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18 posts from November 2007

November 30, 2007

London falling could mean buy-to-let bonus

London falling could mean buy-to-let bonus

4wallsandaceiling.com Newsletter

Source:- Assetz

Nick Says…

Just to compliment my last blog, I’ve found this.

This week has seen slightly mixed signals over the state of the UK property market, with three different sets of house price figures indicating slightly varying signals about the state of the British housing market. What has emerged, however, is that London property has ceased to be the boom which echoes through the national figures.

Two property websites, Hometrack and Rightmove, produced figures this week showing an overall downturn in property prices. Hometrack showed a 0.2 per cent fall in prices across the UK in October, following a 0.1 per cent dip the previous month. Rightmove, whose figures covered England and Wales, said prices were down 0.7 per cent.

Today's Land Registry figures for October would most accurately be compared with those of Rightmove, as these also covered the situation in England and Wales. Unlike the earlier surveys, it did not record a fall, with prices up 0.1 per cent to an average of £184,346. This was, however, still down from the 0.4 per cent rise recorded in September.

Perhaps of greater note, however, was the regional variation. While Hometrack and Rightmove pinpointed the midlands as the places where house prices were falling fastest, the Land Registry said London has recorded a 0.6 per cent fall, the first time in ten months it had not seen its house price inflation outstripping the national average.

However, the contrast is only partial. Hometrack, while stating that the east Midlands had the biggest fall at 0.3 per cent, recorded that parts of London had seen greater falls, principally central London at 0.5 per cent. This, of course, has been an area where property inflation in prime property has been particularly high, driven by city bonuses.

The reverse may now be happening, as lower bonuses following the credit crunch reduce investment. David Bexon of property website SmartNewHomes.com, while giving an upbeat prediction of house price inflation in 2008 being as high as four per cent, said London may see a fall due to cautious city buyers keeping their money in their pockets.

As further trend data emerges it may become clearer whether any price decline in the capital is principally the result of lower prime central London property investment or a broader fall across different districts and types of property.

The implications of this for the buy-to-let market, however, may be encouraging. Just as recent data has shown that rents are rising as more would-be first-time buyers either avoid the market in a time of uncertainty or feel priced out, the impact of such a trend in London would be an even greater boost.

Figures from the Association of Residential Letting Agents (Arla) suggest just that. Its survey of the buy-to-let sector for the fourth quarter stated that nationally the demand for rented property was at its highest in five years. Futhermore, Arla noted, two out of three letting agents in central London had more demand than there were properties for, while in the south east as a whole 57 per cent report such a shortfall of supply.

Arla described the situation in central London as a "dramatic turnaround", with the supply shortage growing "thirteenfold" over five years. This indicates that the trend is not a completely new one, but the current situation "should come as no surprise", according to Arla's head of operations Ian Potter.

He added: "These latest figures confirm that the private rented sector will once again be the safety valve for a housing market worried by the current financial uncertainties and the softening of house prices."

Thus if the situation in London, far from being one of housing boom driven by high buyer demand, becomes one of uncertainty and even decline, the buy-to-let industry could be in an ideal position to make good capital gains as properties are filled and rents rise.

November 29, 2007

Tenant demand at 'five year high'

Tenant demand at 'five year high'

4wallsandaceiling.com Newsletter

Source:- BBC

Nick Says…

I’ve got personal experience of this.

I’ve just re-let my little 1 bed flat in Highbury (London). I’ve had 19 viewings and the rent has gone from £215 per week to £245! That equates to £130 per month extra.

I can live with that.

Analysts are trying to predict the direction of the housing market
The level of tenants seeking to rent property privately has hit a five year high in the UK, the Association of Residential Letting Agents (Arla) says.

A number of factors have combined to push up demand including an increase in immigration, more people living alone, and a weakening of the housing market.

The South East has seen an acute shortage of rental properties, while central London has seen demand surge.

Letting agents were warning of shortages across the UK, Arla said.

"This peak demand should come as no surprise" said Ian Potter, head of operations at Arla.

"Softening in the sales market is always a driver of further demand in the rental market," he added.

In the South East of England, 57% of the letting agents said that they were seeing demand outstrip supply, according to Arla's quarterly report.

Elsewhere in the UK, 37% of them have reported rental property shortages.

Central London has seen a 13-fold increase in demand for rental property over the past five years, Arla said.

At the same time, tenants are choosing to rent for "well over a year", Arla said in its survey, which is which is based on responses drawn from 517 letting offices.

Property is remaining empty for "well under a month", down from an earlier average of nearly five weeks.

November 28, 2007

Northern Cyprus - Is Your Investment Protected?

Northern Cyprus - Is Your Investment Protected?

4wallsandaceiling.com Newsletter

Nick Says…

Ok so I’m reading lots about investing in North Cyprus, let’s see it how it is:

With a run of reconciliation between the two communities afoot, many brave (principally British), souls have chanced their arm with an investment in the Northern Cyprus property market. (How you can call it an investment buying in what you already know to be occupied land?)

There are unquestionably property bargains to be had in the beautiful and largely unspoilt northward part of the island and the overpowering desire to purchase what seems to be a bargain is attractive. However, remember this part of the island does not belong to the Turkish!

The Turkish Republic of Northern Cyprus is legally recognised by few countries except Turkey, & therefore the legal position of title deeds issued in the TRNC (Turkish Republic of Northern Cyprus) is precarious to say the least.

Turkey’s entry into the European Union, whenever it happens, dictates this precarious nature with the threat of damages, compensation and land “re-grabs”. Now based on that question, ask yourself:- Is it safe to buy?  If the answer is “no”, and/or there is any element of doubt, then you have to question the sense in moving forward with the purchase.

The irony is investing in Cyprus is very much “chalk and cheese”: Southern Cyprus being a “no brainer”, whereas, the North (occupied land) being extremely high risk.

You have to see it for what it is. It makes perfect sense to invest in southern Cyprus and for all the right reasons.

If you want to know any more about investing in Cyprus please drop me a line at nick.tadd@4wallsandaceiling.com

November 27, 2007

Cyprus will reward investors, minister promises

4wallsandaceiling.com Newsletter

Source:- un-known

Nick Says…

Get involved.

As much as the UK may seem to be a struggle at the moment, the measure of a “serious” investor is to seek out new opportunities when they arise, Cyprus is such a place and has such opportunities, but to take the best gains you must pay attention to the finer details.

If you want any more information on investing in Cyprus please drop me a line at nick.tadd@4wallsandaceiling.com

Cyprus is an area which has seen a lot of change in the past few years, with much of it succeeding to make it an even more attractive destination for property investors and holidaymakers alike. After becoming a member of the European Union in 2004, the economy expanded and business opportunities have thrived, an aspect which the government is keen to promote.

Antonis Michaelides, minister of commerce, industry and tourism for the island state, recently spoke at an event entitled "Cyprus as an international business investment centre", during which he outlined his homeland's many charms.

Mr Michaelides told the audience that Cyprus would provide ideal opportunities for foreign investors, explaining that many of the island's advantages stem from its position as an economic hub between Europe, Asia and Africa.

"My country has seriously taken up the challenge of intensified competition emanating from its accession to the European Union and the worldwide trend toward globalisation," Mr Michaelides remarked. He also suggested that Cyprus had earned more and more credibility among international investors in the past few years.

Another positive feature of the island's economy is its favourable tax system, which offers a ten per cent corporate rate - the lowest of any European Union member state. According to Mr Michaelides, "other advantages [of Cyprus] include a stable socio-economic environment, state-of-the-art infrastructure, a highly qualified labour force and a business environment".

At the same time as government officials tout the state's lucrative appeal for investors, figures reveal that tourists are continuing to be drawn to sunny beaches of Cyprus, which may help assure its role as a popular destination for holiday lettings. Gulf Weekly newspaper has praised the island as a "prime holiday destination" and reported that an increasing number of people are also considering retiring there permanently.

Anyone who doubts the continued appeal of Cyprus to visitors need only refer to recent figures from Hermes Airports, which stated that almost 776,000 passengers passed through Pahos and Larnaca in October. Additionally, traffic at Larnaca - the major international airport in the country - was revealed to have grown by 5.27 per cent during the year, while Pahos saw a rise of 0.54 per cent.

Regardless of whether one's aim is to make money or enjoy a beach-filled holiday break, Cyprus has a magnetism which is difficult to deny.

November 26, 2007

A pre Christmas gift to you ... !

A pre Christmas gift to you ... !

Dear Readers,

To thank you for your loyalty over the last year, and for supporting and reading my ramblings on property, I would like to share with you some valuable information of how to save some serious cash at a time of year when it would, no doubt,  be helpful.

If you are the holder of any credit cards, then you can find that a 5 minute phone call makes a serious difference to your financial situation.

It goes like this :

1.    Phone your credit card supplier and ask to speak to the Customer Loyalty Team.
2.    When you are put through to them, explain that you have been offered 0% interest on balance  transfers and purchases for 10 months by BarclayCard Flexi-card.
3.    Ask them if, in order to keep your business, they can give you a better interest on your current outstanding balance with them, and if they can offer you 0% on balance transfers.
4.    My experience is that they will always give you a better interest rate than you already have and may give you a 0% balance transfer offer.
5.    Start paying less interest straight away, and therefore pay off your balances more quickly!

I cannot stress how valuable it is to make these calls, as it is quick to do, and will significantly help your financial situation.

Make time to do it, and start saving money today!

My wife and I do this exercise two or three times a year and it is really worth it.  It is also good discipline for you, as someone interested in property investing, to take control of your financial situation and save money wherever you can.  Be aware of what interest rates you are paying at all times and understand your debts and control them.  Remember: the difference between 5% and 10% is not 5%, it is 100%!

I would be interested to hear back from as many readers as possible as to how much they got their interest rate reduced.  My wife had one interest rate reduced from 14.9% to 7.9% which is a reduction by a half.  Well worth having!

Cheers

November 24, 2007

New flights opening to Cyprus

New flights opening to Cyprus

4wallaandaceiling.com Newsletter

Source:- un-known

Now easyjet are out there! More importantly most of their flights will arrive in Larnaca.

Remember, if you can get something with-in 20mins of an International airport you increase your chance of occupancy by 39%.

All of the investments we recommend are with-in the 20min radius.

For more information please e-mail me at nick.tadd@4wallsandaceiling.com

New flights opening to CyprusBudget airline easyJet will soon fly to Cyprus from the UK, it has emerged.

EasyJet's acquisition of British Airways franchise airline GB Airways earlier this year means the provider has been able to expand its operations, with plans to take over routes to Cyprus as soon as April next year.

The flights were earmarked by easyJet owing to the country's popularity with British holidaymakers.

Indeed, the Gulf Weekly recently described the island as a "prime holiday destination", pointing out that its allure means many people consider buying property in the country or retiring there.

The newspaper went on to highlight the rich history of the islands, supposedly the birthplace of the Greek goddess of love, Aphrodite.

It listed, among other things, superb beaches and year-round sunshine, factors making it perfect for travellers looking for a relaxing winter break.

Marketing manager at BuySell Real Estate, Litsa Chrysostomou, commented: "The prospect of easyJet flights into Cyprus is very exciting for current homeowners as this makes the island even more accessible for them and for the holiday rental market."

November 23, 2007

House price index November 2007

Click Here for House price index November 2007

Nick Says...

Click on the above for the latest House Price Index, courtesy of Rightmove.

Rmlogo_02

Buy-to-let landlords urged to sell now.

Buy-to-let landlords urged to sell now.

4wallsandaceiling.com Newsletter

Source: - homemove.co.uk

Nick Says…

OK soapbox time!

I’ve brought to your attention this article that I found on the net the other day written for a site called homemove.co.uk… and I’m going to use it to explain the danger of reading/listening to un-educated misleading tripe.

It starts with…” Experts are warning that small-time property investors with around 20 – 30 investment properties face ruin unless they sell up immediately.”… what an absolutely ridiculous, dangerous and quite frankly irresponsible statement to make!

“Experts are warning”…what experts and more importantly why are investors with 20 – 30 properties at risk? What I want is the so-called “experts” to quantify their statement, which they cannot otherwise they would have done this already.

It then goes on-to say that capital gains tax is to dropped from 40% - 18% and, therefore, landlords will be expected to sell their assets.

Firstly, as they have stated this takes place next april, that’s 5 months away and if what they say is true, with reference to the property market, it would be too late.

Secondly and more importantly is that any landlord with over 20 – 30 properties will be aware of how to take care of their tax liability by going off-shore thus mitigating CGT and IHT. Waiting for 3 years is for un-educated people. (They would have known this as owning and running that many properties becomes and should become a full time occupation, therefore, it will be at the forefront of their minds as they, inevitably, would have mixed with like-minded landlords who also don't listen to tripe.)

But then the writer of this article would have known this if they were a landlord, which clearly they are not.

Notice how this article goes on-to explain that capital up-lift will take a hit… and your point being?

What the writer fails to understand (again showing their lack of experience as a landlord) is that any landlord with common sense invests for positive cash-flow not capital growth (there are other ways of making positive cash-flow other than single occupancy). Yes it’s true that there might be a drop in prices, but I think it’s fair to say that at some point in the future the prices will go back up again. However, if you have positive cash-flow it will take you through the down times and then when the prices go back up again you have the perfect vehicle to access the equity.

Lastly this article refers to “a flood of properties coming on-to the market”...doesn't that create a buyer’s market? Now I operate with science and mathematics and my intuition tells me that, if it is a buyers market, then that would be the best time to buy!

My point is this, clearly I have exposed this article to be a one sided, un-educated, misleading bunch of tripe and the sad thing is the general public will read it and believe it!

Doing you own homework is the only answer and not listening to un-educated scare mongering tactics like this.

Ok off the soapbox now, but before I go… just be careful who you get your information from.

Experts are warning that small-time property investors with around 20 – 30 investment properties face ruin unless they sell up immediately.

It is anticipated that the UK property market will crash by at least 25% meaning that buy-to-let landlords will risk losing a minimum of 30-40% off the price of their investments over the next 18 months.

The turmoil in the credit markets is a huge problem for the UK with the problem worsening for buy-to-let investors as recent changes in capital gains tax laws could tip the balance of a stream of properties onto the already waning UK housing market.

The rate of capital gains has been cut from 40% to 18% and the new rule, which comes into effect in April 2008, means that in a thriving market, the lower 18% payment would encourage landlords to sell more freely instead of waiting for 3 years as is the case now, in order to avoid paying the tax.

However in a falling market, hundreds of buy-to-let properties will flood the market as landlords bail out. Experts are so certain that the UK property market is headed for a crash that they are anticipating a 40% correction in the market over the next 18 months.

Howard Pinto, property specialist at City Homes London, said the sub-prime mortgage problems in the US are a scary situation for global economy. He added The fact that the US is facing losses of over 55% and falling is a sign of what is about to occur here.

During October, property prices fell at their fastest pace for over 2 years as prospective buyers are in ‘wait and see’ mode. The cost of property in the UK fell for the third consecutive month in October, the fastest rate since July 2005, according to The Royal Institution of Chartered Surveyors.

Furthermore, the percentage of people looking to purchase a property fell for the 11th month in a row as a mixture of the tightening of lending criteria from mortgage lenders and higher interest rates hit demand.

November 22, 2007

UK rental yields hold steady in Q3

UK rental yields hold steady in Q3

4wallsandaceiling.com Newsletter

Source:- moneyextra.com

Nick Says…

Time to change the strategy, if you have not already, and get some positive cash-flow and if you don't know how... learn!

__________________________________________________________________________________________

Data from Landlord Mortgages suggests that rental yields are showing signs of recovering from their long-term downward spiral. Rental yields in Scotland have increased by 0.18% over the last quarter (from 5.85% in Q2 to 6.03% in Q3), increasing the gap between yields north of the border and the rest of the UK to 0.61%. Yields in England stabilised over the last quarter, remaining at 5.42%. Meanwhile, London was the only region to see a continued downward spiral in yields, falling to 5.25% (5.38% in Q2).

The fall in rental yields, evident since the end of 2006, may now be coming to an end. The house price boom experienced in the UK over the past decade, coupled with rents remaining static, has resulted in fairly low rental yields over the last year.

Buy-to-let investors have relied on capital appreciation to make a profit but with house price rises levelling off; this may no longer be an option. Any indication that rental returns are no longer falling will be welcome news to landlords.

The increase in rental yields in Scotland shows that capital appreciation in the region is stabilising and returns on the rental property are becoming more profitable.

Lee Grandin of Landlord Mortgages comments, "We expect rental yields to increase further next quarter. In addition, the turmoil experienced in the sub prime market may lead to an increased demand for buy-to-let property.

"With many people having their finances stretched to the max with higher debt repayments and mortgage offers growing increasingly uncompetitive and thus unattractive, many will be turning to rental accommodation until the market settles."

November 21, 2007

Barratt sees sharp fall in sales of private homes

Barratt sees sharp fall in sales of private homes

4wallsandaceiling.com Newsletter

Source:- The Times

Nick Says…

Telling times (pardon the pun).

Without wishing to appear as a cold hearted business man, however, based on the piece below I think it’s safe to say that you could pick up a few deals at the moment.

Or can you?

Remember getting the deal is one thing financing it is another. The problem we are finding at the moment is getting the financial product to fit.

But I believe there is light at the end of the tunnel. Remember if a lender does not lend then he has no business, so inevitably this will change… how and to what is any-ones guess, but I think due to the sub-prime mess lenders will, and should, make it harder to get their product not in cost but in accountability.

_________________________________________________________________________________________

The homebuilder says that the tough conditions show no signs of easing after rate rises and the Northern Rock crisis

Barratt Developments, the third-largest British homebuilder, gave warning today that tightness in the housing market showed no signs of easing.

The builder, which sold one house in ten in the UK last year, said that in the 19 weeks to November 5, private buyers per site were down by 14 per cent.

The drop is even steeper once buy-to-let investors are taken into account.

The company said that the sharp drop in private sales "reflects the more challenging market conditions but also our decision not to pursue the lower margin segments of the buy-to-let market".
Related Links

Barratt said that the credit crunch, and five interest rate rises in the past 18 months, have led to the tightness in the private market.

Shares in the homebuilder were savaged last month after earnings downgrades following the fallout from the Northern Rock bank run.

The company said this morning that it had a secured forward order book of £1.8 billion, which represents 61 per cent of its full-year target.

The homebuilder said that cancellation rates were above those of last year but were in line with "historic norms", according to the company.

Last week Harry Hill, the chairman of Countrywide, the estate agency, said that cancellations were at their worst level since the early 1990s.

The update today was not as bad as investors feared, and shares in Barratt rose 11.50p, or 2.23 per cent, in early trading.

Other homebuilders were also on the rise this morning as investors came to the opinion that risks of a downturn have been priced in excessively.

But today a survey by Rightmove, the property website, found that asking prices had fallen by 0.7 per cent, month-on-month, between October 10 and November 10.

It also found a slowing in housing market activity generally, as buyers become increasingly nervous.

The average time needed to sell a house rose from 85 days to 92 days in the month to mid-November.

Rightove said: "Even allowing for a normal seasonal slowdown in activity, this was still the highest November figure since Rightmove started keeping records five years ago."