Interest rates are at a very low level and financial systems worldwide are stretched to a dangerous level. Equities are also in a bad state and this is making the property sector  a more attractive option for financial investors.

Figures have recently been released by the revenue service which shows that financial institutions have put over £2 billion into apartments and homes in the UK last year. This is a significant increase on the previous year’s figures which were around £750 million.

Wedlake Bell, the city law firm, has a residential property team which is headed by Jeremy Raj. Mr Raj stated, “Financial institutions are coming to invest significantly more in residential property and this is clearly because the demand for such properties is very high and there is a significant shortage of them on the market.

It also seems as if this demand will not go away in the future, making it an appealing investment opportunity. What will be interesting to see is whether this trend the purchasing property continues over the next 12 months.”

The average rent in the United Kingdom is over £700 a month and in the south-east of the country there is a significant shortage of homes which is unlikely to be relieved in the near future. Mr Raj continues, “The credit crunch has meant that fewer houses are being constructed but the demand for new homes has hardly decreased. Unsold houses that were constructed before the credit crisis are now almost all sold leaving the market with a significant shortage.”

Barclays Capital have recently teamed up with UK Regeneration and together they are planning to build over 20,000 homes in Britain by the year 2020. Government incentives have also made homebuilding an attractive option for investors and they have launched a scheme where builders can build properties today and pay costs later.

The breaks from stamp duty have also made institutional investment in property more appealing. Before the breaks were implemented in 2011, if an investor purchased more than one property they would be penalised more than if they had bought a single location. Some financial institutions have suggested that the government should implement tax breaks for those investing in real estate, such as those that are available for commercial property.

Savills have recently released research which suggests that by 2016 ,20 percent of all homes in Britain could be in the rental sector. The research commented, “Since the credit crunch the demand for rented accommodation has increased significantly and this has provided a good investment opportunity for financial institutions. The amount of investment available is particularly high because in recent years there has been less activity in people who are buying to let.

“It is clear from recent activity that the investment sector is moving on this investment opportunity but it is still not financial institutions who are leading the way. Geared investors are struggling, particularly to find a sustainable model in the industry.”

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This is not the only study that are shown changes in prices in the housing market. According to the Land Registry the average price of a house in England and Wales is just over £160,000. The chief economist for Nationwide is Robert Gardner who commented, “A one percent growth in the housing market is not exactly a great performance but when you compare it to the performance of the rest of the economy it is certainly quite impressive.”

London is an area that has outperformed the rest of the country with house prices increasing by over five percent in the last year. This is in stark contrast to house prices in Northern Ireland which fell by around nine percent. The only areas with falling house prices in England were in the north in the north-west where the cost of houses dropped by around one percent.

Mr Gardner continued, “In the last three years London has outperformed the rest of the market. Despite the rest of the economy, the prices in London are still just 1.5 percent below the record price of the region. What is clear from these figures is that there is a significant divide in house prices between the South and the North.”

The average house price in London is significantly above the average for the UK with the value of the average property being just shy of £343,000. In the south-east house prices are also very high but there was a drop in prices last year with a fall of around one percent. When you compare this with the falling value of property in the North there is a significant difference as prices in the north-east dropped by nearly 6 percent.

One of the most significant changes in the whole of the United Kingdom was in Hartlepool were the price of property fell by a staggering 20 percent bringing the average price of a home to just over £75,000. LSL Property Services is headed by David Newnes who commented, “Mortgage lending has remained restricted which makes it a tough year for property, however in the second half of the year we did see some improvements.

Lenders have dropped their mortgage rates because of the ultra low interest rates set by the Bank of England which makes lending conditions quite favourable. Many people are held back by the significant deposit amount but if you can scrape this together then you are going to be able to get a mortgage at a very affordable price.” Over the next year most analysts in the housing market are predicting very little change in prices.

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Begin by comparing the rates offered by various home insurance companies. This, obviously, helps you to save money, while selecting the right coverage for your unique situation. The internet has made it extremely simple to get quotes from various companies instantly. That way, you can make your selection based on what you get for your money, rather than having a salesperson pressure you into choosing the first insurance company that you visit. Remember to compare what you actually receive for your money, as the cheapest option will not always provide you with the insurance your home needs.

Do not base your entire decision on the rate that you will pay, as you must end up with enough coverage to protect your home properly. When making your comparison, look at how much coverage each agency provides for the quoted rate. If a rate seems too good to be true, there is a very good chance that you will end up underinsured. For example, if your insurance does not include fire coverage, you could end up in a tough spot if your house ever catches fire. If you feel like a situation could occur at your house, make sure that you have insurance that covers that scenario.

Before making your selection, compare the exact coverage offered by each company you have contacted. Each company will likely have its own advantages and clauses, so read over this information carefully. Taking the time to compare insurance policies helps you make the right decision for you and your family, rather than taking the word of the salesperson. In the end, buying your insurance online gives you a major advantage because you can take your time when comparing quotes in the comfort of your own home, allowing you to make this very important decision on your own.

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Although you do not have to follow these recommendations, making your home more energy efficient before you put it on the market could increase its value and desirability. As fuel costs soar, buyers are increasingly attracted by energy efficient homes that are economical to run. And carrying out pre-sale energy efficiency measures means the buyer does not have to do or arrange the work themselves when they move in. With today’s tough housing market, it could be worth taking steps to make your home more enticing to buyers and help it sell more quickly.

Improving your EPC rating does not have to be expensive or involve a lot of hard work. Some simple, low cost measures you can take include:

• Insulating your hot water tank. Cylinder jackets can be brought from most DIY stores.
• Fitting draught excluders to internal and external doors, keyholes and the letterbox.
• Spraying insulation foam where pipes enter your home, to stop draughts.
• Sealing any draughts between your floorboards, below skirting boards and behind your bath panel.
• Replacing all your ordinary light bulbs with low energy ones.
• Insulating your loft and/or cavity walls. Depending on your age and circumstances, you may qualify for free or discounted installation – ask your energy company for details.

If you are happy to spend more on your home to attract the eco-friendly buyer, there are other options to consider, including:

• Installing an A+ rated condensing boiler.
• Replacing traditional windows or old double glazing with uPVC.
• Improving your heating controls by adding thermostats and programmers.
• Installing a microgeneration technology such as solar panels or a heat pump.

When you have installed your chosen energy efficiency measures, make sure you have your home reassessed so your EPC shows your new and improved rating.

Conveyancing services from The Co-operative Legal Services

Our team of legal experts is here to offer free advice and answer all your questions about buying and selling your home, from conveyancing fees to energy performance issues.

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Be that as it may, the current reported average cost of a home in the UK is £160,063, which is down about 1.3% from the same time last year.  Martin Ellis, housing economist for Halifax, said that the stability of housing costs will depend partially on the how the rest of the Eurozone is doing, but there are several other factors involved.

Even though the Bank of England is likely to keep the base rate of interest at 0.5% through 2012, banks are still nervous about lending in the face of an economic slump that many forecasters expect will only get worse, so mortgage loans are not easy to obtain.  In fact lending criteria is about to get even more stringent in the next few months; lenders say they’re concerned about loans already out there that borrowers can’t repay.

Anyone who does manage to qualify for a new loan has the advantage of record low rates; only about a quarter (26%) of disposable earnings would be needed to make the monthly mortgage payment, well below the average ratio over the past 25 years.  However, with the iffy job market and a large majority of homeowners finding that reducing their debt level rather than taking on more of it is a top priority, caution seems to be the byword on both sides of the lending situation.

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This means that the number of individuals, couples and families who are forced to rent their home because they cannot afford to buy one has been on the increase over the last couple of years. With increased demand, renters are able to charge more for their properties and this has lead to a significant increase in the average monthly rent across the UK.

In fact, in Britain’s 50 largest towns and cities it is only cheaper to rent rather than buy in three places, whereas just one year ago renting was cheaper in 10 locations. Ironically, while those who are refused mortgages are finding themselves spending more money than ever on their rental costs, those who have managed to buy a property are enjoying some of the lowest mortgage rates ever. Following the banking crisis, the interest rate was dropped to 0.5% and has remained there ever since.

Property website Zoopla conducted a study of house prices and monthly rents across the country and found that the only places where renters were better off than property-owners were Plymouth, Bournemouth and Swansea. The town which offers the best value for money for property buyers was Milton Keynes, where renting is almost 40% more expensive than owning your own home.

London is another location where renters are left out of pocket, paying, on average, more than £6,800 a year more than those able to secure a mortgage and buy their own property.

Of course, owning a property does come with extra costs, as renters are not responsible for maintenance and repairs, while mortgage repayments can increase over time in response to changes in the interest rates. As the UK recovers, or if there is a further financial crisis, the Bank of England is likely to increase the interest rate which will have a knock-on effect on those who have mortgages linked to this figure.

There are dozens of different types of mortgage, even within each financial institution. For example, Nationwide customers who signed up for a mortgage with the building society before 2009 are still benefititng from the company’s pledge to stick within 2% of base interest rate, paying just 2.5% at the moment. However, those who have taken out a mortgage since late-2009 are paying an average variable rate of 3.99%.

It is not just the mortgage rate which prospective house-buyers have to worry about either,  as since the banks found themselves in financial trouble because of bad debts, they have been demanding larger and larger deposits from people looking for mortgages, often between 25% and 40% of the house value, and this is pricing many people out of the housing market.

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Many people who are seeking borrowing are finding that mortgages are unaffordable and those without a completely clean credit rating are finding it very challenging to find a mortgage at a good rate. Currently anything with a loan to value rate of above 90% is being considered as sub-prime.

Wriglesworth Consultancy is headed by John Wriglesworth and he said, “Unless we get to see a return of a healthy sub-prime market sector the housing market is never going to return to normal. There needs to be a mix in the market and specialist lending needs to return in order for the whole market to be as it once was.”

Most experts in the property market are saying that lenders are currently only offering to the people they see as the lowest risk and thus these experts are wanting lenders to be more flexible with their loans so that more people are able to enter the property market.

A specialist mortgage lender is Kensington has recently announced that they are going to be launching several financial products that are intended to work even in these times of recession. These products are going to be targeted towards those who have slight credit problems but the company is denying that they should be labelled as sub-prime mortgages.

Harvey Jones is from lovemoney.com and he is commented, “It is good to see the return of this sort of sub-prime mortgage even though it is taking place slowly. Many people have been affected by the financial crisis through no fault of their own and they should not be punished by not being able to get on the housing ladder.”

It is also possible for people who take up this type of mortgage to later be able to switch to a lender who has a lower rate of interest. This is because, as they make regular mortgage payments, their credit rating is likely to improve. However, they might be limited from doing this for a certain amount of time as there often penalties attached to moving mortgage provider during an initial period.

Sub-prime mortgages came to the forefront in the United Kingdom in the early part of last decade and they were given to people who were a higher credit risk, usually because of things such as divorce and redundancy. These people were charged a slightly higher rate of interest because of the increased rate faced by the bank.

Unfortunately, this ultimately led to many people having negative equity and their mortgages became unaffordable. This is what led us into the financial crisis and many people are worried that their return might lead to further troubles.

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Upfront, anyone on the market for a green home is definitely concerned with its environmentally friendly features, so you will find an eager audience when you talk of a green electricity system such as solar panels. You can also hone in on how your home fits into its natural surroundings. For example, if your home is surrounded by trees, point out that they provide extra coverage from the harsh summer sun and high winds in the winter.  You could also note how these climactic tendencies aid nearby renewable energy companies with solar power and wind power.

You can also boast less maintenance. This key point will help prospective buyers save on both time and money, which doubles the appeal. Updates and installments like efficient and environmentally friendly plumbing or solar panels on the roof can be big draws to a home. Whilst they may justify a slightly higher asking price, which is great for you, they also give home buyers the peace of mind that comes with knowing that not only are those systems relatively new but they will also last longer.

In addition to construction, however, you can make your green home more marketable by filling it with greener appliances, such as a front-loading washer that uses less water, a refrigerator that saves on energy and motion-sensored lights that turn off when people leave the room. These changes seem to pay off big because the chances are high that a buyer in the market for a green home would have purchased these things in the long run, meaning that you have just saved them time and earned extra points for convenience.

To increase your “green appeal,” consider getting an evaluation from an independent rating agency that specialises in green environments. You can make a stronger presentation to potential buyers if they know that your home has the official stamp of approval. If you want to go even further, you could also offer a breakdown of how your home’s green fixings have saved you money on monthly bills.

Ultimately, all of these features will only be profitable for you if you know how to market them. If you’re thinking of selling your green home, consider hiring a real estate agent that specialises in environmentally friendly properties to help you earn a higher asking price.

Article courtesy of Good Energy

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Rightmove have quizzed 25,000 people who visited their site, presumably these are prospective buyers or sellers, and asked for their predictions for how property prices would change on the short-medium term. Despite the daily headlines that describe the great economic waves that are battering the housing market, less that a third felt that the prices would drop next year, and 63% said they would rise or at least hold their value.

Even Miles Shipside, the director of Rightmove, is a man who spends his days examining the three way relationship between us Brits, our money and our property, seems bemused by the belief the public holds that the value of bricks and mortar will defy the ever deteriorating situation of the economy.

He said that we need to remember that despite the overall confidence this survey has revealed, the volume of transactions are way down on what we consider the norm. Economic stability is needed both in the eurozone and the UK before many are able, or willing, to engage with the UK property market.

According to Zoopla, as well as transactions being way down, the gap between the inflated asking price and the amount of cash that changing hands has risen to a record high of £19,500. It all boils down to the fact that if the home owning/buying British public are determined to believe that within the property market it is very much business as usual, the banks, for the time being at least, are happy to play along.

After 33 months, the bank base rate of 0.5% is beginning to feel normal, and this is dangerous when you consider that over the past 40 years, it has been demonstrated to such a degree that this isn’t reality. Between 1973-1991 there wasn’t one year that there wasn’t a base rate in double figures, and between June 1978-September 1982 the base rate never fell below 10%.

Up until the autumn of 2008 the base rates reflected what so many economists still consider as unremarkable, as they stuck around 5%. To coincide with the Rightmove Consumer Price Forecast, and to reinforce the interest rate threat, the financial stability report from the Bank of England contained data that suggested, despite pretend interest rates, it was only the leniency of the lender that was keeping many properties within the hands of its owners.

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