nick says...

AT LAST - THE TRUTH ABOUT "NO MONEY DOWN" PROPERTY DEALS REVEALED ....

AT LAST - THE TRUTH ABOUT "NO MONEY DOWN" PROPERTY DEALS REVEALED ....

Dear fellow Investor,

Today's broadcast is about a subject very close to our hearts, and our wallets! 

In the past, we have been big advocates of doing deals in a "no money down" format.  However, those days are now long gone (courtesy of the global credit squeeze), and a wave of change has swept through the U.K. mortgage market with over 600 BTL products being withdrawn in the past two weeks.

Every day, we are bombarded with emails from companies, property clubs, and mortgage brokers telling us that they have found a new way to do so-called "no money down" deals.   And every day, we investigate these deal structures and find them to be fatally flawed on a number of levels.

We are also bombarded everyday with emails from our clients asking us if certain deals structures presented to them by third parties are legitimate. And every day, after we have researched their enquiry, we have to go back to them and tell them that the deal structure is not legitimate.

For novice investors in particular, it is very confusing as one person is saying they can do "no money down", and we are telling them otherwise. At the end of the day, you must decide who's advice you trust.

Since April 2008, it is our opinion that there are now no legitimate ways to do "no money down" deals here in the U.K. with the current mortgage products, and taking into account Council of Mortgage Lenders and Law Society regulations.

(Indeed, our last networking event had a presentation to this effect by mortgage broker, Dan Peacock).

To this end, we have joined forces with our colleagues at Property Traders to bring you the truth about "no money down" deals and to bring into sharp focus the dangers of doing them: not only from a legal standpoint, but also from a tax perspective; something that is never considered by most investors.

This is an unbiased, independent report exposing the serious tax and legal implications of doing deals in this format and it will answer all your questions about whether you should be entertaining these deal structures.  There are issues here which no one else will tell you and YOU NEED TO KNOW THEM.  There is no need to be confused any longer.

The report was co-authored by former Accountant and full time investor, Mark Tolley, and Mortgage Broker and serial investor, Chris Wright, along with support and insights from the Directors of 4 Walls and A Ceiling.

For further information, or to purchase your report for £29.99, please click here

We at 4 Walls and A Ceiling have a deserved reputation for always giving you the best possible advice.  Unlike most other companies with hidden agendas, we have been warning our clients of the dangers and pitfalls of doing "no money down" deals for several months now.  Our very own Nick Tadd (Director) was recently seen on BBC2 on "The Truth About Property", calling for regulation of the BTL industry.  Yet people still want to believe it when someone tells them that they have found a way to fudge the system.   No doubt, you will be asked to use their solicitor and broker.  Ask yourself "why?".  If the deal is legitimate, you should be able to use any broker and solicitor you choose, as transparency is a pre-requisite of any legitimate property transaction.

The bottom line is ... if you are not disclosing the incentive and/or discount to the lender, it is tantamount to mortgage fraud.

Our report dissects all these latest "no money down" systems and exposes their flaws and also flags up the legal and tax implications.  If you are found to have done one of these fraudulent transactions, you can end up with a prison sentence and owing the Taxman thousands of ££££££'s.

Before entertaining doing one of these deals, you need to read our report.

For further information, or to purchase your report for £29.99, please click here

Remember that most of these deal structures require you to get the property valued at the gross price.  That means deceiving the valuer/surveryor in some fashion so that he is not aware of the net price or the discount/incentives involved.  We have one client who was advised by another company to pay for four valuations at £450.00 a shot, and was still unable to get a gross valuation through.  That's a lot of money to waste on a deal that fell at the first hurdle!.  On top of that, there are often significant costs such as bridging finance for the deposit, two lots of solicitors etc.  Hardly "no money down" when you take these costs into account!.  (And please do not even THINK about putting such costs on a credit card ... as recommended by unscrupulous clubs and companies of late ... ).

As much as we love the concept of buying property without putting our hand in our pocket, the time has come for us to take a stand against the "no money down" concept.  Too many unsuspecting people are being seduced into these kind of deals with false promises and a complete lack of understanding as to what they are letting themselves in for.

If you read our report, you will be convinced that it is now not possible to do it here in the U.K. legitimately  - NO MATTER WHAT ANYONE ELSE MAY TELL YOU. 

For further information, or to purchase your report for £29.99, please click here

Please do not waste your money on reservation fees, valuations, solicitors fees etc. This report will explain why and tell you the legal and tax implications of what you are contemplating doing.  The entity trying to sell you a "no money down" deal will never tell you these facts or be able to answer your questions about them.  Indeed, we ourselves have posed as "mystery shoppers" on many occasions and found fatal flaws in these deal structures that the person trying to convince us to use them was unable to explain or overcome!

However, rest assured, the second a LEGITIMATE mortgage product or deal structure becomes available in the U.K. to do "no money down", we will be the first to tell you about it, because we will be using it ourselves!  Until then, extreme caution and a healthy dose of skepticism is advised.

For further information, or to purchase your report for £29.99, please click here

Finally, its worth noting that one in six property investors is going to be audited by the Inland Revenue.  Therefore, you need to be whiter than white, and your deals and accounts need to stand up to scrutiny.  Many of these "no money down"/cash-back formats have yet to be tested through doing a tax return, and when that happens, these deals will start to be exposed for what they are and a lot of people who got involved with them will start to find it hard to sleep at night.  Don't be one of them!.

If you are interested in the truth about "no money down" deals, you NEED this report.  It could save you from financial ruin in the future. It's everything you need to be aware of, but didn't know to ask about.

Every investor interested in "no money down" deals should read this report and make up their own mind whether to get involved or not. 

You can only make an informed decision on anything when you have all the facts and fully understand all aspects of what you are attempting to do!

Now, more than ever, education is vital to make sound investment decisions. This report will educate you as to the truth about "no money down" deals. 

We at 4 Walls and A Ceiling promote education and networking as we believe they are vital to your success.   This report is another example of us helping you increase your knowledge base and make informed decisions to secure your financial future.

Property investment is like taking part in a marathon - not the 100m sprint!. In other words, you need to take a mid to long term view and not be seduced by deals that seem too good to be true.  There is no "short cut", or "get rich quick" and be wary of anyone who is telling you there is!

For further information, or to purchase your report for £29.99, please click here

Warning to banks as King hints at April cut

Warning to banks as King hints at April cut

4wallsandaceiling.com Newsletter

Source: - Simon English, Evening Standard

Nick says…

This is good news.

As expected Merv King has “hinted” at a rate drop from 5.25% - 5% (which is expected to go down further before the end of the year).

There is a delicate balancing act that he has to achieve to keep our economy on the straight and narrow, and clearly he has some work to do to keep it as such.

I’m glad I don’t have that job!

However, there are x2 points that I have pulled out of this body of writing that are refreshing.

1.    King said there were 'two quite different policies and two separate sets of circumstances' in Britain and recession-bound America. This, in my opinion, has always been the case… not that we can be arrogant about the situation but as a country, economically we are still in a commanding position.
2.    King said “Closer regulation of financial services is inevitable in the wake of the crunch…the pain that will be suffered by the financial institutions this year will keep minds focused on it for a number of years”. Great, bring it on.

What does this mean to us Landlords?

Financially we are in a “consolidation” period in this country at the moment, but as the year progresses and goes into 2009, in my opinion, it will get better as time goes on.

It’s not going to be as easy as it has been to find the financial products that we have been used to over the last few years, however, that does not mean that it will be impossible either. It’s just that we are going to have to work a bit harder.

Having said that because of this situation it means that “sellers”, who ever they are will be finding it tough to sell their property/ies… which is goo for us.

More importantly the knock-on effect is that, in theses conditions, rents will have a tendency to rise. My own circumstances can confirm this.

A few weeks ago we received a document from Mortgage Express, who did a survey of 2000 landlords, of which the conclusions were quite intriguing: -

1.    For rental statistics over the last 12 months 52% stated it would stay the same, 38% said it would rise and only 2% said it would be lower. (The rest were don’t know or not stated)
2.    For rental statistics over the next 6 months 33% said it would rise, 62% said it would remain the same and only 1% said it would go down (the rest were “don’t knows”)

From what this tells me is that the market place is still buoyant and confidence is still there.

The Bank of England today paved the way for a reduction in interest rates next month but warned it will not follow the aggressive cuts seen in the United States.

Governor Mervyn King said the financial crisis has 'moved to a new and difficult phase' as the deepening credit crunch increases the risks of a sharp slowdown in the economy.

He said 'Yes' when asked by MPs on the Treasury Select Committee if the tighter lending conditions mean interest rate cuts are more likely.

Economists said King's dovish comments suggest he could vote for a rate cut as early as April after resisting such calls this month. The Bank has already reduced rates from 5.75% to 5.25% since December.

Howard Archer, of Global Insight, said: 'We now expect the Bank of England to trim interest rates by a further 25 basis points to 5% in April rather than in May as we had previously forecast. Further out, we expect interest rates to fall to 4.5% by the end of the year and to 4% in the first half of 2009.'

However, King was adamant that the UK will not follow the same path as the US, where the Federal Reserve has slashed rates from 5.25% to just 2.25% in recent months, including a cut of 75 basis points last week.

King said there were 'two quite different policies and two separate sets of circumstances' in Britain and recession-bound America. 'This is not an economy that has ground to a halt,' he said, adding that conditions in the US are 'materially worse' than in the UK.

He added that inflation is still a major concern, having hit 2.5% in February and now heading towards 3% - well above the 2% target.

King said the Bank faced 'a difficult balancing act' between rising inflation and slowing economic growth. 'We are not going to lose control of inflation in this country,' he added.

He also signalled that the era of unfettered liberalism in the banking system is coming to an end, condemning the 'hubris' of bankers whose bad decisions had brought crisis to the City.

'There's a lot of hubris around in thinking expansion of financial services was a good in itself,' he said. 'It's not, it's a means to an end.'

King said closer regulation of financial services is inevitable in the wake of the crunch. Financial institutions 'will have to hold more capital in the longer run', and have their activities 'monitored more carefully' - although he said it was not the time for 'knee-jerk reactions'.

'I think the pain that will be suffered by the financial institutions this year will keep minds focused on it for a number of years,' he said.

At 4wallsandaceiling.com we hold networking/seminar events and frequently discuss such topics as the above. If becoming part of this dynamic group please register here, Click here, to be kept in touch.

Seeing signs of a British Recovery...

Seeing signs of a British Recovery...

4wallsandaceiling.com Newsletter

Nick Says...

Even the Germans and the Yanks see the light!!!... after all it's not rocket science!

After record losses in property investment, some see buying opportunities.

Source:- Los Angeles Times

Calling the bottom of the British property investment market is a high-stakes game no one wants to get wrong.

The risk of "catching a falling knife," experts said, has stopped any widespread return to the market. Most investors are looking to buy into a market on the way back up -- even if they miss the turning point.

But this is causing a Catch-22: Without deals, it is difficult to obtain an accurate understanding of where the market is; yet without that understanding, there are few willing to risk doing the deals.

So far, it has been equity-rich investors, such as German funds, and the brave, such as the opportunity funds, that have been making the early moves in a British market that has been indiscriminately hit by a fall in prices over the last 12 months.

But with these leading the way, there are signs that some mainstream investors are poised to return to the market. Some are even predicting that prices are set to rise again.

It would be a remarkable turnaround if that proves to be the case after record losses in British property, and the view remains contrarian. Total returns -- the combination of rental income and capital growth -- dropped 7.6% last quarter, the biggest fall in the history of the benchmark Investment Property Databank index. Capital values were down 8.7%.

But Robert Houston, chief executive at ING Real Estate Investment Management, said his company was ready to spend money in Britain again as value has now returned.

"We think that there is a buying opportunity," Houston said. He believes the latest average yield of the IPD index of 5.25% represents the British market's basic fair value.

"Anything more than that we think is fair value, and that is pretty much every sector right now. We don't see prices going down any further, and, if anything, they could go up in the next six months."

Houston said that circumstances were very different from the last severe fall in property prices in the early 1990s, when the market was hit by a three-year downturn.

"The fundamentals are sounder this time, as we don't see tenant demand falling off," he said.

Martin Moore, managing director of Prudential Property Investment Managers, said the nation was now past the crisis point.

"Last year was an extraordinary period even for my 35 years in the industry," Moore said. "We had been surprised how long the market had continued up, but it has corrected so hard that the market is fairly priced. Now is an interesting time to put money back in."

The fact that the sell-off in the market was so indiscriminate has meant that there are opportunities in many parts of the market, he said.

"As we look to the future, we cannot see any clear indications of why we should favor one sector over another," Moore said, though he warned that London had further to fall and that there were question marks over the "more average shopping centers and bulky goods parks."

There are still many who are nervous about returning to the market until there is more evidence the correction is over.

Agents said that the equity-rich German funds can justify paying prices at yields of 5.5%, for example, but are unlikely to go any lower, and so are unlikely to drive further compression of yields in Britain.

This leaves the opportunity funds, which have yet to show any real appetite to buy significant amounts, and sovereign wealth funds, which have so far been content to cherry-pick trophy assets.

"We see prices being cheaper at the end of the year than now," said Andy Rofe, managing director for Invesco in Europe.

A lot of money is coming from German and U.S. investors, he said, but it won't be spent until later this year.

"The U.K. has parallels with the U.S., and investors are wary of catching a falling knife," Rofe said.

Given the levels of uncertainty, however, it will be several months before an accurate picture emerges -- and that will depend on the wider economy.

"Overall, our observations are that, as best it can, the commercial property market is adopting a wait-and-see approach," said Jim Tucker, a partner at KPMG. "There are bound to be asset-specific problems for some stakeholders, and there are opportunists already seeking any assets that come up for sale.

"The next quarter, and the one after that," he said, "is likely to give a much better indication of how far and fast the market will fall, and how widespread the problems will be."

Buy-to-Let investors boost the health of the whole market.

Buy-to-Let investors boost the health of the whole market.

4wallsandaceiling.com Newsletter

Nick Says...

No one gives this much credibility, however, it's true we are "propping up" the market.

Take out the "doom mongers" rants and put together the stats, all you have left is fact.... the market place is strong.

Buy to let investors should ignore commentators' suggestions that they received favourable tax treatment, said the Association of Rental Letting Agents (ARLA).

The ARLA Review and Index, published last week, said buy to let investors were vital to the health of the whole housing market, and without them there would be little or no choice in housing.

The latest quarterly results showed that 42 per cent of all investment landlords had one or two properties to let, while one out of ten landlords had more than ten in their portfolio.

Results showed that four out of ten investors in the buy to let market had mortgage borrowings with a loan to value ratio between 51 and 75 per cent. A further quarter had borrowed that account for less than half of the value of their residential property investments.

Six out of ten of these investors expected to acquire further properties over the next twelve months and the average life expectancy of these investments was longer than seven years.

Adrian Turner, chief executive of ARLA, said, "Again, our quarterly figures show that investment landlords are in the business of residential letting for the long term. This is vitally important. Without these investors, who have helped to save the private rented sector by re-financing it, there would be little or no choice in housing.

“If that had happened, the probability is that house prices would have risen further and the social rented sector would have buckled under the pressure. So, we must ensure that investors are neither misled nor panicked as a result of ill-informed criticism of the sector."

"Also, it should be made perfectly clear that these investments are taxed on profit and capital gains in precisely the same way as any other investment or business," he said.

Mortgage Fraud...

Mortgage Fraud...

4wallsandaceiling.com Newsletter

You must read this article I found on the Financial Times web-site, Click here. It illustrates why you should ALWAYS obey the law when it comes to finance... and for that matter anything in my mind.

Ironically enough this is something that we covered, in depth, last weekend (17th Feb 2008) by Andrew Callen our favoured Solicitor at our networking event.

The problem with mortgage fraud is deeper than the initial fraud itself. Not only does it ruin peoples lives (by selling property to people on the grounds that it is a "no money down deal", only to hang these people out to dry because they have no business acumen to cope with the acquisition - thus causing reposession). This is morally wrong. Finally as and when the lenders/FSA clamp down on the situation, which they will do,  it makes our (you and me as professional landlords) lives harder... and that annoys me!

The only person that gets "stitched up" in a fraudulent transaction is the one you see in the mirror!

You can make a good living out of property without "dodgy" transactions.

This is why it is so important to understand what you are stepping into. All these property clubs that sell all those wonderful deals: the first thing you need to understand is how are they doing the finance or writing the contracts... if you don't know how to do this it is tantamount to buying a formula 1 car when you don't have a driving licence!

Ignorance is not an excuse in a court of law. You have to take responsibility for what you are doing, even if you are paying someone else to do it for you.

If you want to know more about the legal aspects of finance then please stay in touch. As I said earlier, last weekend we had a whole section on the Law Society and The Council of Mortgage Lenders Hand Book. By understanding this (and it's not rocket science) you will understand what you can and can't do.

Come along to our networking events, we tend to cover most topics that have relevance to lives as a landlord and usually more besides... you can never learn less!

Click here to attend our next networking event 16-3-08

Lenders call for buy-to-let mortgage regulation

Lenders call for buy-to-let mortgage regulation

4wallsandaceiling.com Newsletter

Source: - Homemove

Nick Says…

This can only be a good thing as this whole market place, in my opinion, needs regulating. However, the regulating should not just be for the mortgage advice it should also cover the advice given by so called “property clubs” and “finders”. The good ones will have no problem but the “sharks” will get a kicking… and that can’t be a bad thing.

According to research by legal firm and repossession specialists, Moore Blatch, almost nine out of ten mortgage lenders want to see regulation introduced specifically for buy-to-let mortgage advice.

The results of a recent survey suggest that some new buy-to-let investors are ill prepared for the financial implications of their investment, prompting lenders to call on the Government to regulate buy-to-let mortgage advice as if it were an investment product.

In its research, Moore Blatch found that 68% of lenders expect buy-to-let repossession to increase, while 50% of respondents thought buy-to-let borrowers were extremely vulnerable to repossession.

Eighty-one per cent of respondents agreed that repossessions will increase overall in 2008, while 31% expect to see shortfalls increase following sales of repossessed properties.

Of the 68% of respondents who agreed that buy-to-let repossessions would increase, 38% expect this to be by up to 10%; a further 31% predicted a rise of between 10% and 15%.

Thirty-five per cent of lenders questioned believe that void periods (periods when a property is unoccupied) will be the most likely reason for repossession; 27% expect the rise to be fuelled by landlords’ inability to subsidise their mortgages.

Finally, the survey found that 54% of lenders expect an increase in litigation against mortgage brokers by landlords claiming they were not given risk-based advice.

The Government, which is responsible for determining the scope of regulation by the Financial Services Authority, has not yet indicated that it will consider regulating buy-to-let mortgage advice.

Property investment news: A look at the interest rate decision

Property investment news: A look at the interest rate decision

4wallsansaceiling.com Newsletter

Source: - Equity

Nick says…

This is exactly as it should be. All it means to me, other than the focus on mortgage products, is that builders will still find it hard to shift stock as the lenders will find it hard to release new products until the bank makes up it’s mind.

As I write this, we already have a whole day’s worth of visits to building sites booked in… note we did not phone the builder they phoned us! This just goes to show the motivation.

News Image On Thursday, the Bank of England's monetary policy committee (MPC) voted to keep the UK's base interest rate at 5.5 per cent. The move went against the demands of the retail industry, which for the most part wanted a cut in order to boost sales after a weak Christmas shopping period. Despite the high street's calls, however, the Bank's decision was in line with most experts predictions. A poll of eight of the country's major financial institutions found only one who was expecting the rate to change.

"Despite some evidence of a sharper-than-expected deterioration in business and financial services, overall data developments during the past month do not seem sufficient to force an earlier policy response," said Ross Walker, spokesman for the Royal Bank of Scotland.

Giving a possible reason for the MPC's decision, he added: "A follow-up rate cut in January would risk signalling that the MPC had abandoned its November Inflation Report central projection and soft-landing narrative." Mr Walker also said that the general feeling is that the cut will come next month, sentiments shared by Global Insight and HSBC.

As property investors may be aware, February will see the release of the UK's quarterly inflation report, which Mr Walker referred to. Inflation is always a major factor in the MPC's decision making process as it can use the interest rate to try and control it. The holding of the base rate at 5.5 per cent would appear to be an anti-inflationary measure amid high oil prices, soaring energy costs and a floundering US economy, but obviously the committee will have a better view of these things when the report comes out next month.

This idea is shared by Trevor Williams, Lloyds TSB's chief economist for the UK, who said before the decision: "My view is that they should leave it until February; because then they will have the new forecast of inflation which [looks ahead] two years, gives them a better feel for how the economy has performed over the last few months - and how it may perform through the next two years - and what implications this has for the inflation target."

People in the property investment market, who may have been monitoring the interest rate decision closely because it can affect their mortgage repayments, should be aware that while many predict a rate cut next month, further cuts are also expected later in the year.

Barclays Capital spokesman Simon Hayes - the one expert in the poll who did move for a 0.25 per cent rate cut this month - said his organisation also expects a reduction next month, followed by another in April. His forecasts would see the base rate set at 4.75 per cent by the start of May.

Property investment news: A look at the interest rate decision

4wallsansaceiling.com Newsletter

Source: - Equity

Nick says…

This is exactly as it should be. All it means to me, other than the focus on mortgage products, is that builders will still find it hard to shift stock as the lenders will find it hard to release new products until the bank makes up it’s mind.

As I write this, we already have a whole day’s worth of visits to building sites booked in… note we did not phone the builder they phoned us! This just goes to show the motivation.

News Image On Thursday, the Bank of England's monetary policy committee (MPC) voted to keep the UK's base interest rate at 5.5 per cent. The move went against the demands of the retail industry, which for the most part wanted a cut in order to boost sales after a weak Christmas shopping period. Despite the high street's calls, however, the Bank's decision was in line with most experts predictions. A poll of eight of the country's major financial institutions found only one who was expecting the rate to change.

"Despite some evidence of a sharper-than-expected deterioration in business and financial services, overall data developments during the past month do not seem sufficient to force an earlier policy response," said Ross Walker, spokesman for the Royal Bank of Scotland.

Giving a possible reason for the MPC's decision, he added: "A follow-up rate cut in January would risk signalling that the MPC had abandoned its November Inflation Report central projection and soft-landing narrative." Mr Walker also said that the general feeling is that the cut will come next month, sentiments shared by Global Insight and HSBC.

As property investors may be aware, February will see the release of the UK's quarterly inflation report, which Mr Walker referred to. Inflation is always a major factor in the MPC's decision making process as it can use the interest rate to try and control it. The holding of the base rate at 5.5 per cent would appear to be an anti-inflationary measure amid high oil prices, soaring energy costs and a floundering US economy, but obviously the committee will have a better view of these things when the report comes out next month.

This idea is shared by Trevor Williams, Lloyds TSB's chief economist for the UK, who said before the decision: "My view is that they should leave it until February; because then they will have the new forecast of inflation which [looks ahead] two years, gives them a better feel for how the economy has performed over the last few months - and how it may perform through the next two years - and what implications this has for the inflation target."

People in the property investment market, who may have been monitoring the interest rate decision closely because it can affect their mortgage repayments, should be aware that while many predict a rate cut next month, further cuts are also expected later in the year.

Barclays Capital spokesman Simon Hayes - the one expert in the poll who did move for a 0.25 per cent rate cut this month - said his organisation also expects a reduction next month, followed by another in April. His forecasts would see the base rate set at 4.75 per cent by the start of May.

Interest rates to fall again - and to carry on doing so this year

Interest rates to fall again - and to carry on doing so this year

4wallsandaceiling.com Newsletter

Source: - Stuart Law, Assetz

With rates dropped before Christmas in December's Bank of England rate decision we saw the beginning of what we expect to be a fairly quick series of base rate reductions. The talk this month between the members of the MPC committee will mainly centre on whether to drop rates this week or at the beginning of February instead. Just like last month there will again be discussion of whether to drop half a point rather than quarter of a point. Our overall expectation is that it is extremely likely rates will be dropped by another quarter of a point this month and if not this month, certainly at the beginning of February. There will be another quarter point drop by the beginning of April at the latest.

This will take base rates back to 5% which we've always said was around the neutral level but with the American sub prime market problems still reverberating around the financial world we would not be surprised to see base rates going slightly below 5% and 4.5% or 4.75% are likely to be where rates level out by the end of this year.

There's been much talk of these base rates not being passed on to mortgage holders - this is only partially true and mainly with regard to sub-prime/ adverse clients rather than good-credit clients. There has also been much talk of mortgage rates remaining high even if base rate drops due to LIBOR, the interbank lending rate, being artificially high recently with the credit problems. What most commentators have got wrong is that most buy to let mortgages are not related to LIBOR and also LIBOR has come back over the New Year to be much closer to its normal premium over Base Rate. Don't believe everything you read in the press, in fact at the moment believe very little as is almost entirely hype from dyed-in-the-wool property bears.

We still say the best mortgage products to purchase at the moment are the base rate trackers - with base rates coming down so fast and hard you're going to see some pretty good payable rates later in the year. Our Assetz Finance division has plenty of great products so at risk of repetition don't believe the press comments that great mortgage products don't exist at the moment provided you've got a decent credit rating - they do.

The fundamental upward pressure on rents continues and details of all of the market participants confirming that this is happening are in my previous blog entries. In summary, the majority of adverse credit history mortgage applicants are being turned down, homebuyer mortgages are more expensive than buy to let mortgages now, the housing shortage hasn't gone away and is being made worse by developers slowing down their build programmes due to more difficult credit conditions (EC Harris, the global property development project managers are the latest to confirm this).

Combine this with developers giving bigger discounts against current RICS market valuations, and some private vendors agreeing to 'cheeky' bids and the net combination is an excellent buy price versus rental yield versus mortgage cost combination leading to a profitable acquisition for your portfolio.

May we take this opportunity to wish you a prosperous and happy New Year and may 2008 provide you with excellent property investment opportunities - we are sure we will be bringing you many.

Tax change may spark house selling surge

Tax change may spark house selling surge

4wallsandaceiling.com Newsletter

Source:- The Times

Nick Says…

Looks like rich pickings in the new year.

According to the “have your say” bit, most people believe that the rush to sell will be upon us quicker than April… no s**t Sherlock!

It’s my belief that the first quarter of next year will be telling times, however, that is going to be a benefit… just like beach combing after a storm, the bargains are going to be abound!

FEARS are growing that an overhaul of the tax rules for buy-to-let investors and second-home owners could lead to a surge of selling in April, sending precarious property prices tumbling.

An estimated 650,000 people with buy-to-lets and second homes will see their tax bill fall significantly if the government’s plan to introduce a flat 18% capital-gains tax (CGT) gets the green light.

Although the government is expected to tweak its tax plans in the new year in response to fierce lobbying by business leaders, the proposals for property owners are expected to remain unchanged.

Second-home and buy-to-let owners will save an average of more than £6,000 by selling under the new regime as their lowest CGT rate drops from 24% to 18%.

This has sparked concerns that some landlords, struggling to cover borrowing costs and worried about falling house prices, will rush to sell when the more attractive tax regime takes effect. This could spell trouble at a time when the housing market is expected to be exceedingly weak.

Steve Smith at Andersen Charnley, a wealth manager, said: “The government’s intention to reduce CGT could cause a false market in which fewer buy-to-lets are marketed before April but then there is a rush to sell.

“It is the flipside of 1988, when a false market was created by [chancellor] Nigel Lawson’s decision to end tax relief on mortgage interest. This led to a rush to buy homes before the perk was scrapped and resulted in the property crash.” Estate agents have reported more landlords running into trouble because they can’t find tenants, or because interest-rate rises mean their rental income no longer covers their mortgage repayments.

The average rental yield – the rent expressed as a percentage of the value of the property – has slumped to just 3% after tax. This means many are losing money once mortgage payments and maintenance costs are taken into account.

Until recently, property investors were willing to shoulder these costs because they expected to make money from capital growth. But with the housing market looking shaky thousands are believed to be looking to exit the market.

Simon Rubinsohn, economist at the Royal Institution of Chartered Surveyors, said: “I don’t think we are on the edge of a complete bailout, but some landlords are looking to sell. We could see a pickup in properties coming to the market in April, although I think most buy-to-let investors are still committed for the long term.” If you need to sell, you could defer paying CGT at the higher rate in force now by rolling profits into an enterprise investment scheme (EIS).

The CGT must be paid eventually, but if you sell your EIS shares over several years, using your CGT allowance each time, you may be able to avoid the tax or at least get the lower rate.

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.

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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".
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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."