BBC 5Live Wake up to Money Housing Special report

publication date: Oct 8, 2015
author/source: Kate Faulkner, Property Expert and Author of Which? Property Books

BBC 5Live Wake up to Money Housing Special report


On Thursday I was chatting on 5Live with the super Adam Parsons and a really sensible talking investment expert, Saker Nusseibeh, chief executive of Hermes Fund Managers.

As the programme started at 5.15am I didn’t think everyone may have caught it! So, here’s a summary as we covered a huge amount of information which is likely to be useful.

RICS latest property price survey
The programme was partly off the back of the latest interesting report from the RICS which highlighted that there was so little stock available in some areas of the country that some agents may end up running out of properties to sell.

Secondly, the RICS talked about the fact that we are in a ‘catch 22’ when it comes to properties for sale. “Significantly, 40% of respondents feel the biggest factor behind the negative trend in new instructions is the lack of stock already for sale which is deterring would be movers as they struggle to find a suitable property to move on to. The next most cited influence was economic uncertainty, followed by stretched affordability."

Interestingly, what they are saying is that affordability is number three on the list of reasons for people not looking or buying a home, many can’t find somewhere suitable, others are still reeling (understandably) from the economic crash and fearful of tying their money up in property.

Financial Conduct Authority reviews mortgage market
This is ironic as other people are so sure that property will deliver they are buying to prop up pensions which the financial services industry failed to deliver. Property is being bought by so many to buy to let that even the Financial Conduct Authority (FCA) is nervous and has now launched a review of what problems a fall in house prices would cause investors – and their tenants.

The FCA is right to be worried. The Mortgage Market Review is making it so much tougher for people to buy on the one hand, while on the other, buy to let investors are being handed money like sweets, mostly based on rents being 125-130% higher than the mortgage cost. Unfortunately though, in my view, this isn’t a good measure of whether a buy to let is a good investment or not.

No-one should be adding an additional property to their wealth without understanding:-

  1. The tax implications, for example those earning over £50k could end up losing child benefit from additional rental income

  2. The need for a will and potentially putting property into trust

  3. Knowing the 140+ rules and regulations to let a property (source: RLA)

And buy to let mortgages for me shouldn’t be lent unless investors understand the potential net income – or loss they may incur and their likely maintenance costs over the period of ownership. Using the 125-130% isn’t enough to protect investors – nor is helping to make sure they can afford to keep the property legally maintained.

Read our - Help to Buy Checklist

Can we build enough stock?
Building wise we are in a catch 22. On the one hand we need more homes, but mostly for the 1.4 million people stuck on council waiting lists, that’s our true housing crisis and not one politician seems to care or have any desire to tackle this issue.

The problem to build what we need is a lack of a cohesive housing strategy, all that seems to be happening is the lots of ‘individual’ policies which don’t necessarily address the localised issues. Some areas have plenty of land, they just need local leadership and access to investment finance, such as Nottingham or Manchester (the latter of which is absolutely getting on with the job) Other areas have no land, poor transport links and just don’t have the variation of homes available, let alone at a reasonable costs, examples being Harrogate, Aberdeen, Bristol and London.

But the other issue is after six years of recession, the industry lost so many people, not just trades people, but with council cuts then now don’t have enough planners, engineers or even search experts, which impacts on buying and selling as well as building new homes.

Read our - Building a Home Checklist

What are your thoughts? Having any issues buying a home? Renting a home?
Do let me know. There was a guy on the radio today that thought he could never buy a house, but I think he may well be eligible for shared ownership, so there can be ways to get on the ladder of find somewhere to rent that suits you. AND the situation will get better, for the first time I can remember, housing is now near the top of the political agenda, Labour are making sure it’s not going away, so it’s possible that they may force the Conservatives hand.

And if you are in London, do come and see me at the First Time Buyer Show in London on October 10th at the Business Design Centre in Islington

Come to the show for YOUR chance to win £5,000 and worst case, get lots of helpful, free and independent advice!

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