Property Market Update people | moving | property Autumn 2014
As temperatures rose this summer the property market showed distinct signs of cooling in London and the South East. Previously where we had experienced over subscribed Open Houses suddenly new buyer registrations dropped by a third and viewings, offers and sales all followed suit. Following the implementation of MMR (the mortgage market review) previously unknown levels of complexity were experienced with new mortgage applications and mortgage valuers added to the mix with an extra cautious view around current values. London saw some significant corrections in price whilst locally the ripple effect experienced was gentle by comparison. All the analysis around first time buyers is very positive which bodes very well for the market as a whole. August saw 28,300 first-time buyer completions – up 7% compared to 26,400 a year ago which has been driven by more higher LTV (Loan To Value) lending encouraged by Help to Buy – as average first-time buyer deposits fall 6% year-on-year to £27,114. In the lettings market 93% of tenants asked want to become homeowners and17% expect to buy before the end of the year, 41% within 5 years.
Greg Young Managing Director
Mortgage News At Intercounty we work with Embrace Mortgage Services, they are part of the same parent company and as such we consider them part of our team within all of our offices. EMS have a comprehensive panel of mortgage providers and they will work with you to tailor their service to suit your personal circumstance whether you are an Investor, a First time Buyer, an experienced mover or looking to remortgage.
embrace mortgage services
Mortgage Type Interest Only
Capital and interest £100K
Interest
£100K
Capital £50K
£50K
£0
£0
25
0
25
0
Years
Years
Types of Rates Tracker Rate
Fixed Rate
8%
Interest Rate %
Interest Rate %
8%
6%
4%
Your home may be repossessed if you do not keep up repayments on your mortgage. In general, Buy to Let mortgages are not regulated by the Financial Conduct Authority. *Source LSLPS Mortgage monitor
10
0
10
0
Years
Years
Collared Rate
Discount Rate
8%
Interest Rate %
Interest Rate %
8%
6%
4%
2%
6%
4%
2%
0%
0%
10
0
0
Years
10
Years
Standard Variable Rate
Capped Rate
8%
8%
6%
Interest Rate %
Intercounty is a trading name of ICIEA Limited and is an introducer appointed representative of First Complete Ltd for purpose of the provision of advice in relation to mortgage and non investment insurance products. Mortgage and Protection advice is provided by LSLi Ltd t/a Embrace Mortgage Services, an appointed representative of First Complete Ltd. First Complete Ltd is authorised and regulated by the Financial Conduct Authority.
0%
0%
Interest Rate %
“With new regulation for the mortgage market combined with the influence of The Help to Buy Scheme the latest report from our parent company LSL Property Services has shown that there is an increased willingness amongst banks to lend to high Loan to Value (LTV) borrowers. There is a wider range of higher LTV options available and this has resulted in the higher proportion of approvals for high LTV lending since October 2008.”
4%
2%
2%
Andy Trantum EMS Managing Director spoke to us about the current Mortgage environment.
6%
4%
2%
6%
4%
2%
0%
0%
10
0
Years
10
0
Years
LSLi Ltd t/a Embrace Mortgage Services charge a fee of between £399 and £699 on application. The amount we will charge is dependent on the amount of research and administration that is required.
Sales Annual Property Value Increase
9.2%
10.2% ROYSTON
M11
SAFFRON WALDEN
7.6% STANSTED MOUNTFITCHET
4.1%
9.2%
BISHOP’S STORTFORD
SAWBRIDGEWORTH
5.4% OLD HARLOW
Stansted Airport A120
9.0%
6.7% BRAINTREE
GREAT DUNMOW A130
6.2%
CHELMSFORD
Information collected on Zoopla Zed Index value change September 1st 2014 versus 1 year ago.
Thinking of selling your home? The data indicates that since our last edition, with only a few exceptions, there has been a marked increase in the value for detached houses on the same period last year. Bishop’s Stortford, Sawbridgeworth, Great Dunmow and Chelmsford have experienced the most notable increases, inferring that the improvement in the market that we have been experiencing has reached the higher value homes in the area. Saffron Walden experienced a near 4% increase in the Zoopla Zed index. At the time of writing the children have been back at school for a month and the housing market has been late restarting this year, with most agents reporting fewer sales for September compared to earlier this year. Things are now looking more promising, but it’s all about price and never before have the 1st couple of weeks of marketing been so important in securing the best possible prices and buyers. It isn’t enough to rely on ‘sticking it on the internet’, your agent will need a full register of buyers and an appetite for hours of phoning to drive those buyers to your door.
Property Value Changes by Type Average Current Value vs Average Paid Last 12 Months Detached 21% + 18% 15% 12% 9% 6% 3% Bishops Stortford
Braintree
Chelmsford
Great Dunmow
Harlow
Royston
Saffron Walden
Sawbridgeworth
Stansted Mountfitchet
Bishops Stortford
Braintree
Chelmsford
Great Dunmow
Harlow
Royston
Saffron Walden
Sawbridgeworth
Stansted Mountfitchet
Bishops Stortford
Braintree
Chelmsford
Great Dunmow
Harlow
Royston
Saffron Walden
Sawbridgeworth
Stansted Mountfitchet
Semi detached 21% + 18% 15% 12% 9% 6% 3%
Flats 21% + 18% 15% 12% 9% 6% 3%
Statistics sourced from Zoopla.co.uk 01/09/14
Lettings Tenant Demographics
0.8%
84.8%
Others
Employed
0.4% Retired
13.6%
0.2%
Maternity
Self employed
Average wage of tenants £35,928
Stansted
£34,902
Sawbridgeworth Bishops Stortford Saffron Walden
£34,713 £34,213 £32,411 £27,784 £26,832 £25,972
Based on the available tenant reference information year to date as at 01/09/14.
Great Dunmow Royston Chelmsford Harlow
Facts up front Lettings Market
Richard Durrant Lettings Director
With the uplift in the sales market in the first half of 2014 lots of the properties for sale received multiple offers often achieving prices in excess of the asking price. As a result of this the lettings market has seen a large number of landlords taking advantage of favourable sales conditions and selling up. Couple this with a large proportion of “would be” first time buyers deciding to stay put and sign into extended tenancy agreements, this has resulted in a severe shortage of properties available to rent and as a result prices rose. The LSL buy to let index for July stated that the average residential rent across England and Wales was 2.0% higher than in July 2013, currently standing at £753 per month. Landlords could choose from fantastic tenants who would normally be homeowners and this was reflected in Intercounty Rent arrears achieving their lowest level ever at 1.1%. With the belief that the UK is becoming a nation of renters the Government continues to add new legislation to protect tenants thus making it more and more difficult for a landlord to manage their own property.
* http://www.telegraph.co.uk/finance/personalfinance/investing/buy-to-let/10788736/Buy-to-let-returns-top-allother-asset-classes.html
Rent Arrears
Void Periods
With the influx of buy 2 let investors of which the majority have mortgages, rent arrears are one of the biggest concerns for landlords. The key to keeping rent arrears to a minimum includes extremely strict referencing checks, continual monitoring and management of the tenants, as well as a clear display and understanding of the legal obligations should your tenant fall into arrears.
Top of the list of concerns for many landlords, a 1 month void period could wipe out your whole years return/profit. Knowing how, when and to whom to market a property will reduce your void periods as well as correct timing and serving of notice periods. Attracting the right tenants who see your property as a long term home rather than a stop gap will also help improve your return.
2014 5.4 Days per year
2014
1.1
6.6
Intercounty
National Average
2
1
3
Landlords staying past their initial fixed term
Percentage of asking price achieved
Out of all of the statistics, this one pleases me the most, up from 92% to 95%. If you can keep your landlords voids and arrears low and secure a tenant close to the asking price you may think a landlord continuing with your service is a given, think again.
3 of information available on the internet, 2 the accessibility 1 With tenants are completely aware of what price your next door neighbour rented their property for, the floor plan, condition and 2 of the 1 walls.3Positioning your property correctly will help colour increase your chances of not only a quick let, but also reduce void periods. On an £800 pcm rent, marketing your empty property for £25 less a month than you could “possibly” get, is the equivalent of it taking 10 days longer to rent.
We treat our clients properties as if they where are own homes, every property manager cares deeply about the condition of the property, by looking after it, the tenants will want to stay longer which in essence, is ideal for the landlord.
2
95%
1
SOL
SOL
3
99% Figures based on system information from June 2014 to September 2014
Branch Network Bishop’s Stortford 21 North Street Bishops Stortford Hertfordshire CM23 2LD Sales: 01279 757250 Lettings: 01279 504079
Braintree Market House Braintree Essex CM7 3HG Sales & Lettings: 01376 328288
Chelmsford 6 Duke Street Chelmsford Essex CM1 1HL Sales: 01245 251442 Lettings: 01245 347040
Great Dunmow Barclay House 1 - 3 High Street Great Dunmow Essex CM6 1UU Sales: 01371 878322 Lettings: 01371 874005
Old Harlow The George Old Harlow Essex CM17 0AN Sales & Lettings: 01279 639666
Royston 17 Melbourn Street Royston Hertfordshire SG8 7BP Sales & Lettings: 01763 242528
Saffron Walden 57 High Street Saffron Walden Essex CB10 1AA Sales: 01799 522641 Lettings: 01799 513224
Sawbridgeworth 1 Bell Street Sawbridgeworth Hertfordshire CM21 9AR Sales & Lettings: 01279 600333
Stansted 8 Cambridge Road Stansted Essex CM24 8BZ Sales & Lettings: 01279 814400
IF YOU HAVE ANOTHER AGENT INSTRUCTED ON A SOLE AGENCY AND/OR SOLE SELLING RIGHTS BASIS, THE TERMS OF THOSE INSTRUCTIONS MUST BE CONSIDERED TO AVOID A POSSIBLE LIABILITY TO PAY TWO COMMISSIONS.