Buying, selling and letting - Friday, September 15, 2006

The basic concept of the offset or current account mortgage is straightforward. The borrower pays his or her monthly income into the mortgage account, which is augmented by any savings that they may have. The monthly mortgage payments are then deducted from the balance available in the account, up to a predetermined level.

Now, even the most uncertain borrower will have realised that this type of account isn't ideal for everyone. In fact, Bradford & Bingley's The Marketplace has calculated that in order to benefit from an offset mortgage of £100,000 you would have to have at least £30,000 worth of savings in the same account. So why would you go for an offset mortgage?
The offset advantage

Offset mortgages have been designed to 'breathe' with the borrower, being sufficiently flexible to enable borrowers to overpay in the good times and to relax a little when times are less prosperous. This means, in theory, that the mortgage will give borrowers some degree of flexibility so that they don't need to change products as regularly as the usual fixed-, capped- and discounted-rate brigade do.

One could argue that if the borrower is sold a suitable product in the first place, he or she should have no need to swap their mortgage every few years to keep up with the best deals in the market.

In some cases, however, borrowers can't even be sure that they have received proper advice from their brokers. In fact, the Financial Services Authority has warned that it will be getting tough on firms that have mis-sold badly designed lifetime mortgage products to vulnerable customers, so it follows that sales that have been made to meet ambitious targets will be scrutinised at the earliest opportunity by the new regime.

Because offsets are billed as a lifetime product, it is arguable as to whether they are being sold properly. As they reduce a broker's income stream, lenders tend to pay slightly higher procuration fees to compensate for the fact that borrowers will remortgage less often.
So, are some brokers just selling them for the quick fix of a large procuration fee? As an alternative, lenders could possibly look at offering brokers a loyalty bonus so they don’t recommend an alternative product to clients.
Going low

As a country, the UK still has a collective nose for the lowest possible interest rate. At this time of likely interest rate rises, therefore, there will be a natural tendency among borrowers to select fixed-rate products with some degree of flexibility built in. But most people are uncomfortable with the idea of putting all their financial eggs in one basket.

Many people would be happier with the notion of a flexible mortgage, where for example they could make overpayments, take payment holidays, use drawdown facilities and benefit from interest calculated on a daily basis.

In this regard, truly flexible products include the Woolwich OpenPlan, Intelligent Finance (IF) and The One Account. However, it is also correct to say that some other high street lenders offer products that incorporate an element of flexibility, so they are not true offsets but do feature many of their benefits.

Recent research by Datamonitor shows that in July 2001 eight per cent of borrowers were using an offset mortgage, but by July 2003 this figure had risen to 16 per cent. In
addition, forecasts suggest that in five years offset products will account for up to 20 per cent of the market, with total lending equating to some £44 billion.
So who's it for?
Where does all this leave the average borrower in search of the best product for his/her purposes? As you may already have guessed, the answer depends to a great degree on the circumstances of the particular individual.
Taking the example of the first-time buyer, we all know they are struggling to gain a foothold in today's property market so an offset mortgage would seem to be just the thing to help them take their first step.

Many offset mortgages work on the principle of affordability, rather than conventional income multiples. IF, for example, allows applicants to stretch up to four-and-a-half times their salary, dependent on affordability and credit score.
The problem is that a broker would probably not be giving the best advice if he or she recommended such a product to a first-time buyer. Most first-time buyers have no
substantial savings and usually want to reduce payments as much as possible in the early stages of the loan, which makes an offset mortgage less suitable than a more
conventional short-term discount- or fixed-rate product. As for the self-employed, their tax bill can be saved until the end of the financial year, acting as 'savings' until it has to be paid, thus reducing the interest paid.

How to improve the product
It is clear that offset mortgages can be a godsend to certain categories of borrower, but how can they be made more attractive to a wider audience? First, it is worth suggesting that a fixed-rate option within the offset would attract more borrowers.
With this option customers could experience a maximum monthly payment, but the offsetting facility would mean that this payment could be reduced while at the same time having a longer-term effect of capping the mortgage. Equally, offset mortgages featuring longer-term discounts could be offered, so that the monthly payments don't rise too sharply after the initial three- to six-month discounted incentive period.

Interest rates hold steady

Interest rates remained at 4.75 per cent today as The Bank of England’s monetary policy committee (MPC), a move that will no doubt come as a relief to home owners and prospective buyers after last month’s quarter-per cent rise.
With inflation still set to go way above its two per cent target, however, many experts predict at least one further rise this year.

House prices keep rising

The annual rate of house price inflation picked up for the third consecutive month in August, according to the latest market study by Nationwide Building Society. With prices rising by 0.8 per cent in August, the annual rate of growth accelerated to 6.6 per cent.
Fionnuala Earley, Nationwide's Group Economist, said, ‘House prices are now 6.6 per cent higher than at this time last year. This is the fastest annual rate of growth since April 2005 and almost three times faster than at this time last year. The underlying market remains fairly firm with prices increasing by 0.8 per cent in August.’
The average house price in the UK is now £167,721 - £10,412 higher than August 2005 and the equivalent of a rise of almost £30 per day.
The housing market is unlikely to slow as rapidly as in the last rate rise cycle, said Earley. ‘The rise in interest rates in August, together with the expectation of another rise before the end of the year, naturally leads to comparisons being drawn between now and the last cycle of interest rate rises. The five increases between November 2003 and August 2004 led to a rapid fall in house price inflation, from over 20 per cent in July 2004 to 2.3 per cent by the time rates were reduced again in August 2005. While we expect base rates to reach five per cent by the end of the year - above the peak of the last rising cycle - we do not expect the market to slow as sharply as before.’
The main reasons, said Earley, are: fewer interest rate rises are expected than happened in the last inflation cycle; fixed mortgage rates have moved more gradually; and demand, particularly from the investment sector, is likely to remain fairly supportive. ‘There is a stark difference in the tone of the MPC minutes’ between last month’s rate rise and those during the previous upward trend, she said.

Short-term fixed rate

Accord Mortgages has a fixed rate until 30 September 2008 at 4.89%; this reverts to the standard variable rate (SVR) for the remaining term, currently 6.5%. Overall cost for comparison is 6.6% APR. An early repayment charge applies to those who repay all or any part of the mortgage during the fixed-rate period. Valuation fee is £260; the £695 arrangement fee can be added to the loan.

Long-term fixed rate

Alliance & Leicester has a fixed-rate deal to 31 August 2011 at 5.19%, reverting to the SVR (currently 6.59%) for the remainder of the mortgage term. The overall cost for comparison is 6.4% APR. An early repayment charge will apply if all or any part of the loan is repaid during the fixed rate period of the loan. The valuation fee is £280; the £499 arrangement fee can be added to the loan.

Cashback

Chelsea Building Society is offering 6% cashback with its five-year fixed rate loan (rate 6.74, fixed until 30 November 2011).Overall cost for comparison is 7.1% APR. The cashback must be repaid if the loan is repaid within the fixed rate period. The product comes with free valuation; the arrangement fee of £545 can be added to the loan.

Short-term discount or tracker

BM Solutions has a two-year tracker scheme at the Bank of England base rate minus 0.25% (currently 4.50%), reverting to the SVR (currently 6.74%) for the remaining term of the mortgage. The overall cost for comparison is 6.7% APR. An early repayment charge applies if you repay all or part of the mortgage within two years. The valuation fee is £350; the £500 arrangement fee can be added to the loan.

Long-term discount or tracker

Northern Rock has a two-year tracker buy-to-let deal at Bank of England base rate plus 0.19 (equivalent 4.94%), reverting to the SVR (currently 6.7%) for the remainder of the term. The overall cost for comparison is 6.8% APR. An early repayment charge applies to those who repay all or any part of the mortgage during the first two years.  There is valuation fee of £350, as well as an arrangement fee of £1,500 that can be added to the loan.

Remortgage

The Bank of Scotland is offering a tracker at base rate plus 0.14% (current equivalent 4.84%) until 31 October 2008. The rate reverts to the SVR (currently 6.65%) for the remainder of the term. Overall cost for comparison is 6.6% APR. An early repayment charge applies if you repay all or part of the mortgage during the discount period. Free valuation and legal; no arrangement fee.

Buy-to-let

BM Solutions has a two-year tracker buy-to-let at the Bank of England base rate plus 0.19% (currently 4.94%), reverting to the SVR (currently 6.7%) at the end of the period. Overall cost for comparison is 6.8% APR. An early charge applies if you repay all or part of the loan within the first two years. There is a valuation fee of £350; the £1,500 arrangement fee can be added to the loan.

Lifetime tracker

Norwich & Peterborough has a lifetime tracker at base rate plus 0.35% (currently 5.1%) for the full term. Overall cost for comparison is 5.4% APR. There is no early repayment charge. Valuation fee is £220; the £599 arrangement fee can be added to the loan.

100% mortgage

Norwich & Peterborough has a three-year discounted deal at 1.1% off its SVR, (current equivalent 5.64%), reverting to the SVR (currently 6.7%) for the remaining term. Overall cost for comparison is 6.6% APR. An early repayment charge applies if you repay all or part of the loan during the discount period. Valuation fee is £220; no arrangement fee.

Chosen by mortgagetalk.co.uk

The neverending mortgage

Kent Reliance Building Society has introduced a home loan with no payback date. Dubbed the 'deathbed mortgage' this could help reduce payments by £150–£170 a month and will enable borrowers to take that crucial first step on to the property ladder.
Borrowers will be able to take out a 25-year interest-only loan, and after the end of the 25-year period, will simply be able to extend it for a further 25 years – the loan is 'portable' so when someone dies, it can be passed on to the next generation or paid off with the sale proceeds of the dead person's property.
Critics say that the loan will turn into a life sentence, with buyers paying a mortgage all the way through their retirement - and still leaving later generations to pick up the bill.

Buy-to-let boom

Buy-to-let investors have seen their rental yields rise recently, according to figures from the Royal Institution of Chartered Surveyors (RICS).
According to new figures released by RICS, rental prices for between May and July have risen more sharply than any other time over the last eight years, with a 30 per cent rise in rental levels. In the first quarter of 2006 the average rent was £778 per month.
Jeremy Leaf, an RICS spokesman who also owns his own London surveying business, has suggested that high immigration levels into the UK could be impacting on rent costs, as
increasing numbers of immigrants come to the UK from EU accession countries
looking for accommodation.
Speaking on BBC Two's Working Lunch about increasing rent prices, Leaf
observed: ‘Immigration influences the property market because a lot of the people who are working are here for short periods, and therefore not looking to buy. They want to rent and they'll do that for at least six months, maybe a year.’
While rising rental yields are good for owners of rental property, the picture is less rosy for students, who rely on renting, as well as first-time buyers, according to Leaf. ‘Because the lettings market has remained active, it's actually restricting the opportunities for first-time buyers in particular to save those deposits that they actually need to buy a property.
‘So, unusually, both parts of the market are quite strong.’
According to RICS, the average cost of renting a one-bedroom flat has risen from £569 per month in 2005 to £593 for 2006, while the rental on an average three-bedroom semi has risen from £877 per month last year to £932 at present.

Shortage of London houses widens price gap

An acute shortage of family houses and an increased confidence among top-end buyers has widened the price gap between houses and flats in London. Although flat prices have risen this year, they have not done so to the same degree as house prices.
Winkworth Notting Hill has recorded ‘phenomenal activity’ in the family house market, with cases of sales being agreed, often above asking price and within days of being marketed. The office has found that, while prices of flats have risen by around 15 per cent this year for a typical one bedroom apartment, house prices have risen by nearer 25 per cent. Alex Thompson of Winkworth Notting Hill says, 'Demand continues to dwarf supply, particularly in the family house market where confidence is highest. With buyers now prepared to exchange within 24 hours, an increasing disparity has emerged between house prices and flat prices.'

Zones challenge the traditional triangle

The new kitchen zones – Robert Entwistle, Design Director, Thomas & Thomas

When planning a kitchen, today’s designers no longer rely on the traditional ‘triangle model’ of fridge, cooker and sink which was key to the smaller ‘work’ kitchens – changing lifestyles, greater space and the advent of new fixtures, appliances and technology mean that we now work with clients to create intelligently designed living and working spaces that fit in with their individual lifestyle.

Often this means creating three distinct zones within a larger ‘triangle’ which are designed to work in harmony with each other and the people who use them.

The emergence of the extractor hood to remove cooking smells from the room and the island unit which is a wonderful practical addition to any kitchen creating a central hub to the room – and the increased use of the dishwasher means that today’s kitchens often have 3 working zones - a ‘cooking/ preparation’ zone, ‘washing up/crockery and utensil storage’ zone and a third ‘refrigeration and food storage’ zone, often centred around a large, American-style fridge freezer and larder cupboard.

It is now popular to have two sinks in the kitchen – one still traditionally sited next to the window for washing up and a second as a preparation sink, usually located in a central island unit which has become the focal cooking and preparation point in many kitchens.
                                                                                        
Most clients want their kitchen to work both as a place to prepare and cook food but also perform as an informal eating space –a place where the whole family, friends and relatives can hang out and eat. The traditional triangle design of kitchens was appropriate when kitchens were smaller and families ate in a separate dining room. However, formal dining rooms are losing favour – we see people knocking the two rooms through to create one large living, eating and cooking space or building an extension to allow them to introduce a dining area to their original kitchen.

Tradition and technology have combined to create kitchens which are much more family oriented than before. As all members of the family become increasingly busy and working parents struggle to spend quality time with their offspring, the kitchen has developed to allow parents the space to prepare, cook and eat while at the same time hang out with their kids and, when friends come round they are much more likely to gather in the kitchen, chat with their host and then sit down together for a meal in the living area of the room.

The kitchen is no longer just the heart of the home – it is the central hub of operations!

Those who are seeking the top investment location in the UK should head to Ipswich, according to a study by the Property Investor Show. As Suffolk continues to attract higher and higher prices, particularly in seaside locations, Ipswich, more inland but blessed with good retail and transport amenities as well as high-quality housing stock has emerged as the number one hotspot.
According to the study, Ipswich came top of the list of towns where average house prices were lower than the stamp duty of £125,000 but yet house price inflation is set to see significant future increases.

In Ipswich, the average price for a flat or maisonette is £121,700 - significantly lower than the £167,000 UK average.

The top ten list also featured Peterborough, Chatham and Middlesbrough – other locations in which house price rises outperformed other markets in the UK.
’With prices soaring over recent years, it is incredibly difficult for novice property investors to get started. However, there are many emerging areas that are still very affordable and benefit from extensive regeneration projects,’ said Nick Clark, managing director of the Property Investor Show.

’These present excellent investment prospects. The identified investment hotspots offer investors and first-time buyers the opportunity to buy homes at some of the lowest prices in England and Wales and are also set to see some of the highest price rises in the next few years.’

With prices still rising, getting on to the ladder is tough. But there are still some great new homes right for the property novice, finds Johnny Turner

First-time buyer Victoria Bemrose is settling into her dream home thanks to a scheme designed to help young people gain that all important first foothold on the property ladder.

Victoria, 23, is revelling in a new found domestic bliss after snapping up a two-bedroom apartment at Waterford Gate, Fairford Leys, in Aylesbury. Waterford Gate is a development of one, two and three-bedroom apartments designed to appeal to those seeking a slice of stylish ‘urban village’ living within easy reach of Aylesbury and London.

Taking advantage of Bellway’s offer to pay the 5% deposit on her £175,000 apartment enabled Victoria to spend the money she had started to save towards a deposit on furniture and bills. It also meant she was able to move into her ideal home sooner than she had imagined possible.

Originally from Holmer Green in High Wycombe, Victoria chose to purchase in Fairford Leys as she felt the quality of properties on offer far exceeded anything she had seen elsewhere.

Fairford Leys is contained within gated walls and includes amenities such as a health and fitness centre with swimming pool, Chinese takeaway, supermarket, bar and hairdresser; perfect for a busy young career woman such as Victoria.

“It’s fantastic having everything I need on the doorstep and I’ve already had a guided tour of the gym which I intend making full use of. There’s a good mix of young couples and families here and it really feels like joining your own little community” she says.

Minutes away from Aylesbury town centre, an hour from London by rail, and within easy reach of the M25, M40 and M1 motorways, Waterford Gate is ideally located for commuters like Victoria, who works as an Account Development Manager for vehicle leasing company LeasePlan UK. She regularly commutes to her clients’ offices in the north of England and to her head office in Slough, and spends the remaining time working from home.

“I am thoroughly enjoying living in Waterford Gate and even though moving house is supposed to be one of the most stressful experiences in life I have found the whole experience exciting and painless thanks to the sales staff who have been very supportive throughout the entire process.

“As my apartment wasn’t ready when I reserved it in mid-March I was a little nervous about purchasing off-plan. However, the sales negotiators really helped by talking me through the plans and helping me visualize my new home in relation to the show apartment.

“As a first time buyer I had so many questions and it was great having people to turn to every step of the way. Since moving into my new home in June I haven’t looked back; being a homeowner is a fantastic feeling and as I have friends in the area I know I am going to be very happy here.”

Prices at Waterford Gate start from £146,000 for a one-bedroom apartment, and from £160,000 for a 2 bed apartment with en-suite & secured allocated underground parking. The on-site sales centre is open 7 days a week between 10am and 5pm. Telephone 01296 394758 for further information or visit www.bellway.co.uk.


First time buyers helped onto the property ladder at Woolwich Green

It has been reported that houses prices are set to rocket over the next six years in a boom that will see the average cost of a home top £300,000 nationwide.¹ While owners are standing back and watching as the biggest investment of their lives soars in value, first time buyers are going to find it harder and harder to get onto the property ladder.

In an attempt to help combat the first time buyer crisis, Countryside Properties has launched a ‘Grand Idea’ scheme for first time buyers at Woolwich Green, its development in Shooters Hill, South East London  This new set of incentives has been specifically tailored for first time buyers and enables potential purchasers to reserve and move into a new home at Woolwich Green for just the cost of their reservation fee - £1,000.  

Already over 60% of the buyers at Woolwich Green are first time buyers, including 26-year-old Julie Turner.  

Julie, who is an HR Administrator and works in Fenchurch Street in the City, is now the owner of a new one bedroom apartment thanks to the ‘Grand Idea’ scheme.

She says: “I have wanted to buy my first home for a long time and I have lived at home with my parents for the last five years to save money for a deposit.  Even having done this though, taking the first step onto the property ladder has been expensive, but the help from Countryside Properties has been fantastic and has made it affordable for me.”

Julie will commute each day from Shooters Hill to the City, a journey that she is anticipating to take around just 40 minutes thanks to good transport links from the development.  

She says: “Woolwich Green is just a short bus ride away from North Greenwich station which then offers really fast services into central London on the Jubilee line, so I have an easy journey to work each day.  I think that this combined with some lovely finishing touches such as my contemporary fully fitted kitchen, lovely bathroom with power shower and secure underground car parking makes my new apartment the perfect first home!”

Ian Hepworth, Sales Director for Countryside Properties, says: “We are delighted that we are helping first time buyers like Julie onto the property ladder.  House values are set to increase annually by around £20,000 from this year according to the National Housing Federation, and in 2012 the average home is likely to cost almost 10 times the predicted average salary.  I think first time buyers need all the help that they can get!”

Comprising 141 one and two bedroom apartments, current prices at Woolwich Green start from £170,000 for a one bedroom apartment and just £199,950 for a two bedroom, two bathroom apartment.  

Woolwich Green is set within a conservation area bordering Woolwich Common of Shooters Hill road in South East London and comprises three main residential apartment buildings nestled within landscaped grounds and set around two communal gardens.

The striking architecture combines traditional warm red brick work with white render and steel detailing.  There is extensive use of glazing to retain natural light throughout the apartments, and to create a bright and airy environment.  Many apartments have amazing views over London, Canary Wharf and Woolwich Common and all have the benefit of balconies.  
The apartments range in size from 462 sq. ft to over 700 sq. ft and each is finished to a very high standard and has a stylish and modern specification.  

Kitchens combine warm cinnamon ash and feature panelling with laminate worktops and stainless steel appliances.  Bathrooms are coolly elegant with white ceramic surfaces.  Secure underground car parking is also available at an additional cost.  

Woolwich Green is set amongst over 200 acres of green space, yet the buzz and attractions of neighbouring Greenwich and Blackheath are just a short ride away and provide a variety of cultural and historical landmarks such as the Cutty Sark, The Royal Observatory and the former Millennium Dome, as well as a sophisticated cache of restaurants, bars, pavement cafes, boutiques and markets.  

A well-constructed conservatory adds value. Here Everest, a leading home improvement company, along with glass manufacturer Pilkington, spells out the steps to a successful addition

A conservatory is one of the easiest ways to extend living space and increase the value of a home. If done with forethought and planning, it can provide a bright new room at a reasonable cost, and the right materials can help minimise upkeep.
Escalating property prices and the rising cost of actually moving (approximately £20,000 including agents and solicitors fees and stamp duty) have encouraged many people to extend current homes rather than climb the property ladder. Then, when it does come time to sell, the desirability to buyers – and the asking price – will be improved by having created a well-thought-out extension.
 
Planning

Many conservatories can be built without planning permission, but don’t take a chance. Local authorities will be able to confirm whether or not permission is needed. Those who extend without checking on whether planning permission is needed run the risk of a lot of expense and hassle; the local authority can order the structure to be removed.
Once you are sure a conservatory is permitted, be clear about what the room will be used for – playroom, dining room, relaxation area etc - and make sure the end result fulfils this need. Thorough research should be done into different styles and layouts. To help add maximum value to the property, be attuned to the surroundings - it is important that the style of conservatory fits in with the rest of the home and garden.
Ensure that the conservatory comes with an unconditional ten-year guarantee - all Everest conservatories, which have obtained seven ‘Kitemarks’ and three registrations from the British Standards Authority, come with this as standard. And when obtaining quotes for conservatories, make sure to get it in writing and always ask whether the cost includes VAT and installation fees.
 
Window of opportunity

Glass is obviously a major feature of any conservatory. It can be very time-consuming to keep the panes of glass clean, and if a window cleaner is regularly paid to do it the financial costs quickly mount up. All conservatory roofs need regular cleaning and can be difficult to reach from a standard step-ladder or upstairs window. An environmentally friendly way to keep windows sparkling is Pilkington Activ self-cleaning glass, which works with the weather to keep itself clean.
Pilkington Activ has a dual-action coating that first reacts with UV rays to break down organic dirt (for example, fingerprints, bird droppings, tree resin) and then encourages rainwater flow down the glass in an even ‘sheeting’ effect, preventing rain droplets forming and washing away any remaining dirt. This sheeting action prevents water from drying in streaks and smears following a rain shower; it also means that there is a clear view through the window even in the heaviest downpour.
Don’t be tempted to cut corners and install a polycarbonate roof. It can discolour very quickly, totally ruining the overall look of your conservatory. It also provides limited sound insulation so even the lightest of showers can sound like a torrential downpour. Finally, polycarbonate offers limited temperature control so the conservatory could be cold in the winter and hot in the summer, making year-round use unlikely.
 
A room for all seasons

And speaking of year-round enjoyment, a new breakthrough from Pilkington helps moderate the temperature of a conservatory, thus making it possible to spend time in your extension however high the mercury rises. The recently launched Pilkington Activ Blue, specifically designed for conservatories, is an attractive blue glass that combines dual-action self-cleaning properties with solar control technology to prevent conservatories getting unbearably hot in the summer.
The glass had a faint blue tinge which allows considerably less heat into the room compared to standard glass. In fact it reduces heat transference into the conservatory by approximately 43 per cent. This is because the blue tint absorbs the heat and aims it back outside, helping to keep the interior cooler, with sufficient ventilation, removing the need to install interior blinds , which can cost £1,000 or so. The attractive blue colour also has an aesthetic benefit as it reduces reflection, giving uninterrupted exterior views.
Double glazing can help maintain temperatures by providing insulation in the winter, and in these days of increased awareness of green issues, it is important to remember that the reduction of heat emissions can also help protect the environment. Any double glazing should always be safety glass, toughened or laminated and marked with a Kitemark stamp proving it complies with British or European standards.
 
On the floor

The floor of a conservatory should be quite hardwearing and suitable for outdoor shoes that might be carrying mud etc in from the garden. Flagstones and tiles are perfect for this, but lino or laminate flooring can also be an option; the latter is good for providing continuity from a kitchen area. Under-floor heating is a great way to warm up the conservatory in winter months.
Further information on Everest conservatories can be found on at everest.co.uk. For more information on Pilkington Activ ring 01744 692000 or see pilkington.com/selfcleaningglass

Buying a property to let continues to be an extremely popular way of investing. Johnny Turner looks at the market and what’s available to buy

For the past five years or so, the buzz in the property market has been about buying to let. While not a guaranteed route to riches, putting money into property rather than more traditional vehicles such as shares has become a way of life for Britons.
Imagine Homes – A REVOLUTIONARY WAY to invest in property
 
If you’ve ever considered investing in property but the risk and effort involved has put you off, then it’s time to consider Imagine Homes – a pioneering new way for you to build an investment property portfolio.
 
Imagine Homes has revolutionised the investment property market by making it possible for you to buy a brand new property off plan with a two year rental income guaranteed. In other words you ‘buy already let’.  Investors will be guaranteed two years rental income at 15% of the purchase price - you will get a cash lump sum equal to 7.5% of your property paid to you annually, upfront over the two year period.
 
Investors will choose their property from Imagine Home’s large portfolio, safe in the knowledge that Imagine Homes only selects first class properties from the best developments. Imagine Homes currently has properties for sale and to rent throughout the country in locations such as London, Manchester, Liverpool and Bristol. Investing in property through Imagine Homes also frees you of all the risks and stress usually associated with renting out property; they do all the legwork for you, from finding a suitable tenant to furnishing and managing the property.
 
Grant Bovey, founder and CEO of Imagine Homes, said: “Many people assume that the Imagine Homes concept is too good to be true, but this is simply not the case. We are there to take the pain and effort out of investing in property and to ensure that all investors get the best possible chance for capital growth. By offering a guaranteed two years rental income at 15% of the purchase price, we make the ‘buy to let’ sector an attractive investment option”. 
 
For two years, investors need not have any involvement with the property and then at the end of that two year rental period they have the option of making the following choices:
·    Inherit the tenant
·    Rent it out
·    Move in
·    Sell
 
For further information on Imagine Homes and their portfolio of properties simply log onto www.imaginehomes.co.uk
Imagine Homes, the company that has revolutionised the buy-to-let sector, is set to open Europe’s first retail experience that will showcase the future of property portfolio management. Imagine Homes has changed the way people invest in property and the new development will now bring this whole experience to life.  
 
Located on the Hogarth Roundabout, the ambitious new venture will encapsulate Imagine Homes’ unique buy already let offering across a 17,000 sq ft, two-storey state of the art centre. This multi-million pound investment has allowed Imagine Homes to create the ultimate environment to consider property investment options.  
 
Investors will be presented with a vision of the Imagine Homes proposition through a high tech audio visual theatre. The company’s county-wide portfolio of luxury properties will be delivered on a series of plasma screens, all at the touch of a button. Investors won’t need to visit their proposed purchase site; a virtual tour of all properties means they can sample every specification from the comfort of this facility.
 
A fully dedicated sales team will also be based on site and will be available to answer any questions investors may have. Further facilities on the ground floor include a relaxing café/ bar and a crèche with fully trained staff where parents can be confident in leaving children whilst they take in everything Imagine Homes has to offer. Executive offices, meeting rooms and a creative presentation zone will be housed on the first floor.
 
This ground-breaking development is situated at one of London’s most sought-after sites with its location on the A4 ensuring passing traffic around the clock. Work has already begun on implementing Imagine Homes’ vision, with doors set to open in the autumn of 2006.
 
Grant Bovey, founder and CEO of Imagine Homes, commented: “Since I launched Imagine Homes, the company has re-written the rules of property investment and made it easier than ever to build a portfolio.”
 
“The next step in our evolution was to create a space that allows investors to have a glimpse of a hassle-free and profitable future by building their property wealth. As a company we are pushing the boundaries in our field and we now believe we have the ideal space to share the vision with an even broader audience.”
 
Neil Christy, Creative Director and designer of Terminal 5 at Heathrow Airport added “I am delighted to be working on this unique project for Imagine Homes.  This development represents a major innovation in this sector.  It brings together a range of state of the art technologies which showcases property investment at its highest level.” 
 
All of the properties in Imagine Homes’ portfolio of high quality developments are in well chosen locations, with good travel links and excellent potential for capital growth. Investors will receive a guaranteed rental income of 15% of the purchase price, for the first 2 years annually in advance.  What’s more Imagine Homes invest up to 20% in each of their developments for their own property portfolio – something that should give customers significant reassurance when looking to invest in the buy to let market for long term capital growth.
 
 
For further information on Imagine Homes and their portfolio of properties simply log onto www.imaginehomes.co.uk
 

David Whittaker of Mortgages for Business looks at how the investment market has changed
A decade ago the buy-to-let investment concept was developed by Andrew Reeves of the Association of Residential Letting Agents (ARLA) along with a group of eight mortgage lenders.
Residential property investment prior to this point was largely the realm of professional landlords and was carried out under complex commercial terms. Today, the majority of banks and building societies are involved in the buy-to-let market under various brands and buy-to-let represents eight per cent of all UK mortgage transactions.

Amateur investors surged to the market in the early years of this decade as house prices enjoyed consistently strong double-digit growth each year. The fortunes of the buy-to-let market in the past two years have been more patchy: amateur activity has dwindled, although signs in recent months are beginning to suggest that smaller investors are beginning to return to the market.

Despite the hype surrounding buy-to-let investment, the amateur investor is still very much in the market’s passenger seat. According to 2006 Council of Mortgage Lenders statistics the large-portfolio landlord remains dominant. Thirteen per cent of landlords own 74 per cent of the buy-to-let stock and – perhaps more striking - 53 per cent of landlords own a mere three per cent of the stock. So despite the growing number of people active in the buy-to-let market, and despite the cultural changes this development has ushered in, amateur investment impact remains relatively small.

Lending on new build properties is now subject to tighter lending criteria and increased scrutiny, with some lenders exiting the new build buy-to-let market altogether this year. Many lenders now require a 25 per cent to 30 per cent deposit compared to just 15 per cent in the final quarter of 2005.

New build properties, particularly in city centres, are showing signs of oversupply and assessing the true market value is difficult. If a lender overvalues a property, then in proportion they could lend the borrower too much money in relation to the true property value.
The affect of the Housing Act on houses of multiple occupancy which came into force in April this year still remains to be seen. There is still a great deal of confusion among individual councils about which properties need a licence, so the first prosecutions under the act are liable to happen in the next six months.

The dynamics of the market have changed significantly with increasing competition between lenders offering more keenly priced products. Ten years ago buy-to-let was the territory of a few specialist lenders who priced on commercial property terms, resulting in high mortgage rates and the need for a 30 per cent deposit!

As the market has matured, terms have changed. More and more lenders have entered the market, increasing the pool of money being advanced and thus competition.
Loan-to-value (LTV) ratios - the amount a lender is prepared to forward as a percentage of a property’s value - have risen in incremental five per cent shifts up to the current market norm of 85 per cent. In recent weeks selected lenders have raised the bar higher and are beginning to offer 90 per cent LTV for investors willing to match higher fees and increased lending margin requirements for borrowing at this level.

The property market is likely to continue to favour the investor as competition intensifies and lenders continue to find ways to differentiate themselves.
It seems plausible that given the short history of the market, 90 per cent LTV will become the new market norm. Investors can expect more finely priced products to become available and especially at lower loan-to-values, although investors should also expect fees to remain higher than residential mortgages.

David Whittaker is managing director of Mortgages for Business, a company that has been at the forefront of the buy-to-let mortgage sector since the market inception ten years ago. Call 0845 345 6788 or visit mortgagesforbusiness.co.uk.