Buying, selling and letting - Friday, July 14, 2006

You rent for some years, save for a deposit and then make the most all-important decision to date: the location and price of the flat you can afford. So far so good, but if you consider the buying process to be the most important decision of all, you’d be wrong.  

It’s a bit like a wedding and a honeymoon: what seems important now is in fact the trivial preamble to the important bit – the long-term marriage.

When buying that first apartment, choosing your new home is the fun bit: then you have to live with the service charges and the way your block is managed. Like most decisions, going into this unaware is a recipe for misery or, in some cases, disaster.  But with a few simple rules to guide you, the business of leasehold property can be smooth-sailing.

Ten-Point Guide for Would-Be Leaseholders

1.    Who’s in charge of managing your block?

The key question to ask is ‘how is this block managed’? Is there an outside freeholder who may or may not be interested in the property. Or is your building controlled by the lessees themselves through their own Residents Management Company (RMC)? Whichever is the case, it is likely that a managing agent will have been appointed to run the day-to-day management of the building and oversee any major works.
However, it is staggering to note that anyone can set up in business as a property manager. If you are wise you will make sure that your managing agent is a member of ARMA – the Association of Residential Managing Agents – which gives you peace of mind that the person or people managing your  most precious asset knows their stuff. Having an ARMA Member company on the case brings the sort of comfort that you get when booking a holiday through an ABTA-bonded agent. It just makes sense.  If your agent is not a member of ARMA ask yourself why not?

2.    How is the RMC run?

If, as is increasingly the case, the lessees control the management through an RMC,  check whether you will be a shareholder, who the directors are and whether the company is compliant with the Companies Act in which case annual returns and accounts need to be filed. Also find out how active the directors are and whether regular shareholder meetings are held.


3.    Laying down the law

If you think the process of managing your block is easy, and some residents do manage themselves, then be aware of the pitfalls1. There are at least a daunting 82 pieces of legislation and regulations that owners and occupants of apartment blocks need to heed. And that’s before you start on the requirement to understand the minutiae of leases, property services, accounts, company law and building works.

4.    How much?

Be clear just what the service charges are and how these are reported to you. Across England and Wales, residential managing agents hold £1.5 billion in other peoples’ service charge contributions. Residential  lettings is the only other sector where so much money is held by businesses with no requirement to be registered with anyone.

5.    Is the managing agent insured and audited?

Ask, is the managing agent properly insured and are they subject to an independent annual audit of client accounts? ARMA members have to provide annual evidence of both professional indemnity insurance and independent auditing of client accounts.

6.    Health & safety?

Ensure that the block has had a Health & Safety risk assessment carried out. The public areas in and around your block are a workplace for those who provide services – gardeners, window-cleaners and others – so make sure your managing agents is complying by keeping the place safe.

7.    What if things do go wrong?

Find out whether there is a published internal complaints procedure in case something does go wrong. All ARMA members are expected to have one of these and if this doesn’t resolve your problems, you can turn to ARMA who will look into the issues on your behalf and, in worst cases, employ sanctions against Member companies including suspension or even removal from ARMA.

8.    How is your money accounted for?

How are service charges budgeted and accounted for? What are the procedures for  reporting to the leaseholders? Communication and comprehension of this important matter is essential.

9.    Meeting of minds

And finally, if your block does have a managing agent, ask how easy it is to communicate with him or her?

10.    Moving on

You are only just moving in but be aware that one day you’ll probably want to move on and that, if this is after June 2007, the Government will require you to provide a Home Information Pack (HIP). Keep all important paperwork including management charges and other bills as this will save you time, trouble and money later.

So just what can go wrong?  One block using a non-ARMA Member paid for insurance for public areas that in fact wasn’t appropriate: so if a tree branch, for example, had crushed a car or a person, the lessees would have been liable. In another example, Directors of a residents management company needed firm advice from the ARMA managing agent to persuade them that although they owned the freehold, they could not ignore the terms of the leases and the Landlord and Tenant legislation which is there to protect the interests of all leaseholders: e.g. that relating to the consultation procedures where expenditure exceeds certain statutory limits.

So remember, when you’re buying leasehold don’t just ask ‘how much?’; also ask ‘how managed?’. If they’re not ARMA Members, you may be in for some nasty surprises.

To find out more about ARMA Members3 in your area, visit www.arma.co.uk

Rates hold steady but may rise soon

The monetary policy committee (MPC) of the Bank of England has held interest rates at 4.5 per cent for the 11th consecutive month. According to RICS (Royal Institution of Chartered Surveyors) this is a welcome if not unexpected decision.
‘The UK economy is performing significantly better today than at the turn of the year, due in part to robust activity conditions in Europe and Asia which has spurred a rise in manufacturing output and exports,’ says Milan Khatri, chief economist of RICS.
’The property market has shown some signs of cooling in recent months according to figures released by mortgage lenders, with Halifax reporting a 1.2 percent drop in prices for June. However, RICS estate agents are in a confident mood with new enquiries from would-be buyers rising throughout June despite the World Cup, and follows on from a strong rebound in market activity in May.’
RICS expects the Bank of England to follow the lead of other world central banks and raise interest rates later this year by a quarter percent point, says Khatri. ‘A modest rise in borrowing costs will not though depress the wider economy and we expect the housing market to retain an element of strength, with only a modest slowdown envisaged.’


House price rises ‘subdued’

House prices rose by just 0.3 per cent last month, according to the latest figures from Nationwide building society.
June’s figures mean there has been a three-month run of flat rises – evidence of what Nationwide refers to as a more subdued phase. Prices have risen by one per cent in the three months to the end of June, compared with 1.6 per cent to May and 2.1 per cent in the first three months of the year.
The average house price rose at a rate of £22 a day during the past year and now stands at £165,730.
Nationwide's group economist Fionnuala Earley pointed to the World Cup as a contributing factor in the relatively slow growth. But she said the lack of affordability was also important.
‘Mortgage payments for someone on average earnings now take up around 42 per cent of take-home pay compared with around 32 per cent three years ago,’ she said. ‘While earnings growth remains lower than house price growth, the ability to pay constraint will continue to bite.’

Rental yields ‘set to rocket’

Rental yields will rocket if interest rates rise, according to the Association of Residential Letting Agents (ARLA). ARLA’s latest data shows rents continued to rise in the south, and the asset value of property in London and the South East increased significantly in the second quarter of 2006. This points to healthy capital returns for existing landlords, it concludes.
Mark Alexander, managing director of The Money Centre, says, ‘The governor of the Bank of England has predicted a series of increases in interest rates, which I believe will result in property prices falling and rental yields rocketing.
‘If interest rates rise and property values fall, there are likely to be fewer new buy-to-let investors entering the market. It is new investors who sustain the supply of property to the rental market, so if new investor buying slows, or they withdraw from the market entirely, there will be an insufficient amount of new rental property on the market to satisfy tenant demand.’
However, he says, existing investors are likely to see this scenario as an opportunity to add to their portfolios, as they tend to have equity which means taking on new stock is less risky for them. ‘Most serious investors will have equity available to them through re-financing and, despite interest rates being higher, will continue to invest,’ says Alexander. ‘Cash is always king if property values fall and if they don't, then increased loans can easily be repaid.’

For buy-to-let landlords, the ultimate nightmare is not having tenants in a property. There are many reasons why a rental property can lay empty but leading London estate agent Hurford Salvi Carr, has identified the top Seven Deadly Landlord Sins.

Kari Trajer, Lettings Manger at Hurford Salvi Carr’s Clerkenwell office, explains: ‘As any buy-to-let landlord will tell you, periods when their property is bereft of tenants with no rental income to cover property costs, known as void periods, can have a significant impact on cash flow.

 ‘To avoid the nightmare of voids, landlords need to treat their property as a product, which must be correctly presented to the target market.’ To help landlords who might be experiencing void periods, Hurford Salvi Carr has compiled a list of rental faux pas - the Seven Deadly Landlord Sins, and also provided advice to on how to achieve tenant heaven.


The Seven Deadly Landlord Sins are:

1 - Slothful first impressions – Poorly decorated interiors, neglected exteriors and shabby communal areas in dire need of decoration are a big tenant turn off. Ensure that the property is kept in good decorative order throughout, with repainting carried out every two/three years. Although communal areas may be the responsibility of the freeholder, insisting that the communal parts of a building are properly presented is essential. Make sure every aspect of your property, and the building it’s in, is welcoming. Also, ensure that key access is given freely to the agent as if they can’t quickly take tenants around, the marketplace and the agent will tire quickly of fruitless cancelled viewings and go elsewhere.

2 – Take Pride in cleanliness– No matter how wonderful the property, a tenant will immediately realise if it’s dirty and untidy. At the end of each tenancy agreement, always get the property professionally cleaned, inside and out.

3 – Envy – When it comes to bathrooms and kitchens, an outdated décor or flouncy decoration is a lettings disaster. Kitchens and bathrooms are a top priority for most tenants and they look for clean, functional lines that their guests will envy. White tiles, fully equipped kitchens with the latest stainless steel appliances, working showers and a spotless bath for family renters are a must.

4 – Lust - Flooring flaws – Floors are often overlooked by landlords but they make a big impression on prospective tenants who crave the simplicity of good flooring. Scruffy floor coverings can let a property down, and carpet in the bathroom is the deadliest sin, as is a carpet in the kitchen. Easy to clean wood, good quality laminate and tiled floors are what people expect. If you have carpet as is carpets in the bedroom/s and or the living room kitchen, make sure you get it cleaned during any void periods to neutralise any nasty whiffs from previous tenants.

5 – Gluttony (More or less) - Every clued up and experienced landlord understands that flexibility with furnishings is the key in attracting the right long-term tenant. Offering a property on a furnished, partly or unfurnished basis will increase the audience that the property appeals to. Self-storage costs, or the cost of buying a bed/sofa are minimal compared to the length of time it could take to wait for someone who fits your property perfectly. As a landlord, you can even negotiate a longer-term tenancy (or even no break clause) in return for removing/adding items to the tenant’s specification.

6 – Greed – Make sure you ask a reasonable monthly rent compared to local competition. Do your research to find out how much landlords with similar properties to yours are charging. Set your rent too high and all you’ll do is drive tenants away into the hands of the opposition. As tenants will always negotiate on the listed price, keep in mind the difference between your marketing price, and your bottom line requirement. It must be stressed that your outgoings cannot control the market price of your property therefore correct forecasts are essential before purchasing.

7 – Anger – Once you successfully find tenants, don’t get cross when repairs crop up…Nor should you rest on your laurels. A regular inspection of the property, at least two inspections a year, will show the tenant you care about the state of the property they have rented. If there are any repairs to be carried out, make sure these are organised quickly and efficiently. Not only will this impress the tenant and encourage them to stay, you’ll also be able to monitor the property’s condition and identify minor damage before it turns into a major job.


For information on lettings opportunities in the City, Clerkenwell and neighbouring areas, contact Kari Trajer at the Hurford Salvi Carr, One Britton Street, Clerkenwell, on Tel. 020 7566 9444.

The ideal time to think about a new fireplace is not the winter – it’s now. And a special giveaway makes the idea even more timely

It is difficult to imagine cold weather when you’re experiencing July heat, it’s true. But canny home owners will find that this is the time to plan ahead for winter. And to make the decision even easier, Design Fireplaces in Reading has the largest range of fires, fireplaces and fire surrounds on display in the South East.
And to thank those customers who have driven the success of Design Fireplaces over the past decade, new owner Richard Billington has announced a ‘£4 Million Thank You’: he is actually giving away £400 each to 10,000 customers have bought from the company over the past ten years.

The £4 Million ‘Thank You’ is unprecedented in the fireplace market and forms part of the company’s celebrations surrounding the opening of its sixth and largest showroom yet; at 470 Oxford Road in Reading. The new mega-showroom means Design Fireplaces now has the largest range of fires, fireplaces and fire surrounds on display in the South East.
Every customer will be sent a £400 cheque which they can spend on their next fireplace at Design Fireplaces. There are no catches or range restrictions. The only conditions are that they place their order before 20 August 2006 and spend over £1,500. If some customers can’t use their £400 cheque themselves but their friends or family can, that’s fine - and Richard will give the original customer £50 of M&S vouchers free when they buy!
Richard Billington says, ‘I don’t think this has ever been done before. All retailers should make more effort to thank their customers like this. We only have records going back ten years, so if anyone bought from us before that please send me your details and we’ll send you a Design Fireplaces cheque for £400 as well!’
The £400 cheques are welcome at all six Design Fireplaces showrooms: Camberley, Guildford, Sutton, Walton-on-Thames, Whitton and now Reading. Visit designfireplaces.co.uk or call 01483 543 510 for further details.
Customers wanting their £400 cheque can email richard @ designfireplaces.co.uk or write to Richard Billington at Design Fireplaces, Design House, Walnut Tree Close, Guildford GU1 4UQ.

Did you know that;
The most popular fireplace in the South-East during 2005/ 2006 was The Oxford. The Oxford is loved because it combines traditional style with modern flair and features a gentle arch, adding warmth and character to your home. The Oxford is displayed in 5 of the 6 Design Fireplaces showrooms and will feature on the Design Fireplaces website shortly.
Design Fireplaces supply around 2,000 to 2,500 fireplaces a year to people who live in the South-East.

Generally, people believe the best time of year to install fireplaces is during October, in preparation for the colder months. However, fireplaces can be installed all year round. We recommend installing a Fireplace during the summer months of June/ July; as this allows people to avoid the winter rush!
The latest fireplace trend is to install a stunning electric or flueless gas fire in your home. As you don’t need a chimney everyone can have a fire warming their home. The designs vary from ultra-modern to urban chic and the varying sizes make them suitable for any room.

City analysts have predicted a cut in interest rates as early as this summer as official figures showed weaker economic growth than expected at the start of the year. In a set of figures that will make gloomy reading for chancellor Gordon Brown, the Office for National Statistics (ONS) revised first quarter gross domestic product growth to 0.4 per cent on the quarter and 2.1 per cent on the year, compared with expectations of 0.5 per cent and 2.7 per cent.

However, annual growth was increased for the last three years, up 0.2 percentage points to two per cent in 2002, up 0.3 percentage points to 2.5 per cent in 2003 and up 0.1 percentage points to 3.2 per cent in 2004. With each set of weak economic data, the pressure is growing on the Bank to lower borrowing costs. Earlier, Nationwide said June’s rate of annual house price inflation of 4.1 per cent was the lowest for nine years.

UK house prices cooled in June, reducing annual price inflation to its lowest level in nine years, according to the latest figures published by Nationwide. Some have held the World Cup partly responsible for the sudden sag in the market. The 0.2 per cent drop in prices followed a 0.3 per cent rise in May and reduced year-on-year growth to 4.1 per cent, compared with 19 per cent this time last year. This, said the Nationwide, was the slowest rate of growth since July 1996. The average property now costs £157,791. London remained the most expensive place in the UK to buy, with an average property price of £241,344.
DIYers go over budget
Enthusiastic home improvers have forked out close to £4 billion more than they budgeted for on over-ambitious home building projects, according to new research from ING Direct. Inexperience and a lack of technical knowledge have contributed to nearly a third (29 per cent) of the home improvement projects completed in the last three years exceeding their initial budget. Time, that other precious commodity, is also being wasted with 30 per cent of home improvers admitting that the work was finished late and one in 20 (six per cent) exceeding their initial schedule by more than three months.

Brits have spent a total of £76 billion on home improvement projects, more than a third (38 per cent) of which were undertaken by professional builders. Four million of these home improvers (29 per cent) overspent on these projects by an average of £908 each.
These problems occur because home owners’ expectations often exceed their capabilities. A quarter (25 per cent) of those that went over schedule or budget say that they underestimated the scope of the project when they started out and nearly one in ten (eight per cent) admit that it was hard to maintain their momentum once the work had started.
ING Direct CEO Lindsay Sinclair says, ‘The vast majority (94 per cent) of home improvers agree that it’s important to save up for home improvements, but only half (50 per cent) actually use savings to fund the work. The large number of projects that go over budget demonstrate just how important it is to have buffer savings in place before starting out.’

20th June 2006… With summer finally here, more and more people are enjoying the lighter nights and balmy evenings in the pleasant surroundings of what many perceive as the extension of their home – the garden.

The results of a recent survey carried out by Bryant Homes, suggests that homeowners in the South East are a region of garden lovers, with 67% considering it as important as their indoor living space.

The survey also reveals that 69% of homebuyers in the South East are now looking for an easy to keep garden that provides the ideal space for a safe play area for children or somewhere to entertain friends – rather than somewhere that requires a great deal of time and effort to maintain.

Jane Stockwell, sales and marketing director for Bryant Homes South East, said: “When the summer months arrive we increasingly look to the garden as an extension of our home. We are quick to decorate and improve internal rooms but sometimes forget about the garden – come the summer however, it is essential that it is looking good and somewhere we want to spend our time.

“Our survey showed that people want to enjoy their gardens but have less and less time for its upkeep. Increasingly they are looking for a low maintenance garden that offers the best of both worlds. At Bryant Homes we are aware that the garden plays a large part in influencing purchaser’s decision to buy a new home. For that reason there are a range of packages available for purchasers to have their garden specially designed when they buy a new home at any of our developments.”

With time at a premium when it comes to making the most of your garden, Bryant has also put together some no fuss top tips to transform your garden in time for the summer entertaining season –

-    Plant in pots and window boxes for a splash of colour.  Containers allow easy access and require minimum maintenance.  Line with plastic or polythene to keep moisture in and be sure to water often – daily if possible.  You can also grow fruit, vegetables and herbs in containers.

-    Hard landscaping helps to reduce the size of a lawn and provides an ideal area for outdoor entertaining.  Choose from low maintenance slabs, wooden decking or gravel.

-    To screen off unsightly fencing, a rundown shed or an area of neglect use attractive bamboo or raffia screens for a stylish quick fix.

-    Slow growing conifers give colour, shape and texture all year round and there will be no need to rake up leaves during the winter.

-    Create an alfresco dining area and an outdoor cooking area. Include a barbecue surrounded by fragrant herbs. Add stylish garden furniture and ‘talking points’, such as eye-catching water features.

-    Using dishwater on your garden saves water and is also good for fending off aphids.

-    You could collect rainwater using a water butt, which can then be used at a later date and water from your condenser tumble dryer can also be reserved for the garden.

-    With water shortages being a hot topic, make the most of your reserved water by watering your garden at cooler parts of the day to avoid evaporation and target specific plants with a watering can.

UK has a third of Europe’s mortgages

Independent market analyst Datamonitor reveals that the UK accounted for one-third of new lending in the Western European residential mortage market in 2005- way ahead of the rest of Europe. Indeed, France, the next biggest market, is only one-third as large as the UK market. Very high switching rates in the UK and further advances have been major factors behind the growth of the UK mortgage market.
European mortgage markets have performed exceptionally well in recent years, and this solid performance continued in 2005, says Datamonitor. Rapid house price growth, high demand for housing and increased competition have pushed mortgage markets onwards. Indeed, as a whole, residential mortgage lending has grown by 13.6 per cent per year on average over the past five years. Best performers include Turkey, albeit from a very small base, followed by Finland, Ireland and Belgium, which has benefited from strong growth in remortgaging activity. In contrast, the gross lending in the German mortgage market has fluctuated in recent years. In 2005 it is estimated that new lending fell to just €89.6 billion, from €113,926 in 2004.
Growth rate in the UK is slightly below European average, at 12.3 per cent per year on average over the last five years, but still accounts for a third of new lending in the Western European residential mortgage market.


Brits ‘buying blind’

Every year well over £200bn of homes are bought without their condition being investigated, even as research shows that the state of residential property in England is far from good.
According to the English House Condition Survey produced by the Building Research Establishment, it would cost £48 billion to bring all the homes in England up to a decent standard.
Most people decide to buy a property after spending less than 30 minutes looking around. They may visit the property on average only twice and as much as 85 per cent won’t even have a survey carried out. Yet, with the average price at £192,745, buying a home today involves a considerable investment.

Healthy market in first half of 2006
The first half of 2006 has been exceptionally buoyant for the property market in London, according to Hamptons International’s mid-year property market report. The agent reports record levels of buyers registering throughout its network, which has in turn led to an unprecedented number of transactions being agreed.
The supply of new properties coming up for sale has not been high enough to replace those properties sold or to satisfy such strong demand - consequently prices have jumped by up to 20 per cent since last October.

Post the summer break we may find that the number of properties coming to the market will rise, although not substantially. That, coupled with other economic pressures and the fact that the market has already risen between 10 and 20% so far this year, we will see a slowdown in sales numbers and unlikely further rises of properties coming to the market.

David Whittaker, managing director of Mortgages for Business, answers questions about the current investment market.

Who is buying to let at the moment?

The buy-to-let market is dominated by professional investors who already have large buy-to-let portfolios; amateur investors and first time buy-to-let investors currently take a minority share of the market. As capital appreciation in the property market slowed at the back end of 2004 and throughout 2005 amateurs became wary. However they are now beginning to return to the market largely due to positive capital growth predictions and indications that capital growth is already well ahead of many experts’ predictions for 2006.

What is the most common mistake investment buyers make?

Amateur buy-to-let investors tend to lose sight of the fact that buying a property to rent is an investment and not a lifestyle choice. Investing in the current ‘in vogue’ trends that you have no knowledge of, can result in disastrous financial implications.
Location is paramount to the success of a property and so a significant amount of research must be done before investment is made to ensure that the property is in line with its risk profile, meets the investor’s objectives and provides strong capital growth potential. Decisions must be made based on the market and the property and make a detached and unemotional decision – this way the investment will undoubtedly be more successful.
Professional landlords’ most common mistake is to hold onto properties that are not performing. Regular reviews need to be made to ensure that the investment remains profitable. When a property is no longer meeting the financial objective, it is best to release it and invest in a better performing property. Although, these decisions depend on the market at the present time, regularly reviewing the properties and maintaining a balanced portfolio will prevent any significant losses.

What do you see the housing market in general and the buy-to-let market in particular doing in the next year to five years?

Buy-to-let activity in 2006 is likely to continue to be dominated by the more professional investors with larger portfolios. Amateur investors and first time buy-to-let investors as in 2005 are likely to represent the minority of 2006 purchasers.
Buy-to-let lenders are launching more finely priced mortgage products and relaxed credit policies, in a bid to fuel remortgaging demand and attract new business. There are also signs of loan to property values on lending increasing to 90 per cent loan to value, away from the traditional 85 per cent loan to value.
2006 is likely see increasing red tape entering the market with the HMO licensing act being introduced, Local Housing Authority pathfinder areas increased and the tenancy deposit legalisation being introduced in October. Caution is expected to remain in 2006 towards the new build sector, which faced increasing pressure in the last quarter of 2005.
Buy-to-let property remains a solid investment, but investors should stick to market fundamentals, by thoroughly carrying out their research, allowing them to identify property that has solid capital growth potential coupled with strong rental demand.
The number of first time buyers in the housing market appears to be continuing to stay low, so demand for rented accommodation remains high as they continue to be priced out of the market. After significant growth the buy-to-let market is now steadying, but interest still remains high and has been attracting more and more attention from investors

What property types and locations tend to work best as investments?

All property types and locations can work well if the landlord correctly assesses their investment opportunity. Again it comes back to landlords doing their homework.
Good property capital appreciation can be related to a number of factors such as the regeneration of an area or affordability issues in major urban areas causing migration to surrounding areas.
More seasoned professional investors may also choose properties that require light to heavy refurbishment work in order to allow for greater capital uplift. Larger portfolio landlords in our experience are also more likely to be comfortable with taking on DSS tenants and ex-local housing authority properties.

Mortgages for Business is a leading specialist buy-to-let mortgage brokerage. Visit mortgagesforbusiness.co.uk or call 0845 345 6788

Rates expected to fall

The news that the Bank of England’s chief economist voted for a drop in the base rate during the June meeting of the monetary policy committee (MPC) is seen as evidence that this rate-setting arm of the Bank will pave the way for cheaper borrowing next month.
Charles Bean, along with fellow committee member Marian Bell, were the first to vote for a lower base rate in two years; indeed, minutes show that at the May meeting the talk was of raising interest rates. The sudden trend towards an easing of the base rate from the present figure of 4.75 per cent is thought to have been sparked by weak growth figures.

Parents advised to invest in student digs

With a 10%+ annual rise in student rents in the last 3 years, parents should be investing in more than just text books.
As this university year draws to a close, the next generation of students and their parents should consider investing in digs of their own, says Assetz, a leading UK property investment specialist.
With 1.3 million students in the UK at over 80 universities there is always going to be a high demand for student accommodation, leading to rent rises in university towns which easily outstrip national averages. The currently average weekly rent for students now stands in excess of £60– a 10%+ increase since the 2001/02 university year – stretching the pockets of students and parents even further.
But by purchasing purpose built student accommodation or converting existing housing stock, parents can not only reduce the burden of debt for their children – predicted to be £17,561 on average in 2006 – but also invest in their own future, enjoying a healthy rental income long after their child has left university.
Stuart Law, Managing Director of Assetz comments: ‘University towns have enjoyed big rent increases over the past five years, and with Government incentives to boost student numbers to 50% of all 18 – 30’s by 2010, this growth rate looks set to continue. What’s more, students now expect to pay rent for a full year, despite the fact that the academic year is only about nine months long.
 
‘Students are becoming more demanding these days, with broadband internet access generally being viewed as essential. However we all remember The Young Ones! Investors should be sensible about the quality of fixtures and fittings – hard wearing and inexpensive are definitely best and we are definitely seeing evidence of better quality property being treated with more care, perhaps with parental guarantees being more commonly needed nowadays.’

Trading up will lead market recovery

Those ‘green shoots’, much-discussed during the John Major government of the 1990s, have once again been spotted, according to Home Sale Network. The network of independent estate agents says that last month’s decision by the monetary policy committee (MPC) of the Bank of England to cut interest rates to 4.5 per cent, has set a recovery in motion.

The first to become the most active buyers will be families wanting to ‘trade up, according to the Network’s members. First-time buyers are also expected to enter the market, following a decline of activity over the past few years. Almost a third (29 per cent) of Network members believe that first-time buyers will also dominate sales activity. However, 40 per cent of Home Sale Network members forecast that families wanting a bigger home will be the most active buyers in the second half of 2005.

Richard Tucker, managing director of Home Sale Network, says, ‘This is the most encouraging feedback for many months, especially for the plight of first-time buyers.’

Fifty-six per cent of members have also seen signs of buyers acting more decisively, with the time between properties’ being marketed and their achieving a final offer falling below 11 weeks.

‘Successive decisions to leave interest rates unchanged, followed now by a rate cut, are helping to boost buyer confidence, alongside the fact that fears of a property price “crash” have now been disproved,’ says Tucker.

Another factor in the recent optimism is the impending change in rules regarding SIPPs, which will allow the purchase of residential property to form part of a pension fund from next April. An impressive 91 per cent of network members believe that the new SIPPs rules will boost the buy-to-let market.

London’s front gardens disappearing

London has lost two-thirds of its front gardens, according to new research by the London Assembly Environment Committee. Members are urging the government to change planning laws to control the number of concrete-covered gardens in the capital.
Gardens play an important role in the capital's ability to soak up rainfall; rain not absorbed runs into underground drains, putting additional pressure on the already creaking Victorian sewerage and draining system. In recent years, flash floods meant tons of raw sewage were dumped into the Thames, which in turn led to localised flooding as rivers burst their banks.
According to Darren Johnson, chair of the Environment Committee, 'There are various reasons why people choose to pave their front gardens – to park their cars, because they think "minimalist" gardens are sophisticated, or because they just don't like gardening. Whatever the reason, the results are the same: the increase in paved gardens is contributing to London's flooding problems.’ Unless steps are taken to counter this trend, says Johnson, 'the consequences will be dire'.