Home prices breach £300k in London

The average price of London property has broken the 300,000 pounds barrier for the first time as confident buyers battle to secure quality housing, property group Rightmove said on Monday.

The rise means first-time buyers in the capital are being stretched to the limit with many now having to borrow up to five times their salaries in order to get onto the first rung of the property ladder.

'Buyers wishing to acquire property in the most popular boroughs face increasing competition. First time buyers may have to look outside London to be able to afford their first home,' said Miles Shipside, Rightmove's commercial director.

While overall the average asking price rose for the third consecutive month, by 1.7 percent to bring the annual rate to 5.8 percent, not all areas in London performed the same in March.

Asking prices in Hackney rose by 5.4 percent while upmarket Kensington and Chelsea saw a drop of 2. 4 percent.

Across the country the average asking price was 4.3 percent higher against a year ago taking the new average to 203,399 pounds. The figures are the latest to suggest the housing market is picking up after last August's quarter point interest rate cut to 4.5 percent.

Earlier this month the Halifax said house prices were up 5.5 percent in the three months to February on a year ago.

95% LTV BTL Mortgages for ‘Pucka’ Properties

What’s a pucka property?

Well if you can find a property that values up in excess of what you’re buying it for then lenders are happy to lend at what it values for as long as you put in 5%.

So if you find something to buy for £100,000, the lender will lend a maximum of 85% but based on value rather than purchase price and the max loan would be £93500 (85% of £110000).

All you have to put in is the £5000 deposit. These deals are limited to 2 per customer but there is a rumour that they’re going to increase this to 10 per customer.

Self-Certification Mortgages

Have you ever wanted to buy a property that offers great capital growth but a low rental yield and then struggled to find a Buy to Let lender?

Most BTL lenders require the rent a property achieves to be at least 125 -130% of the monthly mortgage payments and for high value properties, this very often doesn’t fit.

Even if you can squeeze it through, very often you will be charged very high fees for the privilege of a rate deal that works.

The good news is that there are a small number of lenders that will cater for this and allow the affordability to be based on your own income (self-cert of course!) With a recent change of lending criteria you can now buy 10 plus properties this way and with great rates starting from 5.09% these deals are also very competitive.

How Off-Plan Properties can Damage Wealth

CAN I really own a £1 Million property portfolio?

Offcourse, but you also own the £ 850,000 debt!

Lets do some maths. If the portfolio yields 6% (which you’d be lucky to get!) then your Monthly Profit & Loss would be:

Rent	£ 5000.00
Letting Agent Fees (10%+VAT)	£ 587.00
Mortgage Interest Only @ 5.5%APR	£ 3896.00
Service Charges for flats 4 x £80	£ 320.00
Repairs a modest £50 per flat per month	£ 200.00
Total Profit Every Month	£ 3.00

So at best, with the portfolio fully let at the market rent as stated by the developer you would basically break even. Great.

The likely scenario would be that the property yields at 5% with 2 months void period per property and repairs at £75 per month. This equates to a loss every month of £1,451. Ouch!

The worst case scenario is that it yields at 4.5% (due to a glut of rental properties that come on to the market just like yours) with 4 months void and £100 repairs. This equates to a loss every month of £2410.

So you need to decide how long you want to hold on to this pretty riverside portfolio. Well this will be dependent on how big your bank balance is because this hungry portfolio is going to eat it all up and probably your life savings too. That’s assuming you’ve got any life savings left over after deducting these property company’s extortionate finders fees!

Buy-to-let investors 'benefit from market growth'

first-time buyers loosing distance on market

New research shows that rising house prices are pricing first-time buyers out of the market and contributing to a trend of people buying later on in life.
Hometrack, the property research specialist, suggests that almost half (49 per cent) of first-time buyers cannot afford to get onto the property ladder.

This is despite the five-year Homes for All policy instigated by the government, which challenged contractors and house builders to build affordable homes for first-time buyers.

Richard Donnell of Hometrack explained that market movements had already altered expectations about home buying.

'The obsession [with owning a property] has been tempered with the reality of pricing,' he said.

Mr Donnell noted that couples were tending to get married later and desired greater financial flexibility than previous generations.

Earlier this month Malcolm Harrison, spokesperson for the Association of Residential Letting Agents, suggested that landlords would be 'joining a buoyant market' if they could afford to purchase another property and that 'tenant demand is definitely growing'.

lettings market 'Hotting Up'

Chartered surveyors are reporting the biggest increase in tenant demand in four and a half years, with 27 per cent reporting a rise in new lets rather than a fall.

The Royal Institution of Chartered Surveyors' (Rics') residential lettings survey for the period between last November and January of this year also claims that rents have steadily been increasing and yields for both flats and houses are above the survey's long term average.

The survey suggests that landlords have become more active in the market which has led to an increase in the amount of properties available. Rics believes that a quarter point cutting of interest rates by the Bank of England's monetary policy committee in August 2005 encouraged investors into the residential market.

Rics claims that a renewed upturn in house prices has pushed potential buyers back into the rental market.

Jeremy Leaf, spokesperson for Rics, said: 'Buy-to-let investors are active once again, which will help dispel fears that an absence in first-time buyers will contribute to a significant slowdown in the wider housing market next year.'

How can HIPs could push property prices up?

June 2007 will see the introduction of the Home Information Packs (HIPs) which could, according to experts across the board, lead to a shortage of homes on the market and further push up prices.

These packs are to help the first-time buyer by placing the costs of searches and surveys onto the seller.

Around 30 per cent of homes on sale at the moment were put on the market spontaneously according to one expert. As these packs will force the sellor to prepare their properties before marketing them, there will be less of a spontaneity crowd or impulse buyers and sellers. With this in mind, the knock on effect is less property on the actual market, therefore pushing prices up.

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