Having just seen a news article stating that Britain is to become a nation of renters, I felt that it contradicted slightly the other news I heard today which was that a leading mortgage provider are now offering a 100% LTV mortgage! Yes, that’s right, it’s back! Arguably the thing which started the whole credit crunch and recession we are currently experiencing in most westernised countries. I understand that, at the moment the terms to these types of mortgages are very onerous, but I feel it’s only a matter of time before these are widely available on better terms.

Obviously there is A LOT more to the credit crunch and the recession than the 100% mortgage, but I must say, when people are given the chance to purchase a house that they can ill afford, I start to get worried. Then again, maybe it is exactly what the market needs at this point to stop the UK turning into a “nation of renters” From my calculations; in most places it would definitely be cheaper to service a 100% LTV mortgage than rent a property. Crucially though, what would this do to house prices, if there is a massive drop off in the private rented sector? With less competition from renters, the currently healthy rental market may start to take a turn for the worse, landlords having to lower their market rent in order to attract tenants. Would this cause a sell off of some investor properties? Doubtful, as prices are not exactly at all time high levels at the moment. So as people may start to decide to Purchase rather than line the pockets of their landlords will we see a correction in rental yields which are very high at the moment, with property prices rising in accordance?

With the return of a 100% LTV mortgage there will now be the opportunity for people that had very little equity in their current house to upsize, this could free up FTB properties which can now be funded with new mortgages on the market. First time Buyer’s are often called the lifeblood of the market. Without new buyers in the market who will purchase all of the new supply from housebuilders?

What does all of this mean for those wishing to invest in UK property? I am a firm believer in a recent article I read in the Estates Gazette which gave a compelling argument for the fact that we need different methods to measure the UK property market these days, and the old method of an average wage multiplier to the average house price ratio should be overlooked. The reason stated in the estates gazette was the fact that property prices have continued increasing albeit very slowly over the past couple of years, but real income has been dropping, much due to the very high inflation we are currently experiencing. This is why other signals must be taken into account, one of which is always going to be mortgage availability and the cost of credit. Now availability is very high and the cost of credit is at an all time low are we just about to see a large increase in UK house prices?

Time will tell…

High Rise Student blocks have started popping up in most university student towns and cities as savvy developers see the potential for a 51 week tenancy agreement and maximising their rack rent by utilising as much of the available space in a building as possible by filling it with bedsits and communal spaces as opposed to self contained apartments.

High rise student blocks are often most popular with the overseas student market that will be coming over to the country and staying for a longer period of time often lets of 43 or 51 weeks, they tend to stay in the UK for the summer, they also normally pay higher fees, sometimes up to £20,000 per year making them a vital fee earner for UK universities.

London in particular is an area where student development is taking off and with figures recently released showing demand over the next few years and the supply that is currently in the pipeline, it could be only the overseas students that will be in a position to front the rising costs. The predicted shortfall of beds is 47,000 by 2016! In the new Nido scheme at Spitalfields students will be expected to pay up to £350 per week per person!

Even with the caps on overseas students that the government has proposed we feel the student property investment market is going to remain strong for a few years yet. As top universities start to charge higher fees in London maybe more students will start to look at smaller university towns and other large respectable locations may continue to grow.

To see our latest UK student property investment opportunities please click the link.

Let’s start off here. If an economy is contracting this typically means that unemployment is rising, the reason for this is that, the size of an economy is measured on GDP (Gross Domestic Product) this is the total amount in pounds of everything circulating through the economy in a given year.

The formula for GDP is C + I + G + (X-M) = GDP

Where C = Consumer expenditure, I = Investment, G = Government expenditure and X – M = exports minus imports i.e. the total value added to products in this country.

If people are spending less, people are making less profit. If inflation is present it should be easier for GDP to increase as prices are rising, but the figure given as -0.5% is “real terms GDP” this is the total increase having taken into account inflation. Now, inflation can do two things it can lead to further spending or it can stop spending and send an economy into negative growth (much like it, seemingly has here) the reason it can do two things are:

1.       Inflation can lead on to further inflation as people decide to purchase goods early before prices rise further. Resulting in further rises.

2.       Inflation can lead to negative growth as people begin to slow their spending habits as prices hit certain levels i.e. a £9.99 CD becoming a £10.19 CD, the psychological effect of this small rise can damage sales, but the shop has no choice but to raise prices as prices of other goods and services are rising.

However I don’t feel that the negative growth can be solely attributed to increasing prices etc. What must be taken into account is the good old weather of the UK! Because of the poor weather conditions we suffered in December much of the country was unable to get to work and even unable to go out and spend.

But there are two significant ways for a government to battle inflation at the scary 3.7% it currently is and that is… raise VAT, or raise interest rates.

VAT has been raised from the beginning of 2011 and I feel we are yet to see the full effect of this in the figure of 3.7% inflation which was given at the beginning of the year. But now there are lots of rumours of an interest rate hike on the back of this as well, which should of course slow down inflation, but could quite easily send us back into negative growth and further stagflation where growth is stagnant and inflation is still present.

Now if interest rates were to rise I feel there will be lots of unhappy landlords on Tracker Mortgages, especially when rental values are apparently falling (this is taken from a generalised figure, which we try not to rely on too much in this industry) but this will normally mean less in the landlords pocket and in some cases, more out of their pocket!

Further to this we have the savers. Savers have had a particularly hard time throughout the recession, low interest rates and constant inflation means that at no point have they really been “better off” apart from possibly sheltering from losses in certain markets.

We still firmly believe that purchasing property through us on one of our developments is your best way to 1. Build up a portfolio for your retirement or 2. Make a “hands-off” profit, for years to come… or 3. Both!

We have some excellent investment opportunities at the moment; both UK Property and Overseas Property please contact us for more details. In times like these it really pays to think Fresh

Barbados, as a holiday destination has traditionally been a favourite for the British public. These extra flights from BA can only mean one thing. The demand from the UK to holiday in Barbados is increasing and hasn’t wavered throughout the recession.

Barbados is an inspiring holiday destination. The East coast offers rugged shores fronting the Atlantic Ocean, where keen surfers can enjoy themselves on some very highly regarded breaks. As a contrast to this however the West Coast which fronts the Caribbean Sea is regarded as one of the most tranquil and beautiful coastlines in this part of the world and as such, prices are at a premium and have been steadily rising year on year for a very long time.

The west coast is our primary area of interest today. We have carefully sourced an investment opportunity on this prestigious coastline in the Caribbean and we are ecstatic about it.

The opportunity is to purchase an off-plan apartment on a site which is due for build completion in November 2011. The apartment, on completion, will be run by a top class hotel operator and on this basis, investors can expect rental returns of 10%+ on just a 38% occupancy. The apartments start from prices of just £183,000. These prices are unheard of in this location and through lots of market research we feel they represent a discount of around 40% from other local comparables. Not only this, but we have devised some very attractive payment plans which means you can purchase on this resort for as little as £83,250!

Another unique and exciting option with this investment opportunity is that when clients purchase a unit, they are given a login to a website which will allow them to customize the design of their apartment throughout the build period; this can be from the colour schemes right through to the inner walls of the property.

With this latest news and an increasing amount of demand for Barbados holidays, rental returns on this development could be at a level of around 20%. When we put together our expected returns for investors on this resort we worked to just a 38% occupancy achieved by the hotel operator, the average for Barbados is 80% and with this latest news we think this will be easily within reach for this resort.

We have been operating in the overseas property market for a long time and feel that these are an excellent opportunity to own property on this very sought after coast, for a fraction of the cost and with the added benefit of seeing a great rental return when you’re not using the apartment.

Please click here for more information on our Barbados property investment.

Firstly let’s decide why the government has decided to impose this new tax there are 2 main reasons:

1. The previous government has run up an astronomical budget deficit – hence the note recently left by the outgoing treasury minister Liam Byrne, to the new chief secretary David Laws which stated “Dear chief secretary, I’m afraid there is no money. Kind regards ­ and good luck! Liam.” For this reason it is imperative that the new government make a lot of cuts, to bring the level of this deficit to an acceptable level they need to recoup money from the tax payers and this new capital gains tax will do just that.
2. The second reason is that because of the slack lending criteria over the past decade many people have bought up a large amount of property in small holiday towns throughout the south of England, through this they artificially increased the prices of all the houses around these areas and they are now financially out of reach of the average worker in those towns.

The government is therefore going to impose an increased Capital Gains Tax on all second home sales as a way of raising cash for themselves and a way of stopping people becoming too greedy and putting house prices out of reach for first time buyers in holiday locations throughout the UK.

Now what could happen as a result of an increase in Capital Gains Tax?

The big sell off – This first scenario would really depend on when the government decides to impose this new tax, if they decided to impose the tax from the new tax year i.e. 6^th of April 2011 then I would suspect a big sell off of second homes in desirable locations, creating a very large influx of supply into the property market and without the demand to match, probable falls in prices.

The buy and hold – The other scenario, I believe would also depend on the time the new tax is imposed. I would suspect that if it was to be imposed straight away then second home owners and investors alike may decide not to sell their properties as the gains are no longer high enough. Hopefully this will not cause any form of stagnation in the already fragile property market.

One thing is for sure. This will slow down the purchasing of property just for the capital gains that come with it, as the risks may begin to outweigh the possible rewards .An advantage of this however will mean that investors do not inflate property prices further and therefore eliminate first-time buyers from the market. Hopefully this will lead to longer, sustained growth.

Maybe it’s time to look to the overseas property market for your significant capital growth?

What are your views?

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 the election comes around people traditionally slow their searches for new properties, in a hope to not overexposing themselves to possible new policies, which could leave them struggling once the new government has been decided. One such new policy could be an agreement to hold the interest rates at a current low level, this will of course be beneficial to anyone looking to trade up in the housing market and possibly leverage themselves further against the value of their property, if interest rates were due to increase this could be a problem for would be house buyers as they may struggle to match the repayments.

On the other hand it is normal in Britain for the property market to have somewhat of an upsurge in interest during spring, this can be attributed, partly to the sun making house hunting a more pleasant experience and also, to the budget which is often announced late in March and provides more certainty to market conditions.

It is good to see this news, as now the new government has been decided and are getting to work, we would expect the current trend in new house buyers and a slow increase in house prices to continue, as people are given more certainty in the position they will be in, come the next few months. There are a few interesting policies being taken into government, it will be interesting to see what the Lib-Dems have in store with the new “safe start” mortgage, designed to stop new buyers slipping into negative equity.

News of the increase in prices and sales came from RICS this month, as they published their latest monthly survey of some 245 members of the RICS who work as estate agents.

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 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.

The reason for this is simple:

When the banks dropped their interest rates, UK home owners on a tracker or variable rate mortgage had 2 choices:

-          Spend their increased discretionary income as they wish living a better lifestyle with luxury goods or,
-          Invest their increased discretionary income back into their property.

Now this piece of news shows that the majority of UK homeowners have chosen to do the latter…

Well done UK! The reason this is so good for us as a nation is that we, and therefore the banks, are now not so heavily leveraged on our properties and when the Bank of England inevitably raises the interest rates, we will still be able to afford the repayments on our now smaller borrowings.

This piece of reassuring news can put your mind at rest that the UK house prices should remain buoyant and we will not see the “dead cat bounce”

Others will argue that the idea of lowering interest rates is to get the UK homeowners to spend their increased discretionary income in the consumer markets, However, I don’t agree.

As interest rates dropped UK homeowners continued to keep the consumer markets ticking over as they paid off their mortgages. It would seem we have got through the hard stage and now we are in a good position to continue spending in the consumer markets, whilst maintaining our now lower mortgage repayments… Either way we see this as good news!

Rather than buy to let investors paying stamp duty for an entire bulk purchase, the government is looking at charging bulk buyers per individual property. Because of this, bulk purchasers of property are more likely to stay below thresholds for higher stamp duty rates.

Current stamp duty rates are as follows:

£125,000 – £250,000 = 1%

£250,000 – £500,000 = 3%

£500,000+ = 4%

See below for some figures on how this new policy would help you if you are looking to purchase multiple properties.

The current figures:

10 properties @ £150,000 = £1,500,000

Current stamp duty bill = £60,000

Anticipated figures:

10 properties @ £150,000 = £1,500,000

Anticipated stamp duty bill = £15,000

As you can see, on this particular transaction you would be saving 75% from your stamp duty tax bill!

Another new policy from the government could lead to barriers for Real Estate Investment Trust’s being lifted, this would allow REIT’s to invest in residential property and owners would hold shares in actual bricks and mortar rather than the REIT itself.

For a list of our bulk investment opportunities see here

See the article in The Times here

Capital growth, secure economy, stunning scenery, fantastic prices, rising tourism figures, beautiful climate… How about oil reserves and major sporting events? …Ok those last two may not be as appealing, but trust me they are going to drastically effect the value of your investment property.

An example of a major sporting event’s implications on local property values would be South Africa which is due to host the 2010 World Cup. In 2005 property values in South Africa rose by a staggering 35%, with news of the country’s successful bid from 2004. It isn’t only South Africa seeing their property prices increasing either. Cape Verde just off the coast is seeing similar price increases; this would probably be pinned down to it being a great stop off for anyone travelling to world cup games from western countries. Click for our Cape Verde property.

Belo Horizonte, Brasília, Cuiabá, Curitiba, Fortaleza, Manaus, Natal, Porto Alegre, Recife, Rio de Janeiro, Salvador, São Paulo. These are all “host cities” therefore these are going to be the cities that see the most direct benefit that this prestigious event will bring with it. But it will definitely not stop there, I am sure that all of Brazil is going to see the benefits of the 9.8 billion reias the government has set aside for tourism development of which 63.3% is allocated to infrastructure upgrades.

Brazil’s huge newly discovered oil reserves are sure to act as a magnet for Foreign Direct Investments. With oil reserves around the world dwindling and demand not letting up we are seeing another rise in prices at present. Brazil has positioned itself in a position where it is not overly reliable on oil; therefore it is now in a fantastic position to exploit its reserves.

So you can see where the growth of your investment property is going to come from. Other points I think you have to take into consideration though are: The fact that Brazil is only a 7 hour flight from Europe, it has increasing employment and a massive shortage of first-time homes somewhere between 8-10 million!

Oh Wait! Don’t forget that Brazil is also due to host the Olympic Games in 2016!

Check out our Brazil property