Sell and Rent Back Media Picture

Sell & Rent Back Enquiry

Fast Property Sale Enquiry

House sellers left hanging as buyers dry up

Published on By Mike Jones, 18th July 2011.

Seven out of ten of this year’s property sellers are still seeking a buyer, according to the latest research from Rightmove.

The average asking price of property coming to market has fallen for the first time this year.

After six consecutive months of rising prices, Rightmove recorded a fall of 1.6% (£3797) for the 108,249 properties marketed within the last month, eating in to the gain of 8.1% over the first half of the year.

With around 70% of property marketed so far in 2011 still on the market, new sellers will need an edge over their competition to increase their chances of sales success.

Miles Shipside, director of Rightmove, said: "Summer sellers are more nervous about their selling prospects than the early birds who asked ever higher prices during the first six months of this year.

"Early sellers in 2011 had a chance of worming their way into the more active spring market, whereas those coming to market now at the onset of the holiday season have to price more aggressively as many buyers have already gone to ground.

"With seven out of ten properties marketed so far this year still on the market, sellers in the second half of 2011 need to do something different to promote their property and increase their chances of catching those elusive buyers."

He added: "Many equity-poor aspiring sellers will be trapped in their current homes, either unable to come to market or stuck on the market and unable to reduce to a price that will attract buyer interest.

"Those that are equity-rich have an opportunity to increase their chances of success by launching to the market at a price below their over-priced and stale competition."

Back to the top

Why you should really fear for housing market

Published on By Mike Jones, 14th July 2011.

Average UK real house prices are unlikely to recover to their previous peak levels until around 2020, according to analysis by PwC in its latest UK Economic Outlook report.

The analysis points to only a 12% chance that real house prices will have risen back above their 2007 peak by 2015, with the median projection being for a 12% real decline over this period.

Even by 2020, there is only just over a 50% chance of a real house price rise relative to 2007.

John Hawksworth, chief economist at PwC, said: "We expect average UK house prices to drift down further over the next year and then enjoy only a modest recovery over the next few years. This reflects the dampening impact of declining real income levels and continued tight credit conditions for first-time buyers in particular.

"Later in the decade, however, we do expect stronger house price growth as supply shortages reassert themselves and credit availability gradually returns to more normal levels. But it will be a long slow road to recovery."

The report projects modest UK GDP growth of 1.3% in 2011 with consumer spending falling by 0.3% in real terms and the main driver of growth being net exports.

Growth will pick up gradually to 2.2% in 2012, as business investment next year is assumed to pick up from the very low levels seen during the recession

But consumer spending growth will remain subdued due to the continued squeeze on real disposable incomes and weak house prices.

The report identifies significant growth differentials at the regional level, however.

London and the South East are projected to lead the recovery while regions more exposed to the public spending cuts such as Northern Ireland, Scotland, Wales and the North East tend to lag behind.

PwC chief economist John Hawksworth said: "The UK as a whole faces a slow climb to recovery given the continued squeeze on consumer and Government spending. In the short term, risks remain weighted to the downside and it would therefore be prudent for the Bank of England to keep interest rates at current low levels for some months to come, although rates may need to rise gradually during 2012 to keep inflation under control in the medium term.

"We see a distinct regional pattern to growth with the public spending cuts acting as a drag on recovery in Northern Ireland, Scotland, Wales and the North East in particular. London and the South East will not be immune to the cuts, but growth there is less dependent on the public sector and more on the international financial and business services sector, in which growth is likely to remain relatively strong."

Back to the top

Only 2,600 homeowners 'rescued' by mortgage scheme

Published on By Daniel Culpan, 7th June 2011.

A recent report by the National Audit Office (NAO) revealed that the government's mortgage rescue initiative didn't help the number of people it was expected to, the Council of Mortgage Lenders (CML) reports.

The NAO found that although the Department for Communities and Local Government (DCLG) assumed 6,000 households would be helped by the scheme, only 2,600 homeowners having difficulty repaying their mortgages have been 'rescued'.

Furthermore, though the DCLG expected each case to cost an average of £34,000, the actual cost per household was £93,000.

The NAO's report also revealed that 98.5% of households chose the more expensive mortgage-to-rent option, which lets homeowners struggling to meet their mortgage repayments sell their property to a housing association while still living there as tenants. This was more than six times the DCLG's estimate of 15%.

Margaret Hodge, chair of the committee of public accounts, admitted that though mortgage rescue was set up to help 'the most vulnerable homeowners at immediate risk of repossession', it had 'helped fewer than half the number of households expected and each rescue has cost more than three times as much as expected'.

Back to the top

Worst house price slump for a generation

Published on By Cliff D Arcy, Thursday 5 May 2011

House prices are set to slide for five years, according to this new report.

After weeks of Easter sunshine, the hottest April on record and a royal wedding, it's back to doom and gloom for Britain.

This morning, the National Institute of Economic and Social Research (NIESR) released its latest forecasts for the UK economy, which make for depressing reading.

Life after the storm

According to the NIESR, the UK economy will grow by 1.4% this year and 2% next year. These figures are well below the official Office for Budget Responsibility's estimates of 1.7% and 2.5%. In other words, the economy will grow more slowly than expected, making our post-crash pain linger.

However, these independent economists have some good news for hard-pressed consumers: inflation (the rising cost of living) is set to fall back. The Consumer Prices Index (CPI) measure of inflation will peak at 4.5% this year, before easing to 1.9% in 2012. This will lead to a fall in consumer spending of 0.6% this year.

House prices set to slide

The NIESR has some bad news for the UK's 17.5 million homeowners, but good news for first-time buyers and those aiming to move up the property ladder.

It estimates that 'real' house prices (after adjusting for inflation) will fall 4.5% this year. In other words, it is predicting flat house prices in 2011, as this 4.5% drop will be fully accounted for by inflation at 4.5%.

Furthermore, from 2012 to 2015, the NIESR predicts real house prices will fall by an average of 1.5% a year. Thus, by 2016, these economists expect house prices to be down by 10.5%, after adjusting for inflation.

If the NIESR is correct, then 2011-15 would see the most sustained slump in house prices since records began in 1963. In the NIESR's words, "It will be the longest period of falling house prices that we have seen."

Why will house prices fall?

In the words of former US President Bill Clinton in his 1992 election campaign "It's the economy, stupid!"

For sure, house prices are going to struggle, thanks to this toxic cocktail of seven ingredients:

  • the continuing squeeze on household incomes caused by low wage increases and high inflation;
  • cuts in government spending, leading to higher taxes and lower benefits;
  • higher unemployment, fuelled by the loss of 500,000 public-sector jobs;
  • higher mortgage rates as the Bank of England tightens monetary policy by raising its base rate;
  • the end of the huge liquidity support provided to lenders by the Bank of England's Special Liquidity Scheme and Credit
    Guarantee Scheme. From April onwards, this will drain roughly £250 billion from banks' reserves;
  • mortgage lending for new purchases running at less than half peak levels; and
  • the end of 'mad mortgages', such as self-certified 'liar loans' and 100%+ home loans.

What about the supply squeeze?

Despite these challenges, optimists claim that an imbalance between supply and demand in 'this small island' will force up house prices. Not so, according to the NIESR!

It found that, during the boom, ' constraints were less important than is often argued, since supply just about kept pace with household formation.'

In fact, the NIESR argues that looser lending -- in the form of lower deposits and higher loan-to-value (LTV) ratios -- played a much greater part in inflating the housing bubble. Hence, it argues that future house prices would be more stable were limits to be imposed on LTV ratios.

Are falling house prices a bad thing?

With more than half (53%) of UK net personal wealth tied up in housing, falling house prices would make us less wealthy as a nation. Then again, lower prices will make home-ownership more affordable, helping to lure the next (heavily indebted) generation onto the property ladder.

What's more, lower spending on housing costs will leave more income to spend in the wider economy, helping to stimulate growth and create jobs. Also, putting less money into bricks and mortar and more into productive businesses will help companies to expand and grow, thus benefiting us all.

Finally, why do we grumble when the prices of food, fuel and other essentials increase, but cheer when house prices rise? Unless you're a property investor, or plan never to move up the housing ladder again, this simply doesn't make sense!

Back to the top

UK 'On Cusp Of Second Banking Failure'
Published on Sky News. Monday 4th October.

High street banks stand on the verge of another credit crunch and taxpayers may be forced to plug a £25bn-a-month funding gap, an economic think-tank has claimed.

Faced with a huge financial black hole, the New Economics Foundation (NEF) has said the banks could turn again to the Government for support.

According to its report - Where Did Our Money Go? - an estimated £1.2trillion of state cash has already been pumped into the banking system.

However, NEF has described a "shocking" lack of information about how that money has been used and demanded "urgent reform". The report warns that the industry is on a collision course for a severe funding crisis when current financial lifelines are withdrawn.

In particular, there are fears over the Bank of England's Special Liquidity Scheme - a vital source of money since the credit crunch - which ends in 2012.

The group has urged a range of changes, including splitting retail operations from more risky investment banking and the breaking up of "too big to fail" players.

It comes against a backdrop of incoming regulation - such as the Basel III capital rules - that demand banks put aside more cash to boost their capital strength.

Calling for reform, Tony Greenham, head of the finance and business programme at NEF, said: "We are on the cusp of a second banking failure.

"The public have already paid for the failure of the banks twice - first by bailing them out and then by suffering a programme of drastic cuts to public services to appease the financial markets."

A Treasury spokeswoman claimed the Government had already taken measures to reduce risks posed by the financial sector and is pushing for global standards to help protect taxpayers.

She said: "We have introduced a bank levy designed to address systemic risk. We have also established an Independent Commission on Banking, which is considering measures to reduce systemic risk presented by large banks, while promoting competitiveness in the industry."

Back to the top

UK House Prices Wilting in Summer
Published on Thursday 8th July.

UK house prices have fallen slightly in the early summer compared with the start of the year, a survey has found.

Property values dropped by 0.6% in June compared with May, following a 0.5% fall the previous month, the Halifax said.

This meant prices in the second three months of the year were 0.1% lower than the first quarter.

More properties coming on to the market and less activity from house buyers caused the fall, the lender said.

The average home in the UK is now valued at £166,203 according to Halifax figures.

The typical property was still 6.3% higher than a year ago, although the figures point to the house price recovery faltering this year.

Martin Ellis, housing economist for the Halifax, said that the figures were not a great surprise. "This pattern is in line with our view that house prices will be broadly unchanged over 2010 as a whole," he said. "A shortage of properties for sale in 2009 contributed to an imbalance between supply and demand and was a key factor driving up house prices last year.

"An increase in the number of properties available for sale in recent months has helped to reduce the imbalance, relieving the upward pressure on prices."

He said that the continued low level of interest rates continued to keep demand steady. The Bank of England's Monetary Policy Committee announced on Thursday that it is to keep the Bank rate at 0.5%.

Contrast Some of the figures are in contrast to the views of the Nationwide Building Society which has reported month-on-month house price rises in May and June, of 0.5% and 0.1% respectively.

The Nationwide also records prices rising faster year-on-year, although it too suggests this has started to slow down.

The Halifax calculates the annual rate of change by comparing the average house price over the past three months with the average for the same three-month period the year before.

The Nationwide conducts a more straightforward monthly year-on-year comparison, although this could be affected by short-term blips.

A number of house price surveys have suggested that property values will remain relatively static in 2010.

"We believe that house prices are likely to be erratic over the coming months and will probably be only flat over the rest of 2010," said Howard Archer, economist at IHS Global Insight.

"Furthermore, it is hard at this stage to be optimistic about house prices in 2011 as the fiscal squeeze will increasingly kick in, which will hit people's pockets and lead to serious job losses in the public sector.".....

Back to the top

Bank of England cautious on jobs market
Published on 15th March 2010

Despite signs that the UK economy may well have recovered quicker than many had expected, and unemployment has not risen as quickly as many had thought, the Bank of England is still relatively concerned about the short-term prospects for the UK employment market. There is a growing feeling that if the UK economy does not push through with further growth in the short to medium term then we could see pressure on prices which would then translate into pressure on businesses.

While many people have applauded the UK government and its various strategies over the last two years, which have led to the recent recovery in the UK economy, there is concern that this is not job done as yet and more time and investment is required. This comes at a time when the UK government is desperate to portray an economy which is firmly back into growth mode due in the main to decisions taken by Gordon Brown and his cabinet.

The latest quarterly bulletin from the Bank of England is a blow for the UK government as it does highlight the potential for further difficulties in the short to medium term. Are we literally in the middle of a short-term pickup in the UK economy to be followed by higher taxes, falling property prices and a stalling of the economic recovery?

Back to the top

FSA: Homes face repossession if rates rise
Published on By James Coney, Daily Mail 11th March 2010

Millions of families' homes are at risk from shock interest rate rises or falls in property prices, the financial regulator has warned.

It fears that households who have failed to pay back debts could be pushed to the brink should the economic recovery falter.

Under greatest threat are credit-hungry families who use credit cards and loans to keep up an affluent lifestyle, and young professionals who borrowed many times their income to get onto the property ladder.

In a bleak analysis, the Financial Services Authority forecast that any rise in unemployment, interest rates or a further crash in property prices could drastically slash the already stretched incomes of many middle class families.

This would lead to them missing mortgage repayments, and eventually losing their homes.

It will come as a timely warning to thousands of homeowners. Yesterday, it was reported how more than a million desperate borrowers are applying for credit cards with interest rates as high as 60%.

Many economists believe interest rates will start to rise at the end of this year. And this month Halifax and Nationwide both reported falls in the value of houses for the first time in more than a year.

FSA chairman Lord Adair Turner warned yesterday: 'This recession is really quite different than the early 1990s. We have households which are more indebted than they were in the past and that creates a vulnerability.'

The FSA's report examines the state of the economy, and sets out potential threats for households and businesses.

The Bank of England base rate has been at a historic low of 0.5% for one year.

This has helped reduced the amount homeowners mortgage repayments by about £20bn.

Despite this families have failed to repay their debts, instead choosing to use spare cash to top up their pensions or invest in the stock market. Meanwhile the cost of borrowing on credit cards and loans has risen.

And an estimated 4.7m homes are still paying mortgage rates that are more than eight times higher than base rate.

The City regulator said that as the economy recovers the Bank rate may need to increase to more 'normal' levels, such as those before the recession.

This would 'increase the cost of debt before household incomes have recovered fully.'

The report said: 'The high level of debt income has left many households vulnerable to property price, income and interest rate shocks.'

Figures from the Council of Mortgage Lenders show the number of repossessions soared to a 14 year high in 2009 as homeowners were battered by the recession.

Back to the top

Cost of bankruptcy to increase by £90
Published on By Nathan Cameron. 4th March 2010

People who are struggling with their debt problems look set to find it more difficult to relieve their, as the cost of is set to rise by £90.

From April 6 the Government-backed Insolvency Service is raising its bankruptcy petition fees, from £360 to £450.

There will also be an extra court fee of £150 (which can be avoided if the person trying to get out of debt is on benefits), bringing the total cost of going bankrupt to around £600.

The Insolvency Service claimed that it is raising its bankruptcy fees due to the economic downturn, particularly the fall in property prices, as it has meant that they are unable to recover enough money from debtors to cover the costs of allowing debtors to go bankrupt.

A spokesperson for the Insolvency Service said: "The economic downturn has reduced asset values especially property which means a greater proportion of cases don’t generate enough money to cover the fee.

"This has meant that within the overall fee structure, we have had to ensure that more cash is realised earlier in the process. This has led to increases for some but will ensure that the cost of the regime is paid partly by the debtor and partly by creditors.

"Over the last year, the average unsecured debt in debtor petition bankruptcies has been around £33,000. Even with the new higher petition deposit cost, it is not unreasonable to expect those getting the benefit of writing off this debt to pay a proportion of the cost."

Ivan Cooper, Chairman at debt advice specialists Chiltern, said: "The most important thing to establish is whether bankruptcy is the right option in the first place……

Back to the top

UK house prices fall 1.5% in February
Published on By Sunil Kumar. 5th March 2010.

UK house prices slipped 1.5 per cent in February after seven consecutive monthly increases in price, representing a further slowdown in the housing market, mortgage lender Halifax said.

Rise in the number of houses for sale, awful weather conditions in January and February and the return of stamp duty on properties from 125,000 pounds to 175,000 pounds at the start of this year, contributed to the fall in property prices.

Speaking on the topic, Martin Ellis from Halifax said, "An increase in the number of properties for sale has helped to reduce slightly the imbalance between supply and demand." However, house prices were up 4.5 per cent as compared with the corresponding period of last year.

Analysts had predicted a 0.4 per cent monthly increase and 5 per cent annual increase.

Earlier, Nationwide had estimated a 1 per cent decline in property prices for February.

Latest figures shows that the housing market recovery is losing momentum after the number of mortgage approvals hit an eight-month low in January.

Back to the top

Repossessions to jump in 2010
Published on By Christina Jordan. 15 February 2010

The latest figures show arrears and repossessions have fallen, but we’re not out of the woods yet.

More homeowners are hanging onto their properties, according to the latest repossession figures from trade body the Council of Mortgage Lenders.

The number of properties taken into possession dropped by 13% to 10,200 between quarter three and quarter four of 2009. Over the whole year 46,000 properties were repossessed - a 14 year high.

As awful as this is for the thousands of families that lost their homes, it is significantly lower that the CML's initial prediction of 75,000 repossessions in 2009. Thank goodness they were wrong.

There was also a drop in the number of mortgage borrowers having difficulty meeting their monthly repayments, with 188,300 mortgages ending the year in arrears of 2.5% of the outstanding mortgage balance (i.e. £2,500 or more arrears on a £100,000 balance).

Positive trend

More good news came from the Ministry of Justice, showing that court activity for repossessions in 2009 dropped by over a third compared with 2008, and claims for mortgage possession by lenders between October and December 2009 were 26% lower than during the same period last year.

Of the mortgage possession claims that led to orders, 46% were suspended.

Housing Minister John Healey said that measures to help struggling homeowners will remain in place after Government figures showed that thousands have received free advice about their mortgage repayments from their local authority.

In the last three months over 9,000 cases facing legal action were seen by court desk advisers, of which over 7,500 had the immediate risk of losing their home lifted.

The Government's Mortgage Rescue Scheme helped 1,200 households stop the immediate threat of repossession, with a further 544 accepting an offer from a Registered Social Landlord to sell and rent back their property so they could stay in their homes….

Risk of rises

Despite the downward trend in arrears and repossessions many expect they could rise again in 2010. Even the CML expects repossessions to increase this year from 46,000 to 53,000. Last week it remarked that this forecast might now look a little pessimistic, especially because of lenders being more flexible, interest rates looking likely to remain low, and better than expected unemployment levels.

But the trade body didn't actually go as far as revising its prediction and it covered itself saying that because 'both the economic and political outlook remains uncertain, interest rates may rise sooner than we expect'.

The worry is that when rates do rise it's almost certain arrears and repossessions will follow.

There is even more concern in the buy-to-let sector according to the annual Moore Blatch 2010 Repossessions Report, which compiles the views of lenders and asset managers.

It says that 65% of mortgage lenders are worried about an increase in buy-to-let repossessions if rental yields reduce and 56% fear an increase if there were to be a rate rise.

Another worry is the fact that landlords are struggling to pay their mortgage because their tenants are not fulfilling their rent obligations. According to the Assocation of Residential Letting Agents, 55% of letting agents have seen an increase in tenants struggling to pay their rent

The organisation warned that 'we must not labour under illusions, as the threat to the property market is ongoing and very real'.

There has been a raft of measures introduced in the last 18 months to protect struggling homeowners and there are more proposals in the pipeline to ensure that every protection is afforded to borrowers.

Things seem to be improving, but with the economy in such a fragile state nobody knows quite what 2010 will bring………

Back to the top

U.K. Mortgage Approvals Fall For Second Month In January: BoE
published on By RTT Staff Writer. 3rd January 2010

Mortgages approved in the U.K. fell for the second month in a row in January to an eight month low, a report from the Bank of England showed Monday.

The number of loan approved for house purchase decreased more than expected to 48,198 from 58,223 in December. The January's figure also stood below the previous six-month average of 55,924 and the consensus forecast of 50,000.

According to Capital Economics' economist Ed Stansfield, if the economy grows by just 1% this year, it is hard to see a strong recovery in housing market activity in the near future. Mortgage approvals are likely to remain well below their pre-credit crunch levels throughout 2010, the economist said.

Last week, external Monetary Policy Committee member Kate Barker said in a Treasury Committee hearing that she was rather surprised by the strength of housing prices last year. It is possible that some people delayed decisions to move or put houses on the market. She expects the housing market to be quite weak in 2010. Barker forecasts more adjustments in the housing market with decrease in mortgage lending.

Total net lending to individuals rose by GBP 2 billion in January. Within the total, net lending secured on dwellings increased GBP 1.5 billion, larger than the GBP 1.2 billion growth in December. Economists were expecting only GBP 0.9 billion increase. The twelve-month growth rate ticked up to 1% from 0.9% in December.

Consumer credit increased GBP 0.5 billion, while economists were expecting a fall of GBP 0.1 billion. On a yearly basis, consumer credit dropped at a pace of 0.2% compared to a 0.4% drop in December. Credit card lending rose GBP 0.2 billion and other loans and advances increased GBP 0.3 billion.

Earlier in the day, a report from housing research group Hometrack showed that the average asking price for a home increased 0.3% month-on-month in February to GBP 157,600. Prices rose 0.4% from a year earlier - the first annual increase since March 2008. These figures contrast with Nationwide's, which showed a 1% month-on-month fall in property prices, with the icy winter weather largely to be blamed.

Elsewhere, a report published by the Building Societies Association showed that the value of approvals by building societies and mutually owned banks in January was GBP 0.8 billion, and gross lending was GBP 1 billion. "Low activity in the month was expected following the surge of buyers aiming to beat the end of the stamp duty relief in December," said Adrian Coles, BSA Director-General. The adverse weather conditions at the start of the year also suppressed market activity.

Back to the top

UK residential property prices set to fall 7% in 2010 before picking up again in 2012

Published on December 2nd 2009

London and the South East have led a strong recovery for UK house prices during the past six to eight months but prices are set to fall by 7% in 2010, according to analysts.

Although average house price growth for 2009 could reach 5% by the end of this year, the rate of growth is already slowing, says the end of year UK Residential Market Forecast from Jones Lang LaSalle.

But it concludes that the medium term outlook is good. Although 2010 and 2011 are expected to be difficult years for the real estate market after that prices are predicted to rise strongly at 6% per year.

It says that as well as unemployment a number of factors will cause house prices to fall in 2010 including the rise in VAT in January, the general election, the diminishing impact of the quantitative easing programme and further government fiscal tightening will all weaken the demand for housing in the next 12 to 18 months while also forcing more homes into the marketplace.

"Whilst there is evidence to suggest the UK economy is in recovery mode there remain question marks about the depth and sustainability as well as how the public finances can be repaired, quite possibly under a new government," said James Thomas, head of residential development and investment at Jones Lang LaSalle.

"The recent pick up in house prices is based on fragile economic fundamentals such as a weak pound, which has driven overseas buyer demand, and a boost from the stock market recovery, both of which are unlikely to be as supportive during 2010," he explained.

"It is very probable the present recovery will stall next year with prices falling by 7% as the rate in the increase of new buyers to the market eases, while the low number of properties on the market bottoms out and starts to rise again," added Thomas.

Analysts say that the overhang from 2010 will make 2011 a difficult year.

"But thereafter we can expect the potential for strong house price growth of 6% per annum as an improving economy forces increased housing demand to come face to face with restricted supply," concluded Thomas.

Back to the top

House prices up 10% this year... but it won't last as economists predict gains will be wiped out in second dip

Published on December 2nd 2009

The average price of a home in Britain has shot up 10 per cent in ten months, according to figures published yesterday. Since February, it has jumped from £147,746 to £162,764, forcing buyers to pay on average an extra £15,000.

Prices have now risen for seven consecutive months. Yesterday's figures, from the Nationwide, showed that the average house price rose 0.5 per cent in November.

But economists warned yesterday that a second dip" in property prices was on the cards. Ed Stansfield, from consultants Capital Economics, said: "The recent gains in average house prices will not be sustained and house prices will drop back, by perhaps 10 per cent."

Martin Gahbauer, chief economist at the Nationwide, said: "The outlook remains crucially dependent on labour market conditions. The public sector has not yet experienced any significant job losses, but presumably will begin to do so when fiscal policy is tightened from next year." The recent rise in house prices has been largely fuelled by an acute shortage of homes to buy.

James Hyman, from property consultants Cluttons, said: "It is still a seller's market as the stock of property for sale remains extremely limited, forcing prices upwards. I expect to see this change rapidly in the New Year as people who have held off selling over the past year are encouraged to come to market by rising prices, which could in turn bring about a second dip in property values…"

Back to the top

House prices 'recovery' is a rocky road

Published on By Edmund Conway. December 1st 2009

There are few signs of a so-called property boom in many parts of the UK. In fact experts are predicting a double dip in house prices next year.

The average house price rose by more than £700 last month, and they will end the year significantly higher than at the start, defying all the doomsters, according to Nationwide this morning.

The price-boosters were quick to embrace the data as yet more evidence of Britain's fizzing property market. Galliford Try Homes said: "We are seeing a sustained recovery."

Meanwhile, the UK's biggest independent estate agency chain, Haart, says its own figures suggest prices in the capital were up 10% in November alone. That's an amazing increase – from £274,000 to £302,000 in just one month. And Haart reckons we're in for a "strong start" in 2010 as well.

Meanwhile, Rics, the surveyors trade association, says everything points to "further price increases into the new year."

Maybe they'll be right, and this year's falls will be a brief interlude in the ever upward march of property prices. But let's put a few things straight: Don't be conned by the way percentages work. When prices fall by 30% they need a 42.8% increase to return to their starting point. We are, thankfully, seeing only relatively small percentage price rises at the moment, and are still some way off the 2007 peak.

This "recovery" is extraordinarily uneven. Some towns are still seeing price falls, while some types of property (eg one-bed flats) remain in low demand. House prices in the north remain 15% below their peak (even after the recent "recovery") and are selling at prices last seen in early 2004. In Northern Ireland, prices need to rise by 65% to retrace their peak two years ago.

Savills, which has one of the better records in forecasting house prices, is predicting a 6.6% fall in 2010. Jones Lang LaSalle reckons prices will be down 7%.

• Asking prices are already falling, according to the major property websites. said a fortnight ago that prices fell 0.5% month-on-month and warned of a coming double dip in the property market.

At some point – maybe it will be another two years away – we will wake up to find that interest rates are back at "normal" levels. Unemployment will remain high, rental demand low and pay rises subdued, and the banks will still want hefty deposits. This is no basis for a sustained recovery, whatever the property boosters say.

What's it like in your area? Do you see evidence of a boom, or is your local property market heading south?

Back to the top

Residential property prices may fall further

Published on By Edmund Conway. November 30th 2009

One of the major financial institutions in the United Kingdom is urging caution when it comes to Britons who think that now may be the ideal time to invest in residential properties. Barclays Wealth argues that house prices are likely to fall even further, before an actual recovery begins in earnest, mainly because current rates are not yet back down at "fair value."

But the irony in this predicament is that even if real estate values remain high in parts of the country, investing in British residential properties has become attractive to foreign nationals and even the most prominent investors within the UK. In fact, Britain reportedly has the third most promising investment climate for residential properties, behind only the United States and China. Part of this allure, however, may have to do with the current low value of the pound, especially against the euro.

Yet Barclays Wealth urges Britons looking to purchase homes or rental properties to be prudent, as prices are likely to fall further next year. One of the problems that the financial institution identified is that many Britons may indicate that they are buying a property as an investment, but then often let other factors come into play; some of which may result in a raw deal. A partner at Capricorn Investment, for example, noted that some homeowners often purchase houses in part out of "vanity," rather than because they believe that they are engaging in a great new investment.

Back to the top

Gwent house prices keep falling

Published on By David Deans. November 27th 2009

HOUSE prices in Gwent are continuing to take a battering, according to the latest figures released by the Land Registry. It showed that the average price of completed house sales in September, fell from the previous month in all but two areas of Gwent.

Newport saw values slip by 2.9 per cent from August to September 2009, falling from £118,081 to £114,814. That came after two months of marginal price rises. August saw an increase of 0.2 per cent, while July values also rose by 1.5. Blaenau Gwent was the hardest hit, with a fall in values of 4.1 per cent month on month, down to £72,973. Values in September were also down 18.3 per cent on the year before.

But while Torfaen also saw price drops, Monmouthshire and Caerphilly saw slight rises - albeit down on the months prior. Meanwhile the most recent sales volumes figures for July 2009 show the number of house sales rose in three areas - Blaenau Gwent, Monmouthshire and Caerphilly.

Alan Darlow, director of Roberts and Co estate agents in Newport, suggested prices were in fact now rising again in the city, and said the main issue hitting the housing market at the moment was a lack of supply….

Back to the top

Warning signs flash of second slump in housing UK market

Published on By Edmund Conway. November 22nd 2009

WHEN the UK's biggest building society warns of setbacks ahead in the housing market, we should sit up and listen. When the warning coincides with news pointing to a second-wave slump in the world's biggest housing market, we should listen very carefully indeed. For the past few months, commentators have been happy to pick up on the upbeat house price numbers from the Nationwide. Its latest survey said house prices in October were 2 per cent higher than a year earlier – the first annual rise for 19 months.

We sighed with relief over these house price performance numbers. Not only did the slump in the housing market appear to be over, but the great plunge in house prices also looked to have been avoided.

But can we be certain? The latest statement from Nationwide is not so reassuring. It has just reported a big slump in profits – down 62 per cent on the level reported a year ago. Chief executive Graham Beale warns that "we expect the remainder of this year and next to present a very difficult trading environment.

"Much of the increase in prices this year has been caused by an unusually low level of properties available for sale rather than a robust recovery in house purchase transactions." He added that high unemployment and the continued squeeze on lending meant "setbacks" in house prices in the future would not be surprising. This would be accentuated if more sellers emerged and interest rates rose quicker than expected.

This warning has particular resonance in the light of unfolding problems in the US. Like Britain, America's housing market looked to be heading for recovery. Like Britain, massive support has been pumped into mortgage lending institutions. And, like Britain, America's recovery is dogged by rising unemployment. What appeared to be encouraging signs of recovery are now being snuffed out by a climbing jobless total which is forcing up arrears and foreclosures. Unemployment is a lag indicator and most commentators are agreed our jobless total will continue to climb towards three million next year. Could these developments in America be an ominous pointer to what lies in store for Britain?

According to the US Mortgage Bankers Association (MBA) last week, more than one in seven US borrowers were behind on their mortgage payments or facing foreclosure at the end of the third quarter – the highest rate on record.

The percentage of loans in foreclosure or with at least one payment overdue rose to 14.4 per cent, the highest since the MBA began records in 1972 and a rise of more than a percentage point since the second quarter. Late payments and defaults have carried on rising in spite of the end of the US recession. The reason is that unemployment continued to edge towards 10 per cent during the quarter. As Jay Brinkman, MBA chief economist, tartly observed: "Job losers continue to increase and drive up delinquencies and foreclosures because mortgages are paid with pay cheques, not percentage point increases in GDP."

Over the year unemployment in the US has risen by 5.5 million, increasing the number of loans with payments at least 90 days late and driving up the rate of new foreclosures from 1.07 per cent to 1.4 per cent. In recent quarters the importance of unemployment in the mortgage crisis has been illustrated by the increase in foreclosure starts on traditional prime fixed rate loans.

This marks a worrying new phase in the foreclosure crisis that governments here and in the US may find difficult to address. Traditional prime fixed rate loans accounted for one third of all foreclosure processes started in the third quarter, and they were 44 per cent of the quarterly increase in completed foreclosures.

These loans are more conservatively written than sub-prime mortgages. Loose lending standards during the boom meant that the first stages of the housing crisis were most keenly felt in this area.

Could the US economy have a strong recovery in GDP, asks veteran Wall Street watcher Ed Yardeni, without a similar recovery in housing starts? He doubts it. He notes that home prices are down sharply along with interest rates. However, the availability of mortgage credit remains restrained and the unemployment rate is unusually high.

Furthermore, the Federal Housing Administration (FHA) recently started to tighten its standards on mortgage loans that it will insure. Also, the overhang of foreclosures is putting a damper on home price increases.

The tax credit for first-time buyers was set to expire on 30 November, until it was renewed and expanded until 30 April just last week. One would think that there might have been a last-minute burst of mortgage applications in early November by those homebuyers perceiving that the credit might not be available after the end of November. Instead, mortgage applications for new and existing homes plunged 32 per cent over the past six weeks to 13 November to the lowest pace since the late 1990s. That is not a reassuring sign.

Here in Britain there have been warnings in recent weeks that the housing market may not follow through on its apparent recovery this summer and may be due a relapse.

The economist David Blanchflower, a former outspoken member of the Monetary Policy Committee, has persistently warned of the need for a price "correction" of 30 per cent or more. Few share his view that a shakeout of this magnitude is required. But renewed weakness may now be in store.

According to the property website Rightmove, house asking prices dropped this month and will continue falling for the next two months ahead of the traditional spring buying season. The group's commercial director Miles Shipside expects three months of asking price falls, before a tentative recovery in the spring, likely followed by pre-election jitters.

Against a darkening background of rising taxes and looming public expenditure cuts, with jobs being lost in the public sector, prospects in the housing market are not as good as they seemed just two months ago. And weakness here would almost certainly spill over into household confidence and consumer spending. The day after tomorrow may not be as rosy as once it seemed.

Back to the top

British Surveys Show Business Confidence Is Falling Again

Published on, By Ilona Billington. November 16th 2009

LONDON -- The British economy's path to recovery is likely to be bumpy, with surveys showing that business confidence fell for a second straight month in October as access to credit remained tight, while house prices dipped in the first half of November.

The Bank of England Wednesday said that while the U.K. economy has begun its recovery, activity won't return to its 2007 level until 2011 at the earliest. The central bank once again highlighted weak bank lending as a significant drag on growth.

That was borne out in a survey conducted by the British Chambers of Commerce, which found that 33% of companies said it was more difficult to access bank finance in the three months to October, up from 20% in the three months to June. "It is clear that the huge sums that have been injected into the financial system by quantitative easing are still not reaching small and medium-sized businesses in anything like the scale required for business to invest for future success," said David Frost, director-general of the BCC.

The central bank has a special program for injecting more liquidity into the economy by purchasing bonds, which it calls quantitative easing. Last week, that program was expanded to a total of £200 billion. A separate survey by Lloyds TSB found that optimism over future business activity fell for the second straight month to reach its lowest level since June. Despite the fall, confidence remains much stronger than it was at the start of 2009.

There were also signs of fragility in the housing market, which has been one of the U.K. economy's few bright spots in recent months. Property Web site Rightmove reported that U.K. house prices fell 1.6% in November from the previous month, although it said that reflected a seasonal slowdown in demand ahead of the Christmas holiday period.

Back to the top

North-south divide returns to haunt the British property market

Published on November 15 2009

Stiff competition among buyers has returned to bits of London, but properties are harder to shift in the North. Alessia Horwich and Julian Knight report Trying to predict the property market is about as easy as picking next week's lottery numbers. House price indices of late have inched into positive territory, provoking some estate agents to breathe a sigh of relief. The Royal Institution of Chartered Surveyors said last week that house prices had just enjoyed their biggest rise since December 2006, about eight months before the onset of the credit crunch.

But get into the nitty gritty of the housing market and a patchier picture emerges. London is growing strongly, followed by the South and South-east, while the North-east and Midlands are still in the doldrums, not helped by above-average unemployment rates. Analysts are hailing the return of the north-south property divide of the 1990s, which had narrowed during the last boom.

In London, some estate agents and analysts say that prices have now returned to 2007 levels. The price recovery is being driven by several factors. "London is a sought-after city with only a limited number of residences in certain areas. So if you want the best you still have to pay for it," says Charlie Noel-Buxton, a partner at Cluttons estate agents. Sales are up in the capital thanks to an influx of foreign investors taking advantage of the weak pound, as well as British investors who previously would have played the stock market but are now looking for a less volatile proposition. With more buyers about and a shortage of properties, agents in the capital say the right ingredients are there for prices to rise. Even mortgage finance has been showing signs of easing of late, with many of the largest lenders willing to accept higher loan-to-value ratios than a few months ago.

"Kensington and Chelsea and Mayfair are like a parallel universe," says Michael O'Flynn, a director of online estate agency "Agents are talking about gazumping and sealed bids so it's a very hot area with lots of pressure on prices."

In London, the South and the South-east, the middle range is also holding firm. These investors are usually older, cash rich and have good access to finance. They are looking for attractive investment prospects, both flats in town centres and larger houses in the suburbs. "What is selling well," says Mr Noel-Buxton, "is property that is well priced, accurately valued and generally a good floor, address or position."

But even within London, there are wide differences in market strength. Where the mid to top range is enjoying increased investment, price drops in cheaper areas with smaller and lower-value houses and flats show how the first-time buyer market is still struggling because of restricted finance.

The problem for optimists is that the good news might not last. The props holding up the market in the South and East are less than sturdy. Investors will hold on to their purchases for the foreseeable future to ensure capital growth, preventing a renewal of buyers to keep the market ticking over. The amount of stock is limited as many await signs of economic recovery before they launch into a house sale, again falsely propping up prices. "In May, there could be a deluge of property on to the market following the election, which will slow down price," says Ivor Dickinson, the managing director of estate agent Douglas & Gordon. "Until then, I envisage property prices rising 1 to 2 per cent each month." Add rising unemployment to surplus stock and prices could start to fall again.

All these issues in the South are holding the North and parts of the Midlands hostage. The November property price index from shows that where the East and London saw modest price rises of 0.6 per cent and 0.3 per cent respectively, the North-east saw a dip of 2.1 per cent and in Scotland prices fell 0.8 per cent, bringing them under the national average of £150,000. Price falls have been worst in suburban areas where excess stock and low chances of good rental yields have kept investors away and prices low.

"The minute you go into northern suburban towns with a large meaningless block of apartments you're in trouble," says Stuart Law, the chief executive of property investors Assetz. Manufacturing areas are traditionally hit hard by recession. Despite increased affordability as prices fall, residents are often more cash strapped and at greater risk of becoming unemployed. This makes selling even more difficult.

However, city centre properties, mainly apartments in towns such as Manchester and Birmingham, are recovering as developers give discounts to investors. "In the prime cities in the North, house-builders are quietly shifting stock," says Mr Law. "Well-finished and managed developments are in great demand and those who invest in them are soaking up excess stock and providing the underpinning for the market." Property developers will struggle to get finance for city-centre development in the future, so as demand increases and supply remains constant, we should see a good price recovery and capital growth for those who have invested.

It is no surprise that prices in the North and Midlands are not competing with London and the South. "It's always been London first and the North second," says Mr Law. "The North will follow in due course. Once the excess stock has gone, the market will normalise and will steer a move in a similar vein to what has happened in London. But you can't have a buoyant market in a city where there is a lot of distressed stock."

For those trying to sell their homes in a difficult market, the starting block is an accurate valuation. "If your property is priced correctly then it will stand out against the competition, but if you overprice your property, it will not compete in the higher-price bracket," says Mr Noel-Buxton. "You've only got one shot at getting it right."

"Mystery shop your estate agent as a buyer and see how energetic they are about selling your property," adds Miles Shipside, a commercial director at property website "The danger is that estate agents get stuck in a winter slow-down and you need to keep the momentum going." Motivate them by offering tiered commission so they get a higher percentage should they achieve a higher price.

Back to the top

Sorry - the house price crash isn't over yet

Published on By Edmund Conway. August 10th 2009

The housing market crash is over; prices have fallen as much as they are going to; sit back, strap up and prepare for the recovery. That, at least, is the impression we’ve been left with after a number of institutions effectively declared that the slump is at an end. Last week the Royal Institution of Chartered Surveyors binned its forecast for a 15pc fall in house prices this year and replaced it with the prediction that home values could actually rise. This morning, the Centre for Economics and Business Research said we could expect a smal) rise in house prices between next quarter and the end of 2009.

So is the house price crash really over? I’m afraid not - at least not as far as I’m concerned. This is not to say there won’t be plenty of rises as well as falls over the next few years. As this chart from Nick Parsons of National Australia Bank shows, in reality, house price crashes aren’t all about consistently falling prices; during the early 1990s, prices rose quite sharply in some months, but over a three year period they tended to fall that little bit more than they rose.

Halifax monthly house price changes during the latter years of the last slump

The housing market is not like the equity market. Whereas share prices tend to fall sharply earlier than most other asset prices and then recover rather quicker, property behaves more sluggishly, usually dropping gradually and spending a long time at the bottom before slowly gathering pace some time later. A property crash usually lasts five years or so. The reason is that house prices are particularly sensitive to increases in unemployment. When people lose their jobs they sometimes have to move house or, if the worst comes to the worst, have their homes repossessed. It is almost unheard of for the property market to bounce back when unemployment is still rising at a fair whip.

Moreover, the rises in the average house price at the moment masks a key fact, which is that the actual turnover of housing is still close to a record low. Some people may be willing to pay a little more, but this represents only a tiny fraction of the market; few people are putting their homes up for sale; few are really looking to move (in this regard it is worth drawing a parallel with the stock market: yes, it has risen sharply in the past few months, but this has been on extremely low volumes)

Housing transactions - according to the Land Registry

There is no doubt a certain amount of extra impetus has been delivered by the Bank of England’s decision to slash interest rates all the way to 0.5pc. Notwithstanding the extra premium banks are charging customers for mortgage borrowing, loans are still priced very reasonably at the moment. For those who have enough of a deposit, it is a pretty cheap time to borrow. But who are those people flush with cash at the moment? Well that brings us onto the key issue here. There is one sector of the housing market which is starting to boom, and which could continue booming for at least a year: the high-end side of the London and South East market dominated by bankers.

As you will no doubt be aware, bonuses are back, and this is already being reflected in the house price figures. According to the Land Registry, London saw by far the biggest price jump in June, rising by 2pc. Prices in almost any area north of the Watford gap are still falling. When the banks actually start paying the bonuses at the end of the year, this London/South East mini-boom will heat up even more.

But this boom feels very much like a last hurrah. My hunch is that although many bankers think it really is back to the races (in terms of their remuneration) I suspect otherwise (as you may have told from some of my columns. So after this round of bonuses the extra impetus from the City property buyers could dissipate. Moreover, there are still some fears that we could succumb to another round of financial crisis in the next year or so, something which could do for London prices.

And this small pocket of activity cannot dispel the simple fact that house prices are unlikely to be fair value at the moment. They simply have not come down enough. Moreover, the amount of debt the average mortgage payer is in for has not diminished. Many homeowners have survived the first couple of years of the crisis because the Bank reduced interest rates so much. But they will suffer gradually as the Bank starts to lift rates. According to Fathom Consulting, this confluence of potential foreclosures and defaults could be a major issue for the UK economy next year. Others suspect that this means we could see the rise in the numbers of “zombie” households - those who are crippled as the cost of their debt rises, but not in so much trauma that they actually lose their homes.

House prices are currently about 25pc lower than at their peak. There could still be some way to fall, but it seems unlikely that we would endure a further 25pc fall. But to dismiss the prospect of further drops in values is extremely short-sighted. We are still very much in the danger zone. Yes, policies such as quantitative easing could well store up inflationary pressures for the coming years, but I am sceptical as to whether the risk of a Japan-style debt deflation trap has really been averted yet. If not, there is every prospect that house prices could literally go nowhere, or south, for a decade or so. It’s not a palatable thought, I know, but to assume that risk has gone would be extremely foolhardy.

Back to the top

Bank Sees Dim Future For Homeowners

Published on By Mark Huffman. August 7th 2009

Lately there have been encouraging signs in the housing market, with rising sales of new and existing homes. But Deutsche Bank has released a sobering analysis, suggesting homeowners are not out of the woods just yet.

According to the bank's real estate analysts, about 25 million homeowners will owe more on a mortgage than their home is worth by the first quarter of 2011. In short, nearly half of mortgage holders will be "under water" within the next 18 months.

The problem is falling property values. Millions of home buyers over the last four years not only paid inflated prices for their homes, they put little or no money down. As property values fall, the mortgage balances exceed the new market value of the property.

Gone are the days when consumers could use their homes as ATMs, taking out cash in home equity loans. "For many, the home has morphed from piggy bank to albatross," said analysts Karen Weaver and Ying Shen in their report.

The analysts predict a bad situation in the housing market is going to get a lot worse. For example, an estimated 14 million homeowners were underwater on their mortgages at the end of the first quarter. Weaver and Shen say that number isn't going to shrink, as you might expect in an improving market, but almost double in less than two years.

When a homeowner is in a negative equity situation, it means they can't sell their home, unless they have enough cash to make up the difference between what they can get for the house and what they owe the mortgage company. If they are unable to sell their home, the danger of losing it to foreclosure is much greater.

Refinancing is not an option, since the house is worth less than the mortgage payoff. The only hope is a mortgage modification, but so far government and industry efforts have produced few modified loans. Many homeowners have complained of inept mortgage servicers who have made the process difficult and frustrating.

If more homes slide into foreclosure, it would drag home prices still lower. As home prices fall, more homeowners - even those who put 10 to 20 percent down - might also be underwater. The vicious cycle could have devastating consequences, economists say.

Reducing the number of foreclosures is seen as a key step in restoring stability to the housing market, but so far they continue unabated. The foreclosure crisis could get worse if unemployment continues to rise. As more and more homeowners lose their jobs, they become more vulnerable to losing their homes.

Back to the top

NAEA mistake: It’s Estate Agents over valuing property

Published on By Brian Turner. August 1st 2009

Surveyors are not undervaluing property as the NAEA claims - but instead, estate agents are over-valuing property.

The National Association of Estate Agents today claimed that surveyors are purposefully under-valuing properties, thus adversely impacting the property market. This is especially when someone applies for a mortgage, only to find the mortgage lender will only lend a smaller amount, leaving the buyer in difficulties in either securely the mortgage, or retaining best terms. However, the NAEA claims, widely reported, can only be regarded as facetious.

Closely observing the property market in Scotland over the past two years, it is very apparent that despite falling sales, Scottish estate agents have trying to raise asking prices on properties where they can. If this underlines the NAEA’s complaint, then it becomes very apparent that surveyors are not undervaluing property - but, instead, estate agents are over valuing property.

It must be remembered that many estate agencies gain more money the higher the sale price, due to charging according to a percentage of value, rather than fixed fees.

Surveyors, on the other hand, have no financial incentive to try and fix the value of a property in the same way.

So the NAEA’s claims really need to be taken with a pinch of salt - it hardly seems convincing that an industry who has a self-serving interest to inflate prices, should therefore be able to complain that in an environment where property prices have fallen, that surveyor valuations have additionally fallen.

Perhaps the announcement by the NAEA was nothing more than a bit of posturing, and a desperate one at that. In the meantime, despite the Spring and Summer period being traditionally the peak season for property sales, the Nationwide has only been able to report a small increase in property prices.
Therefore as we approach the Winter, don’t be surprised if we see property prices begin to fall more steeply as even this season’s weak interest falls back.

It’s worth remembering that even conservative organisations such as ratings agencies and even the FSA are presuming an overall fall from peak to trough of between 30%-40%, with rating and Basel II compliance being based on these projections. With property prices now being claimed to have fallen only between 15%-17% so far, there is plenty more heartache in store for the UK property market.

Sales are flat in the areas I’m watching, and I’m incredulous to see that even under such conditions, estate agents and property solicitors are trying to inflate prices as if there’s a boom going on.

Additionally, we have a wave of fixed rate mortgages completing this autumn, which will result in a lot of home owners suddenly having increased difficulty in remortgaging, or else being left on mortgage deals with punishing rates. None of which can be imagined to be good for the property market. In which case, the NAEA would better serve its members by trying to encourage more realistic valuations to promote larger sales volume, instead of the current practice of trying to charge more on a lower volume of properties.

Back to the top

£2bn drop in the value of Scottish house sales in one year

Published on By Helen McArdle. August 6th 2009

More than £2bn has been wiped off the Scottish housing market in the past year, according to the latest quarterly figures released by the Registers of Scotland. They reveal the total value of residential property sales between April and June this year was £2.3bn - a 51.2% fall from the same period last year. The total number of sales also plunged by 47.8% year-on-year, while the average price of a house in Scotland during the quarter worked out at £145,553, representing a decline of 6.5% in the past 12 months.

There was good news for home owners who saw a 3.7% increase in average house prices compared with January to March this year. But experts said it was too early to say whether it was the start of sustained recovery or merely a seasonal blip.

The register reported that 45% of all property sales were cash transactions, a dramatic turna-round in a market that just 18 months ago was being flooded with 100% or more mortgages.

Martin Ellis of the Halifax said: "People who were buying with 95% mortgages are no longer doing so, while those with cash to spare can have their pick." Halifax slashed its predictions of how much further UK house prices will fall during the remainder of 2009, from 15% to 7%. It revised the forecast after prices fell by less than expected during the first half of the year, but it added that the market continued to face significant "headwinds" in terms of rising unemployment and the problems with people accessing mortgages. Mr Ellis added: "We expect the market to stabilise as we go into 2010, but it could still be quite choppy for the rest of 2009. "Once we begin to see job security and consumer confidence return next year, then we will see the knock-on boost for the housing market."

Edinburgh - still the most expensive place in Scotland to buy - had a 9.7% drop in house prices and residential property has dipped to £198,928 on average. Falkirk was the worst hit, with a 13.7% drop, and the average house costing £115,664.

After a rollercoaster ride from the giddy heights of a housing boom that saw average prices reach £168,000 last summer, before tumbling by £32,000 to £136,000 just nine months later, optimists claim that the only way is up for the market.

With some 60% of Scottish households owner-occupied, it goes without saying that the health of the property market plays a vital role in propping up the rest of the economy. Falling prices dented consumer confidence and curtail high street spending, prompting desperate discounting by retailers, which led to lay-offs and even closures.

On the flipside, unemployment and job insecurity - combined with an apparently declining market and expensive mortgages - put first-time buys or property moves on the backburner, sending house prices spiralling further into decline. And so it goes on.

A recovery in the property market should, therefore, be a symptom of a recovery from the recession. Whether we really are there, or even nearly there, yet, is still up for debate. At face value, the figures for Scotland don't look promising. On average, Scotland has seen 6.5% knocked off its national average house price.

All but four local authority regions have seen their average residential property prices fall in the past 12 months, from just 0.6% in Argyll and Bute to a dramatic 13.9% in worst-affected, Western Isles, where house prices have plummetted from £101,916 to £87,772. Only Clackmannanshire, South Ayrshire, Orkney and Shetland have seen their average property prices increase between April and June 2008 and the same period this year.

The number of transactions across the country has almost halved in the past 12 months, down by 47.8%. But in West Dunbartonshire, Angus, and - despite its 2.5% house price increase - Clackmannanshire, property sales fell by more than 60% in a year. The housing market in the Shetland Islands has held up best of any local authority, but even there sales volumes are down by more than 25% year-on-year.

There were mixed fortunes for anyone trying to sell a detached property, on the one hand having to contend with the steepest drop in value - 10.3% -but arguably still enjoying the greatest demand, with a fall in sales of just 44% compared to almost 51% for flats. However, the delay - about three months - between the completion of a property sale and the registration of that sale, has caused several market-watchers to claim that yesterday's RoS report does not paint an accurate picture of current market conditions which, if not quite buoyant, are improving.

"There are definitely green shoots - the decline has stopped, and there is a gradual improvement," says Mairi Echford, managing director of Countrywide estate agents in Scotland. She believes slowing decline in house prices, and the increase in the average house price from a low of £136,192 in March to £150,214 last month, will prove to be the start of a "steadying and sustained recovery". Countrywide has seen viewing go from 1000 per week in 2007, to just 250 a week in March 2008, to their current levels of 600 a week which have been "fairly steady" since March this year.

The penny is beginning to drop that if you're moving in the same market you are getting more for less. The significant figure is the difference: if the market you're moving in is 10% down, then you might get £90,000 for your house instead of £100,000, but if you're buying a £200,000 property, then you're getting it for £180,000 instead.

"You're saving £10,000 and taking out a mortgage based on £180,000 instead of £200,000. So the move is more affordable for some people; if you're in secure employment, then the penny is dropping. And there are some very attractive properties on the market." Only last week, she said, one property in Clarkston, which the estate agent might have expected only one, or possibly two, offers on, sold above its asking price with 11 offers on the table. Another house in the same area is set to go on sale later this month, and already there are 10 clients interested.

Dundee is seeing a similar upturn. George Solley, director of property sales for the city's Thornton Law, told The Herald: "We are finding that there has been a refreshing change. It's not just about house prices, but what's in the mix. Last year, we were really on pushing low value sales but now we are seeing higher value properties starting to sell again.

"Buyers are starting to realise that we're bumping along the bottom now and they are returning to the market. Sellers are being a bit more realistic about sales in the higher to middle market." He added: "There are plenty of willing buyers and plenty of willing sellers, and if the mortgages were there, sales would be going like a train."

Among the most striking figures to emerge from yesterday's report was the fact that cash-sales have accounted for almost half of all property transactions in 2009, at 45%. Compared to the 20% the Halifax's Martin Ellis described as the "norm" and a "historic figure" of 30% quoted by the RoS (this is the first time they have collected specific data on cash-sales), it seems that cash is king in the current market.

"Cash sales wouldn't surprise me," said Mr Solley. "Investment-minded buyers are looking to make a profit and get a better return on their cash than they would elsewhere - in savings, stocks, shares and the like. They are looking for a bargain, buying up newbuild stock and getting it below the mark, so it doesn't surprise me that those with cash are calling the shots."

Joyce Watt, branch manager for Corum in East Renfrewshire has had four cash buyers in recent months: one who had come into an inheritance, two borrowing money from their businesses, and one client swapping properties of comparable value.

Gary Thomson, managing director of Clyde Property, said: "There are a number of people and investors with cash coming back into the market because maybe they're not comfortable putting their money into the stock market or shares, so they are putting it into bricks and mortar instead... "

Back to the top

House prices 'to recover slowly'

Published on August 3rd 2009

House prices in England will fall this year and next before recovering, the National Housing Federation forecasts.

It expects prices to fall 12.2% in 2009 and 4.6% next year, before stabilising in 2011 with a 1.1% rise and continuing to climb in the following years. It predicts that, by 2014, house prices will be 20% higher than current values.

But the group, which represents housing associations, said English homeowners who bought at the market peak could be in negative equity for five years. Although five-year forecasts can be unreliable, the group said that not enough homes were being built.

Price predictions
The group has suggested that house prices in England will fall sharply this year. However, last week the Nationwide Building Society said there was a "reasonable chance" that prices in the UK could end the year higher than they started 2009.

The rebound in prices in England during 2011 would accelerate in 2012 with a 7.5% increase in prices, the NHF said, followed by rises of 8.4% in 2013 and 6.8% in 2014. That would mean that English homeowners who bought at the height of the property boom would be in negative equity until 2014."Our research shows that, while house prices are falling in the short term, they will inevitably increase in the long term because of a fundamental under-supply of housing," said NHF chief executive David Orr.

Only 60% of new homes required to be built each year were being constructed, the NHF said. The group said that many young and lower-income people would remain locked out of the housing market until restrictions on lending by mortgage suppliers eased.

Large deposits Lenders are still keeping a tight grip on the mortgages they are offering to new borrowers, according to figures from the financial information service Moneyfacts. Two-thirds of all deals currently on offer still require a down payment of at least 25%.

The number of deals on the market has risen in the past month from 1,574 to 1,662, the highest number since last autumn. However, the growth has been among deals requiring deposits of 20% or more."Mortgage providers are continuing to maintain prudent criteria with regard to the amount that they are willing to advance relative to the property value," said Darren Cook of Moneyfacts."Even though the Nationwide has announced a fifth consecutive increase to its average house price index in July, providers still seem reluctant to venture out of the 75% tier safe haven," he added.

The number of deals asking for a down payment of just 10% has fallen back again, from 119 to 100. There continues to be just a handful of deals asking for either a 5% deposit, or none at all.

"There are still one hundred 90% loan-to-value deals to be found in the market, but consumers are paying a premium on the rate for only having a small deposit," Mr Cook explained.

Back to the top

Property Prices to Continue Their Decline – NIESR

Published on August 1st 2009

Bloomberg reports that the latest research performed by the National Institute of Economic and Social Research (NIESR) suggests UK house prices will continue to decline until the year of 2012.

According to the research, the decline of property values is expected to resume as the latest improvement was caused by a limited number of properties up for sale and by limited mortgage availability, which fell by 65% compared to the previous year rather than by improved financial conditions.

Moreover, the London-based research organization predicts that the country’s gross domestic product will decrease until the 4th quarter of 2009. Simon Kirby, economist at the national Institute of Economic and Social Research told Bloomberg reporters that the organization does not think that the talks about economy stabilization and recovery will turn out to be true in the near future. According to NIESR, UK property market will only witness growth in the year of 2012.

Meanwhile, the report of the Bank of England, published last week, suggests that mortgage lending the UK might improve in the coming months; at the same time, the report of the Nationwide Building Society along with other British lenders reveals that property values rose in the summer months, in June particularly. Despite the good news, the British economy still has a long way to go to recover from the recession, which was a bad as the one of 1958.

It should be noted that it was stated in the report, published by the National Institute of Economic and Social Research – country’s most reputable research agency, the clients of which include the British Treasury and the Bank of England – that the rise in property values is to be considered to be temporary as it was caused by limited supply.

NIESR report also highlighted that declining property values in the UK are expected to hurt consumer spending in the coming years. The agency predicts that limited consumer spending coupled with unemployment will result in the highest level of household savings ever since 1997.

Back to the top

Interim regime for property sale and rent back begins today in UK

Published on July 2nd 2009

A new interim regime for landlords that operate property sale and rent back businesses comes into force in the UK today.

SRB landlords and companies have one month to submit an application to the Financial Services Authority for permission to continue their business activities as full regulation kicks in.

Under the new rules, SRB operators will have to demonstrate they meet minimum standards and are fit and proper persons. The regime will require that businesses treat customers fairly, making clear important details, such as the length of time they can stay in the property, before they make their final decision on whether to sell.

The main part of the interim regime is the requirement on applicants to provide a sustainable business plan which shows funding streams and evidence that the funding will continue. More specifically, the FSA will be looking to see that applicants have access to funds in order to complete purchases.

One of the major criticisms of SRB has been the lack of transparency. Therefore, under the new rules, SRB operators will have to guarantee access to an independent valuation. In addition, the consumer must be fully aware of the level of discount being offered and that they understand their beneficial interest in the property will cease upon sale.

‘The clock is now ticking if companies or individuals want to continue with sale and rent back transactions. Ethical sale and rent back must be an option for some consumers. It provides flexible tenure and the ability to remain in their property for those who can no longer afford the costs of home ownership,’ said John Socha, Vice Chairman of the National Landlords Association.

‘In the current economic climate, more and more people will be facing financial difficulty including keeping up their mortgage repayments. Although sale and rent back will not stop repossessions, ethical sale and rent back could be a way for homeowners to remain in their properties but become tenants. Only when sale and rent back operators are within a more regulated environment can we be confident that consumers will be treated fairly,’ he added.

Although the interim regime began on the 1st of July 2009, the start date of the full regulatory regime is the 30th June 2010.

Back to the top

A false dawn for house prices

Published on By Cliff D'Arcy. June 5th 2009

Two leading mortgage lenders have reported a May rebound in house prices. However, the downward slide is far from over...

Halifax has revealed that the average UK house price leapt by an impressive 2.6% from April to May. This follows Nationwide Building Society reporting a rise of 1.2% in May last Friday.

So, all is rosy and we look forward to the housing market turning the corner any day now, right? Wrong!

Green shoots or a dead-cat bounce?

In reality, house prices are still falling in yearly terms. All that's happened is that they aren't falling as fast as they were earlier this year. Indeed, from May 2008 to May 2009, the average price fell by almost a seventh (13.7%), according to Halifax. So, while the slope isn't as steep, it still points downward.

Nevertheless, according to the most hopeful 'experts', the slump is all but over and we are bumping along the bottom. To me, this view simply doesn't ring true. It's far, far too early to call the bottom of the housing crash just yet.

At best, house prices will stabilise for a while, before resuming their downward slide. In the previous housing boom, prices peaked across most of the UK in the summer of 1989 and then began their long slide. Indeed, house prices didn't return to their previous high for nearly nine years - and that's before taking inflation into account.

The first of many false dawns

When talking up the housing market, the bulls pin their hopes on two things: affordability and interest rates. As house prices come down from their peak, affordability improves. Furthermore, the dramatic cut in the Bank of England base rate from 5% in October 2008 to a lifetime low of 0.5% today has caused a drop in mortgage rates.

However, while property pundits claim homes are looking increasingly affordable, this doesn't add up when you compare property prices to household incomes. In fact, housing still looks expensive on a historical basis.

The ratio of house prices to average earnings is still above its late-Eighties peak - and it is more than twice the low reached in the depths of the mid-Nineties. Interest rates are low, which makes mortgage repayments more affordable. Alas, the next rise in interest rates - whether by the Bank of England or market forces - is likely to choke any budding recovery.

In addition, you still have to find some way to pay off the capital borrowed to buy a home, which can amount to £200,000 or more.

Housing optimists point to the return of gazumping and sealed bids in the London market as signs of 'green shoots' returning to the property market. However, I'm not convinced that a few super-rich cash buyers in Mayfair will translate into a UK-wide recovery.

Rising repossessions, bad debts and defaults force banks to be ultra-conservative in their lending. Thus, anyone with a less-than-perfect credit history will face an uphill battle when seeking a low-rate mortgage.

The grim reality

Just as one swallow doesn't make a summer, one spring bounce doesn't mean an end to the biggest property bubble in British history. In my view, this spring fever won't last. The harsh reality is that the number of property transactions, mortgage approvals and home loans remain below half of what is needed for stable and rising house prices.

Furthermore, salary freezes and wage cuts are commonplace, and job cuts will add another million people to the unemployment figures over the next twelve to eighteen months.

Thus, while the economy remains weak, it is highly unlikely that we can sustain higher house prices by growing our wages.

Also, the credit crunch is still here and mortgage rationing continues, with roughly two in three mortgages requiring a deposit of a quarter of the purchase price.

Indeed, a quarter of all home loans require a deposit of at least 40%, which is beyond the means of all but a few hopeful first-time buyers.

Thanks to the collapse of the securitisation market, roughly £100 billion a year has been sucked out of the mortgage market - a sum which the banks are struggling to replace (partly with taxpayers' money).

So, my advice would be to ignore the nonsense spouted by estate agents, surveyors, mortgage brokers and property hacks. Not one of these vested interests predicted the crash - and none will predict its end, either!

Finally, this latest news reminds me of the 'phoney war' between 1990 and 1994, when housing commentators seized on any slight rise in house prices to argue that the crash was over.

So, don't make the mistake of extrapolating any short-term trend in house prices into a genuine recovery. It's far too early for that. Having narrowly avoided financial meltdown, we've a long way to go before we're out of the woods.....

Back to the top

Sell And Rent Back - Easy Way To Tap Equity

Published on: May 27, 2009

The housing market is changing every day. With the outlook of the housing market only getting better it is easier to make long term decisions with your property. One newer technique people are using to free up the equity in their homes is the sell and rent back technique.

Sell and rent back is a term used for the process of selling your home to another party and then arranging an agreement to rent the same property back from that person. This means that you are able to sell your home and free up the equity in the home without having to find a new home to move to. This is the primary reason that people utilize the sell and rent back technique. Another reason is to stay in the same area, or keeping their financial affairs to themselves rather than having to tell friends or relatives that they are having to sell the property for whatever reason.

All over the country, people are buying residential property for the purpose of becoming a landlord by renting it back to other people. During the housing boom, many renters purchased their apartment as condominiums in order to gain equity, and the benefits of home ownership, while still enjoying the many benefits of apartment living. Now, with the recent market downturn, many of these people can't keep up on their monthly mortgage payments, and are opting to sell back the same property while staying in their homes by renting the property back from the buyer.

Many people love to live in apartments, because smaller rooms are easier to clean, major maintenance is handled for free by the landlord, no lawns need to be mowed, and the locations are usually close to cities and workplaces. Thus, many people would like to continue to live in their apartments while freeing up the equity that they have built up for other investments or consumption.

Refinancing a home is a popular method for extracting home equity. However, refinancing can lead to higher interest rates, added fees, and ultimately, higher monthly payments. The decreased equity over time can end up costing the homeowner more down the road. Hence, many homeowners seek to tap their home's equity without paying more monthly.

The only other way you can access your home's equity is by selling it. Usually this would involve having to move and buy a new home, eating up your equity. However, the sell and rent back technique has changed this, by allowing you to continue to live in your home without paying higher interest rates or monthly payments. Even better, your friends and neighbors won't know you have sold your house unless you decide to tell them.Recently, the sell and rent back technique has become more commonly used by homeowners looking to make use of some of their home equity. This is a process whereby one sells their home to another, and then arranges to rent the same home back from the buyer.

Back to the top

The Sell and Rent Back Scheme – an Excellent Way to Stop Home Repossession

Published on May 24th, 2009

The idea of having to stop home repossession often induces panic among homeowners. Your family home may be something that you have worked for and dreamt of a very long time, and the prospect of losing it to a financial institution can’t be anything but nerve-wracking. This is all the more true when you have more family members living with you in the same home. However, it is very important that you do not panic, even if you have received a repossession order. You can stop repossession and keep your home if you educate yourself as far as your options go and make informed decisions. Rushing into things may only make matters worse. For instance, if you are facing repossession on account of failure to make mortgage payments, taking out another loan (if at all possible) is very unlikely to help you. If you have not been able to pay the installments you have on time, how is more debt going to improve your situation? It may make things better for a while, but when debts start piling up again, the chances of keeping your home will be slim to none.

Generally speaking, if you want to stop home repossession you have several options to choose from, but the number of available options depends on the exact details of your specific situation. If stopping home repossession is just one of your fears regarding the future (as a result of, say, unreliable employment or unstable financial situation), you have a lot of options. You can start by trying to make mortgage payments on time, however difficult that may be. This will certainly keep you safe from the gloomy prospect of having to stop home repossession.

If you have already received a repossession notice, you should not panic just yet. Try contacting your lender and working out a solution for you to pay your arrears. The bank may agree to smaller payments or to an extended deadline, because they are more interested in getting their money rather than in getting the property.

If you are passed the stage where you can still try to make a compromise with the financial institution, you are not presented with many options, but this doesn’t mean that you can’t stop home repossession. Releasing the money tied up in your property in order to be able to pay your overdue installments is a very good solution. You probably think that this solution is unacceptable, because it equals losing your family home. You couldn’t be farther from the truth. If you opt for the sell and rent back scheme, you can solve all your financial problems and go on living in your home. Moreover, no one has to know about this if you do not want to. The sell and rent back scheme usually comes with the possibility to repurchase the property after a few years. In other words, your home will still be your home. The only difference is that, for a few years, you will be the tenant and not the owner, and that you will be able to come up with the necessary cash to make things right with your lender.

In conclusion, if you need to stop home repossession, do not overlook the sell and rent back option. You can sell your property for cash quickly and discretely, without having to relocate.

Back to the top

Sell And Rent Back Your Property Free Of Charge

Published on May 20th 2009

In life, we all have to deal with emergencies and crises, and more often than not, we might find that we are in a situation where a substantial sum of money is required. In this case, there are several different options open to us, but one that is becoming more and more common to people in the UK is the concept of selling their home and then renting it back. What is this system and why is it becoming so prevalent in the real estate landscape? Take a look below to get a good grasp on this phenomenon and what it can do for you.

What is a sell and rent back, option? This opportunity, at its most basic, encourages you as the seller to sell your house and then rent it back from the company who bought it from you. In virtually all cases, you won’t be moved out of the home at all. Like anyone who is renting an apartment, you will have a lease and depending on what your situation is, you will also have the option to buy back your home at a later date.

Why sell and rent back? There are many situations where you will simply need the capital that you can only get from doing something like selling a home. You might under stress from repossession orders, or you might require capital to deal with mortgage arrears, and with this solution, you can do it all without having to move or relocate. While in this case, you will typically be selling your home for less than it is worth, you will also manage to avoid repossession and large personal debts if you simply don’t have the money.

What are the advantages? There are several advantages to taking a firm up on this offer. Many firms who participate in sell and rent back setups will be able to complete all processes in a few weeks, with none of the problems and stress that goes with selling a house. You’ll also find that many sell and rent back firms state that most people only receive 85% of the worth of their homes when they sell conventionally, and that they will offer between 70% and 80% of the worth of the home, based on a surveyor’s professional opinion.

One of the biggest things that firms who sell and rent back homes offer, though, is discretion. Neighbours won’t be clued in by repossession men showing up, and there will be virtually no disruption in your lives. You’ll continue living as you have before, and it can be a real blessing not to force your children to change schools.

Take a look at some of the facts and think about whether this option is the right one for you. When you are looking for good financial solutions, you need to consider every possible solution, so don’t let the option to sell and rent back your house slide by.

Back to the top

2 Situations When Sale and Rent Back Is the Wrong Choice

Published on April 14th, 2009

This article assumes you understand the sale and rent back process and will discuss 2 scenarios where selling and renting back your property is most likely not the best solution. If you are in these situations it is advisable you look at the alternatives which are suggested.

If you can reduce your monthly outgoings

Some people may find that they can reduce their monthly outgoings by consolidating their debts to a rate that is more affordable. This does not mean taking out more debts to pay off existing ones but getting all existing debts onto the best interest rate possible. If financial difficulties are causing you to consider sale and rent back it is often worth while looking at loan consolidation as a possible alternative.

This may allow you to keep ownership of your house but it does not guarantee that your future outgoings would be less than if you sold and rented back. If you are not sure what to do, it may be worth getting a rental quote from a rent back specialist (the good ones will give this free) and compare it to your potential outgoings if you consolidate your loan. This way you will be able to make a more informed decision.

When you want to get full market value for your property

If you want to get the best possible price for your property then sale and rent back is most probably not for you. Sale and rent back companies are not able to offer you 100% of the market value of your property due to the costs they incur buying it and the profit margin they need. Those companies that say they will offer 100% of the market value and rent your property back to you are most likely not telling the truth. They are trying to get their foot in the door and then will offer less. If they did offer 100% of the market value they could not survive as a business as they would incur a loss for every property they bought. Reputable sale and rent back companies normally offer up to 80% of the properties value.

You need to make sure you sell to a company that (1) is honest and upfront with you and (2) has a sound business model because if they go out of business there are going to be complications with you staying in your house.

If you want the best price possible for your property and do not need to stay in it then selling via an estate agent is the best solution. If you want the best price for your property, do not want to rent back and need a quick sale then a cash buyer is often the best solution. Many rent back companies can offer this quick cash sale service.

The bottom line is: sale and rent back is not the solution for those wanting full market value for their property and beware of companies that say they can offer this.

Back to the top

Can You Sell Your House And Rent It Back To Avoid Repossession?

Published on By Caroline South. March 29th 2009

A new trend from the United States is gaining popularity in the UK, that is the method that allows you to stay in your home if you are under threat of repossession. The idea is that you can sell your house and rent it back.

The idea is simple, if you are in a situation where you are going to lose your home such as through the threat of repossession you need to be able to sell it quickly. When a home is repossessed it is often resold below market value and the banks then chase you for any outstanding debt the sale of the house did not cover.

This is like a double whammy, not only do you lose your home but you also have to pay for the privilege. This is a bad situation to be in as you have lost the house you have lived in for years, all the work and effort you have put into your home would be gone.

More often than not a homeowner has chosen the house and location for a reason. Maybe to be near elderly relatives, to be in the catchment area of a good school or simply because it is a really good area to live.

Once repossession has occurred you will not only have lost your home, you will still be in debt to the bank and to top it all off you will probably have such a bad credit rating it may be years before you can ever get a mortgage again.

A way to avoid all this expense, hassle and heartache is to sell your house and then rent it back so you can continue to live in your home. You can sell your home with an offer often within 24 hours, if the bank is threatening to take your home you often need to act fast.

The rent back scheme means that you are able to stay in your property without any further stress or change. Instead of paying off a mortgage you will be renting the property as a tenant. Many property investors that offer this service often will cover all the expenses associated with selling your home so you do not have to find any extra cash.

You can negotiate the rent and even rent free periods if you are having financial problems due to you or your partner losing their job. It costs nothing to get a no obligation free quote to find out if selling and renting back is the solution for you……

Back to the top

Is it possible to sell your home quickly and then rent it back to stay in your own home?

Published on March 29th 2009

Is it possible to sell your home quickly and then rent it back to stay in your own home? Being able to sell your house quickly can be the difference between losing your property due to repossession and remaining where you are. There are many different reasons people may need a fast sale. If you are going through a divorce you may need to be able to realise the value of your home quickly. This is often the only option in these circumstances but putting the house on the market is not always an option.

Putting your house up for sale and then waiting for a buyer can take months and even years depending on your property and the area it is in. If you need to sell your home due to divorce or because of the threat of repossession then going through an estate agent is not going to get a buyer soon enough.

There are however many property investment companies that you can sell to and if you need to rent it back from. They are often able to push through a sale in a single week and they take care of the usual costs associated with the whole process. A property investment firm is able to help you if you need to sell your home due to the threat of repossession, ill health, divorce, financial problems or if you are moving abroad or need a quick sale so as to be able to buy another house in a house buying chain.

You can get a free no obligation quote by completing the online form giving details of your current situation. You will then be provided with a quote in as little as 24 hours. As it does not take long to fill in the online forms you can make several applications to get the best offer for your home.

Your are of course under no obligation to sell your home if you do not get the price you want. If you do need to sell your property to avoid repossession then a sell and rent back option is often your best choice.

If your home is repossessed your home will often be sold way below the market value. If the bank does not get all their money back through the sale they will chase you for the remainder of the monies owed. This can often be a much more expensive course than a sale and rent back scheme…

Back to the top

Rent Back Scheme Gets You Cash, Without Snatching Your House

Published on November 5th 2008

Financial crunch is a bane in life. It can eat away your peace of mind. It is not easy with lenders knocking at your door. Increasing debts can be stressful. Quick sale of your house is one solution to get out of the hard situation. But this again is not all that easy, when one follows the usual methods. Selling your house involves a chain process where you may have a hired real estate agent negotiating for you the right deal with the potential buyers. The entire process is time-consuming as well as full of hassles.

You may also have to put up with a 'For Sale' signboard in front of your house, so that even your neighbours get a sniff of your financial situation. Not a very savvy situation. With a Sell and rent back scheme, you have the option to sell your property quickly and rent it back at the going market rate or less. This is a great financial product to consider if you have run into financial difficulties. In any case when you are in urgent need of cash and want to avoid the burden of shifting after a quick house sale, you can rent it back for as long as you like. This way you get the instant cash that can save your day and also not remove your very own house-roof from over your head.

If your financial prospects are as grim as a house repossession, you can avail to the rent back scheme as a good fall-back option. It will help you to pay off your mortgage and what better, you would still be residing in the house. Selling your house and renting it back is great way to release the equity tied up in your property. You can do the same when you have to relocate or migrate. You can sell off your present property, to get the cash you need desperately and then rent back this house so that that you stay in the house until you are ready to move out.....

Back to the top


Published on By Oliver Wingrove. November 2nd 2008

If you have a mortgage and are facing arrears give some thought to taking a sell and rent back option. You may be just starting to have trouble paying your mortgage and are stressed trying to come up with the money each month. Selling with a rent back option might be a viable solution to your problems. The best thing with this option is that you could sell your house and still live in it, and have the cash as well to pay off the mortgage lender.

With interest rates rising all the time, more homeowners are getting into arrears with the mortgage meaning repossession could be imminent. If you decide to take this option, it would stop repossession or even eviction straight away. You would then be able to pay off your mortgage and pay monthly rent which is more affordable than the mortgage.

If you need a large cash amount and want to use the equity in your home then you could take a quick sale. This is an ideal solution for you to still have your home and spending money in the shortest time possible. Knowing that you have sold your house to reputable company means you still have somewhere to live, and would give you peace of mind along with a solution to your cash problem. You just pay rent each month and do what you like with the money, knowing that in the future you can buy back your home.

If you are getting divorced it can be very stressful and a quick sale could help greatly. Having the problem of selling your house, uprooting the kids to a new school and starting family life all over again somewhere else can add to the stress. If you take a rent back solution you could still stay in the house after the divorce by choosing to pay rent each month.

If you are emigrating then a quick sale would be useful. This can be a huge bonus if you have to leave at very short notice and you want to leave with no loose ends. You could sell your house and stay in the property until it is time to leave and have the peace of mind of a sale if you take the rent back option. You would have the cash in your hand and then be able to leave at any time. There are a variety of reasons why a sell and rent back option is useful.

These are just some of the many options where a quick sale and a rent back company may be able to help you. Of course there could be others, in fact any situation where you are struggling financially you could look into what a rent back solution could offer. A good company would be able to give you a rough idea of how much your home is worth in just 24 hours and the whole process of selling with them could be over in just a couple of weeks or less.

Back to the top

Situations Where You Might Benefit From a Quick Sale Or Rent Back Deal

Published on By Oliver Wingrove. November 1st 2008

If the time arises in your life when you are getting divorced, it can be a very stressful time. You would have to sell your home to split the proceeds and begin again. Selling your home could take some time and if you want to move on with your life this can add to the stress. A better solution could be to make a quick sale then split the proceeds of the sale down the middle and move on. A company offering a sell and rent back will also offer a quick sale and this should be looked into. It can work out great if one partner wants to remain in the home. Sell the home quick, split the proceeds and then rent it back with a view to buying back in the future.

You may be emigrating or relocating due to work and this means you could sell your house quickly and you would also have cash in your hand. Along with this you would have peace of mind that you sold your home well before you leave. If want to take this option and your departure date is not due then you can still sell quick and remain until it is time to leave.

If you know that you can not pay your mortgage and might have to leave the home you love if the lender repossesses a rent back option may be the answer. If you choose a rent back option, this means that you will have a lump sum in cash to payoff the mortgage and still be able to remain in the home as tenant by just paying rent to the company who bought your home. You would also have the option of being able to buy back the property in the future for a fixed price if and when your finances became stable again.

A quick sale could also be taken with a rent back option if you want to release the equity in the home. You might need cash fast and rather than take on a loan make good use of the equity that has been built up in the home. If this is the case then a quick sale is needed and companies offering buy to rent and quick sales can give it to you. The beauty of taking this option is that you will be able to buy back the property for the sum that was agreed upon at the time of selling....

Back to the top

'Days of inflated house prices are over'

Published in Western Mail. By Abby Alford. October 27th 2008

The credit crunch will prompt a return to old-fashioned values, producing a more sensible and sustainable housing market, according to the head of an organisation representing thousands of Welsh property professionals.

Cathy McLean, director of the Royal Institution of Chartered Surveyors Wales, said the "madness" of the days of inflated house prices and five-times salary mortgages will never return.

She said while the housing market slump would leave many casualties in its wake - repossessions are rocketing and many home- owners face negative equity - it would correct a market that had run out of control.

"It was never sustainable," she said. "Borrowing a ton more money than you needed was just madness. There was a lack of due diligence and management by the banks."

"It was madness that people thought prices were always going to go up."

"Everybody wanted everything today, rather than saving for it. People were just rushing into the property market thinking there was never ever going to be a problem."

"You do get fantastic stories of people who have made a killing, but these people are few and far between."

She attacked TV property shows for fuelling greed and an obsession with house prices, leading many people to see property as a short-term rather than a long-term investment.

"Prior to 10 years ago we lived in our house because we liked the area it was in and we liked the school around the corner, but now it's about whether it's lost or gained one or 2% in value since the last time we looked, which was probably last month."

"People are truly obsessed with the value of their house. It's only, I think, because of TV and the media bombarding us every day with news about property prices and shows like Property Ladder showing people how they can supposedly make a fortune by doing a bit of work to a run-down house."

"People have been relying on someone on a TV programme to tell them if something is a good idea. What qualifications have these people got?"

She added: "In the future, people will think more about the quality of their housing and where they want to live, where they want their kids to go to school, how handy is it for work, what the social atmosphere is like."

"Nobody should be buying a house just to make a quick profit because property isn't like that. But it's still a good investment if you look over the long term."

Her comments come as the number of homes changing hands increased for the first time in five months during October, but prices continued to slide.

The average property in England and Wales lost a further 1.3% of its value during the month, according to property information group Hometrack.

The latest fall left homes costing around £163,200, 7.3% less than a year ago and at a level last seen in March 2006. But the number of properties sold rose by 5.4% during the month, the first increase in transactions since April.
The group said the jump could be early evidence that vendors were finally starting to accept lower offers on their homes after a long stand-off, and this could help to free up the current logjam in transactions....

Back to the top

Scottish house prices 'set to plunge by 12%'

Published By David Leask. October 26th 2008.

SCOTTISH house prices will fall even harder and faster than predicted, leading forecasters warned last night. Capital Economics said it now expected properties north of the border to lose 12% of their value this year and another 15% next.

The research giant, one of the most respected firms of market analysts in the UK, had previously predicted a more modest decline of 10% in 2008 and again in 2009.

The new, revised forecast would see Scotland's average house price tumble from an official £158,360 in 2007 to just £121,145 in 2009.

Seema Shah, one of the firm's analysts, said house prices had been over-valued by massive increases seen during the past decade. Therefore, large drops would be an obvious consequence.

She said: "Just to bring prices down to the kind of level we would regard as value for money would take that kind of magnitude of fall."

The decline, however, will still be far less steep than in England, Wales and Northern Ireland, with Capital Economics predicting UK house prices to plunge 35% over this year and next.

One of Scotland's leading analysts yesterday also came up with new and gloomier forecasts for Scottish house prices. John Boyle, of Edinburgh-based DTZ, had expected properties to lose 5% of their value between the summer of this year and the summer of next. Now he believes the figure will be between 5% and 10%.

Boyle, who has traditionally been more optimistic than Capital Economics, changed his mind after weeks of chaotic crashes on international financial markets and an increasingly bleak picture emerging of economic fundamentals.

He said: "My prognosis must become much gloomier because unemployment has gone up quite suddenly. It's still lower in Scotland than in England, but that will affect of the overall affordability of homes."

"The big caveat, however, is that there is a huge variety of patterns in house prices across the country. House price forecasting can be a pretty tricky proposition."

Scotland's official Government house price figures are traditionally published months in arrears and have still to catch up with the some of market misery that saw the volume of sales halve from the same period of 2007.

Nationwide, one of the country's biggest building societies, this month said an average of £8,000 had dropped off the price of Scottish homes over July, August and September. That was the steepest decline on record. Average Nationwide house prices in September 2008 were 7% lower than a year before, just before the credit crunch that has sparked the current economic turmoil.

Scotland's two biggest groups of house sellers reported similar figures for the third quarter. Glasgow Solicitors' Property Centre (GSPC) said average prices in the country's biggest city were down 8% at £142,500. Its Edinburgh counterpart, ESPC, said its average was down 7%.

Headline figures, however, continue to mask huge variations, even within a single city, market watchers warned.

Back to the top

House sales fall 50% in Merseyside in just one year

Published on By David Bartlett. October 6th 2008.

HOUSE sales in Merseyside and Cheshire have fallen by almost half during the past year, new figures compiled by the Daily Post show.

The figures are revealed in our most in-depth examination of the region's property market to date including the average price of a detached, semi-detached, terraced, or apartment of most postcodes in the area.

Compiled using data from the Land Registry, sales were down 39% in the L postcode areas which includes Liverpool, Knowsley, West Lancashire and most of Sefton for the year to June the period for which the latest figures are available.

The number of sales in the CH area, which includes Wirral, Chester, Ellesmere Port, and Neston was down 45%. Last night, estate agents warned that, until the world's financial markets stabilised, it was difficult to say exactly when sales would pick up.

It follows the revelation last week that Liverpool's housing market had undergone one of the five steepest declines in the country, suffering a 13% fall in values in the year to September.

Paul Lea, of Bradshaw, Farnham, and Lea, said: "It's a tough old business at the moment. People were starting to come back, but then all of a sudden it's dead again."

LDP investgiation reveals worrying falls in our most extensive examination of the region's property market, we have broken down the average price of homes, by category and by postcode.

According to data from the Land Registry sales were down 39% in the L postcode area which includes Liverpool, Knowsley, West Lancashire and most of Sefton for the year to June the period for which the latest figures are available.

The number of sales in the CH area, which includes Wirral, Chest- er, Ellesmere Port, and Neston was down 45%.

CH43 Bidston, Oxton, Prenton, and L25 Gateacre, Hunts Cross, and Woolton were the most popular postcodes by volume of sales, with 130 properties changing hands in each between April and June.

In L18, which covers Allerton and Mossley Hill, there were 47 sales, but the average price was down 11.4% compared to the same period last year.

In Speke, the Land Registry's figures show only 11 sales, none of which were semi-detached.

However, CH60 which includes Gayton and Heswall on the Wirral, recorded the lowest number of sales with just nine. But in some areas, sales of particular types of homes have slowed to almost nothing. The Land Registry does not provide data where fewer than three sales have been recorded, in a postcode sector.

The data shows there were no sales of flats in Waterloo or Aintree.

While in L17, which covers Aigburth and Sefton Park, only three detached homes were sold, the same applies to Childwall and Wavertree, in L16 and L15 respectively.

Last week, the Nationwide said Liverpool's housing market had seen one of the five steepest declines in the UK with a 13% fall in prices in the year to September.

Homes in the North West were worth around 9% less, and nationally prices fell by around 12%.

Back to the top

Squeeze on loan supply will push house prices lower

Published on By Ellen Kelleher. October 4th 2008.

The scarcity of low-priced mortgage deals is hitting home sales across the UK - as the value of the average property has fallen by 12.4 per cent in the last 12 months due to shrinking demand, according to Nationwide.

On average, a home in the UK now costs L161,797, according to the monthly house price index, released this week by the building society. And the market is not likely to improve in the short-term as economists predict further falls. "The latest fall-out in the property market is not altogether surprising given the turmoil in financial markets over the past month," says Simon Rubinsohn, chief economist at the Royal Institution of Chartered Surveyors. "The recent increase in some mortgage rates and the continuing squeeze on the supply of loans suggest that further price falls are likely."

Sales of more expensive homes in London areas such as Knightsbridge and South Kensington have held up a bit better as foreign investors look to benefit from the weaker pound by purchasing high-end properties. But generally the value of properties worth more than L1m has still fallen 10 per cent in the last 12 months in the UK, as the slowdown in the City has damped demand.

Across the country, falls in prices were sharper in the south of England than in the north.

The slowdown in the mortgage market is hitting first-time buyers in particular as they are now required to put down larger deposits. Fewer than 20 per cent of them are now taking out mortgages with loan-to-value ratios of 90 per cent or higher.

Nationwide's survey follows stark figures for mortgage lending in August from the Bank of England, which found that the amount of money borrowed had collapsed by 95 per cent in a month. The lending figure was also 97 per cent down on August 2007, when the credit crunch began.

While the mortgage drought is hampering house sales, the rental sector is seeing increased demand, apart from in prime London markets where City job losses are prompting landlords to cut rents.

As for how far prices have yet to fall, Lucien Cook, director of residential research at Savills, the estate agent, says: "We expect prices to fall by 25 per cent over 2008 and 2009, stabilise in 2010 and return to growth in 2011".

Back to the top

Why even mortgage brokers are struggling to find mortgages for their clients...

Published on: 1st October 2008.

A massive two-thirds of brokers have been unable to source a mortgage for clients in the past two months, according to the Intermediary Mortgage Lenders Association. This surprising statistic highlights just how difficult it is to secure mortgage finance for many borrowers, with even the experts struggling to find us a deal.

The main reasons brokers quoted for the inability to find their clients mortgages are the tightening of lending criteria and the increase in deposits required, as loan-to-values (LTVs) have been cut - a problem mentioned by 51% of respondents. After that, 23% of intermediaries cited the withdrawal of products as the biggest impediment.

And this survey was released last week, before B&B crisis and before hundreds more products were pulled from the market on Monday, wiping out 11% of available mortgages according to some estimates.

So the situation has just got a whole lot worse!

Problem areas

Brokers said that they are having problems finding deals across all product types with remortgages mentioned by 72% of respondents. Over half claimed they had been unable to source a loan for a first-time buyer and 50% couldn't help a sub-prime borrower to find a deal.

Perhaps most worrying is that over a quarter (26%) of intermediaries had struggled to find deals for standard status borrowers - the average Joes who are perceived to be least affected by the credit crunch.

How can you avoid this?

Is there anything you can do to prevent yourself being one of the borrowers that brokers, or indeed lenders, cannot help to find a decently priced mortgage?

Well, it's easier said than done. There are ways you can ensure you can have access to the best deals, but they may not be easy to achieve. Here are three key considerations:

1. Borrow less.
We would all like to have a whopping 40% deposit but it's not that easy, is it? However the best and most competitive mortgages are available to those who only need to borrow 60% of the property's value. However, there are plenty of extremely good deals for those who have 25% to put down. It gets tougher to find a deal the smaller your deposit so it really is essential that you try to save as much as possible. If you have a deposit of 5% for example you will have a pretty small selection of expensive mortgage to choose from. The good news is that with house prices falling, first-time buyers may be able to continue saving for longer, rather than feeling pressured to rush into the property market right now.

2. Clean up your credit record.
Lenders love whiter than white borrowers with no history of bad credit. This has always been the case and they have always charged 'sub-prime' borrowers more to offset the lending risk. Now they simply won't lend to people with anything other than the minimum of credit problems. If you do have outstanding late payments on any credit agreements, settle them before you even apply for a mortgage. Although remember that lenders can still see past payment discrepancies on your credit file.

3. Become Mr and Mrs Average.
Unusual requirements are not what lenders want at the moment. Although there are self-cert mortgages out there for those who can't prove their income, for example, they are expensive and the cheapest deals are available to those in full-time employment, on the electoral roll where they live, and preferably having lived in the same property for a while. Credit scoring often penalises those who move house, and jobs, frequently.

Back to the top

B&B fallout will hit mortgages and take prices down further in UK property market

Published on: 30th September 2008.

The fall out from the nationalisation of UK troubled bank Bradford & Bingley will further restrict the choice of lending in the property market, it is predicted.

The most competitive deals are being pulled and the cost of mortgages will be increased. Until now B&B was offering the best buy-to-let mortgage deals.

Analysts are warning that between 400,000 and 500,000 of the 1.2 million outstanding buy-to-let mortgages in the UK are likely to require refinancing in the next 12 months.

With the values of properties falling and the required rental cover needed to secure new borrowing rising, most borrowers will struggle to meet lending criteria, according to Ray Boulger, senior technical manager at mortgage broker John Charcol.

'Nobody is now offering 85% or above. If people can re-finance at 75% or less they will have a lot more choice, although valuations are a lot more conservative,' he said.

'With rental cover now expected to be between 110 to 120% of mortgage payments a lot of people are going to struggle to re-finance and will have to take their current lenders default rate,' he added.

Attention will now turn to the government and its strategy for dealing with the rising arrears level on the B&B loan book, facing a choice of protecting value and being seen to foreclose on vulnerable borrowers. B&B had seen a rise in the number of borrowers more than three months in arrears.

The fall out from the UK crisis combined with the turmoil in the US will have a further weakening effect on property prices. Howard Archer of economic analysts Global Insight predicts that banks will keep cutting back on lending.

'It seems odds-on that house prices will head downwards for some considerable time to come, particularly as lending conditions tighten further in the near term at least amid the current turmoil caused by the collapses in the US,' he said.

He warned that rising unemployment would speed the fall in house prices as people will be forced to sell homes at huge discounts.

Analysis firm Capital Economics also predicts further house price falls. 'Recent events in the financial markets and the likely fall-out on the wider economy, which is already tipping into recession, are set to weigh heavily on buyer confidence,' said Seema Shah, property economist.

Back to the top

U.K. House Prices Fall the Most Since at Least 2001

Published on: By Brian Swint. 29th September 2008 .

U.K. house prices fell by the most in at least seven years in September as the global financial crisis choked off mortgage lending, Hometrack Ltd. said.

The average cost of a residential property in England and Wales slipped 6.2 percent from a year earlier to 165,300 pounds ($304,000), the London-based research company said today. That's the biggest annual drop since the index started in 2001. Prices fell 1 percent from August.

Credit markets have seized up after banks' concerns about losses led them to hoard cash, making it more expensive for potential homebuyers to find mortgages. That's pushed the U.K. into its worst property slump since the early 1990s and led the government today to seize Bradford & Bingley Plc, the country's biggest provider of home loans to landlords.

"Weak demand continues to put a downward pressure on house prices," said Richard Donnell, director of research at Hometrack, in a statement. "It is very hard to identify the mechanisms by which the current cycle of weak confidence, declining sales volumes and falling house prices can be reversed in the near future."

The number of homes changing hands may fall to the lowest level since the 1960s this year, Donnell said. In London, prices have dropped 7.1 percent in the past year, the report said. Rightmove Plc, the most-used property Web site in Britain, said last week the property market is "on its knees."

Mortgage Approvals

Buyers are now clinching an average discount of 9 percent from the asking price of a home, the Royal Institution of Chartered Surveyors said in a report today.

U.K. mortgage approvals dropped to 32,000 in August, the lowest level since comparable records began nine years ago, Bank of England data showed today. The value of loans fell to 143 million pounds, the lowest since April 1993.

Prospects for mortgage lending are deteriorating after the collapse of Lehman Brothers Holding Inc. derailed financial markets, sending lending rates higher. The cost of borrowing pounds for three months jumped to the highest since December on Sept. 25.

Bradford & Bingley was seized after the crisis shut off funding and competitors refused to buy mortgage loans that customers are struggling to repay. Banco Santander SA, Spain's biggest lender, will pay 612 million pounds ($1.1 billion) for the bank's 197 branches and 20 billion pounds of deposits.

Britain entered a recession in July, forecasts by the European Commission and the Confederation of British Industry, the country's biggest business lobby, show. Bank of England Governor Mervyn King said in August that economic output will be " broadly flat" for a few quarters.

Back to the top

Bradford & Bingley: your main questions answered

Published on: By Deborah Hyde. 29th September 2008.

What does it mean for savers?

Nothing should change. As of this morning Bradford & Bingley accounts remain open and branches will trade as usual. Banco Santander has bought £20 billion in retail deposits. Bradford & Bingley's customers will continue to use their existing channels - branches, telephone and internet - for transactions, as usual, according to the statement from Abbey. As a result of the involvement of the Financial Services Compensation Scheme - and the extra money the government has lent it - all the deposits of B&B's 2.5 million savers are protected.

What does it mean for B&B mortgage holders? The situation is more uncertain for the bank's 1 million mortgage customers. Their mortgages have been nationalised and are now the responsibility of the government. As Bradford & Bingley mortgages come up for renewal, it is likely borrowers will be encouraged to go elsewhere and will not be offered attractive remortgage deals. This could cause problems for buy-to-let investors and holders of self-certified mortgages.

With a rising number of the mortgages in arrears, industry watchers say there remain issues about whether the government-owned bank will make moves to actually repossess people's homes.

What does it mean for investors and shareholders? The news is very bad for B&B's 950,000 private investors holding its ordinary shares as well as its permanent interest bearing shares (Pibs) as well as City institutions who own the bank's bonds and who gave the bank £400 million in a fund raising this summer. The Treasury's statement makes it clear that its move to take over B&B's assets and liabilities means they will receive nothing.

Many investors dumped their shares as the stock collapsed this year to close at 20p by last Friday. Those who did not get out, unfortunately, will get nothing. What does it mean for taxpayers? The government has been trying to reassure taxpayers that they will not have to carry the cost of nationalising the group. The government has lent money to the Financial Services Scheme to provide complete protection for B&B's savers. Interest on the loan will be paid for by the banking industry and it is hoped that the loan will be repaid in full without need to call on public funding in the long-term. However, the £50 billion of loans and mortgages will be added to the national debt and the government (and taxpayers) will ultimately be responsible.

What does it mean for the housing market?

This looks like very bad news for the housing market. With some industry analysts suggesting that as many 500,000 buy-to-let mortgage deals may be up for renewal next year, it is likely that many borrowers will not be able to arrange a new deal.

The credit crunch and problems at HBOS means that around two thirds of buy-to-let lending supply has been withdrawn. If buy-to-let investors struggle to find attractive remortgage deals and take fright at higher borrowing costs we could see a glut of houses being put up for sale which would further depress prices. Self employed borrowers with self certified mortgages may also find it difficult to remortgage.

Is this the same as what happened to Northern Rock?

No. The government nationalised all of Northern Rock. Today, it only part nationalised Bradford & Bingley. The move has also been financed differently. On Saturday, City watchdog the Financial Services Authority put Bradford & Bingley in default saying the banking group 'no longer met its threshold conditions for operating as a deposit taker'. The group's retail business was then put up for auction and today it was announced that Spanish bank Banco Santander - which already owns Abbey National and Alliance & Leicester - had won the group's savings business, with 2.5 million customers, for £612 million pounds.

Back to the top

Home owners struggling to find remortgage deal

Published on: Mortgage By Natalie Martin. 26th September 2008

Research from online credit information provider Equifax shows that 23% of home owners are having difficulty getting a competitively priced deal.

Some 25% think they have found it difficult to get a good deal because of past defaults on other credit.

While 19% think it's because their property has lost value since it was purchased and 9% think it was either because they have applied for a number of other credit deals in the last few months or because they didn't have a large enough deposit.

A fixed rate remains the most popular option at 54%, followed by tracker/discount and interest only at 16% each.

Equifax found 69% made only one application before securing a new deal with 19% making two to three applications, 21% of those who have remortgaged have done so to help clear their debts.

For those who currently aren't home owners, 28% won't be taking out a mortgage in the next six to 12 months because they wouldn't be able to meet the repayments and 26% because they can't afford the deposit.

Neil Munroe, external affairs director at Equifax, says: "Along with the news today that rates for new deals are going up again, this indicates that consumer confidence is fairly fragile - although there are some glimmers of hope in consumers' attitudes to managing their finances."

Back to the top

Sale and rent back 'a child of the crunch'

Published on: 8th September 2008

Breaking News

BDRC, a market research agency, has described sale and rent back as a child of the credit crunch, following its quarterly survey of UK private landlords.

The survey examined the growth of sale and rent back, with almost half (46%) of landlords saying they perform a useful function for both homeowners and landlords. Around 5% already own at least one such property, while almost a fifth (19%) plan to increase the number of such properties in their portfolio.

Around 58% of landlords said they were worried that such schemes could be misused, with 64% stating that the system needs regulation.
Mark Long, client services director at BDRC, says "The sale-and-rent-back phenomenon has been born out of the credit crunch. Almost half of private landlords see it as a positive mechanism to help cash-strapped homeowners remain in the same house and avoid further disruptions to their families, especially those with children at local schools."

Back to the top

More Scottish homeowners face repossession than the rest of UK

Published on: By Rosemary Gallagher. 10th August 2008

More homeowners in Scotland are facing repossession than other parts of the UK, largely because of greater exposure to sub-prime and high loan-to-value mortgages, an investment firm has warned.
Repossessions in the UK are now at their highest level since 1999, with the Council of Mortgage Lenders reporting that they reached 18,900 in the first six months of the year, up from 12,800 for the same period of 2007. The number of households with mortgages in arrears for three months or more rose by nearly a third to 155,600 in the first half of this year.

And more homeowners are expected to fall into negative equity as house prices drop. Halifax last week said that prices fell for the sixth month in a row in July, when they dropped by 1.7%.

Bryan Jackson, insolvency partner with PKF in Scotland, said: "If you combine the issues around the credit crunch, historic debt and banks not wanting to lend, then there are going to be more repossessions. "Recently I've come across more sell and rent back companies in the market wanting to capitalise on this."

He said there is potential for a faster rise in repossessions and insolvencies in Scotland because trends tend to lag a year behind England where such problems appear to have peaked already.

Back to the top

Boom time for 'sale and rent back' sector

Published on: By Rosemary Gallagher. 27th July 2008.

THE unregulated "sale and rent back" sector, which involves companies buying houses from owners who need to raise cash quickly, is booming on the back of the credit crunch.
Companies who operate sale and rent back schemes attract customers by promising to buy their properties quickly. However, they generally offer only between 80% and 90% of the value sellers would achieve on the open market.

Many homeowners accept the lower valuation because otherwise they would face repossession. Others reasons for clients wanting a transaction to be completed quickly include relocation or a relationship break-up.

But consumer bodies are concerned about the rapid expansion of the sale and rent back sector as household budgets become increasingly stretched. The Office of Fair Trading (OFT) is studying the need for it to be regulated.

John Fingleton, OFT chief executive, said: "Sale and rent back schemes might be helpful for some but there are a number of potential concerns, including whether consumers in difficult circumstances are making well-informed choices." The OFT expects to report its findings in the autumn.

Back to the top

Sell & Rent Back Enquiry Fast Property Sale Enquiry