In Sky News recently we heard that mortgage lending for house buyers was 19% higher during July this year than in the same month in 2008 indicating the first material annual growth since early 2007.  The number of first time buyers applying for loans also increased significantly, some 18%, giving hope that the battered property market is genuinely on the road to recovery.

Whilst some pundits extol the virtues of the low base rate others are anticipating a down turn in late 2009 and early 2010.  What comes across loud and clear to Property Pathways is that whilst the property market in the UK is still a real mixed bag at the moment with no one able to predict what will happen next, the forecast is a far rosier picture than the 8% fall for 2009 and flat line for 2010 as predicted in Reuters June survey.

The latest polls indicate that house prices have finally bottomed out and a slow return to growth is anticipated after the second quarter of 2010.  The Banks are rebuilding trust even with all the toxic debt they have, appearing more stable and even though we all know they are not out of the woods yet, monthly mortgage approvals have increased even with the tightened lending criteria.  Recent surveys also indicate that there are around a million first time buyers just waiting for increased confidence to encourage their entry into the market.

Bovis Homes confirmed a growing trend of stabilisation in August with Bellway and Taylor Wimpey posting positive trading statements in spite of the forecast decline for completions in 2009.  Prospects for house builders are optimistic in the long term with a current under supply of housing, low interest rates and higher employment being likely to increase demand in the second half of 2010.

The global crisis of 2008 to 2009 has created a massive shortfall of new build stock in the UK market making the period up to 2016 the perfect time for buying ‘off plan’ as more and more developers are going to be stepping back into the market to fill the ever rising demand in order to secure loans to start building.  This in turn means that they will be willing to incentivise ‘off plan’ sales as quickly as possible by making them as attractive to the buyer as they can.  In turn, all property sold against good solid fundamentals will increase in value as the market begins to move again with the mass entry of the first time buyers.

If you are considering buying, ‘off plan’ could be the way for you to dramatically increase your profit as long as you remember that the earlier you get in, the better the deal will be and the less risk you’ll take as long as you focus on the fundamentals like shops, schools, transport links, employment opportunities and investment.  With ‘off plan’ you will be buying property at rock bottom prices with an upward trend in the property market that is on your side right now.

In the meantime home owners need to be aware of the predicted ‘double dip’ that could hit in early 2010 should the record low interest rates of 0.5% currently being enjoyed be increased.  If this happens, the borrowers who’ve survived this far because of the low loan rates will be pushed even further increasing repossessions and forced sales which will add more supply onto the market and could push house prices down if not tempered by the entry of the first time buyers.

The good news is that for those in the market to buy it’s a breathing space to make the right choice knowing that you can offer between 20 – 25% lower than the current asking market price and probably secure a great deal on your mortgage to boot.  The latest HSBC’s 1.99% home loan offer has created a lot of speculation and it’s yet to be seen whether or not the other lenders follow suite.  What is certain is that the Bank of England will be forced to keep the interest rate relatively low throughout the first quarter of 2010 to balance low inflation and expected tax rises.

Looking at the biggest price improvements among property types you’d be well placed to look at terraced houses as they are registering rises of 3.2% against last July followed closely by semi-detached and flats.

“Be greedy when everyone is fearful, be fearful when everyone is greedy.”

Warren Buffett – U.S. investor, businessman, and philanthropist.

There’s also been a strong surge in the buy to let market in 2009 as home owners are unable to sell their properties for the expected return and investors are snapping up bargains to rent out until the current recession breaks.    The Association of Residential Letting Agents (ARLA) revealed data of the types of properties being snapped up on the buy to let market as:

Semi detached 68%
Detached 67%
Terraced houses 52%
Flats 29%

If you are in the enviable position of having cash flow to buy then do it now before the cycle swings and take a long hard look at off plan buys.  (We will be taking a more in depth look at this topic in November)

Some lenders are even offering let to buy schemes where by you are allowed to borrow money to buy a new home to live in whilst your existing house is let out to tenants.  You can borrow without your existing mortgage being factored in as long your rent on that house covers the monthly payments!  In this way you increase your property ownership but, if you’re downsizing, you reduce your monthly costs.

Those of you sitting tight can shop around for fixed mortgage deals now ensuring that you enjoy the benefits of today’s low base rate for a few more years to come.  When your current mortgage deal expires don’t just transfer to the lenders standard variable rate, shop around and see what’s on offer first.  A fixed rate mortgage offers peace of mind for a set number of years.

With the lull before the boom still ahead for the next nine months rather think about adding value to your home and if you do remortgage factor in those extras such as a conservatory or another bedroom whilst the interest rates are in your favour.

Ultimately adding value will pay off when it comes to selling.  Nationwide Building Society and RICS tell us that a loft conversion adds the most value to a home these days at 21% added whilst a new kitchen or conservatory will only add at best 4 – 6%!

“Experts are not expecting mortgage rates to increase during the remainder of 2009 but as to what will happen next year, the picture is not quite so clear.  If you have some slack in your monthly budget to absorb any rate rises next year, HSBC’s is an attractive offer”

Andrew Hagger – Moneynet.co.uk

The headline rate may be attractive but the deal is reserved for those with 40% equity in their homes and has an arrangement fee of ₤1199.  The rate goes up the less equity you have.  However there are a myriad of attractive offers out there at present as the squeeze continues and any savvy homeowner should take advantage of them.

In the meantime, we’d recommend doing your due diligence on the property market whilst battening down the hatches for a little bit longer, looking at adding value to your property before putting it on the market and considering taking advantage of the situation with ‘off plan’ buys and buys to let.  However, if you’re a first time buyer or have investment cash – buy, buy, buy!

I’m selling, do I really need a HIP?

As of the 6th April 2009 your property cannot be marketed until a Home Information Pack (HIP) is in place. The aim is to make the home buying and selling process easier and more transparent for consumers offering more information that should incur less wasted costs and delays.

For consumers, selling and buying property is a difficult process and one which is felt is made more so by the government’s introduction of Home Information Packs (HIPs) which puts more regulations – and penalties – on sellers than ever before. HIPs are an extension of the legal process of selling your home and it is important that you are looked after by professionals who understand all the requirements.

If, as a private seller, you market your home without a HIP, there is a £200 penalty.

Ask yourself these simple questions to find out if you need one before marketing your property:

• Is the property used or intended to be used as a residence?
• Is the property in England and Wales?
• Is the property to be sold without any tenant of the whole property?

If you answered NO to any of these questions, you do not need a HIP

If you answered YES to all of these questions answer the following:

Was your property put on the market before the relevant commencement date;actively marketed in the run up to the relevant commencement date and intended to be sold before the relevant commencement date? (See underneath for dates)

The relevant commencement dates are:

• 1 August 2007 for four or more bedrooms;
• 10 September 2007 for three or more bedrooms; and
• 14 December 2007 fro all other residential properties.

If you answered YES to ALL of these questions you do not need a HIP

If you answered NO to any of these questions answer the following:

Are you selling:

• non-residential property that is, and will continue after sale to be, used for non-residential purposes?
• Land ancillary to a dwelling house?
• A holiday home that you are not allowed to live in all year round?
• A property that has a mixture of business and residential use that you are selling as one unit such as a shop with a flat over it?
• A property that has can be used for business and residential such as a live/work unit?
• A number of properties that you are selling as one lot?
• A property that is unoccupied and unsafe for occupation?
• A property that is for demolition and redevelopment of the resulting site and has the appropriate planning consent for such demolition and redevelopment

If you answered YES to ANY of these questions you might not need a HIP but conditions are attached to these exceptions so you need to take advice before committing yourself.

If you answered NO to ALL of these questions you will need a HIP to market your home but the need for a HIP should not delay the start of marketing provided that you request the preparation of the HIP before your agent starts the marketing.

The required contents of the HIP are:

• Evidence of the Legal Title.
• Local Authority and Drainage Searches.
• An Index and a Sale Statement.
• If the property is Leasehold, a copy of the lease.
• An Energy Performance Certificate (EPC) which will guide buyers as to the home’s energy efficiency rating.
• Property Information Questionnaire (as from 6th April 2009)
• It should be noted that not all Home Information Packs are the same.

Our advice is to choose a solicitor that considers delivery of the HIP as part of the conveyancing process so that you ensure you have a fully compliant HIP that is valued by your estate agent and the buyer’s attorney.