House Repossessions In The South East

Current property repossessions are at an all time high in the Kent region of Thanet, provoking even more worry and misery for those that are currently struggling to keep their heads above water. Or rather a roof over their heads.

Despite the combined efforts of charitable organisations, bank-led schemes and of course the home-owners themselves, house repossession numbers remain far too high for many, and too close for comfort for others. What’s truly frightening is the fact that one home owner, under threat of eviction, turned to a local mortgage rescue scheme for help.

Due to the fact that the rescue scheme’s wheels turned far too slowly, the home owner found himself despairing, until he turned to the Citizens Advice Bureau. Thankfully, with some help from the CAB, he managed to rescue his situation at the 11th hour and has managed to keep his home and has got his finances back on track.

Unfortunately that’s not the case for everyone in the region and Thanet residents continue to struggle to meet their mortgage payments, and arrears abound throughout the area. Another area of the housing market that’s massively struggling is the rental one, with hundreds of individuals finding themselves evicted due to rent arrears.

According to recently published figures, rental repossession crept up around 27%, and it’s believed, in part, to be due to the 10% year on year increase in rental prices. Looking back over the last few years, demand for rental properties has continued unabated and landlords have reacted accordingly.

Unfortunately the persistent rise appears to have left many renters out priced, thus leading to the inevitable – evictions and the more house repossessions up and down the region. Of course there are some that claim the figures to be disproportionate to the actual number of residents, rental properties in comparison to other parts of the county.

However the figures are what they are and there must be some cause for concern as the recent spate of repossessions have cause the CAB to look into offering a new service to those living in the local area – they’re looking for funding for a project that will allow them to inject direct help to those that need it the most.

If you live in the Thanet region, and you need help in relation to mortgage or rent arrears, or you’re simply looking for some solid financial advice, you can contact your local CAB direct, or visit their website in order to make an appointment.

Move Out of London – Spotlight on Bishops Stortford, Hertfordshire

It was heart warming to see an article in the London Standard a few weeks ago that pretty much covered what I wrote in my move out of London post several months ago. Obviously old pub in bishops stortfordgreat minds do think alike! Apparently Savills, one of the largest auction houses in the UK, has done some research and identified three “Cinderalla” towns where property is cheap, where there are plenty of facilities for townies to appreciate and which are in commuting distance to London. The Standard article does not talk explicitly about buying property in these towns from house auctions, but there are auction bargains to be had in these areas.

One of these Cinderalla towns just happens to be on the very edge of Essex/Hertfordshire border – Bishops Stortford. In fact Bishops Stortford is just a stone’s throw from where I live, so I’d say I know Stortford pretty well. I have to agree that Bishops Stortford does have some things going for it as a commuter town, but the image painted of the town in the Standard is not wholly reflective in my view. Before I get onto why I wouldn’t live in Bishops Stortford, I’ll tell you what is good about Stortford first.

The train journey into Liverpool St takes around 45 minutes and there are some stunning old properties, cottages and the like on the outskirts of the town and in the surrounding villages. New apartment and house building has been going on relentlessly for the last 20 years, so there are plenty of newer properties to choose from if you are after something shiny and new.

It goes without saying that house prices are substantially less in Bishops Stortford than in London, and you will, in general get more square footage for your money. Here is what you can expect to pay in Stortford itself (rather than in one of the surrounding villages) if you buy through a traditional estate agent rather than at a house auction:

  • 2 Bed Flat – 145,000 Min
  • 2 Bed Terraced House – 175,000 Min
  • 3 Bed Terraced House – 190,000 Min
  • 3 Bed Detached House – 260,000 Min
  • 5 Bed Detached House – 450,000 Min

bishops storford house for auctionThe prices are tempting aren’t they? Stortford has a cinema, plenty of shops including a big Waitrose, some great oldy worldy pubs, a few good schools, a swimming pool and a few gyms for the health conscious. One benefit of Stortford that should be made clear is its location. It’s very close to Stansted airport, so for those who need to travel for business or like lots of holidays, it is convenient to be so close to an airport. Bishops Stortford is also within a half hour drive or train journey to Cambridge (23 miles) and is a short drive to Chelmsford (15 miles).

In my view, that’s about it. It’s the surrouthatched cottage stortfordnding villages such as Great Hallingbury, Thaxted and Hatfield Heath that offer the most appeal for me and the best properties, not Stortford itself. These villages are jam packed with character – village greens and beautiful cottages – and none are far from mainline rail.

One thing that those not au fait with Bishops Stortford will not be aware of is its strange culture. Bishops Stortfordonians tend to look down their noses at those around them and believe they are better, richer and cleverer than the wider population (though there is absolutely no evidence for that). There is a lot of drug use in the town with cocaine being the drug of choice, which means plenty of fighting in the town on weekends fuelled by huge amounts of alcohol alongside illicit drugs. There are also some big pockets of deprivation in Stortford and estates that you definitely would not want to go into at night.

So like most towns Stortford has it’s positives and it has it’s downsides. Given the choice I would not live in or bring up my children in Bishops Stortford, but I would happily live in one of the villages. If you’re lucky enough to find a renovation job or a repossessed house to buy in one of those, then I’d say go for it and leave the stink of London behind you.

bishops stortford prximity to london cambridge & chelmsford

UK Inflation Rises and How They Affect Property Investors

Yesterday, the Office of National Statistics (ONS) reported yet another rise in inflation, up 0.4 %inflation and property investors from the previous month taking the figure to 4.4% and it’s unlikely that things will stop there. Andrew Sentence from the Bank of England advised that inflation “could easily rise above 5 per cent later this year”. So how do inflation rises affect property investors? Is this something we should be concerned about?

It really depends on how much actual cash you have to play with and whether you can afford the squeeze on your finances that an inflation rise implies. When inflation rises it means that the cost of living is higher – your food, utility, clothing and petrol costs are elevated, but it’s not only these daily necessities that are costing more. One of the main reasons that inflation is rising is because of the increase in VAT from 17.5% to 20%, which means that all the goods and services you buy when developing a property to sell on will cost you more.

From surveyors, plumbers, electricians and solicitors to paint, flooring and curtains will all cost 2.5% more than they did previously, if not more (when petrol prices go up goods and services tend to increase in price as well). Now that doesn’t sound a lot, but on a budget of £25k for a property upgrade including fees, where previously £4,375 of that amount would have been VAT it has now risen to £5,000. If you have several properties, the increase in costs for goods and services both from VAT rises and retailers putting up prices will be felt more sharply.

Add to that the high likelihood that inflation increases will lead to an increase in mortgage rates and you can see how your profit margin gets squeezed from all directions. David Kern, Chief Economist at the BCC, said, “It is likely that the MPC will look to restore its credibility and so we can expect interest rates to be raised in the next few months.”

So going back to the original question of how inflation rises affect property investors, we can see that if you have enough cash flow to pay more than you’re used to for goods and services and you can afford a % increase in your mortgage interest rates you will probably fair ok, though with lower profit margins. You will be able to claim these costs back in expenses when you come to filing your Tax Form. The difficulty is that you need to be able to swallow those costs for at least a year until you can claim the amounts back against your earnings.

So ultimately, the healthier your cash flow the better you will be able to manage inflation rises.

Two other important factors to consider when working out a properties’ investment potential and how inflation rises will affect you are factoring in rising rental incomes if you’re investing for buy to let and of course in the first instance, buying property as cheaply as you can.

Thinking of Buying Repossessed Houses? Guzumping is Par for the Course

According to a recent article by the Financial Times, many buyers putting in offers on repossessedgazumping on repossessed houses houses which have been accepted are finding themselves being gazumped by banks and estate agents. The FT makes a bit of a fuss about it but to be honest I don’t think this practice is anything new or something to be overly concerned about.

Bank owned properties marketed by estate agents or auction houses have to, by law, publish offer notices in a local or national newspaper. This gives other potential buyers the option to put in a higher bid (which the bank can accept or not, but why wouldn’t they?) and for the bank to recoup more of the debt owed to them. For the banks and the person who has had their home repossessed, getting the highest possible sale value that they can is a good move. This is especially true for repossessions where there is negative equity in the property.

Imagine how you would feel if your home was repossessed and you knew that the bank had taken a low offer, despite having higher offers on the table, leaving you with more of a debt to the bank than was necessary? Even if there is positive equity in the property the previous owner has the right to expect the highest price it can achieve. Most repossessed homes sell for a good 20 – 30% less than the market value anyway, so having to pay a few thousand pounds more is not going to damage your profit margin too badly.

So while we can all agree that the practice of gazumping on repossessed houses and flats may be inconvenient to the potential buyer (who is in many cases a property investor looking for the cheapest houses s/he can find), it’s par for the course and not something we should be griping about. It’s just a case of pulling our socks up and either putting in a higher offer (which is still probably much less than the market value anyway), or cutting our losses and walking away.

2011 – A Good Time to Invest In Property?

As we move further into 2011 and the country moves tentatively out of recession, we askinvest in property buy to let ourselves whether it’s a good time for the novice/beginner to invest in property. Despite uncertain predictions for the UK property market in 2011, with some analysts predicting a small increase in house prices and others anticipating either a minor slide or no move at all, there is positive news to be found for those thinking about putting their money into property.

Recently the Financial Times reported that Buy-to-Let mortgage deals have never been better. With a few lenders raising Loan to Value (LTV) amounts to the highest levels since the start of the recession, (Kensington Mortgages are offering up to 85% on rental yields over 6.1%); many established banks entering the Buy-to-Let mortgage arena (creating more competition for your business and therefore lowering interest rates) and Buy-to-Let mortgage rates still very competitive, finding one or more cheap houses for sale, upgrading them and becoming a landlord for the increasing numbers of people wanting rental properties, is looking a far more attractive option than it has done over the last 3 years.

If you have enough cash in the bank for a healthy mortgage deposit (15% +, ideally 20% or more), can buy property cheaply through house auctions and have found a location where rental properties are in demand then I think it’s really a no brainer. Savills, one the UK’s largest auction houses see its’ category C properties having the potential for the most stable return over the next 5 years. They say,

“For investors looking to build portfolios with strong income streams that will be attractive to future investors, the strategy of buying good Grade C letting properties with low capital values looks sound.”

In essence what Savills is saying is that rental prices are increasing, mainly due to the fact that less first time buyers are able to get on the property ladder; the demand for rental properties is higher than ever and properties in less than prime locations and/or condition, which tend to command lower rents, are attractive to those renters taking a hit caused by higher inflation. Savills anticipate a return of 30% over the next 5 years if their predictions are correct.

So whether you would describe the current housing market as stable or stagnant, property is still a viable investment opportunity for those looking for long term returns and 2011 may just be a good time to take the leap.

House Repossessions Set to Rise But Government Cuts Debt Advice Funding

Short sighted is the polite way to describe the recently announced government cuts to the Financial Inclusion Fund and the loss of the 500 specialist debt advisors all of whom are now facing redundancy. The less polite description of this action would be downright stupidity.  With the effects of recent government policies on tax rises and spending cuts starting to affect us all (and with worse yet to come), leading to sharp increases in house repossessions and more people struggling with debt, as well as setting the country up for an almost certain double dip recession, the need for free debt advice has never been greater.

One of the largest organisations who will lose out due to this cut in funding is the CAB. Financial Inclusion money was used by the Citizen’s Advice Bureaux to deliver face to face debt coaching for most vulnerable – those in mortgage arrears due to a change in circumstances, those subject to IVA’s, in fact anyone facing problem debt. The money was also used to train more debt advisors from a variety of organisations. Since 2004, when the Financial Inclusion Fund was first launched, evaluations have found that the services it funded have really made a difference to the lives of people using them – they worked – which is another reason that cutting this fund is an unwise move.

In response to this news, Shadow Cabinet Office minister Tessa Jowell said: ”There are not many better examples of the ‘Big Society’ in action – large numbers of volunteers giving their time to help people resolve their legal problems and find a way out of their money worries. When they say ‘we’re in this together’, what they mean is ‘it’s your problem now, not ours’.”

With CAB’s around the country also facing huge funding cuts from local authorities and from legal aid as well, we wonder how they will manage with the undoubted increase in demand for the free services they provide. Those facing house repossessions or who need help with mortgage repayments still have some government services to rely on, such as the mortgage rescue scheme, the mortgage support scheme and the national debt line, but for how long?

Get Cheap Properties by Moving out of London and Into Essex

Thinking of moving out of London to escape the pollution, crime and

move to essexhugely inflated property prices? I don’t blame you! The lure of cheap properties, which allows you to get much more for your money and therefore enjoy a lot more disposable income, as well as the pull of a cleaner and safer environment are some very good reasons to consider a move away from the big smoke.

Essex has long been one of Londoners’ favourite counties to move to either because they’ve gotten tired of the hassle and expense of London and want to start looking for affordable cheap houses, or because they simply want to live in the countryside and have a view that doesn’t include a tower block. The former is especially true for those Londoners who are thinking of starting a family and the call of lush green fields, safe places to play and more breathable air become increasingly more important.

Save Money On Low Cost Property in Essex

Moving out of London and into Essex has many advantages but the primary one from a financial perspective is the relatively low cost of property. One comparison I did the other day for another article, showed clearly that you can move just a few miles out of London and save at least 50% on a 3 bedroom property. Just imagine the difference it would make to you between having a £150K mortgage and a £300K one – it would transform your life. In fact you’d probably need a much smaller mortgage than that if you’re selling up in London and have equity in your current property.

According to recent land registry figures, the average house price in Essex is £256K, but that is pushed up by the many country residences and rich areas such as Epping and Uttlesford. Many properties in Essex are well below £200K, even in village locations and if you decided to look into properties available at house auctions you could reduce those prices even further.

One thing you’d need to factor in when thinking about moving out of London and into Essex is that you’d probably have a little further to commute to work, but all of the large towns in Essex have excellent train links into London, and if you fancy living in a picturesque village rather than a town, they are never far from a train station either, so commuting shouldn’t be a big deal. The average yearly rail cost which you might have to factor in if you did decide that moving out of London was for you, is around £4,000. Not cheap – but a lot less expensive than a huge, weighty mortgage around your neck.

There’s More to Essex Than Stilettos & Gangsters

Don’t be put off by the bad press that Essex has had in the past and that stupid TV series, “The Only Way is Essex,” which has done nothing to improve its image – it’s really not like that. Trust me I’ve lived here for 25 years and while it’s true that we talk a little strangely, what comes to mind when I think of Essex, is pretty villages with thatched roof houses, rolling fields of wheat and rapeseed and benefiting from being just 30 minutes away from the beach.

Moving out of London and into Essex is the way to go if you want to save money and buy property cheaply and if you want a better quality of life, Essex can do that for you too.

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