Property Investment News

Over the last week, RICS property experts have expressed concern about the end of the stamp duty holiday at the end of the year having a negative effect on the property market.

Earlier RICS had expressed concerns saying the housing market was already struggling in certain areas of the UK, and the end of the stamp duty holiday could make matters much worse in those areas.

The stamp duty threshold was raised from £125,000 to £175,000 temporarily to help the property market recover, but on 1^st January 2010, it will return to £125,000 once again. RICS surveyors have expressed fear that this could cause housing activity to fall to almost zero if this happens, which the Government has said it will.

The property investment market also needs to be aware of this when putting cash into property, so they are aware of the additional amount to pay over £125,000.

Rental supply has fallen by 20% during the last quarter caused by the market going through a sharp balance correction of supply and demand, according to figures from a leading UK lettings chain. During the last 2 years there has been an oversupply of properties and dropping rents, but this picture is changing rapidly. A survey was carried out by Countrywide Residential Lettings from more than 200 of its offices, and it found that in the three months leading up to October the number of new tenant enquiries increased by 11%, while the number of new rental properties dropped. The south east region had the highest proportion of enquiries for new tenants. As the property investment market improves, landlords will at present find it easier to fill properties in the current market.

UK mortgage lending rose by 5% in October compared with the previous month, according to a lenders’ group. That said, the £13.5 billion of overall mortgage lending recorded by the Council of Mortgage Lenders was down by 27% in comparison to the same month a year ago. The group said that the month-on-month rise in lending was typical seasonal activity. But the type of lending has changed since the start of the year, with remortgaging at “decade-low levels”. This shows it is still hard to predict a rise or a fall for the property investment buy to let market at present. Although increased lending is good news.

The recent survey results which was issued by RICS has suggested that house prices will continue to increase in the short term.

The survey showed that sellers are now coming back to the property investment market, but they are still being outnumbered by the number of buyers waiting for property. Most of the surveyors who observed an increase rather than a fall in October went up from 30% the previous month to 34%. RICS stated that this result was the strongest balance of price increases since December 2006.

According to RICS, London has led the way for the price rises, although there was a significant upward trend in all regions in October, especially in the North of England and the South West.

The survey also provided evidence that activity was rising, but were slowing due to supply shortage which was limiting activity.

Completed sales have gradually risen to an average of 19% per surveyor during the past three months, amounting to marginally less than three sales every two weeks.

Recent data has found that lenders are making it slightly easier to obtain a mortgage, as reported by BBC News.

The number of mortgages needing a 15% minimum deposit has increased from 189 to 226 in the past month, reaching the year’s peak. The number of mortgages for the same period requiring a 20% deposit has dropped from 136 to 117.

Despite the figures switching, two-thirds of mortgages that require a smaller deposit was good news for first time buyers. It is also encouraging news that the 85% loan to value mortgages had increased in the last month. This could indicate that mortgage providers have been watching house prices and regained confidence in the market.

The easing may also reflect an increase in lender competition. Northern Rock, for example, have re-entered the market with some aggressive deals.

This has increased competition for lower loan to value deals, which has pushed other lenders towards lending more at higher loan to value.

According to recent CML figures, more first time buyers are still required to put down a 25% deposit. It does appear, however, that lenders have relaxed slightly their fear of losing large amounts if the borrower should default.

The fact that lenders are becoming more relaxed with LTV is a good sign for the property investment market which means investors could soon get mortgages more easily, and buy to let LTV could be next for lenders to relax on.