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| Property Related News |
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| A brief insight into the UK property market can be read below. This news page will be updated weekly. To subscribe to news directly in your inbox simply email news to; info@skybluehomes.co.uk. |
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| Week Commencing 17th November 2008 |
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 40% of buy-to-let landlords could fall into negative equity next year
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Up to 40 per cent of buy-to-let landlords could find themselves in negative equity by the middle of next year if house prices continue falling at their current rate, according to research from ratings agency Standard and Poor's.
By June of next year, landlords with a buy-to-let mortgage will be facing higher levels of negative equity than ordinary mortgage holders, the figures show, and will therefore experience more repossessions.
By analysing 200,000 cases – 20 per cent of the market – S&P found that buy-to-let mortgages which have been granted in the last two years will be the worst affected because they were taken out at the peak of the property bubble, when houses were at their most expensive.
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£8.5m block of flats in prize draw
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MIA Developments is putting up a block of 11 new flats near the City in a bid to find a buyer in the depressed property market – which is particularly hitting new build flats.
The firm estimates rental income from the flats could be as high as £500,000 a year.
The draw is limited to 200,000 tickets – with £600,000 donated to Great Ormond Street Hospital Children’s Charity if all tickets are sold.
Rafik Patel, managing director of MIA Developments, said: ”The UK has nothing like this.
”This is by far the largest of its kind and I think we will start to see more like it as a new trend emerges.”
If not all 200,000 tickets are sold, the number of apartments given away will drop – according to the number of entrants.
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Bank of England points to interest rate cuts
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The Bank of England has signalled more interest rate cuts could be in the pipeline.
The Bank's quarterly Inflation Report points to inflation dropping over 2009 – from the current high of 5.2 per cent to below the government target for the consumer prices index (CPI) of two per cent and staying low until 2011. The report also highlighted the danger of deflation – or falling prices – as oil prices drop and so enables the monetary policy committee to drop interest rates further.
Mervyn King, governor of the Bank of England, said: ”Since the August report the economic landscape has changed. ”The economy probably entered recession in the second half of 2008 and output is likely to contract further.”
He predicted CPI inflation will fall to ”materially below” the two per cent in 2009 and the Retail Prices Index (RPI) could become negative. Mr King also warned ”uncertainties were unusually large” given the lack of historical precedent.
The governor of the Bank of England also admitted the monetary policy committee (MPC) was prepared to cut interest rates further if it was needed to keep inflation to target.
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A glut of unsold homes has flooded the rental market, driving down rents at the fastest rate on record.
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The Royal Institution of Chartered Surveyors (Rics) said new instructions to sell flats and houses had been at record levels in the past few months. However, Rics said many people who cannot sell their homes have decided to let their properties, and this increase in supply has pushed rents down. The proportion of surveyors reporting lower rents was its highest since 2003.
The past year has seen a dramatic turnaround in the UK property market because of the international banking crisis and the credit crunch. The latest quarterly Rics survey - for August, September and October - shows that the difficulties people have had in buying and selling homes have spilled over decisively into the rental market. With the supply of mortgages, sales and house prices all falling fast, many would-be vendors have decided to let their homes instead of selling them.
”Frustrated vendors are placing their property on the market to let as they have been unable to agree sales due to a lack of demand in the housing market,” said Rics.
The turnaround for potential landlords and tenants has been swift and the number of homes available to rent has boomed. |
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