Buying, selling and letting - Friday, August 04, 2006

What’s ahead

June's strong lending figures point to a robust current market, says Howard Archer of Global Insight. 'This suggests that house prices may well spike higher in the near term at least,' he says, 'after showing some recent signs of losing momentum.
Archer predicts that the current shortage of properties in some areas may also boost prices. 'This is particularly true of London and the South East, which are currently showing the strongest increases in house prices by a significant margin. Indeed, most other areas are currently seeing much more limited house price rises.'
'We continue to believe that house prices will eventually settle down into an extended period of relatively modest rises, allowing for monthly fluctuations around this trend,' he concludes. 'Despite high employment and a modestly improving economy, we suspect that buyer activity will be increasingly squeezed over the coming months if house prices move up significantly, and that this in turn will cap prices.'

How high is too high?

Meanwhile, an audacious prediction from the Oxford Economic Forecast (OEF): a report says the average house price in the UK will rise by over 50 per cent in the next six years, to over £300,000. OEF claims that by the year 2012 the average house will cost the equivalent of nine and a half times the average annual salary.
However, Halifax economist Martin Ellis disputes this forecast: 'It is a big increase, and certainly higher than the increase we would be expecting over the next few years. I don't think it is a likely figure at all; I think it's far too high.'
A more settled housing market is likely in the next five years, he says.'
Mortgage lending up again
The number of mortgage approvals hit a high last month, taking home loan activity to its highest level so far this year. In its report on lending to consumer, the Bank of England said the number of mortgages approved but not yet granted rose to 120,000, substantially higher than the 116,000 average for the previous five months.
This follows a similar finding from the British Bankers' Association last week. Meanwhile, Home track said house prices were rising at their highest rate for nearly two years and a RICS survey showed a six-year high in the pace of house price rises.

Mis-selling costs lenders

The Financial Services Authority (FSA) last week revealed that the cost of claims related to the mis-selling of endowment mortgages has doubled to £2.2 billion in little over a year. This comes hot on the heels of news that Bradford & Bingley has set aside a further £89.4 million to cover potential endowment claims, in addition to the £75.8 million already booked by the bank since 2004.
Tim Moore of EndowmentClaims.com says, 'Far from commiserating with the likes of Bradford and Bingley that endowment payouts are eating into profits, it is my opinion that insurers are getting off lightly. The FSA estimates that around 2.2 million home owners could have a valid mis-selling claim, which adds up to a potentially staggering compensation sum.
Moore believes the insurance industry is using unfair tactics to keep further victims of mis-selling from claiming. 'The industry has propagated a campaign of confusion and misinformation to dissuade endowment mortgage holders from seeking rightful recompense for mis-sold policies. This includes implementing potentially flawed time bars that stop people pursuing a claim after a certain date.'

Co-buying is the way forward in these days of high property prices. We get tips on this increasingly popular buying method

Four rules for co-buyers

Take your time It is important that you get along with your co-buying partner(s) both on a personal and business/property level. So be patient – you may have to kiss a few frogs.
Keep perspective Focus on what you’re trying to achieve. For first-time buyers this is a stepping stone, not the house you will live in for the next 20 years, so be prepared to compromise – it’s the basis of every lasting relationship.
Protect yourself Get all the legal side well covered and agree a set of terms you will live by – literally!
Be honest Be open with your co-buying buddies and you should get on fine.

As the first rung of the property ladder gets harder to reach, would-be buyers are having to find new ways of gaining access to the marketplace. In recent years we have heard of people buying with family or friends, but that isn’t always possible.
For one Londoner who was finding it difficult to get on to the property ladder, an inventive strategy for becoming a property owner has developed into a business.
Theo Michaels, 29, founded Co-BuyWithMe.co.uk out of his need to find someone with whom to share the cost of buying a property. The website guides prospective co-buyers through the process, helping the buyers be clear about their own objectives and matching them with others with complementary goals.
Michaels’ successful experience in the property market has prompted him to share his wisdom with those who are unsure of the best way to proceed. He offers these answers to frequently asked questions about co-buying.

What is co-buying?

It is when a group of two or more people join forces to buy a property together. Come co-buyers do it because they cannot afford to buy their first home alone, others want to co-buy with an investor to get into the buy-to-let market, and other co-buyers want the pleasures of a holiday home without the massive cost!
 
So why did you co-buy?

I was one of the thousands of first-time buyers who simply could not afford to get on the property ladder on my own. After looking into a mortgage and seeing how high London property prices were, I knew the only option I had was to co-buy which meant we had a bigger deposit, larger mortgage and split all the costs.
 
Did you know your co-buyers?

Not originally. I put the word out with friends, family, colleagues and eventually got introduced to my co-buying buddies through mutual friends. We all met up a few times to get to know each other (i.e. went drinking!) and then spent some sober time working out what we all wanted from our co-buying experience and what terms we would agree to.
 
What were your aims as a group?

We all wanted to co-buy as a stepping stone to get on the property ladder so we agreed on the following (although different situations call for different terms):
 
·    to stay in the property for two years minimum; if anyone wanted out before the two-year period they had to find another co-buyer or carry on paying their share until the two-year period is up
·    if after two years anyone wanted their money out, we would sell the property and not restrict anyone, unless they could find someone to buy them out.
·    all costs to be split equally
·    be as flexible as possible with each other
 
This all sounds good but isn't it risky buying with strangers?

It's only risky if you don't protect yourself. There are several things you can do to protect yourself and your investment, including: draw up a Declaration of Trust, a legal document which states the terms and says we are all legally responsible for our share of the mortgage
get payment protection on the mortgage in case someone was out of work; at least that would ensure their share of the mortgage was paid.
each draw up a will to protect our asset should anything terrible happen to us

Do you still live with them now?

Actually, yes! We have just come up to our two-year period and are going to remortgage our co-bought property to take some money out and use that as a deposit to buy on our own! Co-buying was a perfect stepping stone and luckily we are able to keep our current house and rent it out - not to mention the holiday home I and some others co-bought.
We may have started off as strangers but we're definitely friends now!

What holiday home?

After the success of my first co-buying experience, a friend and I wanted to buy a holiday home in a ski resort, but found that it would stretch us financially. We realised we needed other co-buyers to make it viable. Eventually there were six of us that co-bought it (two of them I've never even met!) and it has worked out great - we'll be off snowboarding by March 07!

What if I don't know anyone to co-buy with - where can I find other co-buyers?
I thought you'd never ask! After my experience I created a free website for co-buyers to find & contact other co-buyers, plus we have some great co-buying information including a co-buying guide and case-studies from first-time and overseas co-buyers, as well as investor co-buyers who want to get involved in buy-to-let market.

Visit Co-BuyWithMe.co.uk

As more buyers enter into shared ownership agreements

House prices have trebled since 1995, whilst average incomes have only increased by 50%[1] making it even harder for first time buyers to get on the first step of the property ladder. In addition up to 10% of first time buyers are choosing to club together with a friend[2], Equifax, the instant online credit information provider is therefore advising home buyers to be aware of some possible pitfalls of a joint mortgage agreement.

Buying with a friend could mean getting on the property ladder sooner, getting a bigger home or moving to a better location.  However, whilst statistics from a recent Equifax survey reveal that 83% of young people are planning to make a major purchase over the next six months, worryingly 23% of young people under 25 already have up to £10,000 of long term debt to pay off, which may lead to possible problems if money runs dry. Mortgage providers will hold home buyers jointly responsible for repayments so if a housemate can’t or won’t continue repayments those left behind will be expected to keep up the payments alone.

On a more positive note the Equifax survey also reveals that 82% of home buyers will obtain a copy of their credit file before making the purchase.  “This is good to know” confirmed Neil Munroe, External Affairs Director, Equifax.  “However I would also urge buyers to ensure they take steps to improving their credit file before making a major purchase. And of course there is no guarantee that things won’t go wrong when people buy a home together.  But there are steps buyers can take to avoid any potential problems.

“I would advise consumers to have an open relationship with their buying partner and to be upfront about any existing credit agreements or debt”.

“If a friend isn’t prepared to share information about their financial status buyers may need to be cautious of entering into a financial agreement of that significance. Perhaps they are hiding unpaid loans or other financial problems which can affect the mortgage rate buyers receive. An open relationship will also let the buyer know if their friend will be financially stable and reliable”.

Richard Cohn founder of SharedSpaces.co.uk a website that helps aspiring property buyers to find potential partners agrees: “I highly recommend potential house mates being open and honest about their financial status.  Co-buying is a great way of affording to buy years sooner than you could do alone, but whether you are buying with a friend, a family member or someone you meet through our co-buyer network, I would urge people who decide to buy together to have a Deed of Trust drawn up by a solicitor, setting out the rights and responsibilities of both parties involved and in particular what should happen when one of you decides to move on”.

Equifax advises anyone who is going to enter into a mortgage agreement to check their credit rating to ensure they can get the best mortgage deal on the market. The Equifax credit rating can be obtained instantly at www.equifax.co.uk.

If you would like more information or would like to arrange an interview please contact Cecile Stearn, Claire Foster, Kate Clements, Elinor Puzey or Wendy Harrison at HSL on 020 8977 9132 or email cecile@harrisonsadler.com

About Equifax (www.equifax.com)

Equifax Inc. is a global leader in information technology that enables and secures global commerce with consumers and businesses. We are one of the largest sources of consumer and commercial data. Utilizing our databases, advanced analytics and proprietary enabling technology, we provide real-time answers for our customers. This innovative ability to transform information into intelligence is valued by customers across a wide range of industries and markets. Headquartered in Atlanta, Georgia, Equifax employs approximately 4,600 people in 13 countries throughout North America, Latin America and Europe. Equifax was founded 107 years ago, and today is a member of Standard & Poor’s (S&P) 500® Index. Our common stock is traded on the New York Stock Exchange under the symbol EFX

Johnny Turner looks at developments where buyers can be both owner-occupiers and landlords
One option for those who wish to get into the property investment market is to buy a property where they can live and also rent out the second bedroom. Two-bedroom flats with enough space and the right facilities make an excellent introduction to life as a landlord. The current market boasts quite a few attractive options for the live-and-let-out investor.
When renting out a room in your property, you have to get into pretty much the same mindset as any speculator – and the first consideration must be location. A tenant/flatmate will want to be in a convenient setting near good transport, amenities etc. Also, the specification of the apartment must be of a good standard and the property should be low maintenance, allowing you to get on with your own life with a minimum of hassle.

A good example of a development that ticks all these boxes is Equinox, located in Island Gardens, at the end of the Isle of Dogs. Telford Homes is currently offering the ideal property for the investor, whether you want to let out the whole thing or live there while letting one of the bedrooms. This spacious two-bedroom, two-bathroom apartment spans 852 sq ft – and as it is on the fifth floor, it boasts an exceptional vista that takes in Canary Wharf to the north with views over the Thames towards the University of Greenwich to the south.

Combined with its excellent location and panoramic views, the design, layout and specification of this apartment on the newly named Douglas Path, is second-to-none. The space is open-plan with the kitchen extending into the spacious living area, which in turn leads out to a balcony. Both bedrooms within the apartment are doubles with extensive surrounding views. The main bedroom includes integrated wardrobes along with an en suite shower room.
The finish is excellent standard. The kitchen is by Urban Myth and has a sleek quartz stone work surface. The full range of integrated appliances by Smeg and Siemens include an oven, five ring gas hob, stainless steel and glass canopy, built-in dishwasher, fridge/freezer and washer/dryer.

The main bathroom and en suite are complete with pure white Villeroy and Boch suites finished with chrome taps and fitting by Grohe. Other features include polished chrome towel rail radiators and a large tiled-in mirror over a polished stone shelf in both the main bathroom and the en suite.

Equinox is within easy reach of the business districts of Canary Wharf and the City. With Island Gardens DLR station directly opposite the development, scooting into work will be simple and quick. Also, upmarket Greenwich, with its entertainment and shopping possibilities, is just ten minutes’ walk away via the famous foot tunnel under the Thames.
Plot 71 is available at £395,000 and comes with the option of secured parking at £17,500. Find out more about this apartment, and the range of other homes at Equinox, by calling Telford Homes on 020 7537 2302 or visiting telfordhomes.plc.uk.

In Romford, another Telford development will find a keen audience in buy-one-let-one-out purchasers. Market Place, s £40 million mixed-use scheme in the heart of the town will feature 89 one- and-two bedroom apartments for private sale. The three-acre scheme, on the northern edge of the town’s famous open-air market, is being developed in conjunction with Pickenham, part of the Beadie Group. The residential part is due for completion at the end of the year. Call Telford Homes on 01992 809800 to find out more about these apartments.
Reading has been cited as one of the UK’s top ten property investment hotspots according to Channel 4’s Where Best to Invest. Their research found that average house prices in the area have risen by 197 per cent in the last ten years, five per cent above the national average.
This bustling city is also an obvious choice for someone who would like to buy a high-spec two-bedroom apartment and rent out the second bedroom, as developer Crest Nicholson (Chiltern) Ltd knows. In Queens Road, central Reading, Crest is creating Q, a cutting-edge development of one-, two- and three-bedroom apartments with all the hallmarks of an excellent investment.

A new marketing suite and two-bedroom show apartment opened recently, giving purchasers their first look inside the development, which is set to become a landmark site for this cosmopolitan town. Its striking architecture and extraordinary use of glazed art on the façade, by leading London glass designer Kate Maestri, signals to buyers and neighbours alike that Q is style-conscious and trendy. Two landscaped roof terraces on the fifth and eighth floors will provide residents with superb views across Reading towards the countryside. These views can also be enjoyed from the terraces of selected apartments.
Some apartments will feature spacious open-plan living and kitchen areas with stainless steel De Dietrich appliances as standard. They will also have floor-to-ceiling windows, while several of the apartments will include wrap-around terraces, providing spectacular panoramic views. The bathrooms include Villeroy & Boch and Hansgrohe chrome taps and fittings. The apartments also benefit from audio visual entry phone systems, lifts to all floors and there is gated basement parking.

The current release of two-bedroom apartments is priced from £234,950. For more information contact the sales office on 0870 755 1645.
Another well-connected location is Luton, with its quick train links to London, easy access to air travel and proximity to the South East’s road network. And those in the market for a two-bedroom apartment will be interested in exploring Bellway’s Academy development on Castle Street, which is currently offering a ‘move in for £99’ incentive on all of the one- and two-bedroom apartments.

Chris Edginton, sales director of Bellway Northern Home Counties, says, ‘Using the offer, purchasers only have to pay £99 to reserve their apartment. We will then pay the five per cent deposit, one per cent stamp duty and legal fees up to £750.
‘The offer is perfect for first time buyers who, though in full time employment, find it impossible to save for a deposit and have to live in rented accommodation or at home with their parents. Money that would otherwise be lost in rent can be invested in a home of their own.’
To illustrate the offer on a two-bedroom apartment with en suite, balcony and car parking space priced at £179,000: Bellway would pay a five per cent deposit of £8,950, one per cent stamp duty of £1,790 and legal fees up to £750 – saving purchasers £11,490. Purchasers must use Bellway’s nominated solicitors and financial services.
The Academy is located five minutes from Luton town centre.

One bedroom apartments offer secure underground parking and a terrace or balcony and are priced from £158,000; two-bedroom apartments with the same facilities, as well as an en suite to the master bedroom, are priced from £173,000.
The marketing suite is open daily. Speak to a sales advisor on 01582 451013 or visit bellway.co.uk.

On the fringe of very popular Cambridge, sales at George Wimpey South Midlands’ Horizon development are soaring. An impressive one property per week is currently being snapped up at this sought-after development, proving the range of stylish two-bedroom apartments and attractive two-, four- and five-bedroom houses is extremely popular with purchasers.
The two-bedroom Emanuel apartment, for example, is available from £224,995 – and this would make the ideal home for buyers who want to rent out a bedroom. The home features a large living room with one or two French doors each leading to a Juliet balcony, as well as a thoughtfully designed kitchen. The two bedrooms, one enjoying en suite facilities, offer plenty of space to relax in comfort. The main bathroom, an airing cupboard and a useful storage cupboard complete this attractive apartment.
Like all new homes at Horizon, the Emanuel benefits from a high standard of specification, including gas central heating, double glazing and fitted kitchen with built-in oven, hob and hood. Apartments also come complete with a washer/dryer, audio entry system and security alarms in all ground floor properties.

Other new homes currently available comprise the two-bedroom Albany starting from £199,995, the four-bedroom Kent priced at £299,995 and the five-bedroom York and Mortimer Special homes, which are available from £359,995. Incentives are available on some homes.

Horizon is part of Arbury Park, a brand new neighbourhood located less than three miles from Cambridge’s cosmopolitan city centre. A range of local facilities is being constructed alongside the homes, including a primary school, sports and play areas, community buildings and shops.
The community will also be well-served by existing and new public transport links, including the proposed Cambridgeshire Guided Busway. Commuters will find the A14 and M11 a short drive away, and Cambridge rail station operates regular services to London.
Further information is available by visiting the sales centre, which is based at the nearby The Quills development located off Wellbrook Way in Girton and open daily from 11am to 5pm. The Sales Call 07785 363297 to find out more.

Beechwood Court is a collection of just ten two-bedroom apartments set within communal landscaped gardens in a sought-after area of Leatherhead, Surrey. The two individual three-story apartment buildings are designed to suit their mature setting, featuring traditional brickwork and elegant tile hanging.

Inside, each apartment incorporates an airy and spacious reception room flooded with natural light from the large windows. Luxury fitted kitchens include granite worktops, ceramic floor tiles and a range of integral appliances such as stainless steel oven and gas hob as well as built-in fridge/freezer, dishwasher and washer/dryer.
Upstairs, the master bedroom has fitted wardrobes and an en suite bathroom, while there is a further bathroom for bedroom two. Bathrooms feature classic pure white Ideal Standard sanitaryware. There is a lift to all floors as well as a video entryphone system. Plenty of parking has been provided for both residents and their guests.
Leatherhead town centre offers a good selection of shops and restaurants, café bars and leisure facilities, as well as independently owned shops and traditional pubs. The M25 is immediately accessible, providing swift links to greater London, as well as to Gatwick and Heathrow airports. There are also regular trains from Leatherhead to central London.
 
The nearby towns of Dorking, Guildford and Reigate offer further shopping and leisure opportunities. Leatherhead is also well served by golf courses and sports facilities, and there are endless opportunities for walking, cycling and exploration along the entire length of the North Downs. and gardens
The two-bedroom apartments at Beechwood Court are priced from £320,000. For further information call 01372 450255.

Higgins Homes specialises in well designed and reasonably priced homes, and many of their developments offer the ideal solution for those looking to buy a place and rent out one of the bedrooms. The Garden Apartments in Wanstead E11 is a new addition to the Higgins line.
Set in one of north-east London’s most desirable areas, The Garden Apartments is a select and exclusive development of just 12 new homes created with the discerning buyer in mind. The design of the development has been heavily influenced by the work of the iconic American architect Frank Lloyd Wright and encompasses his trademark love of space and light combined with a truly luxurious specification.

As well as timelessly chic kitchens and bathrooms and a wealth of comfort features, each apartment will enjoy access to either a balcony/terrace or a ground floor patio/garden area. Wanstead Village itself offers a great combination of high-quality shopping and entertainment options and easy transport. From Wanstead Underground station, commuters can access Liverpool Street in around 17 minutes, while there is also a comprehensive local bus network.
Another excellent Higgins Homes scheme is Emporium in Buckhurst Hill, just minutes from beautiful Epping Forest and the classic beauty of the Essex countryside. This new development of 23 one-, two- and three-bedroom apartments provide an excellent mix of home comfort and 21st-century convenience.

Emporium will appeal to a wide variety of potential purchasers, including investors, sophisticated first-time buyers and upgraders. It will offer a range of light, bright and spacious new homes set within a settled and thriving community. Each home will benefit from the very latest in smart, chic and easy-to-maintain kitchen and bathroom design from top-name suppliers.

There are very good shops and amenities nearby, and Roding Valley station is within easy walking distance. From here London commuters can get to the capital in under 30 minutes.
For further details of either The Garden Apartments or Emporium visit higginshomes.co.uk.
In lovely Wealdstone, Harrovian Court is a new scheme of apartments that will appeal to a cross-section of buyers, including young professionals, first-time buyers, commuters and sports enthusiasts.

These nine one- and two-bedroom apartments are high-quality yet low-maintenance, and boast the advantage of being ideally situated in Byron Road. These apartments are within a short walk of local shops and Harrow & Wealdstone station, which provides direct services into London Euston. For sporting enthusiasts, Byron Recreation Ground and Harrow Leisure Centre are both very nearby, offering a range of facilities including tennis courts, swimming pool, bowling green and football pitches. For an even wider array of retail stores, bars and restaurants, however, central Harrow’s large shopping centres are also easy to get to.
These homes provide well-proportioned contemporary accommodation and high-quality internal specification. Each apartment benefits from a fitted kitchen with electric oven, gas hob, extractor hood, washer/dryer and laminated timber floor.

The bathrooms are equally impressive, featuring classic white sanitaryware and luxury chrome fittings. The two-bedroom properties have the added benefit of an en suite to the master bedroom complete with thermostatic shower, while most master bedrooms also boast built-in wardrobes for extra storage.  

For security, the development features an audio entry system and mains-wired smoke detectors. In addition to double glazing throughout and central heating, the development also features two separate entrances for added ease and privacy.
Built by Cairnpark Properties using traditional brick construction, Harrovian Court has been designed to blend harmoniously with properties in the surrounding area. The grounds will be attractively landscaped to create an ideal setting and there is even a bicycle store.
Prices at Harrovian Court are also good news: they start at just £180,000. For further information contact Preston Bennett New Homes on 020 8954 8626 or visit perstonbennett.co.uk.

Property presenter joins HIPs protest

Property TV presenter Kirstie Allsopp joined Conservative housing spokesman Michael Gove MP last week in calling on Gordon Brown to abandon plans for Home Information Packs (HIPs). At a photo call, Allsopp, who owns a property location company as well as presenting shows such as Location, Location, Location for Channel 4, said HIPs could cost the property sector £600m a year.
Although due to give birth within days, Allsopp said she felt too strongly about the issue not to lend her presence to the shadow government’s campaign.
Charles Smailes, president of the National Association of Estate Agents (NAEA), backed the opposition’s campaign against HIPs. ‘The lack of cohesion in government consultations has divided the industry and led the Conservative party to take this drastic action,’ he said.  ‘We urge the Government to start paying attention to the concerns of its opposition, the entire property industry and the public who according to NAEA research will not welcome the introduction of HIPs.’
Meanwhile, pro-HIP professionals struck back. Keith Gould, managing director of Stratify Associates Ltd, a Home Information Pack provider, said, ‘The current raising of the profile by various parties to axe Home Information Packs is no more than the final act of desperate parties grasping at straws. While one can detect the opportunity to bash all the policies put forward by the ODPM under John Prescott, this initiative has a significant difference: it has already been adopted by commercial companies. Of course, one mustn't forget the consumers' voice. After all, feedback gathered at the Homebuyers Show in March shows that 80 per cent of home buyers feel that HIPs will bring substantial savings to the home buying process.

House prices ‘beginning to stabilise’

The UK housing market is starting to slow as we head into the latter end of the summer, says Assetz in its latest House Price Watch report. While the market is continuing to show positive growth, we can expect price rises to taper off especially in London, as affordability reaches a ceiling.
The six major UK house price indices show an average of 6.74 per cent annualised growth for the 12 months prior to June 2006. This is a 0.22 per cent increase on the annual growth up to May (6.52 per cent) and a 2.51 per cent increase since the beginning of the year (4.23 per cent).
At the latter end of the summer, Assetz anticipates that annual growth will level off at around the five per cent mark, in line with its original predictions of five to seven per cent growth by the end of 2006.
The average house price, taken from the average price provided by all the six indices, is £189,408, up from £189,317 in May. This shows an increase of over £10,000 on the price of a home in the 12 months since June last year, when the average property price was £179,341.
Stuart Law, managing director of Assetz, said: ‘I am seeing no big surprises from the housing market this summer. A strong performance in the first six months is now beginning to slow, resulting in a confident five to seven per cent growth by the end of the year in line with our original predictions.’

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.’