At Manse & Garret, we are always looking out for information that can affect our Clients.  Halifax recently claimed that it now costs (on average) £100 less per month to buy a property, than it does to rent the same one, which may have an impact on our buy-to-let Client’s.  In the last year, there has also been a rise in the number of first-time buyers successfully securing a mortgage.

First-time buyers have been able to climb onto the property ladder due to the re-availability of 95% mortgages and a number of schemes, such as FirstBuy, Lend a Hand and the Save to Buy Scheme launched by Nationwide.

At first glance, these schemes seem to be just what is needed for ‘first-timers’ to climb onto the bottom rung of the property ladder.  However, regardless of whether someone has spent years saving up for a 25% deposit, has a generous Aunt willing to put money aside, or manages to get backing from their Local Authority, this still does not guarantee that the mortgage application will be successful.

For a start, a bank or building society will only lend four times the amount of an applicant’s wage.  For those earning the minimum wage (roughly £12,600 per year) the amount a mortgage provider would lend is £50,400.  The average annual salary in the UK is around £26,200, which would generate a loan of £104,800.  This means that those earning the average salary would (at most) be able to purchase a 2 bedroom property in London – but only in areas such as Thamesmead, Abbey Wood or East Ham.  Those on the minimum wage would be able to afford a garage in Prime Central London, a one bedroom houseboat, or a share in a new build property, (which also works out more expensive per month than buying outright).

Realistically, unless you are fortunate enough to be able to purchase property outright, or to earn at least the average UK wage, the chance of owning your first property seems to be slim-to-non-existent.  Whilst there has been a rise in the number of first-time buyers purchasing their first property, I suspect that the proportion of first-time buyers unable to buy is much higher than the proportion who are.  The mortgage schemes available, for some, are most definitely a mirage, as they lack the substance necessary to be tangible.

Fortunately for top-end Buyer’s Agents like us, our first-time buyers are either able to meet the requirements for a residential mortgage, or have the funds necessary to purchase a property outright.  We are well placed to help them secure their first home in the right area and at the right price, as we know how property transactions work in the UK.  If you are looking for your first (or second!) property in London or Brighton, give us a call today to see how we can help you with your search, as we are officially the best Property Finders in London.

Technorati Tags: First time buyers, Mortgage Lending, mortgage schemes, mortgages, property, property market news

Tags: First time buyers, Mortgage Lending, mortgage schemes, mortgages, property, property market news

Stamp Duty Allowance

Announced in March 2010 by the Labour Party, the increase in the stamp duty on residential property purchases over £1,000,000 increased on April 6^th from 4% to 5%. This increase is intended partially to fund the tax gap created by doubling the stamp duty allowance for first time buyers to £250,000.

One effect on the housing market in London has been that although property has come to the market between January and March, there has been no shortage of prospective buyers, particularly at the top end of the prime central London market, encouraged by bonus figures being released at the start of the year. Selling and buying has been frantic; the prospect of paying an extra 1% on top of a purchase has put pressure on people to move before April. There have been bids and good offers on those properties which have been reasonably priced at the beginning of this year. We have seen properties selling at and above asking price before they have even fully come onto the market – not quite at 2007 levels, but certainly reminiscent of the pre-crash boom.

A consequence of this is that the dearth of property is now even worse than it was at the beginning of the year, and there remain many frustrated high-end buyers, not best pleased by the knowledge that the purchase of a home will cost them upwards of £10,000 in additional tax.

It is likely that the 5% stamp duty will be with us for the foreseeable future, as the government needs the revenue and luxury, top end property is an obvious source for it, to a government conscious of its electoral viability. The majority of buyers at the top end of the market who are most likely to be affected by the increase in stamp duty will be the plethora of overseas buyers and will not be a part of the electorate.

The shortage of property exacerbates the demand in prime central London and key towns in the South-East, where property remains a favourite with overseas investors. The unrest in the Middle East and the recent declaration by Portugal will encourage investors further into the prime central London market which continues to be perceived by most as a comparatively safe place to invest in property.

Technorati Tags: First time buyers, House Prices, House prices in London, investors, London property, London property market, london property market news, property investors, Stamp Duty

Tags: First time buyers, House Prices, House prices in London, investors, London property, London property market, london property market news, property investors, Stamp Duty

Musings of a London Buyers Agent

After  a year or so of mortgages being pulled from the market, the Nationwide has brought back the 125% mortgage for buyers who are trapped by negative equity.  This group of buyers would be unable to move without the new mortgage but it strikes us that this is the least likely group of home buyers who should be entitled to such significant borrowings.  After all, they hardly have a good track record if they are already in negative equity.

However lately we’ve been thinking that the real losers are canny cautious buyers who settle for properties in need of a little work or repossessions or distressed sales, available at a bargain price.   We have represented both first-time-buyers and new investment buyers who haven ‘t got much of a deposit but who would really have benefitted from the 125% mortgage and would also be relatively low-risk buyers. 

The Clients I am thinking of have bought good value property at excellent prices and in some cases below the true market value and need additional funds for renovations, or a lease extension, both of which would add immediate value and saleability. 

However following the boom years, most mortgage companies nolonger have any appetite for this type of lending.  Clearly, some people borrowed more than they could ever repay.  Also agents and mortgage brokers flipped property and finance deals, so that in reality the owners put down very little or no cash other than a brokers fee.  In cases where the valuations were too high, the mortgagors were left high and dry when the housing market crashed. 

The thing is, why on earth does it make sense to lend 125% with a track record of getting into negative equity?  There is no way a commercial lender would do this.  Although not a Conservative by nature, my parents words of wisdom are ringing in my ears – is it time to return to a tory spending regime?  If this new scheme from Nationwide is anything to go by – I rather think so.

PS If you need a Buyers Agent who will give you an honest valuation and justify it and tell you if the market is overheated (as it is now in many parts of London), you know our number!

Technorati Tags: 125% mortgage, Buyers agents, First time buyers, homebuyers, housing market crash, London Buyer's Agent, overheated market

Tags: 125% mortgage, Buyers agents, First time buyers, homebuyers, housing market crash, London Buyer's Agent, overheated market