Buy To Let Mortgages and news

First time buyer numbers fall

The number of first time buyers looking to buy property fell at it’s fastest rate for three years during July.

New buyers dropped at the quickest rate since August 2004 but the number of properties remaining on books rose to the highest level since the beginning of the year.

It is said that with the interest rates at 5.75% and with the possibility of a further rate rise bringing the figure to 6.0% a lot of first time buyers are continuing to rent until the market stabilizes.

Even with the market slowing down the prices of property still rose for the 21st month in succession.

Although buyer activity has pulled back there are now fears that the top of the market has now been reached.

With Interest rates at 5.75% and with a likelihood of it rising to 6.0% first time buyers are continuing to rent until the market shows signs of improving.

Buy to Let Investors Still Needed

Latest reports say that 42% of buy to let landlords have one or two properties and 10% have ten or more. Four out of ten landlords have 51%-75% value ratio mortgages and a quarter of landlords have less than half value mortgages.

At least half intend to buy further properties during the next year and the average term of ownership is over seventeen years.

Average time tenants spend in properties is over eighteen months and this continues the rise of the past couple of years.

Landlords are in favour, around 45%, of buying property in good condition. Only 20% are in favour of new builds and approximately 18% buy property in need of refurbishment but poor condition property is not what landlords in general want to buy.

Without buy to let investors there would be little choice in housing and encouragement should be given to private investors wishing to buy into the residential market.

Care needed for Buy to Let Market

Care should be taken by buy to let landlords as some areas of the country are experiencing over supplies of certain types of property.

For example, in Cambridge every street corner seems to be having a new build of flats erected and landlords have been buying off plan hoping to get a quick gain and reliable tenants.

The market remains good but with so much choice there has been a decline in the rental value of flats especially where blocks go on the market at once, there is nothing to choose between flats apart from the cost. There is always a landlord who will be willing to lower the price and this of course this has a knock on effect.

Some landlords are finding things difficult and are considering selling off some of their property. This could prove expensive in the long term because, depending on the length of time the landlord has owned the property, the Capital Gains Tax my be fairly high especially if they have taken equity to buy further properties. If this being the case they could find they have insufficient funds, when all fees and expenses have been paid, for the Capital Gains Tax bill.

This does not mean that landlords should not continue to increase their portfolios but to make them aware that location is still a priority together with the amount they are having to borrow to finance the property.

First Time Buyers

First time buyers have been featured a great deal lately because they are finding it very difficult to afford to buy a property.

Buy to let investors have been blamed for purchasing the lower end of the markets property but in fact only 10% of the market is owned by buy to let investors.

In the 1950’s and 1960’s only 30%-40% of property was owner-occupied. In those days houses were purchased with the intention that a family would be raised in the house and parents would remain there throughout their lives. The trend changed as prices went up and couples were forced to buy smaller property and move when they were more financially stable and when starting a family.

First time buyers used to account for 45%-50% of all property buyers but the 21st century has bought a change in the market and this has gradually declined to around 30%-35% of the market.

First time buyers will continue to struggle to get on the property ladder until more property is built a year. Once supply is on an increase and with mortgage lenders relaxing criteria first time buyers will be again able to afford property.

The London Rental Market

London’s rents are at their highest for 10 yeas and further increases are expected.

In the first half of 2007 Docklands rents rose to £490pw for a 2 bed apartment and £375pw for a l bed apartment.

A shortage of housing is the main cause of price rises together with mortgage rate rises. Student growth is also a factor.

Sealed bids are now becoming the norm around London. Some attractive properties are let before details have been printed.

No Smoking Laws

Landlords must ensure that all public areas of their properties which include hallways, if any member of the public has access and public rooms in share properties such as bathroom, hall, lounge and kitchen. No smoking signs must be displayed.