UK Property Investment Blog

If you have been watching the property market as vividly as we have, you’ll have probably noticed the gradual evaporation of lending options during the last 12 months.

Restricted to loans beginning at 60-80% of the properties value, 100% mortgages had all but disappeared compared to their surplus supply this time last year. But no more…

Over the last few weeks, new and exciting mortgages deals have been re-appearing on the market, bringing with them a selection of tempting offers to suit all investors interests.

Who are offering the best deals?

Many of the UK’s leading banks have jumped on board this rising trend, yet Yorkshire Bank are certainly a step ahead of the pack. Offering property investors unique buy-to-let loans at 80% LTV, this is a 5% rise on Cheltenham & Gloucester’s closest deal at 75% LTV with a fixed rate of 4.79%.

Even homeowners are being offered a deluge of deals to tempt them back onto the property market. Deals which as property investors, you too can take advantage of:

1. HSBC – 90% LTV 2 year fixed rate of 4.99%
2. Yorkshire – 90% LTV 2 year fixed rate of 5.99%
3. Post Office – 90% LTV 5 year fixed rate of 6.01%

Surely there is a catch?

No, there is none. Some banks have even gone to the extent of offering borrowers incentives to come join their bank.

Halifax for example are pledging to pay a borrowers Council Tax for the first year, if they take out a mortgage with them – a saving of over £1,000!

How can this information benefit property investors?

Simple. Like a homeowner, you too can take advantage of these growing mortgage deals, and ensure that your property investments are always receiving the best deals. Click here!

Speaking to future retirees in a recent survey, price comparison site uSwitch.com discovered that 10% of 55-65 year olds felt they did not have the finances to retire at 65.

Hindered by the increasing reductions in interest rates and pension funds, more than 18% of over 65 year olds revealed that they planned to continue working beyond retirement to help finance them in later life.

A discovery that truly puts into perspective the rising retirement crisis.

Is there an alternative solution?

Whilst many retirees are feeling the necessity to continue working well into retirement; there is a simpler route to achieving a secure future that could even allow you to retire early: property investment.

More than 1.7 million pensioners across the UK are already using property investment to help build up their pension fund by realising the equity growth within their properties. And you can do the same. The only difference will be, you will know where and when to invest.

How can property supplement your pension?

If you were one of those pensioners who had already invested, you may be finding that acquiring extra cash through the sale of your properties is now very difficult.

This obstacle can easily be overcome.

By resisting the desire to sell your properties and waiting for the property market to re-stabilise, you can sit back and watch as your property investments experience capital growth.

Alternatively, you can begin earning an instant positive cash flow of £500+ a month simply by turning your property investments into rental properties.

A task which at Property Mentor we can help you to achieve.

Structure your property investments for long term success

If you DO want to use property to help support your pension, then, choosing now to become a professional landlord could be more affordable than you think.

Private pensions have taken a huge blow in the last 17 months, according to pension consultants Aon.

Following a study into the effect falling share prices is having on private pensions, it was discovered more than 3.7 million people across the UK are experiencing falls of 29% in the value of their pensions. A reduction of over £161 billion.

Which schemes are involved?

Primarily focused on those involved in final-salary schemes, other projects affected by these pension reductions include: individual private pension plans, company DC schemes and additional voluntary contributions (AVC’s).

How will these falls affect those near retirement?

Whilst many homeowners are choosing to for-go making pension contributions until the economy has recovered, this could be a big mistake.

With people on average living longer than they did 15 years ago – men 77.2 years; women 81.5 years – more and more people are entering into retirement without the adequate funding to support them in later life.

So whilst reducing your pension contributions may be helping your current finances, in the long term this – combined with the existing economic climate – could have a damaging affect upon your future.

Is there a safer way to secure your finances?

The simple answer is yes. Whilst paying into a pension scheme may feel risky at the moment, there is alternative route you can take that will allow you to safely build up your pension no matter the financial climate: Property investment.

By investing in buy-to-let properties and leasing them out to tenants, you can offer yourself an additional positive income of £500 every month that can all be done in your spare time.

Don’t miss your chance to start now. We’ve got everything you need to do this. Click here!

The G20 summit may be 2 weeks behind us, but the impact of their £1 trillion economy boost is still on everyone’s mind.

Core to Gordon Brown’s and Barrack Obama’s discussions was the prospect of increasing trade finance and liquidity funds through the injection of £1 trillion into the economy.

A boost that Alistair Darling has stated will take some time before it is felt by the public.

G20 Measures – what are they?

Key to creating this economic boost, Obama and Gordon first plan to look into: increasing trade credits (allowing firms to collect bills at a later date) and extending the resources of the IMF.

The IMF (International Monetary Fund) are an organisation of 185 countries whose sole goal is to increase global monetary co-operation, secure financial stability, encourage international trade, promote employment and help sustain economic growth.

Through their increased involvement in re-stabilising the economy, Gordon hopes to introduce global quantitative easing, that shall increase the worlds money supply and stimulate more lending.

What difference will this make to the economy?

Whilst these are only the beginning of what shall be a wave of strategies designed to boost the economy; the success of the G20 summit has already been globally profound.

Over the last week there has been a flurry of positive actions within the economy:

In the US – the ISM Manufacturing Index climbed to a 4 month high
In China – according to the official Purchasing Managers Index (PMI), manufacturing output has begun to expand once more
In Europe – their PMI for both their manufacturing and services field rose

Yet of all these locations, the UK has easily experienced the most benefits from the success of the G20 summit.

House prices, stocks, mortgage approvals… March has turned into a productive month for the UK, bringing with it:

A 0.9% increase in house prices*
A rise in mortgage approvals of 38,000
The FTSE being 15% higher at 4,000

*Reported by Nationwide

And with the Bank of England declaring that lenders will be increasing credit availability over the coming months, homeowners have got a lot to look forward to when choosing to sell their homes.

Perhaps it’s time you get a piece of the pie?

Considered to be the new alternative to bankruptcy, anyone owing under £15,000 in debt – whilst living on a minimal surplus income – could now classify for a Debt Relief Order. A scheme that has been greatly welcomed by the Citizens Advice Bureau.

Under this new scheme, lenders and creditors must wait a period of 30 days before trying to collect these debts, to give homeowners the time they need to find the assistance they need.

What has inspired this new scheme?

According to a report released by Citizens Advice Bureau (CAB), most homeowners looking for help to pay off their debt will never be able to do so during their own lifetime.

On average, a typical homeowner would need 93 years to pay off a £16,971 loan – a timeframe that unfortunately cannot be shortened for some due to low incomes, illness, disabilities or job loss.

In a survey taken amongst 1,407 people in England and Wales during July 2008, the CAB found of this number:

The average CAB client owed two-thirds more than 7 years ago
50% had debts consisting of mortgage repayments, rent, fuel bills or council tax
10% had more than 10 credit debts i.e. credit cards, overdrafts and personal loans

Offer your finances increased security

If you would like to protect your finances from entering this kind of situation or would generally like to improve your monthly cash flow, at Property Mentor we can help.

Using little, if any, of your own money we can teach you how to invest in buy-to-let properties and begin earning a positive cashflow of £500 per property, per month.

Bank of Scotland, Northern Rock and Royal Bank of Scotland are all beginning to re-enter the buy to let market which can only be a good thing for buy to let investors!

Alongside Birmingham Midshires, who are getting offers out as quickly as ever and the Mortgage Works and C & G this will offer a very good range of lenders.

An interesting point from David Smith in the Sunday Times at the weekend, who stated that actual lending by many lenders was still quite constrained last year – with the average first time buyer earning an average of £35,600 in summer 2007 and the average salary of a mover being £45,600 compared with less than £25,000 for the population as a whole.

So the median loan-income ratio for first time buyers was less than 3.4 and for movers just over 3 which supports average prices of £180-200,000.

Clearly still people on the average salary of say £25,000 would struggle to get finance while prices were this high, and it would be irresponsible for lenders to lend at this level.

The days of 125% mortgages are clearly, quite rightly gone, but it does look as if with some tightening up across the board the lenders will be back lending confidently again. The key for them is making sure values are sensible, and most importantly the debt serviceability is realistic ie on buy to lets at least a rental coverage of 125% (we normally go for at least 150%) and for owner occupiers probably looking at no more than 3.5-4 times annual earnings.

All in all though, good news for buy to let investors with more of the big players coming back on to the market and looking to lend again!

Three pieces of fairly positive property news this week.

Tony Pidgley, the Chief Executive at Berkeley Group, who also called the 1990′s housing market correctly, says we’ve reached the bottom of the market. “We all accept that, give or take 5 per cent, the market is somewhere along the bottom (of its economic cycle).”

Tony was interviewed in The Independent, and stated there will be between 35,000 and 50,000 construction starts on new homes in 2009. And you will recall that the government wants 240,000 new homes built each year just to keep pace with the demand for new households. So based on supply and demand prices will rise.

Also over the last couple of days, the National Association of Estate Agents (NAEA) said the average selling price of a two-bedroom flat increased by 1.6% during the month to £124,727, while the sale price for a three-bedroom terrace increased by 0.6%.

Top end, executive properties enjoyed the biggest lift, with the price for which they change hands soaring by 11.1% during February to average £591,111.

But three-bedroom semi-detached properties and four-bedroom detached homes fared less well, seeing their prices drop by 3.8% and 4.2% respectively.

Peter Bolton King, chief executive of the NAEA, said: “Smaller houses actually saw their value increase – this suggests that people who are buying are picking up smaller houses than they may have done previously, possibly because they can only get smaller mortgages. It may also reflect a trend of downsizing.

The price of small properties and executive homes rose during February but the value of other houses continued to fall, research has showed.

“The very top end of the market has also performed well, demonstrating not only that the very rich can still afford a high end property, but that with plummeting interest rates are now perhaps more tempted to put their money into bricks and mortar.”

The figures come after property website Rightmove said house prices rose for the second month in a row during March.

What does this tell us?

Well as we have felt for the last few months the huge bargains at the lower end of the market may only be with us for the next 3-6 months, as once financing improves more and more people will be looking to buy and snap up the bargains and properties at high yields.

We are busier than ever with new and existing investors – this morning I took a call at 8.30am from someone with over 5000 UK properties, looking to buy another 1000 over the next 6 months!!

It also shows that the larger family properties will continue to slow down, in my opinion, for the next 12-18 months as many professional families will have had a scare and be careful about taking on increased levels of debt on their family properties.

I firmly believe the market will continue to move in different camps ie the lower end of the market, the investment end where first time buyers and investors compete for properties, will be more and more competitive, while the £200,000-500,000 end of the market will continue to slow for the next 18 months.

From the stats above this is looking the way it is going, and I see no reason why this will differ. So buy as many investment properties as can just now, and hold off moving home for a while is my opinion!

Property investment in the UK has never been more attractive according to leading property investment magazine Jet to Let.

Following their recent annual survey into popular investment locations, the UK for the first time ever entered in at number 8 in their Top Ten places to invest.

An accomplishment that proves that the UK property market is on the brink of change.

Other countries included within this survey were:

1. Cyprus
2. France
3. USA
4. United Arab Emirates
5. India
6. Spain
7. Italy
8. UK
9. Morocco
10. Greece and Turkey

One of the reasons Jet to Let offered for the UK’s sudden appearance in their magazine was increasing property interest from foreign investors, and we can see why.

With the Euro already taking 20-30% off UK property prices, investors can now benefit from an instant 50% profit when investing in our reduced property prices. A profit that has spurred investors back onto the market.

Of those who were interviewed for this survey, 36% stated that they planned to make an investment in the UK in next 12 months, whilst a further 26% planned to invest even sooner opting for the next 6 months.

When you take into account that previous to this survey the UK has never before received such a high ranking globally, both of these statistics go on to prove that confidence in the UK property market is returning.

Investors have recognised the long term potential of investing in the UK and are taking advantage now in preparation for the capital they’ll receive when the market begins to stabilise.

An event that may not be that far off.

In the last two months, UK properties have on average experienced a value growth of £7,400. An increase that has occurred across the entire breadth of the UK.

The press may be all doom and gloom at the moment, but the property market certainly isn’t. In fact it seems to be getting better and better with each passing month.

In a recent report released by the Royal Institution of Chartered Surveyors, they experienced – for the third month running – an increase in property interest of up to 16%.

An increase that backs up the growing theory that buyers and investors alike are returning to the property market.

But the Royal Institution of Chartered Surveyors are not the only ones to feel this surge in interest, the National Association have also reported a similar uptake.

Discussing these details in their January report, they found during the first 2 weeks of January, that the number of first time buyers investing in property more than doubled to 22.5%, whilst the number of registered buyers rose to 14.5%.

This sudden burst in interest is not that far off what is considered to be the first signs of a market recovery. The NAEA for example witnessed a surge of property sales topping on average 4 per estate agent during these same 2 weeks, compared to their 6 property sale average during November and December.

Now whilst the recession has still got a way to go, all of these figures when placed side by side, equal optimistic news for the property market!

Having lost a lot of consumer confidence during the onset of the credit crunch, the fact that 22% of these sales were due to property investors, proves that confidence is returning.

And it is not only property investors who are feeling the pull of the property market.

With property prices now 17.2% cheaper than they were this time last year, the appetising appeal of these properties is attracting a lot of interest.

The only obstacle left for obtaining these incredible deals is getting a mortgage – something that as an investor you won’t have to worry about if you take the first step towards your property success.

The Bank of England may have only cut their interest rates down to 1% last week, but the impact of such a change has already been felt by homeowners who have got tracker deals.

With many verging on the edge of falling into negative rates, mortgage lenders have confirmed that whilst they will not pay their customers for their loans, homeowners will not have to pay a single penny of interest on their mortgage. Meaning many homeowners are now looking forward to months of no repayments.

Now whilst not all tracker deals will fall into this category, this interest rate cut can still offer great savings for investors.

Those who were lucky enough to get Cheltenham & Gloucester’s minus 1.01% tracker deal (to the Bank of England’s 1% base rate), on a £100,000 property, can look forward to monthly repayments of only 8p.

8p compared to the £500+ increase in profits they will experience from renting out their properties on the buy-to-let market, if using the tried and tested Property Mentor scheme

Even those with repayment mortgages are now benefiting from lower monthly repayments. An investor who has a property worth £100,000 for example at an interest rate of 0.5% would only have to pay as little as £355 a month to own it. Not bad when most £100,000 properties have repayments of £600 a month.

Now factor into the equation that rental prices have risen by 20% in the last year and these falls in monthly repayments could prove to be a great asset.