What will the election mean to the property market?
This election could mean boom or bust to the already fragile property market in the UK.
As we all know, possibly the largest challenge facing the new government will be our economy. The 3 big parties have outlined the steps they will take to try to deal with the £170bn deficit in the UK’s finances.
With it looking increasingly like a hung parliament, what will be the main points of debate from these parties on our property market?
Listed below are some of the key points of each party.
Conservative:
- Scrap home information packs
- Keep the £250,000 stamp duty threshold for the foreseeable future
- Add a new 5% stamp duty threshold for £1m properties from April 2011
- Increase inheritance tax threshold to £1m
- Regards Northern Rock, they have not stated whether they will consider remutualisation
- Include more local initiatives rather than large scale regional building plans
- Will look to split state and part owned banks into 2 parts, retail and investment
Labour:
- Add a new 5% stamp duty threshold for £1m properties from April 2011
- Keep the homebuyer direct scheme for low earners
- Keep Home Information Packs
- The £250,000 stamp duty threshold is due to expire in March 2012
- 10,000 affordable homes to be built a year by 2014
- Northern Rock: Manifesto pledge to consider remutualisation as an option, ‘while ensuring the sale generates maximum value for the taxpayer.’
- Will look to break up large banks but probably not into retail and investment
- Maintain the standard interest rate on the Support for Mortgage Interest Scheme at 6.08 per cent until December 2010.
Liberal Democrats:
- Charge VAT on new homes
- 1% “supertax” on homeowners with properties worth over £2m.
- Create a new “Safe Start” mortgage that keeps buyers from slipping into negative equity
- Propose a green loan for people to invest in home energy efficiency and micro-renewables
- Get rid of home information packs and keep energy performance certificates
- Consider remutualisation regards Northern Rock
- Will split state and part owned banks into retail and investment
- Concentrate on local rather than large regional building plans.
Fresh Invest is a property investment company with the aim of maximising our investor’s funds whilst minimising their risk. For more information see www.freshinvest.co.uk or phone 0800 043 69 56.
As lending relaxes property investment increases!
It’s what most of us have been waiting for, the small time frame between lenders relaxing their criteria and property prices increasing.
We all knew that lenders were going to need to increase their loan to value rates, and that when they did it would make a massive difference to the property investment market.
Over the past few months half decent rates had been reserved for investors with 40% deposits. Now i do not condone most no money down deals, i think they lead to more problems than they alleviate.
However! the case for the investor with a healthy 20% deposit should be heard, they have a large amount of equity in their property and should now be relatively safe from negative equity.
It seems the lenders now agree.
What are the new rates like?
Since the BOE base rate reached 0.5% products requiring a 15% deposit have risen from 169 to 231. And the number of products requiring just 10% upfront has gone up from 89 to 105 in the last month alone.
This is certainly a massive difference to a year or even 6 months ago.
Nationwide has already announced a new influx of deals, including some at 85% loan to value and they have also released some of their best rates at 70% ltv, from their previous at 60%.
They have even released a special 90% ltv rate for investors that hold one of their flexaccounts. These start at 4.63% for a 2 year tracker.
The Woolwich have also released details of their new 75% ltv rates, this is the first time the lender has made it to 75% for at least a year. The new mortgages include a lifetime tracker on 2.94% and 2 year fixed on 3.99%.
Abbey also have a new range out, these are exclusively for their current account customers. One of their best is a 90% ltv 3 year fixed rate at 5.99%, their cheapest mortgages are now available at 70% from 60%.
So why the sudden change?
It seems that lenders now believe that the worst is behind us, in short if they are offering 90% ltv mortgage they believe that property prices will not drop more than 10%, in fact they believe that prices will increase in the future, as now being reported in most news channels.
Just last month hsbc pledged to lend an extra £500m at 90% ltv by the end of this year!
Add this to the political pressure being put on lenders by the government, this was summed up by the governments own lending house northern rock as they released some of the best ltv rates seen for over a year!
So should i buy now?
If you are looking at getitng into property investment there has never been a better time to invest, there are still seller under pressure but now there is also the promise of some competitive rates. This means that not only can you buy cheap, you can also borrow cheaply!
We don’t expect this to remain the case for long so why not add or start your portfolio with some discounted property now!
Also check out our UK Buying Guide for handy hints and tips.
Latest Buy to Let News…
Bank of Scotland will cease business from 01/07/2009, thus leaving even fewer lenders to choose from in this challenging market.
After a brief period of lenders lowering their rates last week saw rates rise due to the increase in SWAP rates. BM Solutions raised their but to let rates by up to 0.6% in one move with Platform also increasing by 0.6%.
It has been announced also that Leeds Building Society will no longer lend on new build flats on a buy to let basis. The market is certainly challenging and previous lenders are still showing no signs of re entering the market to ease the pressure.
Please be aware that the remaining current lenders will only lend on a certain percentage of a development and once this exposure limit is reached they will not lend anymore on the site.
Once certain lenders have reached their exposure limits obtaining a mortgage for sites/developments may become extremely difficult or sometimes impossible so please ensure you do not leave it till the last minute to enquire about or to arrange a mortgage.
It’s all the NINJAs fault!
As we all sit around wondering why our shares are worth 50% of their initial value and our savings are returning a staggering 2% per annum, i think its time to blame NINJAs, or more importantly, the people that lend them money!
If your thinking, he’s finally lost it, hold on and let me explain.
I’m not talking about the type of NINJAs that wear black pyjamas and lurk in dark places! Im talking about “No Income, No Job, No Assets” N.I.N.J.A.s.
It’s because the lenders lent money to these massively high risk characters that we are in the poaition we are today.
There is a reason NINJAs do not own their own houses and it’s generally because they can’t afford both the deposit and the monthly mortgage payments. With 100% mortgages available many high risk applicants decided the time was ripe to take their first step onto the ladder.
Suddenly all the spare cash that was swilling around at the beginning of the century was quickly used up, much to the lenders delight.
Bankers then took all of these loans, mixed in some better ones and sold them to other banks who found the high interest rates attractive.
The problem arose when these “fixed rate” mortgages came to fruition!
Suddenly Joe Blogs went from paying an affordable rate to one miles outside his comfort zone, they default on their payments and the heavily traded loans that were made are found out to be be worth about the same as the paper they were printed on!
This may have been manageable if their hadn’t been over $1 trillion worth of these loans in the market!
Any lender with a high risk business model eventually came a cropper as banks bit the bullet and decided to stop lending to one another.
From there on i’m sure you all pretty much know the story, banks are “helped out” by the Government and we all eventually suffer.
One point worth noting is that the banks that took these massive gambles that eventually doomed us all were rewarded by being taken over by the Government!
Interesting seeing that if any small business owner made such a colossal cock up we would be on the street before we could say Northern Rock!
