Saturday, January 14, 2006

Tips for buying abroad

Independent Online Edition > Homes
By Rob Griffin Published: 14 January 2006

Will 2006 be the year you finally take the plunge and buy a property abroad? If the answer's yes then you certainly won't be alone. An estimated 80,000 Britons are expected to splash out on a second home over the coming months. And while most will be used for holidays and short breaks, an increasing number will be bought as long-term investments and rented out to generate income.

According to Chris Hall of Norwich-based Villas Abroad, demand from potential buyers is still strong - even though the stagnant UK market means they often can't fund the purchase out of equity in their homes. "There are an increasing number of cheap flights available now which has really helped the market, while a number of people are also looking at property to supplement their pension," he says. "There is also more interest in buying abroad after Christmas because that's the time families sit down and discuss their plans."

So where should you look to buy? Is it best to concentrate on tried and tested destinations such as France, or be more adventurous and opt for somewhere like Slovakia or even Serbia and Montenegro? According to Peter Esders, a partner at law firm John Howell & Co, there's no easy answer. Different people, he maintains, will have different ideas, budgets, priorities and tolerance to risk."

Click title for full article covering a number of European countries.

Take care to seriously study the financial implications of your intended purchase. If you are buying off-plan will you be able to sell... who to? If you are buying to let will there be enough tenants or holidaymakers to fill all the available accommodation? If you are buying for capital appreciation are you in early enough or have you missed the boat?

Chris Bell

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Friday, January 13, 2006

Interest rates left on hold for fifth month

Guardian Unlimited Money Special_reports
Ashley Seager Friday January 13, 2006 The Guardian

The Bank of England yesterday left interest rates at 4.5% for the fifth month running as manufacturing output expanded at its fastest pace in seven months.

Expectations are growing in the City, however, that the continued sluggishness of the economy could force the Bank to reduce borrowing costs again in the coming months.

By contrast, financial markets are expecting the European Central Bank, which also left interest rates on hold at 2.25% yesterday, to raise borrowing costs again, probably in March, as it seeks to contain inflation, which is running at 2.2% in the eurozone.

The Bank of England's monetary policy committee has made it clear that it is no hurry to move interest rates either way while it assesses the strength of consumer spending over the Christmas period and whether pay deals in the new year turn out to be inflationary.

But many in the City feel inflation is well under control and that consumer spending, which has driven the economy for years, has weakened, even if Christmas sales at retailers such as Marks & Spencer, Jessops and John Lewis have been better than expected.

With consumer confidence weak, debt levels high and new borrowing shrinking, few expect the signs of strength to persist. 'I am doubtful that a strong spending recovery will be sustained as other indicators of consumer activity have remained weak,' said Roger Bootle, head of the consultancy Capital Economics. 'I think there is a good chance that rates will be cut by 0.25% in February. And even if the committee holds back for longer, I still see interest rates falling to 4% by the end of the year."

Good news for landlords and the whole property market.

Chris Bell

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Private landlords could find it harder to get mortgages

Private landlords could find it harder to get mortgages
firstrung.com

Private landlords could find it harder to get mortgages
Private landlords could find it harder to get mortgages as a result of the government's new licensing regime, lenders have warned.
Compulsory licensing of houses in multiple occupation above a certain size will be introduced in April, along with a raft of new health and safety requirements applying to all private rented properties.
Landlords who fall foul of the new regime, introduced by the Housing Act 2004, could face fines of up to £20,000.
Lenders are poring over the details of the rules to decide if they need to tighten their requirements to cover the additional risks presented by landlords. If landlords are hit by large penalties, it could affect the ability of some to meet their mortgage repayments.
Andrew Moss, product development manager at Bradford & Bingley, the largest buy-to-let lender by balance outstanding, said all lenders offering products to private landlords would be examining the effect of the new regime.
'I would expect all lenders to be reviewing the buy-to-let plans and see what impact they have on how they lend,' he said.
'We will look at what the government has put on the table and see if there is any need for us to change our lending criteria.
There is an impact on the private rented sector through what the government is planning and as lenders we need to take that into account.'
Andrew Heywood, senior policy advisor at the Council of Mortgage Lenders, said lenders were concerned. The costs to the sector in carrying out the new regulatory requirements could outweigh the benefits in protecting tenants, he said. 'What we are saying is that the scale and scope of the licensing should reflect the real risks involved,' he said. 'We remain unconvinced about that.'
There were also concerns about the cost of an HMO license. A single license could cost as much as £1,000, he said.
Mike Stimpson, chair of the National Federation of Residential Landlords, said he was not surprised lenders were looking at requiring more cover for their mortgages.
'If I was granting mortgages I would look for a better balance between what I would loan and what any income on the property would be,' he said. 'There is going to be at least a 5 per cent increase in costs [on running homes].'
But he said commercial pressure on lenders to sell mortgages to landlords could help keep costs down.
The additional cost to landlords of meeting the regulatory requirements meant that tenants would also be facing higher rents, he warned.
'We don't care if the government hits the bad landlords hard but what they are doing is hitting all landlords.'

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UK student housing boom

Bristol-based property experts King Sturge say tuition fees will not halt the UK student housing boom. The firm says that universities are increasingly looking to replace their ageing residential accommodation...

12:56 - 12 January 2006
Bristol-based property experts King Sturge say tuition fees will not halt the UK student housing boom. The firm says that universities are increasingly looking to replace their ageing residential accommodation as student numbers continue to rise - despite the uncertainty caused by £3,000-a-year tuition fees introduced this year.

King Sturge believes the number of high-quality, modern, city centre, student residences will continue to grow over the coming years.

The company found that while the number of commerciallyoperated halls of residences had risen 50 per cent since its last research was published in January 2004, that figure still only represented 6.7 per cent of all full-time students in Higher Education (HE).

King Sturge's latest research indicates that more than 25,000 student beds have planning consent.

Bristol-based Unite Group is the largest national commercial provider of student beds, having completed more than 30,000 and with another 8,000 in the pipeline.

Philip Hillman is the national head of King Sturge's student accommodation group and is based in Bristol.

He said: 'Modern, quality-built and well-located residences should show sustained rental growth for the foreseeable future.

Older schemes in secondary locations may struggle to compete with the high-quality, city centre schemes now being developed."

Mr Hillman believes student numbers will continue to rise to meet the Government's target of getting 50 per cent of school leavers into HE.He said: "The UK population of 18-year-olds is predicted to rise to more than 800,000 in 2009 and then begin to decline gradually to around 684,000 in 2020.

"In addition, there has been a fall in the number of new student numbers from China, which has been offset by a 24 per cent increase in new students from the EU."These fluctuations in overseas student numbers, the possibility of an increasing proportion of 18-year-olds wanting to go to university and the unknown impact of tuition fees from 2006 onwards, make it difficult to predict longer term trends."

Unite chief executive Nicholas Porter said the £10 billion per year injected into the economy by overseas students promised a bright future for student accommodation. He said: "The rise in overseas students wanting safe, managed, accommodation ensured that we had a strong year in 2005."

The private landlord providing student accommodation needs to upgrade to compete with these new developments.

Chris Bell

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French property prices rise

thisfrenchlife.com: French property prices rise

PROPERTY prices across France rose by 10.3% in 2005 according to figures from the French National Association of Estate Agents (FNAIM).

This was actually down on 2004 when prices rose by 15%, but if you look further back there has been a 107% increase in prices since 1998.

The slow down has been blamed on the economic conditions in France but FNAIM expected things to be slightly worse and were surprised to see an increase in the number of properties passing through agents' books.

Apartment prices rose by 10.6% in 2005, down from the near 18% increase seen the year before, whilst the price of a house has risen by 9.9% against a 12.5% rise in 2004.
According to the Halifax UK property prices "

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Sunday, January 08, 2006

New-build flats have fallen in value by 5.6% in the past three months

Guardian Unlimited Money Property For sale - at a price that's far too high: Lenders issue warning about valuations on new-build homes

Phillip Inman, Rupert Jones and Lucy Barnard
Saturday December 17, 2005 The Guardian


Are you being ripped off by a dubious valuation on a new-build apartment? Mortgage lenders said this week that they are becoming increasingly concerned at valuations on new-build flats which are inflated to the point where a Manchester home can have a Monaco price tag.

The Council of Mortgage Lenders (CML), which represents the bulk of banks and building societies, says the public is being duped by surveyors who rubber-stamp developers' advertised prices for apartments at far higher levels than the market can sustain.

New-build flats have mushroomed in the capital and city centres across the country, and now account for 50% of all homes being built in Britain. Many are sold 'off-plan' before they are built, with developers accustomed to getting the deposit cash in early. Punters make a commitment with only computer-generated images and plans submitted to local authorities as a guide."

Check out the complete article - click on the title.

How many thousands of, admittedly naive, investors are now looking at massive losses due to the 'off-plan' apartment scam. If an offer looks to good to be true (15% instant equity!) then it usually is. Buying off-plan made money during the boom but it started to be massively promoted by unscrupulous developers and investment clubs as the market turned cold. Easy money can sometimes be made in property investment - when you find it yourself. When people are 'giving' you easy money watch out.

Chris Bell

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Estate agents admit to pushing up values

FT.com / Your money / Your home - Estate agents admit to pushing up values
By Roger Blitz in LondonPublished Published: January 6 2006

"Estate agents, members of a profession not especially known for frankness and honesty, have confessed to a practice long suspected by homebuyers and sellers: overvaluing people’s homes.

The National Association of Estate Agents on Friday conceded that housebuilders’ accusations of “aspirational pricing” by estate agents, which they claimed had contributed to the stalling of the market last year, were mainly valid. “I would accept that,” said Peter Bolton King of the association. “Some estate agents persistently overpriced over the past year.”

There were examples, he said, of agents overvaluing properties solely to get instructions from homeowners. But there were also big numbers of homeowners who refused to lower valuations in spite of months of inactivity.

This week Redrow said aspirational pricing by estate agents was contributing to what Neil Fitzsimmons, its chief executive, said was the worst market for new and secondhand homes for 30 years. Property transactions in the year to November were 13 per cent lower than the previous 12 months, according to official statistics.

The chief executives of Persimmon and Wimpey on Friday said aspirational pricing had made market conditions more difficult. John White of Persimmon said that adding 20 per cent to a property’s value might be achievable in a buoyant market but in tougher times it likely to leave property prices “marooned”. "

A lot of houses are hanging around unsold because of overpricing - those that want to sell just have to be realistic about what the market will bear. According to Hometrack the average price acheived by vendors is just 94.5% of the asking price.

Chris Bell

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