There has been a recent rise in the number of agents reporting an increase in available properties, to 15 per cent from -20 per cent, described as “the first sustained shift towards supply for two years”.
While market indicators are consistent with further house price increases, recent gains have been attributed to the lack of property available. Lower interest rates, better mortgage deals and patience from lenders has meant that more homeowners have been able to stay put during the recession, rather than being forced to sell. As prices have increased, homeowners have put their properties on the market, which may have contributed to February’s price fall, along with the end of the stamp duty holiday and bad weather at the start of the year.
Price falls have been reported in Yorkshire and Humber, the West Midlands, Wales and the North.
House builders are starting to see the first signs of a recovery in the UK housing market, with the values of land gradually improving and their off plan sales improving they can see the first green shoots of recovery in the house building sector.
One of the remaining challenges for the sector is down valuing, when property surveyors are recommending lower property values than that estimate by the developers. The values of the finished homes on new build developments is the most critical number in a development appraisal these figures make up the GDV, gross development value. Once the land costs, build costs, and overheads are removed the remaining balance is the developer’s profit. If the property developer over estimates the final sales prices the results can be financially devastating for the development project and the property developer. With more land owners looking to complete joint venture as a result of a less fluid market for residential development sites, more and more investment consortiums are pawing through the figures and estate agents comparables to make sure the sums add up.
Recent figures have shown that the average UK house price has dropped for the first time in recent months, missing the double digit inflation predicted by many. This falter comes after the end of the stamp duty holiday so there is evidence to suggest that the missing sales and higher offers have all been used up before the stamp duty holiday ended. The bank lending criteria has loosened but with the chance of an increase in interest rates, 2010 looks to be a great year for predictions with one thing for sure some of the pundits will be left with egg on their faces.
One of the things to consider when having a home extension built is the relationship between the builder and the architect. If there is an issue on the build that the architect has missed or the builder does not carry out the architects plan there is room for problems. So we would always advise that you have a single point of responsibility, a company that are confident enough with their work and skills to take care of the whole design and build process. Then if there is an issue during the build phase of the project they have to take some responsibility for the corrective action.
The Royal Town Planning Institute (RTPI) expresses positivity at the news of the governments concerns over the increases in the number of Houses in Multiple Occupation in some residential areas.
Houses in Multiple Occupation or HMO’s as they are known in the property sector have been the subject of licensing in recent years after the HMO license scheme was piloted in areas including Derby.
There is particular concerns for areas prone to high demand form Students in university towns with some quarters voicing concerns that HMO’s can lead to the lowering of community spirit in some residential areas. The nature of HMO’s does favor students and more transient short term residents which is sure to affect the feeling of community in areas of high HMO’s. It will be interesting to see what is included in any planning policy guidelines and how this may affect values and the availability of share households.
Property investment companies are quietly raising funds from investors to allow them to invest in depressed property values in some areas of the midlands. The key strategies for many companies is to focus on high yielding property investments typically with low capital values per unit. The key to turn a profit from these types of properties is to negotiate preferable rates with main contractors and go for high volume purchases.
This give you more leverage with negotiating purchase prices and all the suppliers that assist in the future refurbishment programs which are key to increasing capital values of property investments.
The other plus to a refurbishment of existing property portfolios, is the opportunity for increases in rental yields again this has the knock on effect of increasing capital values of investment property.
The tenant deposit scheme was introduced in 2006 much to annoyance of many property investors, buy to let landlords and letting agents.
The schemes key objective was to act as a neutral arbitrator for tenants deposits to stop unscrupulous landlords from unjustifiably withholding tenant’s deposits. The scheme has of course got costs and it is a legal obligation that any landlord or letting agent holding a deposit is a member or has an agreed insurance or other agreed policy in place to hold and deal with tenant’s deposits.
The scheme has recently announced a new fee structure which has many in the residential property sector up in arms. What many fail to realise is that what is bad for landlords, property and buy to let investors is invariably bad for tenants. These costs or a best a proportion of these costs will of course end up filtering through to rental increases for tenants. Given that many tenants are facing challenges meeting their current rent obligations many in the industry find the timing at best staggering.
The world of house building and property development sites is awakening from its slumbers, there is the sound of the first tentative footsteps from the speculative property development funders. Land agents are starting to dust themselves down and pick themselves up after some of the knock out blows that the down turn in the property market has caused them.
Property and land deals are starting to be put together with the usual collaborations and joint ventures from the banks and funding agencies with property developer’s builders and main contractors. Land agents are starting to enjoy their finder’s fees and the professional fees for architects, commercial surveyors, and conveyances are starting to flow. Many of the professionals within the property sector are looking to build back there reserves and to recruit new staff. The designers and estate agents are watching for the first signs of new build properties coming to market.
The many private investors and investment consortiums are starting to flex their muscles after a long and unwelcomed break. The banks and development funding agents along with auction and bridging finance houses are starting to talk to the secondary and tertiary lenders to see if property deals stack up.
There are design statements, feasibility studies, and development appraisals being written with bankers and lawyers starting to prepare joint venture and funding contracts, project meetings and property development negotiations taking place and soon there will be site clearances, demolition, and ground works taking place. The companies that complete the preliminaries, main contractors and sub contractors will start to see their contract managers and quantity surveyors busily preparing tenders documents. Soon there could even be builders building, is some normality returning to the property development and property sector?
The Council of Mortgage Lending has released its figures for gross mortgage lending for December 09 and they have taken many in the property sector by surprise. The figures showed an incredible 14% rise in mortgage lending for December, which is at best normally a poor month.
Many believe that property buyers, property traders, and buy to let investors have decided to buy in 09 to take advantage of the reduced stamp duty. It is becoming increasingly difficult to find anyone in the mortgage market who believes that 2010 will not out perform 2009. So it will be very interesting to see January’s figures and the future path of interest rates.
There is ever increasing concern that the number of available properties for households on lower incomes will be reduced as the funding crisis for Housing associations continued to cause concern.
Many Housing associations are using their limited resources to create shared ownership schemes but this leaves the most vulnerable families forced to look to the private rented sector for their housing requirements. Many Housing associations and private rented Landlords are facing funding challenges after surveyors have “written down”, the value of their property portfolios.
