler breaks down during the festive period, there are a copule of quick checks you can do before you incur the cost of an engineer call-out charge. Central heating systems often switch off for other reasons besides a problem with the system itself – for example, a blown fuse or a lack of water in the system. These are the first two things an engineer will check and are simple things to fix. So try checking your water gauge and topping up the system, as well as replacing the fuse.
If the boiler is still not working, you should not attempt to repair the boiler in any way. Having made sure it’s neither the fuse nor the water level, call a CORGI-registered service engineer.

Protect yourself from CO

You can’t see it or smell it but carbon monoxide (CO) is a poisonous substance which is responsible for the deaths of 50 people every year, and which makes many more ill from exposure to it. A good way to minimise the risk of CO poisoning is to have chimneys swept and gas appliances and flues checked.

Draughty dangers

Living rooms with solid fuel heaters should be ventilated, as hazardous situations can arise when windows and doors have been draought-proofed and the permaent ventilation is blocked by the home owner. When keeping out uncomfortable draughts, make sure that you’re not keeping in something much more dangerous: deadly CO fumes!

Lights and electricity

Electric heaters and kitchen appliances are in constant use during the winter and should also be checked by a registered electrician to ensure they meet safety standards.
If a piece of electrical equipment cuts out continually or gives off a strange smell, or if the plug feels warm, switch off immediately and get it checked.
Never overload power points. If there are not enough sockets, consider having more installed as this is a much safer option than extension leads.
For appliances that use a lot of power, such as heaters, hair dryers and kettles, use only one plug per socket.
Never double up your Christmas tree lights with the plug of another appliance as this could result in overheating, electric shocks and short circuiting – and could possibly cause a fire.

Candles and flames

Candle safety is all about common sense but during the festive season our sensible selves can seem to be absent. There are, however, some simple rules you should follow about candle use:

Don’t surround candles with foliage or Christmas decorations
Always use a stable holder – don’t stick a candle to a saucer with hot wax
Don’t place candles on carpets, tablecloths or other flammable surfaces
Keep lit candles away from pets, children, hair and clothes
Never leave burning candles unattended while you are out of the room – and never forget to extinguish them before going to bed.

Bedtime checks

By carrying out the following checks before you go to bed, you can greatly reduce the chance of a fire starting while you are asleep – and increase your peace of mind:

Make sure all the burners or rings of your cooker are off

Check all heaters are off and place guards in front of open fires
Switch off all unused electrical appliances at the socket
Close all internal doors, particularly in unoccupied rooms such as the kitchen, living room and dining room

This information is provided by gas-elec, a company that provides the next generation of gas and electrical safety inspection services to letting agencies, private landlords, home owners, buyers and sellers. For more information visit gas-elec.co.uk or call 0800 587 9999 for your regional offices.

Home Information Packs to go ahead

The Housing Act 2004 has now received Royal Assent, which means that from the introduction date of the new scheme anyone selling a property in England and Wales will need to compile a Home Information Pack (HIP) up-front for potential buyers when marketing their property.
This pack will include a Home Condition Report (HCR), all the required legal documentation, a lease copy and management records (if the property is leasehold) plus planning permissions and building control approvals for alterations and extensions. From January 2007, it will be illegal to market your home without a HIP.
The HCR needs to be produced by a government-licensed home inspector. Local chartered building surveyor Rund Partnership Limited, based in Locks Heath, will be among the first few home inspectors in the UK and will be expecting to introduce, in conjunction with local estate agents, voluntary schemes of pre-sale-surveys (i.e. home condition reports) in advance of the launch of the national scheme.
Stuart Parrett, director of the new scheme at Rund Partnership Limited, states that ‘this act is the result of consumer pressure to provide a level playing field when buying and selling homes. The new Home Information Pack is designed to help prevent gazumping, provide property-condition advice and set a national standard for home inspection and report writing. Several innovative features are to be introduced on the Home Condition Report, including an Energy Efficiency appraisal.’
proinspect.co.uk.

Buyer confidence in market increases

The Hometrack November survey of the national housing market reports a fall of 0.6 per cent for the second consecutive month, the fifth month in a row that house prices have fallen. The average property price now stands at £164,800, down from a peak of £167,700 in June this year. Since January this year prices have risen by 1.90 per cent, which hides an initial rise of 3.8 per cent in the first six months of the year before the downturn began in July.
John Wriglesworth, Hometrack’s housing economist, comments: ‘This month’s house price fall confirms, beyond doubt, that the housing boom is well and truly over. With house prices now over 100 per cent higher than five years ago, values have reached their peak given current levels of household income and interest rates.
‘We expect house prices to stabilise next year and recover in the second half. Household incomes are rising by five per cent per annum, unemployment is falling and is now at a 20-year low, interest rates are likely to remain stable rather than increase and lenders are continuing to extend the multiple of income on which they will lend, which all points to a recovery of buyer confidence next year. Typical mortgage repayments as a percentage of average earnings are broadly in line with long term averages, and are two-thirds of the previous peak back in 1989.’

Prices continue to fall

The average property price in the UK has fallen for the fourth consecutive month, according to the latest figures from the National Association of Estate Agents (NAEA), meaning that first-time buyers have increased opportunity to get onto the property ladder. House prices are on average 1.6 per cent lower than the previous month and the annual increase in house prices is down to 7.95 per cent – its lowest level so far this year. However, prices are still historically high.
All monitors of activity show that there has been an increase in the number of homes for sale but a decrease in the number of buyers. New registrations fell by 20 per cent but new instructions and the number of houses available remain at quite high levels. Agents across the country support these figures, with reports of plenty of new instructions on the books but a lack of buyers as the latter wait to see what is happening in the market. With a shortage of buyers, transactions were down on previous months. There were fewer sales agreed, compared to both the previous month and usual activity at this time of the year, and more viewings before a sale.  
Agents also report that only those properties that are realistically priced are selling. This is backed up by the average discount achieved from asking prices, which has been rising for the past six months and now, at 5.5 per cent, is at its highest level for the last two years. This demonstrates the continuing readjustment of prices and the shifting balance of the market as it turns in favour of buyers.

Free video explains tribunal service

The Residential Property Tribunal Service (RPTS) will launch a new video this week to explain its user-friendly procedures to tenants, leaseholders and landlords. The video will guide people through the simple procedure of applying to a Leasehold Valuation Tribunal (LVT) or Rent Assessment Committee (RAC). It is particularly aimed at those representing themselves at hearings without professional help. It will be sent to such users with the letter fixing their hearing date. The video will be available for other users on request.
The video has been produced to remove the fear factor from the tribunal process, using a dramatised case study to demonstrate the simple and user-friendly procedures at each stage of an application, while explaining the roles of the tribunal’s staff and members.
RPTS senior president Siobhan McGrath says: ‘Representing yourself is bound to be stressful. We are very excited about the new video and feel that it will go a long way to alleviating any anxieties that applicants may have.’
The video, which was produced by TNR Ltd and features broadcaster Gill Pyrah, is available on VHS or DVD format. The RPTS National Helpline is 0845 600 3178.

Good mortgage advice is priceless – and making sure you get it is no longer just your responsibility. Shortly it will be the FSA’s too. Victoria Hartley, editor of What Mortgage magazine, reports

A recent survey revealed that the majority of people ask their family of friends for mortgage advice. But do they really have the in-depth knowledge needed to help you make a well-informed decision?
The Financial Services Authority (FSA) has long been intent on getting better information on personal finance to consumers to help them help themselves. As part of this drive, the mortgage and general insurance industry becomes regulated on 31 October this year. Regulation will cover everything from financial advertising to a ban on cold-calling. The FSA believes this will promote greater ‘clarity, fairness and transparency’ in the mortgage marketplace.

Focus on advice

The FSA believes giving consumers quality advice before they choose a mortgage is essential. The well-meaning Mortgage Code of 1997 first introduced a voluntary template of good practice for advisers. Hard-working, honest and well-trained advisory firms thrived under these conditions. Unfortunately, a few less impressive firms thrived too.

Driving up quality

In fact, the industry is predicting that several mortgage advice firms operating now will not come up to the FSA’s exacting standards and close down before October. Even more are expected to have problems adjusting to the regulated era, which again can only ultimately be good for the consumer.
After October all potential advisers will receive background checks before they get a foot in the door. Advisers will be monitored so those who underperform will be identified and retrained before any more damage is done. And if you really do get bad advice, the Financial Ombudsman Service (FOS) will be able to investigate your case if you are unhappy with the response you get from the firm that sold you the mortgage in the first place. And luckily the FOS is renowned for their general bias in favour of the consumer.

Consumer groups such as the Consumer’s Association will also be watching like hawks to ensure regulation brings about the benefits consumers were promised. Spokesman for the FSA Robin Gordon-Walker says consumers must also meet the FSA halfway and take a more active interest in their own finances. ‘The more consumers can get to grips with the subject of finance and feel an obligation to take some serious interest in their own financial position, the more likely they are to get good advice,’ he says.

What to expect

So, what real differences will you see after 31 October? The FSA is desperate to give mortgage borrowers as much information as possible for two reasons. The first is to better inform consumers and the second is to cover financial advisers in the case of a mis-selling complaint. The industry already has concerns that consumers will simply fail to read this paperwork.
But under regulation, brokers must give you an IDD or Initial Disclosure Document. This tells you who the firm is, which mortgage and insurance products they offer, any costs and how your adviser is paid, e.g. a fee from you or commission from the mortgage lender.
The Key Facts Illustration (KFI) is the next document you will receive. This should have even more pages than the IDD. If you are interested in the several products you will receive an illustration for each one. Your adviser should hand these to you in a comparative format enabling you to cross-check different mortgages’ features, such as the overall costs, against each other.

The high points

According to a survey by the Office of Fair Trading, in a single month 36 per cent of newspaper adverts in both broadsheets and tabloids were either illegal or misleading. Ray Boulger, senior technical manager with mortgage broker Charcol, says: ‘In the new world, the small print will have to go and adverts will have to be “true, fair and not misleading”.’ He suspects that the vigilance of a 30-strong team will mean that in future we’ll see far fewer adverts for mortgage products and more advertising for company brands.
Laurence Baxter, a senior adviser at the Consumers’ Association, agrees that restrictions on advertising are important but that KFIs and IDDs will have most impact on consumers. ‘The fact that advisers will have to be honest and identify themselves as salespeople for a restricted number of lenders and not a general intermediary able to advise on the whole market is important. Now consumers will know exactly what they are paying for,’ says Baxter.

Financial Services Authority
Consumer helpline 0845 606 1234
fsa.gov.uk

Financial Ombudsman Service
Consumer helpline 0845 080 1800
financial-ombudsman.org.uk

Low inflation means low interest rates

The latest inflation figures show the annual inflation rate fell in September by 0.2 per cent to 1.1 per cent, the lowest level since March. This is good news for those worried about the prospect of future interest rate rises.
The falling inflation rate, which took analysts by surprise, takes the pressure off the Bank of England’s monetary policy committee to raise interest rates; several economists are now predicting that the base rate will remain at its present level of 4.75 per cent for the rest of the year.
The inflation rate, however, is still expected to rise again, according to the Bank of England.

Surprise upturn in house prices

House prices rose by 1.4 per cent in September according to Halifax, the UK’s largest mortgage lender. The surge in house price inflation followed a small fall in August, and the Halifax says that the annual rate of house price inflation now stands at 20.5 per cent.
Nationwide recently reported figures for September housing a 0.2 per cent rise in September, up from 0.1 per cent in August.

Investors head north

Hunters Estate Agents is seeing a surge in buying in the North of England. Many professional investors from the South and overseas currently view the North’s property market as one of the UK’s best performing property hotspots, according to Steve Arksey, regional manager of Hunters Land and New Homes.
‘Many exhibitors at this year’s Property Investor Show have reported a major fall in sales activity compared to this time last year,’ says Arksey. ‘However, Hunters has been inundated with enquiries from investors that genuinely believe there is plenty of room for the North’s property market to continue growing – even if it will be at a slower pace than over the last three years.
‘This has been reinforced by record volumes of lettings being secured through Hunters’ Manchester, Leeds and York offices. The average time taken to secure a new let is now less than two weeks and voids are virtually non-existent.’

One in three miss out on low rates

New research from Alliance & Leicester has found that one in three consumers overlook the most important factor – the rate of interest they will be charged – when choosing a loan. Thirty-five per cent of consumers admit the annual percentage rate or “APR” is not the first thing they look for when choosing a loan.
Andy Bayes, head of personal loans at Alliance & Leicester, said, ‘While two out of three people rightly focus on the rate of interest when choosing a loan, there is still a large number of people who pay over the odds by not giving it their full attention.’
Among those who said the rate of interest is not their main priority, 37 per cent thought all banks’ loans are similar; 19 per cent said they did not fully understand APRs; and 13 per cent though a couple of per cent would not make much difference to the cost of their loan.

What agents want

According to a poll of National Association of Estate Agents (NAEA) members, the average agent wastes up to 30 per cent or even more of their time showing people properties which are either clearly too expensive for their income or simply unsuitable for their obvious requirements (for example a family of four asking to see a one-bedroom flat). In addition, a staggering 50 per cent of sales fall through due to either the buyer or seller suddenly changing their minds. With the UK offering one of the lowest estate agency fees in Europe, the industry calls on the public to reconsider the ways in which they can help their agent achieve what they both want.

Buyers

Ensure you get your finances in order before you look for a property. Find out exactly how much you can borrow: many people organise this after they have had an offer accepted and are surprised by how little they can borrow, and then pull out of the sale.
Discuss what type of property and where you want to live before you start viewing properties. If you desperately want a garden or a third bedroom, do you really want to look at properties without them? Research the area. This sounds straightforward but a lot of sales fall through at a late stage due to a lack of knowledge about the area. Locations, particularly in big cities, vary from one street to the next. It is advisable to visit at different times of the day so you can really get a feel. If you rely on public transport, try out the journey.
Think before making the offer. Although getting an offer accepted does not mean the agreement is legally binding, the property will often be taken off the market and the seller’s expectations will be raised. Do not make an offer on a property unless you are serious.

Sellers

Don’t lie about your home or why you are moving as the buyer will find out at a later date and either pull out or – in a worst-case scenario – take you to court. Don’t ignore the facts. If your home has been on the market for four months and you have had no viewings, it is likely to be overpriced and you must accept this. Agents work on a percentage of the final sale price, so if they tell you its overpriced it is likely to be overpriced!
If you’re unhappy with an agent say so. It is not acceptable to complain about the service you’ve received when it comes to paying the bill – by this point the agent cannot act on it. The Ombudsmen is very clear that complaints should be flagged up at the time.
Give your home a chance. And remember that if you won’t allow sale boards or weekend viewings, your home will take a lot longer to sell.

Most regions see landlord rental incomes rise

Paragon Mortgages’ September buy-to-let index reveals a pick-up in rental incomes across all but three regions. Rents increased in seven regions and five out of ten regions are now registering rents of over £9,000 per year.

Property values also rose in August across eight of the ten regions – except for the North and the South East, where prices fell slightly. Average property values are now £141,765 as compared with £124,128 in January, a significant increase of 14 per cent.
John Heron, managing director of Paragon Mortgages, says: ‘Landlords across the majority of the country are seeing a rise in rental incomes, fuelled by solid demand from tenants. Those regions witnessing the biggest rent rises were also those which experienced the greatest rise in property values. Prices paid by residential property investors are still increasing, but only very slightly: in August they were up by just 0.8 per cent, in contrast with the large rises seen in the first half of the year when investors had to compete with owner-occupiers in a busy market with limited stock available.’
As a result of rises in property values over the past couple of months, yields have slipped slightly in recent months. On average, landlords are achieving a yield of 6.7 per cent gross from their investment properties.

Landlords continue to enjoy good overall returns, with total returns generated since August 2003 of just over 22 per cent (on an average property purchased that month) – a total of £27,620, comprising £18,266 in capital appreciation plus £9,354 in rental income on a property worth £123,498 at purchase.
Seven out of ten regions provide landlords with a total annual return in excess of 25 per cent. Overall returns tend to be lower in southern regions, where house price inflation has been relatively weaker over the past year, and yields lower. Year-on-year, the rate of increase of landlord property values has also declined, from over 17 per cent in July to 14.8 per cent in August. Paragon’s data continues to show annual house price inflation for investors at lower levels than the latest figures published by Halifax and Nationwide, suggesting that overall landlords continue to negotiate better deals on properties than owner occupiers.

Generally, there is an inverse correlation between yield and property value (i.e. the cheapest properties offer the best percentage yield). The North saw an increase in yields of nearly two per cent as property values dipped slightly in August. Conversely, in London and the South East, where properties values are higher, yields are lower.