Mortgage Market Review slashes home lending

The Mortgage Market Review (MMR) has hit house purchase lending, which fell for the third consecutive month in April.

Home lending has now fallen 17% in three months, according to new figures from e.surv, which said the MMR is largely to blame.

House purchase approvals dropped 6% between March and April to 63,170.

That means there were more than 13,000 fewer home loans in April than in January, when 76,251 loans were approved.

House purchase approvals are still 15.3% higher than 12 months ago, but recent monthly falls are stalling the market recovery.

http://www.estateagenttoday.co.uk/index.php?option=com_k2&view=item&id=795:mmr-slashes-home-lending&Itemid=583

House prices up 8.5% year-on-year

The latest Halifax house price index shows that despite the average house price falling 0.2% in April, prices are up by 8.5% on year-on-year, at an average of £177,648.

The bank said demand for housing "remains strong", and that while monthly figures could be volatile, quarterly figures gave a better impression of the underlying trend in the market.

Stephen Noakes, mortgages director at Halifax, said: "On an annual basis, housing demand still remains strong. Housing demand continues to be supported by an economic recovery that is gathering pace, rising consumer confidence, low interest rates and wage growth finally beginning to outgrow consumer prices.

"However, with supply of properties being slow to respond to market conditions, stronger demand in the past year has resulted in upward pressure on house prices."

Commenting on the figures, Rob Thomas spokesperson for estate agent haart, said only London-centric commentators believe there may be a housing bubble expanding in the UK.

“The latest intervention from Bank of England’s deputy governor Sir Jon Cunliffe warns that ‘the growing momentum in the market is now…the brightest light on [the] dashboard’ for policymakers watching for signs of an overheating economy,” he said, “It’s not difficult to see why someone sitting in Mayfair, Westminster or Threadneedle Street might be starting to worry. Fuelled by the global super rich, Prime Central London property prices started recovering in 2009 and now stand some one-third higher than at their previous peak.

“But what’s the true story away from this Monte Carlo-on-Thames of prime Central London? According to our own national data, which most recently showed average UK property prices at £195,511, prices are still not recovered to their peak 2007 levels. This is supported by the Halifax house price index quarterly and monthly releases, which show that property prices remain lower in the first quarter of this year than at their peak more than seven years earlier in every region of the country – yes, every region including Greater London. The national average property price released by Halifax today is still well below 2007 levels.”

Thomas added that while London’s strong recovery has brought prices to within a whisker of the previous peak, the idea of a bubble must seem like a “bizarre joke” to anyone who bought a house in 2007 in much of the rest of the country. House prices are 18% off their peak in the North and a massive 53% lower in Northern Ireland.

“Perhaps it’s inevitable that, after the embarrassment of failing to see the financial crisis coming, the regulators would feel the need to have their finger on the trigger, itching to apply the weed killer at the first green shoots of recovery. But they do need to remember that spring always comes early to London.”

Judge rules in favour of squatter

A squatter has won a landmark victory for "squatter's rights" after seeking possession of a run-down property he has lived in and renovated - despite residential squatting being "criminalised" by the Government.

Keith Best applied to register title to 35 Church Road, Newbury Park, Ilford, east London, on the basis that he had been "in adverse possession", also referred to as "squatter's title", for a period of 10 years ending on the date he made his application.

The Chief Land Registrar blocked Mr Best's application relating to the three-bedroom, semi-detached house.

The registrar said he could not allow time to run for registration of title by adverse possession because section 144(1) of the Legal Aid, Sentencing and Punishment of Offenders Act 2012 (LASPOA) has made residential squatting a crime, instead of just a civil offence, since September 2012. Read more at

https://uk.news.yahoo.com/judge-rules-favour-squatter-124309211.html#udWRrc5

SAFEagent awareness week

Landlords please make sure you use a SAFE Agent for all your property dealings this will ensure you will be dealt with professionally, you will have a redress system and your funds will be safe. And I am pleased to say that Belvoir Lettings Southampton has always been a SAFEagent.

Properties In Hinkler Road Area Outperform Hedge End Housing Market By 50%

Following a discussion with a local landlord who lives in the West End area of Southampton, in the nice area between Church Hill and Chalk Hill, we got chatting about the Hedge End property market and how it was so opposite to the Hinkler Road area of Southampton. Interestingly, he had a couple of properties in both areas and, after reading my “Southampton Property Blog”, wanted some advice on where to buy next.

I did a comparison between the two and was surprised to find that the property market in the Hinkler Road area had outperformed the Hedge End market by 50%!

The 3-bed semis at the Thornhill Park Road end of Hinkler Road, built just before the war, sell for between £145,000 and £160,000 depending on condition. However, further down the road there are the local authority built properties. Often built to high standards, 3-bed terraced houses achieve around £110,000 to £120,000 and the semis for £125,000 to £135,000 (again all dependent on condition and exact location). When you consider that the rents that can be achieved for these properties are in the early £700s per month this gives us a yield of 6.5% to 7% per year. That means Hinkler Road is the best investment, especially when you consider it compared to property in Hedge End where the average value of a property is £243,500 and the average rent is £901 per month, giving us an much lower yield of 4.4% per year (around 50% more).

This, however, is a great example of annual yield/return not being the only factor when choosing an investment property, as you should also consider how much the value of the property goes up in the long term. In the last 10 years, property values have only risen by around, on average, 22% in the Hinkler Road area, which is worse than inflation. Therefore, in real terms, whilst as an investor you are achieving an excellent yield, this is at the expense of having a depreciating asset in real terms. Hedge End values have risen by 63% in the same time frame. So, if you are investing in Southampton property, do you want capital value or yield?

As we don’t sell property, we can help you to find the best investment property for you with our specialist lettings advice. It is in our interest that you buy a property which will rent well and for long periods of time. If you would like any advice on choosing properties, come and see us at our office on London Road or contact us at 023 8001 8222 or email us at southampton@belvoirlettings.com

Labour pledges to reform rental sector - what will this mean for Southampton Landlords!!

Ed Miliband has announced plans for longer tenancy agreements and rent increase cap if the Labour Party wins the General Election next year.

In a policy designed to be one of the most eye-catching elements in his campaign to tackle the "cost of living crisis", the Labour leader has pledged to make it more difficult for landlords to evict tenants or raise rents.

Miliband’s policy has three main points:

1. There will be three-year tenancy agreements beginning with a six-month probationary period allowing landlords to evict a tenant if they are in breach of their contract. This would then be followed by a two-and-a half-year term in which tenants would be able, as they are now, to terminate contracts after the first six months with one month's notice.

2. There will be a ban on what Miliband will today call "excessive rental increases". Labour says it will be guided by the Royal Institute of Chartered Surveyors, which is examining options for a new rent benchmark. This could be linked to average rent rises or inflation or a combination of the two.

3. Labour will ban letting agents from charging tenants fees for low level services, such as simply signing a tenancy agreement. They will instead have to ask landlords for fees.

http://www.landlordtoday.co.uk/news_features/Labour-pledges-to-reform-rental-sector

Southampton property .. how affordable is it?

I had an interesting chat with a gentleman, who lives in Rownhams, who dropped into our office whilst his partner was visiting at the South Hants Hospital. He is thinking of buying his first buy to let property and he wanted my opinion on the state of the market and if it was a good time to invest.
He was particularly worried that, with all the newspaper headlines of a booming housing market, there wouldn’t be any demand by tenants. 

One piece of advice I give to those looking to invest in property is a simple trick of the trade. You can judge the affordability of an area’s property market (and thus how much demand to buy there could be) by simply finding the ratio of the average property price to the average salary. The lower the ratio the more affordable property is. When we put this to the test, we found that, as a whole, Southampton currently has an average property value of around £232,200 with the average salary being £21,840. This is a ratio of 1 to 10.63 and, in fact, is slightly above the UK national average of 1 to 9.46, which means you have got to look hard to find value. 

However, the issue isn’t just affordability, it is also about raising the deposit. Even with the government schemes reducing the deposit to 5%, when you take into account the fees this cost would be in the region of £13,600, based on the average property value. Purchasers can afford the mortgage payments, but their inability to raise the money for the deposit is driving demand for rental property. Therefore, until 100% mortgages return, demand will continue to be very high for rental properties. It is also worth remembering that not everyone wants to buy a property. Renting gives people great flexibility. We currently have a significant pool of tenants who are eagerly looking for quality accommodation throughout the Southampton area. 

It’s important to buy the right type of property in the right location that will appeal to a wide tenant pool. If you are someone thinking of investing in the rental market, please contact me by phone or call into our office on London Road so we can help you explore the market fully.