Monday, 7 May 2018

UK buyers need more help to find cheaper mortgage deals, says FCA

City regulator suggests making it easier to shop around could save 1 in 3 borrowers £550 a year
 Mortgage debt accounts for more than 80% of total UK household liabilities. Photograph: Andrew Matthews/PA
Plans to make it easier for mortgage borrowers to shop around have been proposed by the City regulator, after it found nearly one in three people fail to find the cheapest deal.
The Financial Conduct Authority (FCA) said these people could have saved £550 per year with a lower-priced deal. It is also exploring ways to help “mortgage prisoners” – longstanding customers who are trapped in their existing deal – to switch.
Publishing its interim report into the mortgage market, the FCA said it had found that competition was working well for many people. But it also identified ways in which the market could work better.
The regulator said that while there was little evidence that current arrangements between firms were leading to poor consumer outcomes, there was no easy way for people to be confident at an early stage of the mortgage products they qualify for.Mortgage debt accounts for more than 80% of total UK household liabilities, so selecting a deal is one of the most important financial decisions consumers have to take, but it can be a difficult one to get right, the FCA said.
This is a significant impediment to shopping around, and about 30% of customers fail to find the cheapest mortgage for them, it said. On average, these consumers were paying approximately £550 per year more over the introductory period of their mortgage compared with the cheaper product.
The FCA also proposed making it easier for people to compare mortgage brokers, saying it intended to work with the broker sector to develop ways to compare deals.One approach could involve lenders making the necessary eligibility and other qualification criteria available to other market participants consistently at an earlier stage, the FCA suggested. This should help brokers and also create other opportunities for new online tools, it said.
The report said: “We found that on average a consumer’s choice of intermediary makes a difference to the eventual cost of their mortgage. In particular, we have observed links between more expensive mortgages and intermediaries that typically place business with fewer lenders. But there are few tools to help consumers choose an intermediary.”
Christopher Woolard, the FCA’s executive director of strategy and competition, said: “For many the market is working well with high levels of consumer engagement. However, we believe that things could work better with more innovative tools to help consumers.
“There are also a number of longstanding borrowers that have kept up to date with their mortgage repayments but are unable to get a new mortgage deal; we want to explore ways that we, and the industry, can help them.”
The FCA also outlined how “mortgage prisoners” could be better helped, many of whom took out interest-only deals before the financial crisis. Stricter lending practices since the crisis have made it harder for these customers to find a cheaper mortgage.
The regulator suggested there could be an industry-wide agreement for lenders to approve applications for a new mortgage deal from existing customers whose most recent mortgage was taken out before the financial crisis and who are up to date with their payments.
The FCA will consult on the findings and proposed remedies, with a final report due around the end of the year.

HMO property continues to deliver the best yields

HMO properties produced the highest yields in the first quarter of 2018, at 7.1% - 1.3% above the market average, according to fresh research from Precise Mortgages.
Yields on multi-units, such as blocks of flats, came a close second in Q1 2018, generating an average yield of 6%.
Across all property types average yields fell marginally in Q1 2018 to 5.8% from 5.9% in the last quarter of 2017 and are now at the same level as Q1 2017.
Professional landlords continue to achieve the highest yields, reflected by the fact that those who currently own a portfolio of between 11 and 19 properties are achieving an average yield of 6.7%.
By contrast those who own just a single property achieved yields of 4.8%.
On a regional basis, landlords with portfolios in the North West reported the highest rental yields at 6.7%.
Somewhat unsurprisingly, landlords with central London portfolios achieved the lowest average yields at 4.8%.
Alan Cleary, managing director of Precise Mortgages, commented: “As HMOs attract multiple tenancies, gross rental income tends to outstrip single lets and rental income is more secure even if one tenant leaves a void.
“Experienced landlords are looking to rebalance their portfolios and there is a real opportunity for brokers to support them to work with specialist lenders who are prepared to be flexible and have expertise across the widest product set.”

Friday, 4 May 2018

High-end agency launches Build To Rent 'boutique' flats in trendy Shoreditch

A newly built, boutique development of eight luxury Build To Rent apartments has come to the market in uber-fashionable Shoreditch, east London. 
The scheme - called The Eight - consists of two and three bedroom flats ranging from 973 to 1,334 square feet with prices starting from £995 per week; unlike many more routine BTR units, these have floor to ceiling windows, polished concrete walls and private balconies. 
Shoreditch Village is a 150,000 square foot mixed-use and public realm scheme in London E1; in addition to The Eight, it consists of a 216-bedroom citizenM hotel, and three retail units alongside a new restaurant building.
Phase two of the development is expected to provide around 50,000 square feet of warehouse-style office space, 20,000 square feet of flexible retail space, and a street market, surrounded by public realm. Development of this phase will commence this year with completion scheduled for 2020.

Great expectations: London house price reductions at record high as 86 per cent of homes sold below asking price

Despite healthy numbers of house hunters, high moving costs and taxes mean many sellers aim too high when setting an asking price.


Already 2018 has become a record year for property price cutting according to newly published data citing a combination of some too-optimistic sellers and ultra-cautious buyers. 
NAEA Propertymark, the national association of estate agents, found that almost nine out of 10 homes – or 86 per cent – sold for less than the asking price during March, the highest level since the association began recording sales in 2013 and 12 per cent up from February.
The market, in short, is firmly in the hands of the buyer.
The problem does not appear to be a shortage of house hunters. The average estate agent has just over 300 would-be buyers on its books, found the association, and is selling 40 homes.
But in London Trevor Abrahmsohn of Glentree International estimated that only around 10 per cent of homes sell for asking price.
He blames overvaluing by agents with their eye on a big commission, and high moving costs and taxes that encourage vendors to aim too high when setting an asking price.
Brendan Roberts, a director at Aylesford International, agreed that only around one in 10 homes in the capital sells at asking price, because buyers are extremely nervous and price sensitive. 
“In a market weak on confidence and high on uncertainty achieving the asking price is rare,” he said. 
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It’s a buyers’ market: only one in 10 London homes achieves the asking price, according to industry experts (Alamy Stock Photo)
Many properties are being taken off the market by owners who are not necessarily desperate to move but testing the water.
If they fail to seal a bid that would make their move worthwhile, they withdraw their home.
Ashley Osborne, head of UK residential at Colliers International, said it is generally the more expensive property that is being discounted.
“Properties which are selling are below the £600,000 mark. There is a lot of competition for stock and vendors just do not need to discount as heavily.”
“Buyers should be looking at property as a long-term investment, so if they pay five to 10 per cent above or below the ‘notional market price’, it is unlikely to be significant over the long term, either way.” Osborne believes there is no such thing as a “right price” for a property, and buyers shouldn’t agonise too hard about small differences.
Vendors who need to sell, meanwhile, should present their home as smartly as possible and be realistic about its value. “Engage with the buyer, and show willing to negotiate.” 
 Mark Hayward, chief executive of NAEA Propertymark, has seen these swings before, and said the market always swings back.

Wednesday, 2 May 2018

Small and medium sized builders in UK report increased workloads

The workloads of small and medium sized home builders in the UK grew slightly in the first three months of 2018 despite record numbers reporting rising material prices, a new survey shows.
The outlook among firms has remained positive but workloads grew at a slower rate than in the fourth quarter of 2017, according to the latest state of the trade survey from the Federation of Master Builders (FMB).
The construction SME sector has now enjoyed five years of consecutive growth and 49% predict rising workloads in the coming three months compared, up from 38% in the previous quarter.
The data also shows that 90% of builders reported increasing material prices in the first three months of 2018, the highest reading on record, and 58% are struggling to hire bricklayers while 55% are struggling to hire carpenters and joiners.
Some 66% expect salaries and wages to increase during the next six months, up from 62% in the previous quarter.
‘Workloads for builders continued to grow in the first quarter of 2018 despite the Beast from the East wreaking havoc across the UK’s construction sites. However, once again, the growth we are seeing is slower than in the previous three months and this can be partly attributed to pressure from rising costs,’ said Brian Berry, chief executive of the FMB.
‘Indeed, 90% of builders reported increasing material prices in the first three months of 2018 and this is the highest reading on record. Insulation, bricks and timber are the materials that have increased the most and builders are predicting that these price increases will continue,’ he pointed out.
Berry believes that in terms of house building, these latest survey results should sound some alarm bells with the workloads of SME house builders dropping off in the first quarter of this year.
He explained that while 197,000 homes were started in 2017/2018, this is some way off the Government’s target to build 300,000 homes per year. ‘The FMB has worked closely with the Government to identify how to remove barriers to small local house builders, but these latest results act as a reminder that there is more to be done,’ he said.
‘The FMB would now like to see the continued and speedy implementation of some positive Government policies designed to bring forward more small sites, properly resource planning departments and increase the flow of finance to SME house builders. If we are to reach our ambitious house building targets, we cannot rely solely on the largest house builders,’ he concluded.

There are still ‘attractive yields to be had’ in the BTL sector

Demand for property in the private rental market is showing no signs of slowing down, and this is placing upward pressure on rental values.
With demand for new rental properties rising faster than supply, there is a growing disparity between demand and supply across many parts of the country, helping to fuel a rise in average rents, which are up 1.21% year-on-year, according to the latest Landbay Rental Index.
Given that home ownerships levels are continuing to fall, a growing number of people are unsurprisingly relying on the private rented sector for accommodation, illustrated by growth in demand for rental properties.
The buy-to-let sector’s ‘safe haven’ status among investors has long made it a wealth magnet for property investment. However, the government’s decision to introduce a 3% buy-to-let surcharge on stamp duty from April 2016 and phase out tax relief on buy-to-let mortgage interest has deterred many landlords from acquiring new properties, contributing to the notable decline in the number of new rental properties placed on the letting market in some parts of the country.
Many experts believe that the number of landlords is likely to plateau or even drop over the next few years, as property investors start to feel the pinch from a series of tax measures that have already been introduced.
But as new supply moderates and demand strengthens, Landbay expect to see continued upwards pressure on rental values in the UK, which are now at a record-high of £761 a month outside of London, the rental index shows.
Growth in rental values means that rental payments in the UK now account for over half - 52% - of the average disposable income. 
In London, almost 89% of disposable income is spent on rent, now standing at an average of £1,879 per month. John Goodall, CEO and founder of Landbay said: “Rents have continued to rise over the last five years, increasing by 9% across the UK since March 2013 and by 7% in London – with monthly payments remaining a burden on those struggling to save.
“Tenants saving up for a house face a triple challenge with more and more of their income spent on rent, partnered with trying to catch up with the pace of house price inflation and record low interest rates limiting their ability to save money.
“There has been much speculation about the long-term future of the buy to let sector from an investment perspective, however, demand remains strong as brokers would attest. Not a day goes by when there isn’t more news about the supply-demand mismatch in the UK housing sector and until this is resolved, tenants will continue to rely on the private rented sector to support them.

Monday, 30 April 2018

Hiring a ghostbuster and only buying on the eighth floor: how beliefs and superstition can make or break a property sale


When the Norman Foster-designed HSBC building in Hong Kong was completed in December 1985, it was the most expensive building in the world ever to have been constructed.

While designed – much like earlier colonial-era structures on the island – with a trained feng shui geomancer, it did not anticipate the arrival, just a few years later, of the Bank of China building, with its knife-like edges, next door. 
Shortly after it was built, the governor of Hong Kong died and there was a downturn in the city’s economy; it didn’t take long for fingers to be pointed at the new building. Feng shui masters were consulted and two cannon-shaped structures were mounted on the roof of HSBC’s building to dispel incoming negative energy from its neighbour. 
Such is the power of the ancient practice of aligning buildings and objects, in order to attract good luck and ward off misfortune, that entire apartment buildings in Hong Kong have been built with holes through the middle. This is to allow dragons – traditional symbols of wealth and prosperity – to reach the harbour. Blocking the dragons’ path is thought to bring bad luck to residents.
While this may be a step too far for London developers, many are all too aware of its importance, and factor in a feng shui consultant if they wish to attract the lucrative Chinese market. 
The HSBC building in Hong Kong, with cannons facing the Bank of China tower CREDIT: RICHARD CHIVERS/VIEW PICTURES/UIG VIA GETTY IMAGES
That means changing addresses if they feature the number four, which is considered inauspicious in China because it sounds similar to the words for “death”. Property developer Ballymore also commissioned a feng shui audit report for its Embassy Gardens project at Nine Elms in south London. The number eight is lucky, and Chinese buyers will often make offers on apartments with eight in the number or floor, explains Merlin Dormer, of buying agent Heaton & Partners. 
“We also receive offers with eights in them from Chinese buyers,” adds Bertie Hare, from Strutt & Parker’s Knightsbridge office. “On the seller side, someone might decline a higher offer like £900,000 if a lower offer includes more lucky numbers, like £888,888.”
Mayfair and Marylebone-based agent Martin Kay, of Kay & Co, says that Chinese clients looking at high-end property will sometimes bring their feng shui consultant with them on viewings. “It’s nerve-racking as it can end a deal immediately if something’s not right, particularly if one of the couple is more superstitious than the other.”
In one example, an enterprising (and not superstitious) wife managed to persuade her husband to buy a flat on the edge of Regent’s Park by convincing him it was on the fifth floor rather than the fourth. “She just counted from the ground floor up instead,” says Kay.
These days in London, feng shui requirements compete with another Eastern system of beliefs, vastu shastra, which is important to some Indian buyers, says Camilla Dell, of Black Brick, a buying agent. “One of the main requirements of vastu is that the front door should face south, which, in theory, sounds relatively simple but in London it can rule out whole parts of the city where the streets simply face the wrong way.” 
Living room in a One Point Six apartment on Pont Street, Knightsbridge CREDIT: ONE POINT SIX
Earlier this year, developer One Point Six took the unusual step of designing a luxury apartment on Pont Street in Knightsbridge according to vastu shastra before putting it on the market. While this remains a niche approach, agents have to find other solutions to remedy such concerns. 
For one of Dell’s clients buying in a new development, this involved purchasing two flats opposite each other as well as the corridor space in between. By linking them together they were able to create a south-facing front door and the deal went ahead. 
“With off-plan developments, we can try and find a way around these problems. But with some Indian clients, it’s likely that their vastu consultant will be the first to see the floor plans,” says Dell. “If something’s not right, the property is simply ruled out before anyone has been to take a look.”
A feng shui flat in South Kensington, £2.5m with Strutt & Parker
Astrological concerns have also been known to delay a sale. “I was bidding on a property for a client, and we were all ready to exchange when she called a temporary halt because the planet Mercury was moving in the wrong direction,” says Guy Meacock, of Prime Purchase.
“While the planet was in retrograde she was of the belief that she shouldn’t sign the contract. I had to tell the selling agent we’d need to wait until it started moving in the right direction, which took several weeks.”
As international buyers increasingly enter the top end of the country house market, concerns regarding feng shui are having an impact here, too, says Rupert Sweeting, head of country house sales for Knight Frank. 
“Many Chinese buyers hate having a well in a house. So if a rural property has its own well in the grounds, they often won’t progress to offer stage,” he explains.
Buyers who believe in the paranormal can also affect how successful a viewing is, adds Sweeting. If there’s any hint of a problem, his advice to vendors is to get the house cleared of any such ghouls by “employing a ‘ghostbuster’ or a priest to exorcise the house”. 
Salisbury-based solicitor Marcus Thorpe, of Trethowans, says it’s important to be honest about any activity in the house. “While questions about the paranormal don’t form part of the standard buyer’s questionnaire, and perhaps it’s unique to the country house sector, a good solicitor might ask the question.”
For astrologer Shelley von Strunckel, who writes horoscopes in The Sunday Times and London Evening Standard, interest in the “mystical” is increasing. “There’s a big buzz about it now and a growing interest in the more subtle elements in life.” 
Concern regarding the alignment of buildings is not a new concept on British shores, as demonstrated by Stonehenge. According to von Strunckel, even the least mindful buyer of a property will be aware of the energy of a place when they walk into it – they just might not know how to articulate it. 
“As an astrologer, we talk about cycles. For a long time, we’ve been in one that’s been very focused on the intellectual – what you can see and measure – to the exclusion of the internal and reflective. That’s beginning to change,” she says.
The energy of previous owners of a property can remain in the walls, she believes; in the case of a new build development, even that of the builders can be present long after they have finished. 
Would-be buyers should, according to von Strunckel, stop and think about what they feel during a viewing, without being embarrassed. 
Can negative energy immediately stop a sale? Not necessarily. “Regardless of any religious belief, you can always ask someone to come and clear the energy or bless the space,” says von Strunckel. “If in every other way the property works, it’s a lot easier to do that than fix physical problems like replacing small windows or bringing light into eternally dark rooms.”
Von Strunckel is hoping to leave some of her positive energy in her loft apartment in King’s Cross, north London, which is on the market for £3.4 million through Currell.
Bought nine years ago, the three-bedroom converted warehouse flat is flooded with light by its huge windows. It overlooks Battlebridge Basin and Regent’s Canal and comes with access to a 24-hour concierge. 
“You get great views from here,” she says. “St Paul’s and the Shard in one direction, the London Eye in another and the arches of St Pancras to another,” explains von Strunckel. “It’s just time for me to move on. I’ll take my energy with me but hopefully some will be left for the new owners.”
https://www.telegraph.co.uk/property/buy/hiring-ghostbuster-buying-eighth-floor-beliefs-superstition/