Northfields

Pent-Up Demand will Buoy House Price in 2009

Pent-up demand in the housing market may cause house prices to rise by the end of 2009, reported the BBC this week. Although such a prediction would have been unthinkable a few months ago, Nationwide has said that there is a reasonable chance that house prices will finish the year higher then they started.

There has been a pool of buyers who have had the funds to buy throughout the credit crunch, but due to lack of confidence in the economic conditions were reticent to buy. Encouraged by low interest rates these buyers have come back to the market. Added to that, few houses have come onto the market which has buoyed prices up as the demand has outstripped supply. The only factors which may keep a rise in house prices in check could be “the squeeze on earnings and rental incomes and the rise in unemployment”.

The recent rise in mortgage approvals over the last few months revealed by the Bank of England, also suggests that there will be greater activity in the housing market over the next few months.

To take advantage of the current market and to find out exactly what your property could be worth, call Kylie Menz on 020 8840 6666 or register your details online here for a free valuation.

4 Key Things Every Landlord Should Consider

1.  Overpay your mortgage

In the current economic climate many landlords are not investing the difference in rental yield and mortgage repayments back into their mortgage. Once the average mortgage payment begins to rise again, landlords who have not overpaid their mortgages will have become used to spending the extra income and will find it difficult to pay higher mortgage payments.  Bad habits like these could lead to an increase in arrears for buy-to-let mortgages.

Although the buy to let mortgage market is expected to recover from early 2010, the lending criteria is expected to remain tight. Lenders of mortgages and other loans will look at your credit rating. Overpaying your mortgage will make you look more attractive to a lender.

THE LESSON:  If you are currently paying less on your mortgages as a result of lower interest rates, use the difference to pay off as much as you can afford. 
  
2.  Be selective with your tenants

Always reference your prospective tenants.  Northfields Estates uses a professional referencing service which assures you of quality tenants and spares you the trouble of chasing the prospective tenants' history. 

THE LESSON - Protect your rental income -  Would you cope with bouncing direct debits if your tenants cannot pay the rent on time? Make sure your tenants haven't got a history of rental arrears by referencing them.

3.  Get Expert Advice 

Landlords face over 70 pieces of legislation that affect their property portfolio, added to that legislation regularly changes.  By using a professionally accredited and award winning estate like Northfields Estates you are assured that your property is meeting all the legal criteria.  For example, did you realise that your rental property must have an Energy Performance Certificate (EPC) every time you change tenant?  Did you know that the law on gas inspections has been changed?  Are you registered with the Tenancy Deposit Scheme?  If not, then you need to hire a professional to look after it for you.

THE LESSON - Changes in legislation mean that you could suddenly find yourself liable for hefty fines. An estate agents' fees are a cost effective way of avoiding both the headache and the fines that resulting from unknowingly breaking legislation.   

4.  Choose the right agent

All agents are not created equal.  Always look for an agent that is a member of professional regulatory bodies.  Northfields is a member of several recognised bodies and as such are bound by the strict rules and high standards demanded by the National Association of Estate Agents (NAEA), the National Approved Letting Scheme (NALS) and the Ombudsman scheme. Just as you would choose an ABTA travel agent, you protect yourself from sharp practise and guarantee expertise by using an estate agent with membership of these organisations.

Another way of ensuring that you are getting an agent who uses best practise is to look for industry awards. The awards we have won for training and developing our people and for our unmatched lettings service are evidence of our dedication to achieving top quality standards, and to providing our customers with outstanding expertise and service.  Click hereto read more about our multi award winning record.

THE LESSON - if the agent is a member of professional bodies and has won industry recognised awards you can be assured of good service worthy of those accolades.  Don't take chances with your property, use an agent who is acknowledged as the best.

For more information about our award winning letting service or to arrange for a free valuation call our Lettings Director, Silvia Eldawi on 0208 998 3111 or register your details here.

 

Confusion over Renewal Commissions as a Result of Foxton's Court Case

The  Office of Fair Trading (OFT) brought London estate agent Foxtons to court under the Unfair Terms in Consumer Contracts Regulations 1999 (UTCCRs) on Friday July 10th. Following the decision in the case, there has been a great deal of confusion and mis-understanding created by the media.

One of the aspects of the case that is causing the most mis-understanding relates to renewal commissions collected when a tenant installed by the estate agent renews their letting contract.  The media has suggested the ruling stipulated that all renewal commissions are unfair and that landlords will be able to recover commission already paid.  However, this is simply incorrect.  Unfortunately, as a result of these misleading reports many estate agents have already been contacted by landlords demanding repayment of alleged unfair fees.

It is therefore worth reading exactly what Mr Justice Mann said regarding the renewal fees in paragraph 33 of his judgement:

I should first make clear what I am not deciding, and what I am not asked to decide. I am not asked to decide, and do not decide, that renewal commissions (in the sense used in these proceedings) are always unfair. I make that clear because some of the evidence and submissions of the OFT come close to asserting a case that they are always unfair, and some of the correspondence seemed to be based on such a proposition, though Mr Nicholas Green QC, for the OFT, eventually made it clear that that was not his case. Mr Michael Kent QC, for Foxtons, opened his submissions by saying that I would eventually have to, and should, rule on renewal commission generally, but he moved away from that. I shall not decide whether or not renewal commission is always unfair to consumer landlords.

Therefore, the judgement in this case in no way rules that all renewal commissions are unfair. 

What Mr Justice Mann did rule on was that Foxton's renewal commission clauses were not worded in plain and intelligible language and were excessive in the level of commission charged.  In addition, Foxton's definition of a renewal also encompassed associates of the tenant which would also attract a fee.

The other source of confusion is in relation to the rights of parties to demand the return of fees already paid.  Many people may be basing their assumption that the judgement will result in returns of funds to landlords due to the decisions made recently in the various cases involving bank charges.  However, in this case, there is no part of the ruling which allows for funds already paid to be recovered.  This particular issue was one which Foxtons fought hard to avoid and at the current time the Court has not made any ruling in relation to it.

In short, no agent is in any way obliged by the OFT v. Foxton's court case to return monies to any party.

Should you have any questions regarding renewals please contact our Property Management team on propertymanagment@northfields.co.uk.

Further Signs that the Market is Looking Up

The BBC reported that HM Revenue and Customs has just released its latest figures showing a lift in the housing market.  The report found that 75,000 UK residential properties costing more than £40,000 were sold in June, up 15% on the previous month.  These figures represent the highest level of activity for a year.  However, the figures are quite modest in comparison to the rest decade. 

It is also worth noting that the early summer is traditionally one of the busiest times for house sales and the seasonal surge will have affected the figures. However, even taking into account the seasonal fluctuations, the figures in June figures were the highest since October 2008.

In addition, less volatile quarterly figures from the HMRC showed that property transactions rose from 141,000 in the first three months of the year to 198,000 in the second quarter of 2009.

Would you like to see how the value of your home has been affected by the current market conditions?  Please call us on 0208 840 6666 or click hereto request a valuation online.

Which housing market survey should you trust?

by Kymberly Ashman, Sales Manager, Northfields at Pitshanger

When watching or reading the news, statistics are quoted from many different bodies that bring fresh news about the state of the property market.  However, the statistics often vary widely or even contradict each other.  So who are these bodies that produce the market updates and which should you trust?

Nationwide and Halifax
Perhaps the best known surveys of the property market are provided by Britain's two biggest mortgage lenders, Nationwide and Halifax. Both surveys cover the entire UK, rather than just England and Wales. Their figures are often very similar, as they are both based on the price agreed after a survey by their mortgage customers.
However, they are based only on property sales financed by mortgage lending, and do not include cash sales.

Royal Institution of Chartered Surveyors (RICS)
Another well known survey, RICS has a rather different focus - this survey reflects confidence in the property market rather than actual property sales.
The figures are collected from three hundred surveyors and estate agents in England & Wales who are asked if they feel prices are falling or rising.
Respondents are also quizzed on a host of other related issues, such as whether the number of buyers and sellers are rising or falling.
As a result the RICS survey often shows any changes in the market earlier than other surveys.

Land Registry
The most authoritative survey has only been recently launched. The Land Registry records all completed property sales in England & Wales.  It is now publishing a monthly report on house prices, in addition to its quarterly survey. The survey records prices since April 2000. The survey also takes into account that incidences of the same house being sold again by using something called Repeat Sales Regression to measure the change in prices over time. In short, this means it is comparing the price of properties sold now with the price paid when it was sold before.

In addition, the Land Registry's quarterly survey is still very thorough. The proceeds of all the transactions are added up, and then divided by the total number of sales to reach an average sale price, but this measurement does not include repossessions and property transfers following a divorce to avoid altering the figures.

Because Land Registry takes almost all residential property sales into account, the Land Registry's figures can provide a unique insight into not only national but local prices. The main downfall of this survey is that the survey comes out only once every three months, the figures are out of date by the time they are published.

Government price survey
The government has its own monthly house price index, issued by the Department for Communities and Local Government (DCLG).  It collates lending information from about fifty lenders, which is collected through the Survey of Mortgage Lenders. Unlike the Land Registry survey the new government index does take into account information on cash purchases and it only appears two months in arrears.

The advantage of the survey is that indexes the whole of the UK, the major regions and separately indexes first-time buyers. This new survey depends much more on the total amount of money spent. Relying on expenditure in this way means that London and the South East, where house prices are highest, really affects the index.

Hometrack and Rightmove
Both of these property websites also produce their own house price surveys. These surveys reflect the prices that properties are marketed at, by surveying asking prices. However, these surveys obviously do not reflect the prices at which properties actually sell.

To sum up, surveys are geared to reflect different aspects of the property market with information ranging from consumer confidence, to actual property sales to the range of asking prices as the basis of the survey.  Many do not reflect the specifics of your local area, so for the latest property update, call Kymberly Ashman on 0208 998 3111 or click here to request an up to date valuation on your property.