It is usual to see a bounce in the price of property coming to market at the beginning of the autumn, but this year the falls in the top-end boroughs of London have instead led to a large average price fall of -2.9%.
Miles Shipside, Rightmove director and housing market analyst comments: “As we enter the autumn selling season we usually see estate agents advising new-to-the-market sellers to push up their asking prices. While this is still the case in half of London’s boroughs, the other half have seen the price of newly-marketed property fall. This is especially prevalent in the most expensive boroughs where five out of the top six have seen monthly price falls as their market continues to re adjust. Because of their predominance of more expensive properties, they also have a disproportionate effect on the average , meaning that a slump at the top-end exaggerates the overall London price fall.”
The large monthly fall has pushed the annual rate well into negative territory, down to -3.2%. This is the largest year-on-year decrease so far this decade. In contrast to the market travails in the most expensive prime boroughs, the cheaper boroughs are rising year-on-year. The most expensive seven boroughs are all down year-on-year, while the cheapest 12 are all up.
One of the few ways that Londoners can fight back against constantly stretched affordability is to seek out the most affordable housing. Their focus on this unfortunately pushes up demand and consequently fuels upwards price pressure. The top five fastest increasing boroughs have seen annual rises in the range of 5% to 10% in the price of newly-marketed property . These boroughs have average prices between £300,000 and £660,000 , so while not affordable by national standards, they are still relatively cheap for London . Hackney and Southwark are among the cheapest Central London boroughs, and these two have seen year – on – year increases of 7.2% and 9.5 % respectively.
Between 2009 and 2015, the large majority of property buyers were cash buyers, although currently not so much. In the current market sales volumes in Prime Central London have dropped, and the market has softened to some degree. We are finding that most homeowners are not in any hurry to sell their properties, which has resulted in fewer listings available to buyers and fewer sales. In 2009 until 2015 the Central London market was inundated with investors looking to purchase property as a way to invest their money in a safe financial environment. However, since the introduction of the 3% surcharge on stamp duty paid by investors, along with the uncertainty as to how Brexit will impact London’s property market, investors have been standing on the side lines. We are beginning to see more and more investors venturing back into the market, but we are still a long way from the volumes we saw pre-referendum.
Our advice to all sellers in many locations across London that the current market requires sensible and realistic pricing. Pockets of high demand still exist but tend to be concentrated around specific streets, schools and transport hubs. Transaction volumes are increasing and properties priced realistically continue to sell well, but those looking to enter the market should speak to a local agent who really knows their patch in order to get an understanding of local activity and demand.
We here at Austin Homes care deeply about the environment, and many people just like us make a conscious effort to help protect the planet. We have come up with a list of tips for every day of the working week to encourage you to keep up the good work and commit to even more small changes.
Reduce the Plastic Use
There has already been a partial ban on microbeads and pressure is mounting to secure a complete ban for all products. But until the government supports a ban on all plastic packaging that can’t be reused, recycled or composted we can all help by reducing the demand for plastic by using less of it. Try using a stainless-steel bottle, re-usable coffee cup and fabric bags to help protect our oceans and marine life.
By reducing the emissions of CO2 from the transportation and storing of food, you’ll continue to help save precious places like the Arctic. To start an eco-food revolution try buying sustainably sourced, fairly traded, organic produce whenever possible and sourcing it locally at farm shops or farmers’ markets when it’s in season.
Shop for Recycled Products
Take your regular toilet paper, kitchen roll, notebooks and printing paper, to name a few, and try swapping them for ones that are made up of 100% recycled post-consumer waste material. Look for the recycled logo. Recycled paper not only uses less energy, water, and produces lower carbon emissions than the manufacturing of non-recycled paper but it also reduces the amount of waste to landfill – as paper can be recycled 4 to 5 times.
Together more than 70,000 of you are putting pressure on Theresa May to create a bold action plan that cleans our air and saves lives. The simplest and most effective way to reduce our personal contribution to air pollution is to opt for greener methods of transport. By walking, cycling or using public transport instead of driving a car, you’ll help reduce the toxic air we all breathe.
Reduce, Reuse, Recycle
The simplest and most effective step you can take is to repair and upcycle your clothes and other items into something that’s new to you before you consider swapping them, donating them to a charity shop or buying something second hand or new. Buying a second hand pair of jeans rather than new negates the need for the 7,000 litres of water and hazardous chemicals that could otherwise get into our waterways and rivers.
There are a number of new buy-to-let mortgage rules coming into force in the end of this month and we therefore have come up with the most important information that you need to know in order to keep up with the changes.
What are the new buy-to-let mortgage rules?
From the end of this month the Bank of England will start enforcing tougher standards for portfolio landlords.
A portfolio landlord is someone who owns four or more buy-to-let mortgaged properties. (This will not include unencumbered properties or properties on consent to let.) However, the rules will apply to those who own three rental properties and want to take out a mortgage on a forth.
As of the end of September 2017, in order for you to apply for a buy-to-let mortgage on your forth property (or any consequent property) you will need to submit a business plan outlining your entire property portfolio to the lender before they will make a decision on what deal they can offer on a single property.
For example, if you have six properties and four are generating enough rental income to cover mortgage payments and then some, but the other two are not, your new mortgage application may not be approved by some lenders.
You will also be required to submit a business plan, cash flow projections of your entire portfolio to support your application.
Who will be affected?
The new rules simply outline the “complexities” of being a portfolio landlord. In practice, this should hopefully not affect borrowers who plan on maintaining their existing portfolios, however, if you are planning on purchasing a new property or take our additional borrowing, then you will e affected.
Mortgage advisers suggest that a few lenders are likely to withdraw as a result of new rules. Santander have already advised that they will not lend to portfolio landlords for purchases r additional borrowing. While there are also other, like Natwest, who have improved their offering.
Should I be doing anything?
It may be too late for you to try and arrange a new deal now but it may be a good idea to try and cut costs wherever possible. Cutting your interest costs by re-mortgaging and getting an up to date rental valuation on your property may be a good idea.
Whenever the property prices are not sky high and the properties are not flying of agents’ books people tend to start studying the market, trying to come up with the “true” answer as to what is happening and why.
The most obvious comment to make about these attempts is that they are all statistically flawed. Some measure only sentiment, not actual transaction prices. Some measure only property bought with a mortgage from a particular lender. There are geographic biases. And they all suffer from the fact that every property is different, it is not an asset class that lends itself to indexation.
But nobody ever says that. Instead, there are various explanations as to why prices are either not going up, or not going up as fast as before, or going up more in some places than others. Lately, there has been a drop in transaction volumes to explain, too. And quite frankly, most of the theorising does not add up.
Let’s take the so called number one problem: “uncertainty” over Brexit, the general election or both. You might think there might be something in this. Houses are just about the biggest-ticket purchase most people ever make. You wouldn’t want to buy one just as the market turned south.
But more people voted for Brexit than not, so I cannot see why they would regard it as a reason not to move house. And for every know-it-all trying to time the market to perfection, there is a couple with a new baby on the way who need to trade up. Or a bereaved family with a big inheritance tax liability that needs to sell. Or, most likely of all, there is someone living in a tatty flat in an undesirable part of town, handing over half their salary to a landlord each month. I doubt the status of the Brexit negotiations is at the top of their minds. And according to the big housebuilders, the referendum and the general election has had little impact on their activity.
Not far behind in the blame stakes are stamp duty changes. It is no secret that onerous taxation of buy-to-let property has reduced transactions and curbed price growth. Mortgage lending to landlords has fallen. Economic theory expects higher taxes, such as the surcharge now levied on purchases of second homes and investment properties, to be reflected in lower asking prices. The ability to offset mortgage interest payments and maintenance costs against taxable profits is also being restricted. If those profits are lower, then purchase prices also need to be lower for returns to remain the same.
On the other hand, serious landlords who are well organised can structure their affairs to minimise the impact of these levies. Mortgage rates have continued to fall since the changes were announced, while overseas investors get the benefit of a weaker pound.
Most will say that a slower price growth is a temporary problem because there is a “chronic shortage of homes for sale”. There is an alternative explanation for each of the factors above. It is that prices are simply too high. There are properties on agents’ books, they are just not being sold because they are not priced to sell.
Unrealistic asking prices are why property remains stuck on agents’ books. Look in London’s three inner zones — supposedly the epicentre of the nation’s housing crisis — and it is not hard to find properties that have been on the market for a year or more.
So the truth is that the housing market in some parts of the capital is in a Mexican stand-off between buyers and sellers that will end when one side or the other capitulates.
Whether you are looking to buy or to rent a property, this will most likely be one of the biggest decisions you would be making in that moment in time. Yet many people decide on a property within the first fifteen seconds of walking through the door. While your gut instinct is important, it’s vital to take a step back, engage your sensible head and keep a checklist to hand, to ensure your snap decision doesn’t leave you with a costly money pit, or noisy, problem neighbours.
So, here is a list of questions that you must ask your estate agent on a viewing:
- How long has the house been on the market for?
This could be the most important question you ask an estate agent, giving you an early indication as to how desirable the property is, if the asking price is appropriate or if there are any underlying problems turning buyers off.
If the house has been on the market for six months or more, ask the agent why, thinking about asking price, location or possible structural problems.
- Why are the current owners selling?
The estate agent doesn’t have to answer, but if you’re lucky they might hint at the circumstances. You might find that the owner is desperate to sell, perhaps because work is taking them overseas, and so would accept a lower price, or they have already found a new property and must move quickly.
- How long the owners/previous tenants lived there for?
If they’re moving out after a short period, why? Find out if the property has repeatedly changed hands – if it has there may be some neighbourhood problems.
- What exactly is included in a price?
Does the property come unfurnished? What about the appliances, are the staying or going? Is the garden shed or greenhouse included? Exactly where does the boundary lie? Make sure you know what you’re getting for your money.
- How much are the Council tax and utility bills per month?
Try and get exact amounts. (You can ask the estate agent to ask the seller/landlord if you have to.) These may not make or break your decision but they’re re-occurring expenses that will add to the monthly cost of owning your home.
- Has the property had any major building work recently?
Was there a particular reason it needed to be done and will it impact on you in the future? It is always good to know if the boiler has just been replaced or the property has had a complete rewiring done
- What is the local area like?
What are the schools like? What is the crime rate like? How good are transport links? Where is the nearest petrol station? While it is a good idea to see what the estate agent has to say, make sure you do some independent research as well.
- What are the neighbours like?
It is important to know what the neighbours next door will be like – are they owners? Are they tenants? Do they have any young children or pets? These are all very important factors to consider if you have specific requirements about where you want to live. Be it a family friendly place or a professionals only kind of neighbourhood.
- Which way does the garden/balcony face?
You may have pleasant visions of sitting out on a summer’s evening sipping a cool glass of wine. But that’s not likely to happen if you have a north facing garden/balcony. If you’re not sure which way the garden/balcony faces, ask.
- What offers has the property had so far?
The agent will most likely tell you if there have been other offers, but not how much they were. But again, they have a big incentive to get a price agreed, so might drop some pretty heavy hints in whispered tones. If you can find out about the other offers, it obviously makes it easier to know what you should offer.