This is the first of what I hope (time willing!) will be fairly frequent round-up of things heard, seen and done in my property world, anything from rentals, sales, finance, rumour, fact, gossip and interesting stuff seen in the press.
Lots of Work
This last week I have been, mostly, knackered. After four years of largely non-back-breaking work following a nasty whiplash car accident, I’ve been told by all the medical experts that though I still have a lot of pain when I do stuff like filling skips or decorating , there is nothing actually physically wrong with my back so whatever I do won’t make it any worse, though it may hurt. Hmmm. So this week I’ve put that to the test. I did try this ‘tough love’ test last year and ended up nearly having an epidural, but they are adamant so here goes again. Been popping the Nurofen but not fallen over yet…. So what’s brought on this flurry of activity? Well, it’s tenant moving time when the sun shines so my rentalsmentals are hectic with people in and out.
Tenant Types
As has been the pattern of change over the last year or so, all my new tenants are teachers / doctors / public sector workers as opposed to the sales reps / marketing bods / property peeps I used to get renting in West Didsbury. I did 8 viewings last week and 3/4 of them were totting up the total bills + rent + sundries to work out their total spend per month – far more cautious and money conscious than any tenants ever before. It’s a real and definite pattern now with tenants, they are down-sizing, sharing and seriously budgeting for the first time in my experience as a landlord. Still far more girls than boys too, I’ve noticed.
Who’s Buying?
I had a good chat with a far more experienced and successful property developer friend than I and he passed on some interesting stats. He’s sold ten flats locally in the past year or so and of those, 9 have gone to first time buyers. Wow, you’d think, that’s great, maybe the market’s picking up…. er, no! Every single one has been funded by the bank of mum and dad, with the parents drawing down equity from their own properties and helping their lucky offspring. 9 out of 10! I found that pretty shocking.
CGT
Property people have been having a whinge about CGT rocking up from 18%. I can understand their point and think there should have been some taper relief for serious landlords who hold / have held property for years. It should be easy to recognise and differentiate between long term businesses and short term speculation and tax accordingly, you’d think? I imagine Cameron doesn’t want to be accused of immediately pandering to traditional Conservative groups like landlords and is being ‘tough’. It may change in the future and as no-one’s selling anything at the moment anyway it’s largely academic anyway 
HMO legislation
I see an interesting battle developing between landlords and groups such as the NLA (of which I’m a member) and RLA, and local residents groups over the HMO legislation changes made by Labour in their dying months. Being a landlord who lives in what has increasingly become an HMO area and seeing the almost 100% negative changes that it brings about, I fully support it being necessary to have to get planning to change houses to HMO’s and preventing too much of a specific area being given over to rented accommodation. The landlords’ groups hate this idea of social engineering through the planning system however and are currently furiously lobbying Grant Shapps et al. Many Most don’t have to live in the areas which have degenerated beyond repair though, I’d imagine, just drive in, do tenant checks, collect the rent and leave. Local and vocal residents groups, many of whom are Liberal / Conservative voters, are up in arms at the reversal however – I see trouble ahead!
Interest Rates
On a serious note, for me and lots of property owners, there is more and more talk of higher interest rates. Low rates means affordability at the moment but a study last week revealed that homeowners are not using the savings they are making to repay chunks towards their mortgages.
A report from Capital Economics suggested lower rates have failed to help households to reduce their loans by as much as expected.
Roger Bootle, an economist at Capital Economics, said: “Claims that households have begun to step up the rate at which they are paying back their mortgages do not look well founded.
“Rather, over the past year or so, repayments of mortgage principal have been far lower than we would have expected given the cuts in interest rates.
“One implication is that the recent improvement in mortgage arrears may mask a highly fragile underlying picture, in which many households remain very vulnerable to any further shocks.”
It comes as the Council of Mortgage Lenders warned that the housing market will remained “subdued” for the rest of the year despite a slight upturn in mortgage lending.
Mortgage lending rose 7 per cent during May, but remained well below the levels seen at the end of last year, it said.
A total of £11.3 billion was advanced during the month, up from £10.5 billion in April, but well below the £13.6 billion approved in December.
Releasing the figures, the CML said in a statement: “The market remains subdued and, while more buoyant than a year ago, turnover is a little below that seen towards the end of 2009.”
What will happen if rates go up, which let’s face it, they are bound to do? There is still so little liquidity that people can’t shop around anymore between different lenders and even your ‘own bank’ is often unhelpful. I know landlords and developers who are completely over a barrel with their banks, so much so it’s like they aren’t even running their own businesses anymore, just being told what they can and can’t do. Mine are spread over different lenders but nothing seems safe and secure anymore, unless you have a very very low loan to value ratio. I suspect far fewer landlords have this than we think, as so many geared up to buy more property in the boom years. It’s the older landlords who’ve owned since the 70’s / 80’s and whose property has rocketed in value who are not as affected by this, lucky buggars
Oh doom doom doom, sorry!
Did anything funny happen? Hmmm, the line of the week had to be when an opera singing baritone tenant had a friend interested in renting one of the flats, she emailed about 8 times but still hadn’t made an appointment. I mentioned this to him and had to laugh when I was told Ah, that’ll be because she’s a flighty soprano! I love that their real life is just like an opera 🙂
And finally an article which appealed to the interior designer in me, all going so wrong over a few inches of wallpaper…..
Just interested (not really offended) – did you not approve my comment because I mentioned I was from Israel?
Eh? I did approve it, just checked and it’s in my comment section on dashboard but not on the post. I think this is because I changed the date of the blog post. I love all comments, no matter where the poster is from x