Empty Homes Charity Helps to Ease the Housing Shortfall

As pressure to address the housing crisis in the UK grows stronger and stronger, new solutions are starting to emerge that could help to ease the strain.  According to UK charity Empty Homes, there are currently 1.7 million families on council housing waiting lists and that figure continues to grow.  The UK population is growing and yet house building rates have not been this low since the 1920s.

It Could Cost as Little as £10,000 to Renovate an Empty Property

New ideas come and go on how to ease this problem, but one idea that can’t be ignored is the idea of reusing the thousands of homes currently standing empty across the UK.  Empty Homes has spent a great deal of time collating local council statistics and estimate there are currently 720,000 empty properties in the UK.  Renovation of each property could cost as little as £10,000.  With new-build homes at an all-time low, this seems like the ideal solution to the shortfall in available housing.

Thousands of Properties Ready to Be Renovated

Often these properties are privately owned or properties that have fallen into disrepair.  Some have been inherited by owners who simply don’t have the resources to renovate the property.  Whatever the reason, it’s apparent that many of these homes could be made habitable for the thousands of families desperate for accommodation and that’s exactly what Empty Homes sets out to achieve.

Empty Homes was first established in 1992.  Over the years they have acted on behalf of those individuals and families desperate for somewhere to live by challenging Government policies and suggesting ways to take advantage of thousands of empty homes.  One of the largest problems faced by the owners of these empty properties is the lack of funds to renovate and repair them.  Empty Homes successfully campaigned for tax-breaks for these owners helping them to raise the funds to make them habitable once more.

Help Empty Homes to Rehome Thousands of UK Families

On a local level, Empty Homes is helping thousands of individuals to bring homes back into use. On a national level, every council in the UK now has a named officer whose responsibility it is to restore empty homes back into habitable condition.  These are just some of the initiatives that Empty Homes has addressed and they plan to continue working with home owners and local authorities to help ease the housing crisis and help the thousands of people desperate for a place to call home.

Empty Homes provides a wealth of free advice and assistance to those looking to renovate an empty property and to those looking to invest in empty property.  You can also report an empty property through their website so they can investigate further.

Property Predictions for 2012

Property predictions for 2012 are being highlighted profusely in this week’s media but the main question for existing and prospective property owners alike is, ‘what will happen to house prices next year?’

In the nation’s newspapers, the experts have been having their say and overall it’s a fairly mixed set of predictions. Jon Hall of the Saffron Building Society suggests a combination of outcomes, depending on the type of property involved.

“The lack of confidence in the economy means that house prices are unlikely to do anything spectacular. That said, we are seeing increased signs of activity at the top end of the market,” Hall said.

He went on to confirm the theory that a rise in demand for houses in need of repair is set to take hold.

“We’re also seeing people choosing to invest in refurbishing older properties to achieve greater returns on their capital,” he concluded.

On the whole, mortgage providers are suggesting that 2012 will mirror 2011 in many ways and if mortgages remain hard to secure, the market as a whole is unlikely to change.

I’d expect that next year would look broadly similar to this year,” said David Hollingworth of London and Country Mortgages.” Mortgage availability has played a key role in the reduced level of housing transactions and there is very little expectation that next year’s mortgage market will be any bigger and could even be a little down on this year.”

Elsewhere, there is a suggestion that the entire market is dependent on the Euro crisis and that nothing significant will happen until this is settled. This view is underlined by Ray Boulger of mortgage brokers John Charcol.

“If the euro collapses the consequences on our banking sector will be severe because of the global nature of banking and the huge write-offs, which will be necessary on loans made to Eurozone banks which will become insolvent,” Boulger said.

“The result of this will be that mortgage lenders will have no choice other than to reduce lending which will have a negative impact on the level of activity in the housing market and on property prices.”

While many are predicting no change, others have hinted at a significant drop and in conclusion, Howard Archer of IHS Global Insight added his views.

“I think house prices will fall by 5pc over the first half of the year and then flat line over the second half, “Archer claimed. “I believe there is a significant risk that house prices could fall more than this given the current weakness of the economy and worrying outlook.”

In twelve months’ time we will know if any of these predictions have come true but for now, the Eurozone crisis, availability of mortgages and many other factors look set to subdue next year’s housing market at the very least.

Golden Rules of Property Investment

People have been investing in buy-to-let property for years, nothing new there.  For centuries tenants have been renting from landlords, but it’s only been recently that the average ‘man on the street’ has had unprecedented access to finance products to use for investment purposes.  Until the credit crunch bit, lenders were practically falling over themselves to provide buy-to-let finance.

However, since the economic downturn, the cost of buy-to-let finance for lenders has increased dramatically.  Lenders are now reviewing their lending criteria so that only those cream of the crop investors get the best deals.

If you are serious in investing in property and you have the finances to do so, the market is still viable, but you should review our golden rules of property investment before you start.

Research is King

You wouldn’t buy a car without knowing the make, model or mileage and the same principles apply to property.  Even more so!  Research your market thoroughly including the area you are thinking of buying in, any regeneration plans, the local transport links, and also other amenities such as schools and shops.  Any property 10 minutes away from transport and local amenities is a safe bet!

Location, Location, Location

Consider who your ideal tenants would be.  You need high quality locations to attract quality tenants.

How to Buy Well

When purchasing a property, consider content and price.  This could save you money in the long run if white goods and furnishing could be included in the price too.

Make the Numbers Work

Buy a property that supports capital appreciation.  Make sure you include all the costs involved in the property purchase including legal fees, service charges, stamp duty, contingency and ground rent so that you can afford any void periods that occur between tenancies.  Many people ignore these costs and it can be a catastrophic mistake.

Use the Right Advisors

It’s essential that you use good mortgage and letting advisors.  A regulated advisor will ensure you have access to the best deals that are free from any fees and which operate in alignment with your investment plans.  A good letting agent will work to keep void periods to a minimum.

Don’t Expect to Get Rich Quick

Property investment needs to be approached with care and patience.  This is a long-term investment opportunity.

Supply and Demand

Speak to local agents to see what is particularly needed in your chosen area.  This will help you to meet the need and to attract tenants easily.

Head Not Heart

Don’t be ruled by your heart when making decisions.  If you are not going to be living in your investment property you should only furnish and decorate it to a clean and basic standard unless you want to attract high end professionals.  Speak to local agents to understand the quality that is expected.

Avoid the Gimmicks

Be wary of any deals offering incentives, such as no money down for example.  Also, so-called get rich quick schemes should be avoided like the plague.  A few years ago these might have been worth a punt, but not right now.

Keep Pricing Real

Never pay over the odds when purchasing an investment property.  You should never pay up-front fees, finder’s fees or commissions prior to completion.

In summary, your aim should be to find a property that generates long-term wealth.  There are many solid investment opportunities out there for those with the finance available.

Spotlight on Below Market Value (BMV) Property

Put simply, Below Market Value or BMV properties as those that are available to purchase below their market value.  Normally this is because the previous owners experienced financial difficulty or needed to dispose of their property quickly without the protracted sales process.  The reason for this is usually the threat of repossession.

The official guidance from the Royal Institute for Chartered Surveyors (RICS) about how a surveyor should value residential property is contained in Appendix 5.1 of the Royal Institute for Chartered Surveyors Appraisal and Valuation Standards (Red Book).  The foundation for the valuation of a residential investment property is normally its market value.  Market value is defined in the Chartered Surveyors hand book as:

‘The estimated amount for which a property should exchange on the date of valuation between a willing buyer and a willing seller in an arm’s-length transaction after proper marketing wherein the parties had each acted knowledgeably, prudently and without compulsion.’

If a property was marketed properly and then a sale agreed, a landlord might consider that they got a BMV bargain.  But this isn’t always the case.  For instance, let’s say an investor buys a property for £180,000 and a year previous to that a similar property sold for £200,000.  The landlord may consider that they have bought the property at 10% BMV.  If we look at the guidance set out by RICS the investor has just actually paid the market price.

So, do BMV properties really exist?  They do and it all depends on whether the property was fully marketed before sale or not.  These situations occur when buyers are given access to ‘motivated or distressed sellers’ who don’t want to go through the normal process of sales and marketing or cannot afford to.

Locating motivated sellers is usually quite simple if you are in a good position to buy.  Targeting your local area with adverts or leaflets is one way.  You could also contact your local estate agents highlighting your interest in property bargains and that you are a potential cash buyer of residential investment properties.  Even if you need to arrange a mortgage for a bargain property it’s still possible to flush out some good deals.  Persistence pays in the current market.  Make your name and number known and make it clear that you are serious about making a purchase.

As with any industry, the BMV industry is rife with rogues and dishonest middlemen.  Those posing as BMV gurus are often anything but and just after preying on those desperate to sell and in a distressful financial position.  Their main concern is with making a massive profit between desperate seller and landlord.  It is much better and easier to search for BMV properties through local estate agents or by offering your own direct service to local customers.

Of course, there are dangers with buying BMV property and this is mostly down to the provisions of the 1986 Insolvency Act.  These provisions could result in a landlord who has bought BMV property legitimately being sued by the previous seller.  If several years down the line the seller has become bankrupt they can take out a court order to reverse the sale or claim the difference back between market value and the agreed sale price.  The reason for this is because the Insolvency Act allows the trustees of a bankrupt to prevent the bankrupt from giving away or selling assets below the normal market price.  A landlord who purchases BMV properties can be exposed to these provisions for up to 5 years.  However, there is a way to protect against this instance by asking the seller to execute a Deed of Solvency.  This declaration states that the seller was solvent at the time of sale.

Invest in the Undiscovered Charm of Bequia

From the very moment you arrive in the Grenadines, you’ll know that you’re going to experience something a little bit special.  Perhaps it’s the sweet steel drum music that heralds your arrival or maybe the hospitable and generous nature of the people that help you to your holiday destination.  This and the laid back lifestyle, sensational weather, and magnificent scenery will ensure a smile is planted firmly on your face and there it will stay for the remainder of your visit.

One of the things that stays with you after a holiday in the Grenadines is the friendliness of the people.  Nothing is too much trouble and it’s hard not to make some good friends during your stay.  Whether you choose to spend your vacation diving the beautiful crystal clear waters or simply soaking up the sun, you’ll feel your worries wash away within hours of arriving.

Bequia – The Little Big Island

The Grenadines is a Caribbean chain of over 32 islands in the Windward Islands.  The largest of these islands is Bequia which forms part of the country between Saint Vincent and the Grenadines.  However, Bequia is still a tiny and exclusive island, home to fewer than six thousands inhabitants, and you too will feel at home the moment you set foot on the glistening white sand of this beautiful hideaway.

If you have dreamt of living on the perfect Caribbean island with pristine sandy beaches, an azure blue ocean, and dramatic sunsets, Bequia fulfils these needs and so many more.  Here in Bequia, there are no crowds, no traffic jams and you’ll be hailed with a warm and friendly hello wherever you go.  If you have a love of sailing, the island’s rich heritage and strong connection to the sea ensures you will always find somebody willing to share their marine knowledge and traditions so that you get the most from sailing around the Grenadines.

By day on Bequia, you can experience the real meaning of doing absolutely nothing, but those looking for adventure won’t be disappointed.  Bequia offers so many activities, from chartering your own yacht to kayaking and windsurfing.  Water sports here come into their own on this wonderful island where equipment is in plentiful supply and the waters are safe and tranquil.  Bequia also boasts many art galleries and craft boutiques where you can enjoy a relaxing afternoon browsing and perhaps investing in some wonderful souvenirs and items to take back home.

Whatever you choose to do here, you will have the time of your life.  There are no schedules or routines, and you can leave your cares and worries far behind you.  Get to know the island on land or water with relaxing coastal walks along the golden sands, or exhilarating diving, sailing or fishing trips.  If you fancy exploring one of the neighbouring islands, there is always a friendly soul to help you get there.

The warm tropical nights mean nightlife takes on a world of its own.  Sharing cocktails under the stars whilst your seafood banquet is cooked on the barbecue is pure unadulterated bliss.  And then later, you can enjoy a sun downer in one of the many beachside bars as you watch the sun gently sink behind the horizon.

Ssh, Don’t Tell Everybody…

Whilst Bequia is always going to be a popular holiday destination, more and more people are starting to think about property investment on this delightful and pristine island getaway.  Property development on Bequia has taken place on a smaller scale than other islands in the region and as a result the island retains much of its beautiful lush rainforest, dramatic waterfalls and spectacular coastline.  Imagine stepping onto your very own private beach every morning and being the only living soul for miles.  It’s all possible and with properties more affordable than on the more established islands, you might find your investment sooner than you think.

If you are searching for a slower pace of life amidst lush tropical surroundings, then Bequia island life is for you.  Whilst property prices on the Grenadines may have risen in the last three years, they still represent a real bargain when compared to comparative properties on neighbouring islands.

Invest with Confidence

Buying property in the Grenadines is very similar to buying property in the UK and therefore there should be no nasty surprises along the way.   In fact, the only challenge you may face is making a choice between the fabulous properties on offer.

Average Costs:

Buyers Legal Fees – Approximately 1% of the Purchase Price

Stamp Duty – Approximately 5% of the Purchase Price

Land Holding – License Approximately 6% of the Purchase Price

Mortgage Down Payment – Usually a minimum of 10%, but could be as low as 5%

Mortgage Repayment Period – Up to 30 years or by the time the buyer reaches the age of 65

Mortgage Interest Rate – Between 7.7% to 9%

It’s a great time to invest in property on Bequia.  Economists visiting the island have observed the island is in the early stages of a 10 year economic boom.  The Grenadines is growing in popularity every year with both tourists and those looking to secure themselves a nest egg in one of the most beautiful regions of the world.  The developing tourist industry together with a boom in international trading has helped to improve Government development policies and general welfare facilities on the Grenadines in general.

Finding the Perfect Grenadines Retreat

Properties often have their own private beach and occupy one of the most exclusive locations in the Caribbean.  One such property is this Prime Front Line Villa, currently on sale, and located between two of the most voted for beaches in the world.

If you are looking to invest in the Grenadines, this property offers an impeccable example of the style of property you can hope to make your own.  Featuring signature wooden floors, high wood ceilings, and immaculate fittings this property commands stunning ocean and mountain views.

Take the First Step

If you would like to find out more you can get expert advice on investing in property in the Grenadines and details of available properties from Grenadine Escape Ltd.  Contact Lara Cowan on +44 203 468 5592 or Lucille Cozier on +784 496 0654 for more details about this fabulous opportunity.

Solar Panels for the Home – A Bright Idea?

I had a salesman call at my house on Monday trying to sell me solar PV panels.  I gave him short shrift as I do with most poor sales people that turn up at my door, but it got me thinking.  Over the past few months I have seen a few local homes with panels slapped onto their roofs, so I decided to do a little delving online.

As you no doubt know, solar panels have been used for years to generate energy through the power of the sun’s rays.  They are most commonly seen on commercial buildings, but thanks to the manufacture of a smaller type of panel, they are now available for the home.  Now, the cost of installing these beauties is actually quite astronomical and you could be facing a bill of £12,500 which is a considerable amount of money for anybody.  The salesperson I spoke to on Monday told me I could save thousands on my heating bills.  What he didn’t tell me is that the average household would save £140 a year on electricity bills so those thousands would take years to materialise!

Ofgem has predicted that standard electricity bills are set to rise by 20% in 2020, but does that add to the appeal of solar panels?  Of course, we are all looking to reduce our bills, but the initial outlay is not going to be covered for several decades and the small yearly saving alone is not enough to deem panels as a worthy investment.

However, the Government, in a bid to improve sustainable resources and push the use of solar panelling, launched a scheme in April 2010 called the Clean Energy Cash Back Scheme.  This scheme is designed to give monetary rewards to owners of solar panels for the electricity they produce even when it is used in the home.  For every unit of electricity generated the scheme offers 41.3p and there is also a bonus of 3p per unit for any unused electricity that is sent back to the National Grid.  That means solar panel owners stand to make approximately £850 a year with this scheme.  And it gets better.  The UK Government have suggested that this scheme will last for at least 25 years and that payments will increase in line with inflation.  Payments are also tax free.  Following the initial outlay for your panels, this means a profit of £12,500 can be made over 25 years.

Of course, there are drawbacks.  Whilst the Government may have promised to run the scheme for 25 years, there is the risk that the scheme could be pulled if money-saving measures are required.  It always seems to be the good stuff that gets targeted.  Solar panel systems may also reduce in price as their popularity grows so your investment now might degrade in the future.  However, on balance, the savings you’ll make on your bills and the payments from the Government scheme do make solar panels an investment worth considering.  There are also the environmental benefits to consider too of course.

A couple of weeks ago we published an article about new energy saving homes and how they are more favourable with home buyers.  So, not only do solar panels give you value through savings and scheme payments, but they could push up the value and selling potential of your home too.

Focus on Turkey: Undervalued property in the fastest growing economy in Europe

The Turkish property market is currently enjoying a boom, not least because its economy is currently the fastest growing economy in Europe according to the OECD. This is a position that will not be relinquished any time in the near future said the body.

This is due to the country being in much better shape than the rest of Europe, with a stable banking system, controlled inflation a budget deficit currently thought to be running at around 2%.  Its growth is set to continue thanks to its youthful population and the transition of many citizens from eastern Turkey into the cities.

Although the downturn sent property prices down in Turkey, this now means that they are undervalued when compared to the rest of Europe, which makes them a juicy opportunity for investors.

Tourism in Turkey is still growing rapidly and the population is expanding, which when coupled with low interest rates ensures that the property market is increasing in momentum.

The Turkish government makes it relatively easy for foreigners to buy property although there is a little red tape to be negotiated.  This red tape comes in the form of the military which has to approve every purchase making sure it does not endanger national security. However because of the rapid pace of reform, which looks like bringing the military under the control of civil courts for the first time in Turkey’s history, this may be removed in the near future.

Rental yields on Turkish apartments are good, with gross yields being up to 7.5% for a relatively small apartment according to research by the Global Property Guide.  Larger apartments tend to generate a little less income with yields being around 3.7% to 5.7%.

Finally, increasing accessibility through improved airport facilities means that this country will continue to be popular with tourists, which are bound to boost the property market even further.

This is a Guest article by Julian Walker of Spot Blue, a Turkish real estate agent currently marketing property in Turkey from as little as £25,000.

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Finding investment property is rather akin to sticking a pin in a map

Last week we thought about buy to let, and whilst that suits certain investors one of the real issues that’s been pondered increasingly is that of institutional money finding it’s way into residential investment.

Commercial property is a safer bet, at least in terms of a solid income, and simpler to manage.  Most tend to be for 15 years with the tenant responsible for all rent and rates as well as insuring and repairing the premises. With luck the investor gets the rent paid, upwards only rent reviews and is handed back premises in re-lettable condition. Capital growth is of less concern than income.

Residential letting is a different ball game. Tenants come and go more often, with attendant void periods.  Management is often of the micro variety and there’s little control of how the place will look when you get it back.  That’s before legal issues around tenants not paying or leaving are taken into account.

Whilst there’s more protection for residential tenants now landlords can still be at the mercy of rogue letting agents who still don’t (yet) have to belong to a redress scheme or be licensed.  Good management is not cheap and as usual you do tend to get what you pay for and this cost eats into the bottom line.  It’s certainly higher than with commercial lets.

The holy grail of course, and never has so much money been crying out for a good home, is the potential capital growth, and seeming rent increases, available to small time landlords.  Of course both capital values and rents can go down, as was seen a couple of years ago in London when both dropped dramatically, but overall the inexorable rise in capital values is enough to drive money into this area.

One fly in the ointment here is that traditional volume landlords have learned long ago that they don’t do this for income, long term capital growth has been spectacular.  In an ideal world rent pays any finance costs and upkeep as of course every few years the property will need updating.  This is fundamental and has held institutions back.  But the gains these landlords have made, just look at the number of property people in the rich lists, have been enviously watched for many years.

My company seeded and started a fund three years ago (great timing eh!) in only prime property, and given that we have over 50 years experience of managing such investments it’s been a success because we know what we’re doing, but has still been hard work.  Money is still slow to come in as for some reason the FSA has said that a property fund with ANY gearing (ours has 20%) is a “risky” one.  However, it has shown that efficient management is the key, and for any institution looking to start a purely residential fund it is the key.

Sourcing property for investment is also a headache and I was heartened to see an entrepreneurial company looking to help potential investors. Rankdesk (www.rankdesk.com) is currently something of a blunt tool but it seeks to rank properties with the kind of criteria used by potential tenants, i.e. closeness to transport, lift, condition etc.. With take up the efficacy will improve and become of real use, and given that finding investment property is still rather akin to sticking a pin in a map it could be the first step to genuinely helping people invest.

As for the players that control the really big money looking for a home in the resi world, they’re circling, but where will they land.

What does it mean to be an ethical property investor?

by Roberta Ward

When I was requested to write an article about ethics in property investment I was asked a few questions:

• Do ethics and property investment make easy bedfellows?
• Are there ethical dilemmas in property investment?
• What does it mean to be an ethical property investor?
To answer these questions properly would take much more than one article, so I’m going to tell you in particular how we choose to apply it to our business.

Dictionary definition of Ethical: ‘moral principles, morally correct’.

Dictionary definition of Morals: ‘a persons standards or behaviour, concerned with right and wrong’.

These are the guiding principles which drive our business. I am often asked – “What is ethical property investing?”  The three things it means to us are:

• Not getting involved with companies or individuals touting a ‘get rich quick’
methodology
• Teaching people the truth behind methods of investing- good and bad/ ‘warts and all’

• Being extremely careful who we link with – and by this I mean on any level-whether that is a text link out from our website to another company or literally the people we choose to work with and for.
In truth, it’s been a huge challenge keeping a moral compass within property
investing. There are many times when you are tempted by bribes or incentives to be part of something questionable. But, our own stance is to connect with and help people who have the same ethics as ourselves. We never directly recommend anyone we have not worked with personally. That way, if they prove to be not what they seem, then at least it’s just us and not any clients of ours who lose money. If we are not completely comfortable with them then we don’t work with them.

Our own code of ethics was developed over time because of the disgust we felt at the way property investing has been hijacked by marketing sharks who are really just chasing the quickest route to your money. The advent of huge ‘property networking’ events, which are little more than sales drives, has made the whole scenario very distasteful. It still amazes me why so many folks get sucked in by them.

As a company, we have to be very good judges of people, and we spend a lot of time examining those we do business with. The higher your profile becomes, the more people are keen to be seen working with you. This in itself presents a challenge and we have had to find ways to say ‘get lost’ politely! ( Not always easy-as those with poor reputations tend to be like a jack russell hanging on to a trouser leg!)

So back to the questions at the start of this article.

“Do ethics and property investment make easy bedfellows”- no not really, it’s complicated but it’s also very rewarding in the long term.

“Are there ethical dilemmas in property investment?” You betcha! Every day we come across new challenges, but business is about challenge after all.

“What does it mean to be an ‘ethical property investor?” It means having courage to stand up for how you believe business should be done and being prepared to weed out those who seek only to feather their own nest.

Roberta Ward is the owner of mypropertymentor.co.uk, a top 20 UK property blog, and teaches ethical property and wealth investment strategies for professionals via Joint Ventures, workshops and revolutionary collaborative events.