Buying, selling and letting - October, 2006

Opportunities in London and Brighton
 
A One-Stop Shop For Investors At City Point, Brighton

Brighton Council granted planning permission today for the Brighton i360 designed by the award-winning London Eye architects, husband and wife team David Marks and Julia Barfield. At 183 metres high and with the observation pod rising to 139 metres, the i360 will be Britain's tallest observation tower, taller than the London Eye (at 135m).
If you’re thinking of investing in the Brighton property market, you’ll find life so much easier at City Point, where Barratt has introduced a ‘one-stop’ shop. Not only will you be able to buy one of the superb new apartments, staff from Leaders rental agency operating from the sales and marketing suite will advise you on its letting potential and find a suitable tenant. Indeed, Leaders are even prepared to waive their commission charges for the first 12 months for investors buying at City Point! 

Ever since its sales launch, Barratt’s City Point in Brighton has been generating interest amongst property investors, aware of the development’s rental potential as well as the possibility of long-term capital growth. City Point is located adjacent to Brighton station, which makes it well-placed for commuters travelling to London Victoria and Gatwick airport. Road links are also excellent providing easy access to Eastbourne and Hastings in the east and to Portsmouth and Southampton in the west. City Point is also just a few minutes’ walk from the centre of Brighton, the seafront and a host of cafes, bars and restaurants.

‘We are absolutely delighted to be working alongside Barratt at City Point,’ comments Neil Ball of Leaders. We have already had plenty of enquiries from interested investors who recognise the potential of this great location, close to the station. The design of the apartments and the fact that City Point provides roof terraces also makes the development appealing.’ ‘The fact that we have a presence in the sales and marketing suite makes it so much easier for investors; they can discuss the letting potential of the apartments before they make their choice from the range of properties available – and we can find them suitable tenants to move in soon after they complete the purchase.’
Owner-occupiers and investors alike are interested in the long term potential for capital growth at City Point. As one City Point buyer, Paul Turton, comments:
 ‘City Point is in the regeneration area which is an amazing location for the future; so much money is being pumped into the area which will attract many more people over the next two to five years.’
For further information on City Point, where prices range from £299,995 for a two-bedroom apartment and from £469,995 for townhouse  please contact the sales office on 01273 689837, open daily from 10 am to 6 pm (closes 2 pm on Mondays) or visit www.barratthomes.co.uk.
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INVEST WITH CONFIDENCE

VizioN7 makes potential investors an unbeatable offer

Life is about to get even easier for those who are considering investing at VizioN7. Until 31st October, the development, a joint venture scheme between Taylor Woodrow and George Wimpey in conjunction with Arsenal Football Club, will be offering a fantastic rental guarantee promotion on *selected two and three bedroom apartments.

Those who reserve a selected apartment at VizioN7 during this period will receive a *7% gross guaranteed rental income for a full year. What’s more, *legal fees and stamp duty will be paid and – as an added bonus – a comprehensive furniture pack will be included.

‘This is an unbeatable offer,’ commented Emma Freeman, Sales and Marketing Director of George Wimpey City. ‘New investors can invest in complete confidence. Not only does this eliminate the worry of not finding a tenant and facing potential void periods, it also means that, with the additional benefit of the furniture pack, the apartment will be equipped to the highest standard, making it even more attractive to future tenants once the guaranteed yearly income comes to an end.’

VizioN7 is an exciting five-acre scheme centred on **award-winning landscaped gardens with lawns, water features and trees. It incorporates three separate buildings in an innovative stepped formation and also includes the conversion of a Victorian building, formerly the Mount Carmel School. Offering a wealth of choice for potential investors and owner occupiers, completions at the scheme started in September 2005 and will continue through until spring 2007 when the scheme is set to complete.

The new residential scheme - which features 467 apartments, many of which have balconies or roof terraces - is also the first residential phase of The Highbury Regeneration Project. The total redevelopment area encompasses 60 acres, which spans four residential projects in London N7 and N5 over a five year period and includes the building of the new Emirates Stadium for Arsenal Football Club.
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VizioN7 benefits from a gym for residents’ use and a selection of commercial units, which will become cafés, shops, restaurants, studios or offices. A 24 hour concierge service, CCTV and gated underground parking complete the picture of a highly desirable scheme.

And the offer is even better news for ardent Gunners fans – once contracts are exchanged on a 10% deposit, an Arsenal season ticket (2006-2007) will be granted. There are now just 37 apartments remaining, so please call the on-site sales and marketing suite on 020 7700 7555, or visit www.vizion7.co.uk. Apartments offering this promotion start at £385,000.

August’s Mortgage Boom Means Autumn Moving Madness.
 
August’s all time high of mortgage lending means Britons will be scrambling to relocate this autumn.
 
Neil Paul, removals expert and director at Cadogan Tate, comments on the boom and a new breed of difficulties affecting the removals craft: “A mortgage spike, like the £32.7bn borrowed in August means that, after contracts are exchanged and sales completed, we’ll see an explosion in the number of moves this Autumn. Relocation is changing as a craft and people planning to move need to know about special considerations that weren’t there two years ago – during the last mortgage boom.”
 
Paul continues: “People now have more fragile and specialist items that need careful attention. More people now want to completely personalise their homes. This means we need to organise the removal of custom fixtures. Hi-tech equipment such as home theatres and sound systems are also increasingly popular. We’ve made a point of developing partnerships with experts in handling these 21st century moves.”
 
Besides specialist items, there are important logistical factors that many people fail to consider. Paul shares some tips on how to plan for a less-stressful move:
 
1.      A stress-free move begins with meticulous planning - the moment you decide to relocate. You must decide what you’re taking and what you need to dispose of. Don’t forget about the contents of the attic and the guesthouse.  
2.      If you decide to use a removals firm, do thorough research to check out who you’re trusting with your worldly goods. Check out the British Association of Removers’ website at www.removers.org.uk, and pay attention to firms’ professionalism during the appraisal and their references. Never choose a firm based on price alone.
3.      Don’t try to avoid an at-home visit from an estimator as they will instantly detect areas and items that will require special attention, saving you any surprises.
4.      Leave rugs, pictures and mirrors in place. Trained removals men have the experience to best pack and wrap these.
5.      Make sure removal men are trained to handle your specific needs or work with outside experts. Whether it’s IT or musical instruments, a book collection, plants or anything that requires discretion – your most prized objects deserve to be handled by qualified and vetted craftsmen. Remember that removals firms range from being three heavies in a van to ones that employ experts, use specially-designed vehicles and bespoke equipment. A full-service firm is prepared to handle the entire move once you toss them your keys. Ask as many questions as you need to ensure you understand their approach.
6.      Make sure that you’re really getting quotes from different companies. There are many removals firms who operate under various names at the same time.
7.      There are also simple issues like making arrangements with the council to park the removals van; otherwise you may not be allowed to park it in front of the property.
8.      If your things need to be stored for any period of time while in transit, don’t forget to check out the security precautions the removals firm is taking. Better ones will have secured depots while others may simply leave the van parked outside.
9.      Don’t forget to notify the post office of your new address and the date of your move well ahead of time. But remember, you will still need to contact people and organisations directly to notify them of your new address. This will avoid any costly and stressful confusion.
10.  If a removals firm offers insurance, make sure that they comply with the Financial Services Authority, as required by law. Don’t forget to find out about any limitations on the policy before making a decision. Not reading the fine print can mean being in for a big shock should something go wrong.
 
Moving – whether it’s simple household items or priceless antiques – will go much smoother if extra time and attention are given to fragile, large and heavy items. Considering these in advance, rather than when the van is already out front, will spare unnecessary relocation anguish and strife. Neil has an additional tip to keep you sane when relocating, “Pack the kettle and tea last and label the box clearly. You’ll be glad you did when you’re settling into your new home!”

Impressive August leads to slower September

The property market slowed in September following a phenomenally strong August, according to the National Association of Estate Agents (NAEA). The number of buyers and sellers on estate agents’ books were down from levels reported the previous month, and was marginally less than the same period last year; despite this sales were encouragingly up from September 2005.
The widely reported plan to increase interest rates further in the coming months could be deterring people from attempting to move up the property ladder. The market seems to have absorbed the August quarter-per cent rise, but a further rise could have a negative impact on the market as buyers and sellers are demonstrating caution.
Sales were down in September by 6.6 per cent from the previous month, with NAEA members reporting an average of 14 sales per agent, down by one on the previous month. The market has recovered from the downturn seen in 2005, the report says, with sales up by 7.7 per cent from the same period last year when agents reported an average of just 13 sales.

Interest rates stay put

The monetary policy committee (MPC) of the Bank of England has held interest rates at 4.75 per cent last week for the second month in a row, following August’s quarter-point rise. Although many expect a further rise before the end of the year – most likely in November – there were those who thought that inflation, running at well above its two per cent target, might force the MPC’s hand this month.
Tom Vosa, chief economist at Clydesdale Bank, said, ‘This may be a relief to home owners but it is likely to prove short-lived. The markets expected there to be no change this month but have already priced-in a rise in November.
‘The MPC will have been helped in its decision to keep things on hold this month by falls in petrol prices throughout September, which should have helped reduce inflationary pressures. It was probably still a close decision, though. A continuing rise in property prices and strong high street sales even after August's surprise increase in rates is an indication that the economy could cope with higher rates.’
Meanwhile, Assetz urges the MPC to refrain from raising interest rates again this year. ‘House price growth is positive but sustainable,’ says managing director Stuart Law, ‘and a further rise this year would instil fear into home buyers, with investors and first-time buyers in particular already feeling the pinch.’

House prices continue to rise

Property prices rose for the third month in a row in September, demonstrating that demand is so far oblivious to August's interest rate rise. A report by Halifax said prices rose one per cent last month, with the cost of an average home at £181,186.
Last week Nationwide reported a similar picture in the housing market. Pundits are now awaiting November’s interest rate decision to see whether the expected increase will have a dampening effect on demand and house prices.

Rental market ignores the season

Letting agents are reporting that the lessening of demand that usually happens towards the end of the year is not being seen this year.
Richard Davies, lettings director at Chesterton Global, says, ‘The incredibly buoyant sales market has had a positive impact on demand from applicants who have capitalised on the sale of their property and decided to rent rather than compromise on their next purchase.
‘Stock levels have been unable to sustain this increased requirement, which has led to a boost in rents. Rental levels across London have increased by 4.7 per cent in the last quarter. Central London has seen the biggest jump in rental increases at six per cent, compared with an increase of 1.9 per cent in west & south-west London.’
The number of agreed tenancies has also risen, he says – by 15 per cent over the past quarter compared with the same period last year. ‘Motivated applicants are viewing fewer properties before committing,’ says Davies.
In light of this, Davies recommends that owners who are considering letting their properties to act quickly. ‘In a market where stock levels are tight and demand is strong a premium rental is guaranteed.’

First-time buyer income multiples reached their highest level ever in July at 3.24 times the average income, according to new data from the Council of Mortgage Lenders (CML). This was up from 3.21 times the average income in June, and 3.06 times in the same month last year.
Today's data also reveals that first-time buyers mortgage interest payments as a percentage of their income have increased for the fourth consecutive month to 16.7 per cent. This is up from 16.5 per cent in June, and just below the 16.8 per cent achieved in the same month last year, but is in line with levels experienced in 2004 and 2005.

Income multiples and the proportion of income used to service mortgage interest payments may continue to rise in the coming months, reflecting the Bank of England's decision in August to raise interest rates. In July the average first-time buyer mortgage was £110,500 and the quarter percent increase in interest rates would have added an extra £17.40 a month to mortgage payments.

Today's data also shows a fall in the number of people taking out fixed-rate loans in July, and this is caused by higher pricing. In July, fixed-rate deals accounted for 65 per cent of all loans (127,300) - down from 68 per cent in June (140,600). The average interest on a fixed-rate loan stood at 5.11 per cent in July, up from 5.06 per cent in June. This was the sixth consecutive pricing increase.

Tracker loans however saw an increase of 15 per cent in July, and accounted for 23 per cent of all new loans (44,600).

Commenting on today's new data, CML Director General Michael Coogan said:
‘First-time buyers are continuing to find ways of getting a toehold on the property ladder, showing just how popular home-ownership is to many young people. But higher income multiples, coupled with higher interest payments as a proportion of income, suggests that they are continuing to stretch themselves to do so.’  
‘It is essential first-time buyers, and all borrowers, look at their finances ensure they are taking sensible steps to ensure their debts are manageable, especially as the markets are expecting a further interest rate rise later this year.’

Andrew Frankish of Mortgage Talk addresses some common buy-to-let questions.

What size deposit is required?

Generally, most buy-to-let lenders require a 15 per cent deposit, although some lenders will now accept 13 per cent (for instance Northern Rock) or 11 per cent (GMAC RFC). The trade-off is generally that they charge a higher interest rate or larger arrangement fee to offset the lower deposit requirement. The size of the rental income from the property will also affect the size of deposit you need. If only a low rental income is achievable, a bigger deposit may be required, although this will vary from lender to lender.

Do I have to have a mortgage already?

Most buy-to-let lenders will not accept a first-time buyer - in other words someone who does not already own a property, either with or without a mortgage. However, one of the biggest buy-to-let lenders - Mortgage Express - is happy to do so.

Do I have to prove my income - and is there a minimum level of income required?
BM Solutions, GMAC RFC and Mortgage Express do not generally need any proof of income, as the rental income stated on the application is more important to them. However, other lenders like Northern Rock do require proof of income above a loan-to-valuation ratio of 75 per cent. Some lenders have a minimum income requirement of £10,000, although GMAC RFC has no such criterion, as long as the clients are already home owners, or at the very least named on a residential mortgage.

What does the rental income have to be?

This very much depends on the lender and the scheme that you choose. For example, GMAC RFC works on the mortgage amount times bank base rate plus one per cent divided by 12 times either 100, 110 or 125 per cent, depending on the deal taken. As a rule, the arrangement fee is higher for the more lenient rental assessments. As ever, I would strongly suggest that you speak with a mortgage adviser who can help you to calculate this.

What are some of the best current best deals?

The best two-year fixed rate buy-to-let is from Northern Rock, at 5.19 per cent until 1 November 2008. There is an arrangement fee of £637.50 which is added to the mortgage, plus an up-front valuation fee of £425. The borrower would need to earn and prove income at £25,000 or more, and the rental income would need to be £407 per month, based on a property valued at £100,000 and borrowing of £85,000.
The best two-year buy-to-let tracker is from BM Solutions, at Bank of England base rate plus 0.49 per cent, currently 5.24 per cent. There is an arrangement fee of £699 which is added to the loan, plus an up-front valuation fee of £315, which is refunded after completion. The borrower would need to earn £10,000 without any proof of income, while the rental income would need to be £487 per month, based on a property valued at £100,000 and borrowing of £85,000.

Andrew Frankish is managing director of Mortgage Talk. Visit mortgagetalk.co.uk for further buy-to-let information.

First-time buyers still priced out

First-time buyer income multiples reached their highest level ever in July at 3.24 times the average income, according to new data from the Council of Mortgage Lenders (CML). This was up from 3.21 times the average income in June, and 3.06 times in the same month last year. The data also reveals that first-time buyers mortgage interest payments as a percentage of their income have increased for the fourth consecutive month to 16.7 per cent. This is up from 16.5 per cent in June, and just below the 16.8 per cent achieved in the same month last year, but is in line with levels experienced in 2004 and 2005. Income multiples and the proportion of income used to service mortgage interest payments may continue to rise in the coming months, reflecting the Bank of England's decision in August to raise interest rates. In July the average first-time buyer mortgage was £3110,500 and the quarter percent increase in interest rates would have added an extra £317.40 a month to mortgage payments. Today's data also shows a fall in the number of people taking out fixed-rate loans in July, and this is caused by higher pricing. In July, fixed-rate deals accounted for 65 per cent of all loans (127,300) - down from 68 per cent in June (140,600). The average interest on a fixed-rate loan stood at 5.11 per cent in July, up from 5.06 per cent in June. This was the sixth consecutive pricing increase. Tracker loans however saw an increase of 15 per cent in July, and accounted for 23 per cent of all new loans (44,600). Commenting on these findings, CML director general Michael Coogan said: 'First-time buyers are continuing to find ways of getting a toehold on the property ladder, showing just how popular home ownership is to many young people. But higher income multiples, coupled with higher interest payments as a proportion of income, suggests that they are continuing to stretch themselves to do so. 'It is essential first-time buyers, and all borrowers, look at their finances ensure they are taking sensible steps to ensure their debts are manageable, especially as the markets are expecting a further interest rate rise later this year.'

Lack of supply sustains prices

Average house prices were up in September despite the previous month’s rate rise, according to Hometrack’s latest housing market survey. Average residential values increased by 0.4 per cent over the month, meaning house prices are now 4.3 per cent higher than they were a year ago. This represents the fastest year-on-year rate of growth for two years. ‘Despite the rate increase in August, house prices continue to rise as we start the autumn selling season,’ says Richard Donnell, Hometrack’s director of research. ‘Prices have risen in nine out of ten regions over September, largely on the back of a 0.4 per cent decline in the volume of homes available for sale over the month,’ he adds. High house prices, fully mortgaged home owners and relatively high transaction costs, especially in southern England, are all acting as a disincentive for households to put their homes on the market.  As a result, the volume of property coming to the market over the last six months has been half the level seen over the same period for the last two years, the report says. This lack of supply, set against rising levels of demand, is providing extra impetus for house prices, negating the impact of the recent increase in interest rates. The supply/demand balance is most out of kilter in London and the South East.