I was interested but not surprised to see the recent survey from Barnardo’s regarding the number of people in the UK that do not have Wills. Whilst it is very important for all adults to have Wills, this is particularly important if you own your own property. Having a Will in all cases makes it easier to deal with your estate but the Will can also be used to protect children by setting up Trusts for them and also by stating who you would wish appointed to become the Guardian of your children should anything happen to both parents. The Will should also be discussed with a view to looking at what provisions could be incorporated in respect of long term care.
All in all having a Will is very important and something that nobody should put off. As an aside, if you are going to speak to your Lawyer regarding making a Will you should also raise the question of a Power of Attorney.
Perhaps as has been the case with such things as Organ Donor cards, the next Government should run a public service campaign encouraging all adults in the UK to make a Will and preferably a Power of Attorney also.
Recently I was asked what effect I thought the General Election would have on the property market. The question was brought about by the heady excitement and much discussion of the recent leaders’ debate. My experience is that after a very slow start in January and February, the number of properties coming on to the market in the Dundee and Angus areas, whilst not quite reaching the boom levels of 2006/2007, are extremely good and way ahead of 2008. The National Association of Estate Agents’ March report indicates that this is a pattern that is repeating itself throughout the whole of the UK. Sales are also starting to follow this activity with an increase in the number of closing dates and many prices exceeding Home Report valuations. My feeling is that the housing market is building up a momentum of its own and is not paying much attention to the General Election. The economists seem to be indicating that whilst the UK economy remains weak, the threats of a double dip recession seem to be receding and yesterday the Council of Mortgage Lenders announced that there was a 24% rise in mortgage lending in March compared to February and the figure was also up on 3% on March last year.
It was disappointing that the property market was not discussed during the leaders’ debate and I would hope that this topic is covered in their final debate about the economy, particularly in relation to first time buyers. Looking back to the end of the recession in the early 90’s, the property market stagnated due to the absence of first time buyers. With the current lack of mortgage finance and the need for very high deposits, I fear that this is a trend which may be repeated. My plea to the political parties is that they grasp this issue as first time buyers are fundamental to the growth of the housing market. My suggestion would be for a Government backed scheme where banks lend the first time buyer a mortgage up to 95% with the Government acting as a guarantor for 10% of that mortgage. This would be for properties up to £150,000 and would only relate to first time buyers as per the recent Inland Revenue definition. The risk to the Government would only be if the person defaulted and with tighter restrictions, this should be minimal. The scheme could be funded by changes to the Stamp Duty regime (perhaps adding an extra band for properties worth more than £2 million) plus changes to the Capital Gains Tax rate for people selling properties other than their sole or main residence within a 24 month period.
Unless more help is given to the first time buyer there is a danger that a whole section of property will go into stagnation both in terms of value and also condition and this will have a negative impact on the property market as a whole.
In 2003 a newspaper carried the headline that Dundee was the property investment capital of Western Europe. Low entry prices, strong demand from tenants, good gross rental yields compared to price all contributed. This trend continued but as prices carried on their rise and rent stayed the same, yields dropped and with the credit crunch in 2008 the picture became somewhat different.
Well what about now?
There is still a lack of mortgage funds available for the buy to let investor with 60% to 70% loan to value becoming the max and stringent rent to interest coverage usually between 120% and 140%. However, in the last couple of weeks I have noticed an increase in property investors coming back to the market. Lower prices tied in with a very strong tenant demand have caused rents and rental yields to purchase price to increase – lack of mortgage funds available to the first time buyer can be attributed to this situation as they struggle to climb on the property ladder. This along with the attraction of potential Capital Gains in the short to medium term has got the sophisticated investor back looking at property.
In times of low interest returns on savings, a secure investment that can be liquidated is a good way to grow your savings with minimal risk – provided you take the right advice.
Whilst I think it is too early to expect returns of the headlines that we saw in 2003, I certainly think that as the economy recovers there will be a growth of property investors coming into the market.
Last week I was at the Council of Mortgage Lenders Annual Lunch. The keynote speaker was Bill Jamieson from the Scotsman. Bill’s talk was informative, enlightening and enjoyable to listen to. As well as discussing the economy he also made the point that housing market surveys are easily manipulated and they do not always paint the full picture. This is a view I strongly endorse as often we do not know the basis on which they have been calculated and this can cause a false impression. Figures can also be skewed when the number of property transactions drop to low levels.
Recently I read that a survey of the English housing market indicated that listings and sales in January and February were down to their lowest level. This was also the case in the Scottish market and Dundee in particular. The extreme weather knocked the usual New Year splurge of properties coming on the market, this situation was not helped by the Home Report. I was concerned that this was a trend developing for 2010 but I am pleased to say that in March we saw an increase in the number of properties coming on to the market and a significant increase in sales. According to my contacts across Scotland this pattern seems to be repeated throughout the country with only a small number of areas bucking the trend. So what about prices – well, prices are not back to the peak levels of 2007 but in general they have not dropped to the low levels that we anticipated and whether or not you see any growth will very much depend on when you purchased your property.
All in all prices are holding up and encouragingly I am seeing an increase in the number of properties selling for more than the asking price and the Home Report.
Is it too early to call green shoots for the Scottish Housing market?
It may be too early to call a recovery but definitely green shoots are starting to appear.