January 10, 2012 | 
Author 
So what will 2012 bring the housing market – more of the same is my feeling.
Overall I think interest rates will likely stay where they are through the year and house prices will just bounce along the bottom as they have done for the past couple of years but it’s still a good time to be a landlord.
Increasing Interest Rates
The Eurozone crisis is the biggest threat and biggest unknown right now and could have a major affect on the UK financial sector leading to a further credit crunch. We have certainly seen an increasing in rates from lenders in the last month or two which seems to indicate a tightening of credit lines though some lenders have cited ‘too much business’ as being the reason behind rate increases.
New Lenders?
I’ve heard mutterings from various lenders about relaxing criteria but not much has materialised in reality as I think there is still a lot of nervousness. There were hopes of several new lenders entering the market too but this seems not to have materialised as planned; Virgin’s takeover of Northern Rock and other planned new arrivals aren’t likely to dent the market sufficiently in the short term to see any much needed competition.
So with lending pretty restrictive as it is I don’t think we will see much change either way in terms of availability of products or relaxing of lending criteria and deposit levels.
2012 Housing Market
As for the housing market as I say a bouncing along the bottom is likely to continue for the foreseeable future.
The stamp duty amnesty won’t now continue beyond March 2012 so that will affect some first time buyers but given the current deposits required I’m not sure the extra couple of thousand would have been making that much of a difference.
First Time Buyer Scheme
The government’s first time buyer security backed scheme may see some regeneration of mothballed new build sites but not all first time buyers want a new build nor will they necessarily qualify for the mortgage so I can’t see this having a major impact on getting the market moving. Other changes such as the improved right to buy rules for council housing won’t generate any movement in the market either.
Rental Market
As for the rental market, this continues to improve as increasing demand forces up rents. They have tailed off after some significant rises last year but I think rents will steadily continue to rise into 2012. Coupled with the low interest rate environment, many landlords on base rate trackers and the opportunity to snap up some bargains, it continues to be a good time to be a landlord.
Reduced LHA Rates
The biggest impact some landlords will face however are continuing changes to the Local Housing Allowance; reduced LHA rates will start to bite this year as the 9-12 month grace periods end and the single person allowance reduces for under 35 year olds. Changes to HMO regulations, especially with regards to planning, may mean these tenants can’t be housed elsewhere and sadly we will likely see an increase in homelessness.
Lisa Orme is an experienced property developer, investor and mortgage broker and specialises in property and financial services for new and established property investors.
If you’d like to discuss your property investment strategy or indeed any mortgage or financial requirements you can contact Lisa at lisa@keys-mortgages.com or call 024 7617 0096, please mention Just Do Property when calling.
You can get updates, tips and advice at www.keys-mortgages.com and via Lisa’s blog at www.lisa-orme.com
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Categories: Finance |
Tags: Buy To Let, commercial mortgages, credit crunch, eurozone, Financial Services Authority, FSA, HMO, house prices, Housing Market, Interest rates, investment strategy, Just Do Property, LHA, lisa orme, property investor, property investors | 
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