House Price Spy Blog

Government legislation comes into force today which could see many ‘buy to rent‘ landlords selling up and place their propeties on the market, the rate of Capital Gains Tax has been cut from 40% to 18% (over value of £9,600) in the recent budget. This could lead to even more properties on sale, lowering prices still further. Good for buyers, bad for sellers.

With contraints being put on credit given out by lenders, many are feeling they want to get out and this change in Capital Gains Tax is the perfect reason. On a national scale house prices dropped by 2.5% during March.

Bradford & Bingley and HBOS have announced that they require ‘buy to let’ borrowers to top up their deposit if their mortgage rises above 85% of the value of the property and many small scale lanlords are bailing out.

The Bank of England surprised everyone yesterday but cutting the rate by 1/4 of a percentage to 5%. The trend has been maintain, lower, maintain, lower but few were expecting another drop so soon.

You can’t have escaped the doom and gloom (and even a bit of panic) in the media in the last few days about the bottom falling out the property market, the state of play is that lenders have had a reality check in how much, and who, they lend to and in addition in the wake of the crisis in US finance the rates of lending between lenders has risen.

While the media will tell you this is all bad, there are up sides in that less people will get stupid over mortgages on overpriced homes and in fact with propety prices falling in some areas first time buyers are actually finding it easier to buy in some areas of the UK!

The facts are that if you do your homework on an area and buy in an everpopular area where property never stays on the market long, and never pay more than what you your head tells you should be paid and have a small deposit to spend you will never be in too much trouble. Since the property market goes in cycles you will never need to wait too long to be able to buy or sell.

If its a buyers market then you just sit it out, there are more people looking for property than ever before so property in good locations will never lose equity.

With the current property climate you still have choices…Avoiding the credit crunch can be as simple as considering a few options:

Consider an interest only mortgage, if you buy in the right area your property will gain value every year.

Move further afield, more and more people are commuting further to get on the property ladder.

Consider joint ownership with parents, friends or a partner etc

Get Government help, the LIFT scheme offers first time buyers assistance to get on the property ladder.

Invest your deposit and wait for better conditions. There are non-risk investments where you could appreciate your thousands better than property.

Take a longer mortgage, for 25 years plus. That does not mean you have to be locked in for longer or stay in one place for that duration.

This will include mortgages, re-mortgages, secured loans for credit cards, overdrafts and business loans. Some mortgage offers and styles of mortgage will be withdrawn as not viable in the current financial climate.

Lenders have also stated that borrowers are happy to take longer duration fixed loans of up to 10 years without significant inducements due to the lack of consumer confidence.

First time buyers will need at least 15% to get onto the property ladder, and the days of 100% or even 100%+ mortgages are well and truly over!

The total number of approved mortgages have fallen by a third on the same time last year to just over 43,000. The drop in demand for the housing market coupled with stringent rules on how much and under what circumstances mortgages can be given has seen less people take the plunge compared with February 2007.

However the number of re-mortgages increased by 5.5% from last year with over 72,0000 customers re-mortgage for better deals on their mortgage.

The numbers come from the BBA The British Banking and Financial Services Association.

Buy-to-let Mortgages seem to have taken a downturn due to the rise in property value of the last 10 years. With property on average cost double or 50+ what it was in 1997 the profits of buying to let have dropped and less investers are taking up this option.

With the recent policy changes at most lenders Buy-to-let Mortgages which were once given to as much as 90% of the property value is now a lot less and are seen as a less viable option.

The golden rule for buy-to-let mortgages is to buy such that you can charge at least 20% more on rent than your repayments are. The most important thing to bear in mind is buying in an area where you know is renting well and go as far as visiting a few properties for rent and checking out what they offer in terms of rooms, furnishings, local area etc Dont pay above what you would pay as a first property, just because someone will be paying your mortgage!

While average rent rose by 13% in England and Wales, the downturn in property prices has seen a check on new buy-to-letters. The Government policy on mortgages has seen the mortgage rate held for the past few months in an effort to keeping the housing market from falling…

There are still significant pockets of bargain Buy-to-let propeties available which are sure fire capital gains winners! Only your knowledge of your local area and property in general can get your money working.

Gordon Brown and Alistair Darling anounced their plans for the Budget 2008 with some interesting items relating to property:

Inheritance Tax - The allowance will be increased after the Budget 2008 to £324,000 per person.

Capital Gains Tax - The capital gains tax (CGT) annual exempt amount will be £9600, with a charge of 18% above that figure.

Stamp Duty - Duty will remain the same for the next year after Budget 2008. This will be good for the property market which has been fragile in the last quarter.

Get the full details with other details from the official DirectGov websiteBudget 2008!!!

The Bank Of England have left the mortgage rate unchanged for March 2008. The rate, as expected, was held at 5.25% with the announcement coming on the 6th.

After last months drop of 0.25% there was no change predicted for March and that is the way it has turned out with the government not wanting to affect the fragile house price market in the build up to the busy summer period.

Visit the official Bank Of England website to get all the latest news and details on this and future rulings.

Joint Mortgages are becoming a more and more popular type of mortgage with many young couples not wanting to commit on their own and not wanting to get married formally. If you are living together but are not married then you will need to formalise any property agreement to prevent any acrimony later.

There are a few things you should be aware of regarding Joint Mortgages:

Have a Deed Of Sale drawn up that has a power of sale. This will prevent one side of the partnership blocking the sale.

Have Wills drawn up for each partner. This will indicate what happens to the other partners share should you die.

Decide What Percentage each partner gets. Is the property to be owned 50:50 or does one partner have a larger share. Are they going to make identical payments for identical durations?

Property Deeds ensure that both names are placed on the property deeds.

The Bank Of England has reduced the mortgage rate for this months by a quarter of one percent to 5.25%.

This news follows concern that house prices in certain areas of the UK are falling with respect to the rest of the UK and the crisis in finance including Northern Rock.

See more detail and get next months changes direct ffrom The Bank Of England website.