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A 40 Per Cent Drop in House Sales Over the Last Five Years

As we all know moving house is getting tougher and tougher but now it appears that activity in the housing market is slowly collapsing as it is now down by two fifths over the last five years.

The Royal Institution of Chartered Surveyors (RICS) conducted a report and found that during the three months up to May there were only 15 completed sales for each surveyor, compared to the same time in 2007, which saw completed sales at an average of 25 per surveyor. This is a 40 percent decrease which the RICS believe is due to the banks reluctance to offer loans.

Bank Loans

“Ongoing economic instability in the UK and overseas has continued to undermine consumer confidence, and the reluctance of many banks to offer affordable mortgage products has created something of a stagnant market,” says Peter Bolton King from RICS.

This also affects landlords because for many of us having a mortgage is the only way we can own a property with or without a tenant contributing to monthly bills. With not many affordable mortgage packages avaliable this will make it hard for landlords to expand their portfolios and increase their profits.

‘Wait and See’

Mark Harris who is the manager at SPF Private Clients, a mortgage broker, has said, “The number of transactions has slumped as wider economic uncertainty means buyers and sellers alike adopt a ‘wait and see’ approach.”

“The difficulty in getting credit unless you have a substantial deposit, squeaky clean credit history and meet lenders’ stringent requirements, means even those who do want to buy may struggle.”
As well as the banks reluctance, another issue is that properties aren’t selling as fast as they used to. This is because buyers can’t afford sky high prices and sellers can’t afford to sell their property for peanuts. This means everyone is waiting for the right price which often takes a long time. Especially now when the cost of just moving property is close to £7000 before other additional costs such and as a good property insurance quote.

Some surveyors have been warning sellers that they need to be more realistic in what they want to get for their homes as prices are gradually becoming lower and lower. If prices are lower, this should increase sales.
Mr Bolton King said, “A gradual stability is returning to the market and surveyors expect transaction levels to increase over the coming months, even if prices continue to dip across more parts of the country.”

Optimism for Landlords in 2012

While I was browsing the property sphere I came across a very interesting article discussing landlord optimism in the New Year. It seems that studies have been carried out within the private rented sector in order to indicate that landlords are excited about the prospects for next year.

Landlord Survey

The research was carried out by the Royal Institute of Chartered Surveyors (RICS) and Paragon Mortgages and it certainly looks like landlords are expecting to bolster their property portfolios in the coming year. Even this year landlords have been improving their portfolio with the average number of properties per landlord rising to 13 properties in the three months to October 2011.

The survey has revealed that 22% of landlords anticipate adding properties to their portfolio in 2012 whilst just 8% of landlords said they would consider reducing their numbers. Furthermore, the research showed that 77% of landlords were feeling more positive about actually being a landlord, whilst 57% of those landlords thought that next year will be a great time for them.

Increased Supply Needed

John Heron is the Managing Director of Paragon Mortgages, and he has been explaining the following: “This is an interesting time for the private rented sector as landlords are experiencing very high levels of tenant demand as other areas of the housing market come under increasing strain.”

He added: “Looking at the year ahead, I am pleased to see that landlords are expecting to add to their portfolios as there is no sign that tenant demand is going to slow in 2012 and to ensure the private rented sector can withstand further demand, there needs to be increasing investment in private rented sector stock.”

Tenant demand is very strong indeed at the moment and so, as demand is so strong, the amount of supply needs to improve and grow. This could then result in higher numbers of landlords as more and more people try their hand at property investment. This will undoubtedly lead to an increasing amount of landlord insurance quotes being applied for, and to be honest, landlord insurance, when managing multiple properties, will be an absolute necessity!

It’s great that landlords are feeling positive for the New Year, hopefully many other industries within the UK will share this optimism as we move into 2012, and hopefully, just maybe, we can begin to move out of the economic recession. Here’s to 2012!

Crunch time for Landlords

Landlords in the UK, again find themselves on the horns of a dilemma as yet another survey reports that house prices are once more on the slide.

Great news for landlords with ambition and a bank balance to match. For these landlords, acquiring property and landlord insurance to go with it, at this moment in time could be a good idea. There is no doubt that for the foreseeable future, the landlord prepared to take a gamble will find some really good bargains and not necessarily in basements. On the face of it, adding to your portfolio does seem an attractive proposition at the moment. Estate Agents and letting agents agree that demand for private residential accommodation is booming.

The austerity measures have not really kicked in yet, so the short term outlook for rented property surely suggests that demand will grow. Job losses in the public sector should start snowballing late autumn and could stay at high levels for the next two years. The NHS and local government spending cuts should see steady job losses until 2013 and with it a reluctance for people to commit themselves to a mortgage in such uncertain times. One great source of income for landlords of course is students. Perhaps here too, landlords will see a growth in demand, with less jobs around there is obviously a chance that many youngsters fresh out of school will opt for University life rather than sign up for jobseekers allowance. So the landlord looking to expand appears to have many factors in his favour, however, there is a flip side.

Over the last 6 months, surveys by landlord associations and letting agents, have reported a small but steady increase in the amount of rent landlords are able to charge. This has been more or less nationwide and not confined to the South East. Although this should continue short term, if more and more properties are turned into private rental accommodation then the tide could turn, and small landlords may find their rental income squeezed. Worse still for the small landlord are the reports on falling house prices.

The Royal Institute of Chartered Surveyors (RICS) survey out today backs up similar data produced by the Nationwide and Halifax in recent weeks, house prices are dropping. Many forecast this drop to continue next year and one report suggests property prices will not increase in value between now and 2020! Many landlords see the actual value of the property of more importance than the actual rental value. This particularly applies to landlords with just one or maybe two properties who see their investment as a retirement package.