Musings of a London Property Finder

As would-be vendors struggle to sell their properties an increasing number of people are thinking up diverse ways to part with their homes while making a profit despite the financial turmoil and barely a month goes by before we hear of another property raffle.

The latest to be publicised in London is a block of 11 flats in Whitechapel, finished to a high standard and worth £8 million and with an annual rental income of £500,000 according to the website.  The development which is due to be finished in December has been planned with a high spec finish with each apartment including a steam room and stone worktops.  According to house price websites such as ourproperty.co.uk, houses in the same street sold for £325,000 in July last year, so it is difficult to see where the £8 million valuation comes from.  However, given that the entry to this raffle is free with the purchase of £60 MP4 player, even with a valuation of £250,000 for the 1 bedroom flats and £300,000 for the 2 bedroom flats producing a total value of over £3 million, the lucky winner may well think that a £60 flutter is money well spent. 

The owners, developers MIA want to net in the region of £7 million from the scheme but have pledged to do a cash draw instead if sufficient funds are not raised, so in essence all purchasers could win something.  To date there are just over two thousand entrants but the developers have the option of extending the deadline from 2nd March by 3 months if they haven’t issued 200,000 tickets in that time.

On the face of it, this scheme may work where others have failed in view of the necessity of buying the MP4 player.    OldboroughRetreat, the million poundhome withcourse fishing lake, woodland and 4 fishing lodges was offered earlier this year for £25 a ticket however it attracted the attentions of the Gambling Commission and the draw has been postponed on the grounds that the offer may constitute a lottery and the owners do not hold the required licence.  Other than that, it seemed to be a successful draw with the property attracting enough interest: 46,000 tickets were sold according to the website – but since no winner has been drawn, you will have to take the vendors word for it!

Tom Kavannagh, Chief Executive of the Gambling Commission has warned homeowners and buyers to steer well-clear of such schemes saying:

“The Commission has been keeping a close eye on the recent developments with such house competitions and warns potential organisers to take note of its guidance and to take independent legal advice before proceeding,”.

Competitions which involve an element of skill which  are not regulated by statute.  If not they are classed as lotteries, the Commission warned.

Under current legislation prize competitions are free of statutory control if they require an element of skill which would  “either deter a significant proportion of potential entrants from participating or eliminate a significant proportion who do enter”.  If not, they are classed as lotteries. 

“Homeowners considering such schemes as an alternative to selling their house risk committing a criminal offence if they cross the boundary and stray into offering an illegal lottery.  Lotteries are the preserve of good causes and cannot be operated for private gain,” he added.

The advice has to be don’t do it, or if you do, be aware that the properties auctioned are likely to be advertised with an inflated valuation and there is no guarantee that a valid legal draw will take place or that entrants will get their money back if that happens.  One of the draws we have found on a quick web search below does not appear to have any terms and conditions advertised – so there is no clear indication what happens to funds raised if only a fraction of thousands of tickets are sold.  There is little doubt that many vendors act in good faith but inevitably this property phenomenon will also attract shysters.

A quick web search brought up the following property draws which are all current.  We will look at them again after they have finished and try and establish if any result in a happy gambler in a new home.

• www.sprialsight.co.uk - a competition to win a 3 bedroom modern house in Telford, purchased for £149,995 in 2004 according to comparison site our property.  The entry fee is £15, the closing date is the 15th of May 2009 and there are 187 entrants to date with a maximum number of 14,700 entrants.
• http://www.myhideawayinspain.com/odds.html -150 Euros or 60 Euros for tickets with multiple chances of winning studios, flats or villas in Spain.  The tickets are issued with vouchers which can be used as part-payment for a stay in one of the boutique hotels owned by the company.  It would appear that English law doesn’t apply. 
• http://www.prizeofalifetime.com/faqs.htm  – The chance to win on of 2 houses in Norfolk for a £25 ticket and completion of a sudoku game.  The competition closes on Valentines Day but there doesn’t appear to be any sign of how many people have entered so far, how many entries are required or any link to the terms and conditions.
• http://www.winadevelopment.com/terms.asp - Possibility of winning apartments in Devon for a £50 ticket, however the question asked is very simple so may not fulfil the Gambling Commission rules above and after a month on sale only 10% of the required 45,000 tickets have been sold.  The closing date is the end of December with an option for the operators to extend by 2 months if all the tickets haven’t sold.

http://uk.reuters.com/article/propertyNews/idUKLNE49904C20081010

http://winadevonpropertywithfishing.co.uk/index.php

http://www.eveningleader.co.uk/news/House-raffle-woman-charged-by.2840749.jp

This London Property Finder recommends property from genuine sources only!

Technorati Tags: bargain property, London Property Finder, property competition, property giveaway, property giveaways, Property raffle, win my home

Tags: bargain property, London Property Finder, property competition, property giveaway, property giveaways, Property raffle, win my home

Musings of a London Property Search Agent

In a speech to the European Business School in London given by Sir John Gieve, Deputy Governor of the Bank of England, Sir John said that complete seizure in the money markets had been averted but warned that we are at the beginning of a recession and that further action may be necessary.  He cited hedge funds as an area of concern, although banks are now more secure following the national Bank’s pledge to underwrite capital issuance of £50 billion which has underpinned confidence.

In addition to considering the causes of the current global financial turmoil which has led to recession in the US, the UK and several other advanced Western economies, the Deputy Govenor set out 4 lessons for the medium term, declaring the need for “… far better coordination of policy internationally and the need for some new policy instruments alongside interest rates to dampen the financial cycle.”

 1. Closer International Co-ordination of macroeconomic policy

International cooperation at global level is necessary in a global economy.  Sir John reiterated that cooperation among members of the EU and G7 was not wide enough and welcomed the G20 and the IMF as playing key parts in macroeconomic coordination, citing inflationary oil prices as an external event beyond the reach of national policy makers but not of the global economy.

2. Better ground rules for cross-border financial crises

“In particular emergencies there are often different national interests at stake and the sheer pressure of events can limit cross-border consultation.  However, if we do not tackle this we will see the growth of national restrictions on the terms on which cross-border operations are permitted – in terms of capital, liquidity and legal structure – and that could have great economic costs.”

3. Strengthening banks’ resilience

There is a need for agreement on liquidity and capital requirements of banks.  ” The FSA is developing proposals for UK which will deliver tougher standards.  But we are pressing for international agreement in the Basel Committee.  Events also brought home the need for a fundamental review of both the amount and definition of capital requirements.”

4. Developing macro-prudential tools

The Deputy Governor outlined three schemes which could decrease the impact of future financial crises, highlighting the need to “bridge the gap between macroeconomic policy and the regulation of individual firms.”

He continued, “We need a third club in our bag which can directly dampen the financial cycle.  This is needed both for financial stability and for wider economic management.”

“But we have seen how the financial sector can drive the wider business cycle, by becoming over-confident in the upswing and over-constrained (by lack of financial resources – capital and liquidity) in the downswing.  It seems to me that mechanisms which oblige banks to build up resources in good times can serve a second useful purpose of dampening the economic cycle.  I think of this as ‘protecting the cycle form banks’.”

In brief the 3 schemes described were

• The Spanish System of dynamic provisions which requires banks to build a general reserve that can be drawn on in downturns
• Growth related capital requirements which make it more expensive for banks to expand their balance sheets faster than normal when confidence is high and could be a useful means of dampening banks’ contribuition  to the business cycle
• Less stable sources of funding could be treated as an added risk factor in assessing a banks liquidity needs.

http://www.bankofengland.co.uk/publications/speeches/2008/speech367.pdf

This London Property Search Agent is not daunted by these comments as buyers can find bargains with the right advice and support – call us!

Technorati Tags: Averting Financial Meltdown, Banks, credit crunch, Financial Crisis, liquidity, London Property Search Agent, recession

Tags: Averting Financial Meltdown, Banks, credit crunch, Financial Crisis, liquidity, London Property Search Agent, recession

Musings of a London Property Finder

A glut of property offered for rental has pushed rents down according to the Royal Institute of Chartered Surveyors, the RICS.  This rather unsurprising news is as a result of numerous frustrated vendors opting to rent instead.  Our clients have benefitted from professional developers need to retain cash-flow this year particularly in Q3 and Q4, renting some fabulous homes intended purely for the sales market. 

In the RICS Lettings Survey published today, London and the South East have been the hardest hit: not a shock since a significant part of corporate relocations were down in Q4 and after 9 months on the market in some cases, vendors opted to become reluctant landlords to help with mortgage repayments.  We have seen an upswing in these properties, particularly since the middle to end of October, as hopes for a sale started to fade for many vendors.  We will therefore expect the situation to worsen in Q4 which is great news for tenants.

It should be said that sometimes rents are frankly ridiculous.  We are frequently offered property with a rent 2 or 3 times the real market value, but as with sales it is usually possible to get the landlord to see sense eventually and also to throw in lots of extras to clinch the deal. 

It is also true to say that fortune favours the brave and it is still possible to pick up buy-to-lets with a yield of over 10% if you buy the right property in the right location at the right price, even with pessimistic rental expectations.   If you don’t know how to do that, call this London property Finder on 020 7923 7564.

Technorati Tags: Buy-to-let, Lettings, London Lettings, London Property Finder, Rentals, RICS

Tags: Buy-to-let, Lettings, London Lettings, London Property Finder, Rentals, RICS