Average National Property prices are therefore £239,672 against £233,139 in September.

Yet this national figures masks the underlying two tier property market taking place within the UK.

The south is pulling away from the north with rises of 4.7% – setting new records. This is in stark contrast to the north that falls back 0.7% – levels first seen over six years ago – back in May 2005.

Elsewhere there have been slight easings in the mortgage famine with the highest mortgage approvals since November 2009.

Miles Shipside, director of Rightmove comments:

“Wider access to mortgages and rising asking prices are early signs of increasing demand, giving home owners some grounds for hope of a market recovery. However, the reality is that there is further evidence of the two-tier twist which is dogging the return to more widespread liquidity in the housing market. While those in the affluent south may have cause to celebrate their prices being well up on this time last year, prices in the north continue to go backwards, leaving the widest price gap ever. For the average asking price of a property in the south you could now buy two average properties in the north and still have enough change left to buy new carpets and curtains.”

Regions of England & Wales

The Halifax July House Price Index (HPI) paints an interesting picture with some increases across the various figures.

The Monthly increase was 0.3%, taking the average UK House Price to £163,981. Over the three months to July, often seen as a more realistic figure, the increase was slightly higher at 0.5%.

Compared to last year however the average prices was down -2.6%, yet it was the second successive improvement in the annual rate.

Little change in housing activity

Although some positive figures were reported, the industry wide number of mortgage approvals still remains low at between 45,000-50,000 per month – where it has been since the beginning of 2010.

Commenting, Martin Ellis, housing economist said:

“Overall, there has been little change in either the level of house sales or the number of properties on the market for sale since late 2010.  These steady market conditions have helped to stabilise house prices in 2011 following last year’s modest decline.

Rightmove.co.uk’s June House Price Index (HPI) reports sellers asking prices are up for the 6th month in a row by 0.6%, leaving the average house price at £240,394.

This also represents a 1.1% increase on asking prices the same time last year.

However just because sellers are asking for increased prices doesn’t mean that this will continue and any chance of this will be hindered by rising stcok levels and low levels of mortgage approvals (lowest this year).

Rightmove believe that the 8.1% increase that has been seen in total over the last 6 months will ‘ebb away’ over the remainder of the year – with a fall of up to 7%. Such a fall would just help strengthen the bargaining power of any buyers out there.

Rightmove state:

Despite expected price falls we now forecast price gains for 2011 as a whole, surpassing 2010’s virtual standstill, as mortgage arrears and repossession levels fall and mortgage options improve

As with other HPIs from the lenders and other market figures, a North/South divide is occuring showing a different in reality as to the state of the economy.

For more details and to read the full HPI announcement visit: http://www.rightmove.co.uk/news/house-price-index/june-2011

Lending secured on dwellings has actually risen by £0.7bn compared to the previous 6 months increase of £0.8bn.

This means a three-month annualised and twelve month growth rate both at 0.7%.

Mortgage Approvals

However on the down side the number of loans approved for house purchases was down by 45,166, a 4% fall.

The approvals for remortgaging was also down by 28,091.

Analysts have indicated that they believe figures to have been hit by the number of public holidays within April.

Brian Murphy, at mortgage brokers the Mortgage Advice Bureau, said:

“The raft of bank holidays and the royal wedding inevitably skewed the April data, so an overall drop in the number of loan approvals and remortgages comes as no surprise,”

Other lenders

Yet the UK’s mutal lenders, mainly building sociesties, have stated that although lending fell between Mark and April, it was noticeably higher than a year ago!

For the full statistices visit: http://www.bankofengland.co.uk/statistics/li/2011/apr/index.htm#HighsandLows

Remortgaging similarly saw an increase expected to be due to concerns over the increase in interest rates.

CML Scotland policy consultant Kennedy Foster said:

“The picture for Scotland looks very similar to that of the rest of the UK with subdued house purchase lending and a resurgence in remortgaging. We expect remortgage activity to grow throughout the UK further in the next quarter as recent expectations of a rise in base rate, although unfounded, led to an increase in remortgage approvals in the first quarter.”

8,000 loans, worth £888 million, were taken out for house purchase in the first quarter of 2011 in Scotland, a 27% fall by number (29% by value) compared the previous quarter and 19% lower (by volume and value) than the first quarter of 2010. Given the fact that lending in the early months of last year was depressed following the end of the earlier stamp duty concession, the fall from the first quarter of 2010 represents a substantial year-on-year decline.

For further details view: http://www.cml.org.uk/cml/media/press/2931

We discuss her history as a professional property investor; the risks of a bottoming market; whether property today is only for the cash rich; newbie investing / entering the market with low cash reserves; no money down in 2011; tips obtaining mortgage finance in a challenging market; improving your credit rating for the buy to let lenders; the FSA’s ‘Mortgage Market Review’; property options / impending regulation; the base rate rise and some advice for highly geared landlords.

1) For those that do not know, can you give our readers a bit of background about yourself? I’m Lisa Orme but you may also see me referred to as Lisa Williams. I can assure you I’m one in the same person! Orme was my maiden name and Williams is my married name. Most people in property circles know me as Orme so I tend to stick to that.  My husband, Stuart and I, started Keys UK Limited almost ten years ago.  We read ‘Rich Dad, Poor Dad’ by Robert Kiyosaki and that was our epiphany moment.  Wanting to ‘get into property’ we started the letting agency working from home in addition to both having full time jobs but quickly realised it was the landlords who were making the money.  So we sold an endowment policy that would never give us the promised returns and used the £40k it gave us to buy a property to refurb. We sold it and made a £40k profit – a 100% return on our investment. We got the property bug and spent the next 8 years or so investing in and developing property in the Midlands.  When the credit crunch hit and things went quiet we started our own mortgage brokerage. A lot of people thought I was completely mad but it’s a brilliant addition to our business strategy and I had no idea how much I would love it.

2) It has become increasingly apparent that the property market is close to the bottom which many people are seeing as an excellent opportunity – but what do you perceive are the main risks? I actually think its got a way to go yet. We still have the fact that the banks have to repay all of their loans, the VAT increase and massive cuts in the public sector which will knock onto the private sector (especially in the construction industry) and affect confidence which will further affect jobs and incomes and ultimately mean people losing their homes thus creating further falls in the market.  That doesn’t mean its not a good time to buy however; prices are low and if you’re either in and out for quick profit or in it for the long haul you can’t go wrong if you buy sensibly.

2) Do you the property investment market today is only for the cash rich? There’s no doubt that cash is king but not in terms of being able to move quickly on deals but in terms of the levels of deposits being demanded by lenders. But that’s not to say that there aren’t ways to buy property without you having the cash yourself and I’m not talking about so called ‘no money down’ schemes.  If you have cash rich joint venture partners then this is a great way to be able to profit from someone else’s cash if they can profit from your knowledge and experience. Partnering together on mortgages is perfectly legitimate way to work together. Buying cash then remortgaging or topping up the difference on bridging then selling or remortgaging are also good and totally legitimate strategies.

3) For newbies – do you think it’s advisable to enter as a property investor without savings or some kind of cash back up fund? Absolutely not.  Even if you fall for a no money down scheme property is still a very cash intensive business. If you have a couple of months void period, a boiler breakdown or what happened to me with one of my first tenants trashing the property leaving £10,000 worth of damage and £6,000 of rent arrears then you’re going to be in trouble!  You should ensure you have several thousand pounds of cash available for these eventualities at the very least. And the more properties the bigger the reserve should be.

4) Should a new investor wish to enter the market with a small amount of cash reserves – what would be your best advice? Ensure you have a back up supply of cash whether that be a JV partner or relative, a credit card or an overdraft. Not that I’d recommend getting into debt other than the mortgage for a property but to go into property with no reserve at all is just crazy.

5) What are your thoughts on no money down in the current market (for example using a secured loan to bridge the deposit and very other strategies being used)?As long as there is full disclosure to the lender of your ACTUAL purchase price then I don’t have problem with it. The problem is none of the schemes I have seen do this and all involve non-disclosure which is potentially mortgage fraud and is being committed by the applicant.  There are lenders that may consider more creative deal structures using borrowed money for deposits, vendor gifts or alternative assets/security being used as the deposit but none of these will be the main buy to let lenders. These will be commercial type lenders that will want to know every aspect of the deal before agreeing to it and probably charge significantly higher rates and fees as a result.

6) As an experienced mortgage finance specialist, do you think the main buy to let lenders will continue to accept these kinds of applications (knowing that investors are leveraging themselves)? Lenders DON’T accept these type of applications at all. They are submitted subversively. Lenders are duped into believing the client is paying x for a property when they are in fact paying y. If the lender was informed (as per their terms and conditions) of the ACTUAL purchase price then they will most likely refuse the case completely but at best only lend based on the ACTUAL purchase price.

7) In terms of obtaining mortgage finance, what would be your suggestions for an investor to improve their positions in the eyes of the buy to let lenders? A good credit score is only half the story and I’m fully aware of people with over 900 on their credit files failing and those with much lower scores passing.  Lenders will be looking at your score and your credit profile combined as well as a number of other factors. Any one of these alone may not have that dramatic an impact but combine two or more and you could find yourself being rejected by lenders:-

• Ensure you are on the electoral roll;
• Avoid moving house frequently – the ideal is one address covering the last 3 years;
• Keep your current bank account clean; by this I mean avoid late charges, going over overdraft limits, ensure you have plenty of credits and debits on a regular basis and that they all get paid;
• Ensure you have at least one utility bill in your name – there’s a tendency for one adult to take responsibility for all bills in many households but this can work against you so put them in joint names or split them between you;
• Watch those credit cards and loans – even if you have never missed a payment lots of unsecured debts will adversely affect your applications;
• Similarly if you have lots of credit cards and aren’t using them cancel a few – lots of available unsecured debt can have the same detrimental affect;
• NEVER miss a mortgage payment – unless you have a very good reason for this and the evidence to back it up this will certainly result in a declined application;
• Avoid missing credit card and loan payments – the odd one over several years is unlikely to have that bad an effect but lots of them or a regular habit of missed payments will mean no.

It’s not true that those with large portfolios can’t borrow as many of my clients could testify and given we are extremely busy with everyone from brand new investors through to investors with multimillion pound portfolios I know lenders are still lending and clients are still borrowing!

8)Can investors and landlords expect to feel the effects of the FSA ‘Mortgage Market Review’? The Mortgage Market Review is primarily concerned with residential mortgages but we are seeing lenders be overly cautions for example self cert was only mooted as being targeted by the FSA but in order to pre-empt the FSA hatchet the lenders just withdrew from self cert and there is now no self cert residential mortgages available at all!  There are rumours about banning interest only mortgages and there are many buy to let investors rightly concerned about this but again it is very unlikely to apply to buy to let and more likely we will only see changes in residential lending and already have.  The impact is therefore that lenders pull the plug prematurely and withdraw from problem areas or areas that they see as requiring more effort. Buy to let is certainly one of those areas which is why we are left with so few lenders. And those that are left tightening criteria and reducing lending levels.  But there are some new players too and likely to be more in the coming few years so all is not lost for buy to let; on the contrary I think the future holds great promise.

9) You are very well known for your understanding of property options – what would be your advice to people looking into this strategy for the short to medium term future? Short would be the operative word for me. We will now only do option deal where there is a very defined and relatively short term exit ideally under 12 months.  A perfect example might be a redemption penalty situation; the clients can sell for say £120k which suits you if it were not for a redemption penalty that adds an additional £6,000 to the debt and finishes the deal for you both. This is a perfect example of where I would use an option to seal the deal, let out the property and then complete on the purchase when the redemption penalty expires.  The clients have moved on, there’s a clear and defined exit and they will be motivated to complete on the deal.

Too many lease option deals are being done where debts are involved and often the sellers get sellers remorse once you have taken away the immediate pain. I am aware of many investors who have lost a lot of money on options that they will never get to complete on because the owner has refused to exercise the option. Taking these to court is a waste of time and money.

10) With the increased media attention options have receiving this year – can we expect to see regulation come into play (as with sell and rent back a few years ago)? This is extremely likely and the FSA already have their eye on these.  It’s not going to happen just yet as with sale and rent back it will be when a number of cases are highlighted in the press or to organisations such as Shelter. This is not likely to come about until we see a wave of repossessions when interest rates rise or when house prices go up.  In the former case investors who have taken on properties due to a low rate on the underlying mortgage will find their cashflow stretched and will walk away (as the option legally though not morally allows them to do) leaving the ‘seller’ in the lurch and probably not realising that this could happen.

In the case of house prices most investors are only going to want to exercise the option when house prices have gone up sufficiently to make it worth their while. At this point seller remorse kicks in and the seller realises how much equity they’re giving up. A quick call to citizen’s advice or their solicitor to check on the validity of these agreements or going to ground will prevent many investors being able to exercise their options.

The real concern comes where there are also tenant buyers who may have paid deposits that investors have spent and/or paid higher rents expecting those to be credited towards their home.  I’ve already seen several examples of investors heading towards bankruptcy and tenant buyers being unaware that their money is lost and option worthless.  It is when all this starts to unravel we will see regulatory changes; all too late of course but the fallout has the potential to be huge and to damage the industry further.

11) What is your advice to people who maybe on tracker / variable rates and are concerned about the eventual base rate rise? Assume rates are going to rise! It would be unwise to get comfortable on the current low rates.  Preparation is key; it’s no good when rates rise saying ‘I never saw that coming’!  If that means selling some or even all of your properties then do it! If it also means not buying any more and consolidating them so be it.

12) And – for the highly geared landlord concerned about the slow recovery of house prices – would you be able to provide some potential risk mitigation strategies? There are a number of things landlords can do but they all involve assessing the situation and getting real with yourself – there’s no quick fix once you have decided to bury your head in the sand. Some suggestions include:

For mortgage advice and information contact Lisa at lisa@keys-mortgages.com or call 024 7617 0096; please mention PSI.

You can also get updates on new products and services, financing tips and advice atwww.twitter.com/keysmortgages and property investor updates and tips atwww.twitter.com/lisaorme

The above is for information purposes only; rates can change and may not be applicable at the time of publication. Please consult appropriate professionals and contact us for up to date quotations. Keys (UK) Limited is an Appointed Representative of Julian Harris Mortgages Ltd. Authorised and regulated by the Financial Services Authority in the conduct of mortgage and general insurance business with FSA No. 304155. Your home may be repossessed if you do not keep up repayments on a mortgage or other loan secured on it. Think carefully before securing other debts against your home. Buy to let (pure) and commercial mortgages are not regulated by the FSA.

For full details of our terms, fees and disclosures please go to the Keys Mortgages website at www.keys-mortgages.com

The Bank of England’s lending data for December last year shows mortgage approvals falling to the lowest levels since 2009.

This represented a sudden dip of nearly 5,000 on the month before, with only 42,563 approvals. This also meant that approvals were lower than in the previous 6 month average figure of 47,433.

Approvals for remortgages also fell in December, but were just higher than the previous 6 month average.

For more information visit: http://www.bankofengland.co.uk/statistics/li/2010/dec/index.htm

Do you want to know what 2011 has in store? Download the Just Do Property 2011 Property Market Predictions eBook: http://www.justdoproperty.co.uk/ebooks/expert-predictions-2011-property-2-3835

This week’s buy-to-let mortgage deal has been revealed by the National Landlords Association as Paragon’s latest offering.

According to the organisation, this product is “perfect” for those who are eager to expand their portfolios and generate funds for refurbishments.

Interested parties will find that the deal provides up to 75 per cent loan-to-value, with tracker and fixed rates available.

What’s more, lending can be sought on portfolios of up to £5 million, while competitive re-mortgaging is an option within six months for the same amount as the original loan, or if complete renovation works are required, although full receipts are necessary as evidence.

It is also available for houses in multiple occupation and limited companies.

Paragon itself recently returned to the market after it was forced to close at the beginning of 2008 as a result of higher costs, but the securing of fresh funds of £200 million has seen it restart its mortgage packages, Reuters reported.

Posted by Luella Ravelin

This means approvals for april where 49,815, and therefore still below the siz-month average of 51,856. Approvals for remortgaging were again not surprisingly lower than in April and below their six month average.

Yet the total lending to individuals did rise again this month by £1.5bn causing the 12 month growth rate to increase slightly by 0.1% to 0.9%.

For more information visit:
http://www.bankofengland.co.uk/statistics/li/2010/May/index.htm

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This means approvals for april where 49,871, however this is still below the siz-month average of 53,098.

Not surprisingly the approvals for remortgaging were lower than in March although in line with the six-month average.

The total lending to individuals rose by £0.4bn but means that the 12 month growth rate is unchanged from 0.8% in March.

For more information visit:
http://www.bankofengland.co.uk/statistics/li/2010/apr/index.htm

Please share this news item via ‘Share and Enjoy’ and please do leave a comment on what you think – we always love to hear your thoughts.