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Bank Rate cut again by 0.25% -
10th April 2008

The Bank of England's Monetary Policy Committee today voted to reduce the official Bank Rate paid on commercial bank reserves by 0.25% to 5.00%.

CPI inflation rose to 2.5% in February. The Committee expects inflation to rise further this year, reflecting the continuing impact of higher energy and food prices, as well as the recent depreciation of sterling on import costs. Such pressures are already evident in producer input costs and pricing intentions.

Even if commodity prices remain at their current high levels, inflation should fall back. But to ensure that inflation meets the 2% target in the medium term, the Committee needs to balance two risks. On the upside, above-target inflation this year could raise inflation expectations so that, in the absence of some margin of spare capacity, inflation would remain above the target. On the downside, the disruption in financial markets could lead to a slowdown in the economy that was sufficiently sharp to pull inflation below the target.

In the Committee's judgement, the balance of these risks to the inflation outlook in the medium term justifies a cut in Bank Rate this month. Credit conditions have tightened and the availability of credit appears to be worsening. While the recent depreciation in sterling will support net exports, the prospects for output growth abroad have deteriorated. In the United Kingdom, business surveys suggest that growth has begun to moderate and that a margin of spare capacity will emerge during this year. This should help to keep domestic inflationary pressures in check in the medium term.

Against that background, the Committee judged that a reduction in Bank Rate of 0.25 percentage points to 5.00% was necessary to meet the 2% target for CPI inflation in the medium term.

Borrowers believe interest rates have peaked
14.08.07

The Spicerhaart Financial Services monthly mortgage survey shows that a higher percentage of borrowers believe interest rates have peaked and house price growth will level off in the second half of the year.

According to the survey, 86% of its customers are taking out fixed rate mortgages in July, but the amount of borrowers opting for variable mortgages has increased from 9% to 14%. This is the highest proportion since October 2006, and 11% of borrowers chose mortgages that tracked the base rate, 1.7% choosing a discount deal and 1.3% opting for other variable rates.
Steve Cox, operations director of Spicerhaart Financial Services, said: The increasing proportion of variable mortgages indicates that borrowers are starting to believe that interest rates have peaked, as inflation stabilises, and are likely to come back down again before the end of the year. With interest rates still historically low, homeowners and first-time buyers are still confident in their financial security and are as keen as ever to move up the property ladder, even if this means borrowing slightly more.

Buy-to-let mortgages increase by 48%
Wednesday February 14, 2007,Guardian Unlimited

The number of mortgages taken out by landlords shot up by almost 50% last year, figures showed today.

During 2006, banks, building societies and other lenders handed out 330,000 buy-to-let loans worth a total of 38.4bn. The Council of Mortgage Lenders (CML) said the figure represented a 48% increase in volume and a 57% increase in value over 2005 levels.

In all, the number of buy-to-let mortgages outstanding now stands at around 850,000, worth a total of 94.8bn. Since the end of 2005, when the corresponding figures stood at 702,000 and 73.4bn, the number of buy-to-let mortgages has risen by 21% and their value by 29%.

Buy-to-let lending now represents 9% of the value of all mortgage balances, up from 8% in 2005. The number of landlords falling into arrears also continued to fall during 2006, the CML said. The proportion of buy-to-let mortgages three months or more in arrears dropped from 0.64% at the end of June to 0.59% by the end of the year. The figure is lower than the 0.89% of loans in arrears in the wider mortgage market.

Lenders repossessed 1,142 buy-to-let properties in 2006, representing 0.14% of all landlord mortgages. This compares to a 0.15% repossession rate in the market as a whole. The number of cases where a receiver of rent was appointed - someone who collects rent on behalf of a lender in the case of mortgage default - was recorded at 0.06% of buy-to-let properties.

Michael Coogan, director general of the CML, said: "The buy-to-let market has performed even more strongly than the wider market over the course of 2006. "With evidence from other sources of strong tenant demand, rising rents and falling void periods, buy-to-let looks set to continue to remain popular and successful.

Mehrdad Yousefi, head of intermediary mortgages at Alliance & Leicester, said: "There was a 20% increase in buy-to-let in the second half of 2006 compared with the first half, which would have been helped by attractive pricing and flexible lending policies in the market, along with the return of the portfolio landlords."

Mr Yousefi said portfolio landlords would "continue to thrive, particularly in a single digit house price inflation environment."

Invest In Budapest? Guide To Hungary's Capital

Budapest, aka the 'pearl of the Danube' is the beautiful capital city of Hungary. The country has been a member of the EU since 2004. With the communist years now a fading memory, and hopes of accession to the Euro before too long, it's considered a good long-term investment.

Budapest itself is a thriving city that effortlessly combines beautiful architecture and a buzzing caf culture and arts scene with the commerce that accounts for 60 per cent of the country's GDP.

For Brits who want to own a city bolthole, Budapest is a more attainable alternative to Western European capitals, and numerous airlines, including the low-cost carriers, can fly you there in a couple of hours.

And, of course, the city's blend of students, workers, and international business people, many of whom need to rent accommodation, has not gone unnoticed by, among others, Irish, Danish, Italian, Israeli, and British investors.

Who's Buying, Who's Renting?

Tom Liddell from UK-based Access Hungary says that most of his clients are buying to let:
"They range from seasoned investors snapping up 60 properties at a time, to people in their twenties who can't get on the property ladder at home."

In Budapest potential tenants will depend largely on the area you choose to buy in, but, according to Liddell, the tenants that his clients have found tend to be students, young professionals and foreign business people.

Location, Location: Where Should You Buy?

Budapest straddles the River Danube, and is comprised of 23 numbered districts. The numbers run clockwise out from the middle, with the most central districts having lower numbers and, usually, higher prices.
The districts all have differing attractions. District VI, for example, is home to the best cafes, bars, theatres and the opera house, while District IV, which is on the Danube, offers clean air and easy access to the centre.

But investors willing to take a risk may want to look further afield, for example to District VIII, home to much of the city's gypsy population, which has recently been the subject of much investment, or District X, which used to be an industrial area.

How Much?

Obviously this can vary enormously, but a one bed apartment in District VI could cost 60-85,000, while the same sized place in the less popular District VIII only 43-65,000.
Hungarian mortgages of up to 70-80 per cent are available to British buyers with interest rates of around six per cent.

What To Buy: New Build Or Crumbling Beauty?

While the beautiful Habsburg-era dwellings can be tempting for the romantic British buyer, agent Robert Weiner, from GPL Hungarian Real Estates warns extreme caution.

Not only can renovating from a distance be costly and difficult, but, he says, pricing resale property is tricky, and you could easily end up paying too much.

In addition, according to Weiner, an older property may not appeal to the local rental market.

As the standard of living of many Hungarians has risen, they are looking for more modern accommodation. You can rent out resale properties but tenants prefer the newly built, says Weiner.

In addition, older properties may come with larger, but fewer rooms, which reduces the amount of potential rental income. "A 40sq metre property might be a resale studio," says Weiner, "but it would be a one bedroom new build."

You could have the best of both, however, in the form of the new loft apartments that are appearing on top of many of the historical buildings.

Developers install a new lift, and build up a couple of extra storeys on top. "The buildings are beautiful," says Weiner, "but the loft conversions are a better investment."

The Prospects: Get Rich Quick?

According to the agents, although there has been a huge amount of new construction, tenants are still out there, and rental incomes are covering foreign investors' mortgages, (though yields of 7-8 per cent may be more likely with international tenants).
But, in terms of capital growth, this is no high-risk, high-profit emerging market. Although the city has seen huge price rises in recent years, it now looks set for more moderate growth, and investors are tempted more by stability than high profits.

According to a recent Knight Frank report on global house prices, year-on-year price growth in quarter two 2006 was five per cent.

Robert Weiner at GPL Hungarian Property says: "I have people who say they want to invest for a few months, and I have to tell them that really it's a three-to-four-year investment."

The Buying Process

If you are buying only one or two properties in Hungary the process is drawn out but straightforward. Permits are required, which appear to be a formality, but can take three months.
However, if you need to speed it up, or plan to hold a portfolio of properties, you will have to establish a Hungarian company.

This will reduce your tax bill on any rental income, but may cost you around 700 to set up, plus monthly payments to maintain your books. In addition, as a business, you may have trouble borrowing more than 50 per cent on a Hungarian mortgage.

Your total legal expenses will vary according to price and whether the property is a new build or a resale.

Stamp duty on new builds is six per cent, but it starts at 15 million forints (around 37,000). So if you're buying a HUF 20 million (around 53,000) new-build property, you should set aside around HUF 800,000 (2,115 or four per cent) for legal expenses.

For resale properties duty is two per cent on the first HUF 4 million rising to six per cent thereafter, so you would need to add an extra HUF 740,000 (nearly 2,000) to your costs.

Tips

Choose a reputable agent and developer.
- Avoid inspection trips offered by agents - don't be pressurised into making any decisions.

- If you want to buy in a less salubrious area, be realistic. It may take a long while for it to become 'gentrified', so look at the reality, as well as the potential.

- If you are asked to pay any fees or commission to an agent, look elsewhere.

Hungary: The Facts

Total Population: 10.1 million
Budapest population: 2 million

Government: Parliamentary democracy

Official language: Hungarian

Currency: Currently the Hungarian Forint (1 = approx HUF 400), but accession to the Euro looks likely by 2014

Major religions: Roman Catholic, Protestant, Greek Catholic, Jewish, Orthodox

Members of: the IMF (1982), NATO (1999), OECD (1996) and the EU (2004)

How to get there: By air: Budapest (Ferihegy) International Airport is ten miles from the city centre. By rail: direct links between Budapest and 25 other capital cities. By water: hydrofoil services during the summer months link Budapest with Vienna and Bratislava.

Within the city: Three subway lines, buses and trams carry passengers throughout Budapest.

Nikki Sheehan Find A Property 2000-2007

Lender backs buy-to-let prospects
Wednesday November 22, 2006
Guardian Unlimited

 

 

A current boom in the market for rented properties will fuel the buy-to-let market for a decade, the third largest buy-to-let lender said today.Paragon Group said a rise in the number of twenty and thirty somethings wanting to rent rather than buy a home will stoke the market for the next 10 years.

The influx of 500,000 Polish immigrants and more to come from other east European countries will also play a part in maintaining the boom, the firm said, after issuing figures showing profits before tax up 15.3% to 82.8m in the first six months of the year.

Northern house prices to rise 60% by 2011
Thursday, 05 Oct 2006 . Source: aboutproperty.co.uk

Homebuyers in Yorkshire & Humberside should expect the average house price in to rise 60% to 220,000 by 2011, a new report reveals.

The research, commissioned by the National Housing Federation, the Chartered Institute of Housing and Yorkshire and Humberside Housing Forum, has been labelled a "timebomb" due to affordability and supply issues.
The rapid growth for Yorkshire and Humberside is faster, in percentage terms, than the national average - benefiting current homeowners and the regional economy, but preventing first-time buyers getting on the property ladder.

The price rises in the region are particularly sharply felt as Yorkshire & Humberside's average income levels have not risen at anything like the same rate as property prices.
In 1998 the income to house price ratio was 3.4, whereas this year it stands at 6.6, the report finds. In actual terms, the average salary in the region is 21,014, but researchers estimate to afford a mortgage homebuyers need to be earning 38,000.
The report predicts this gap will continue to grow year on year.

Jane Evison, of the Yorkshire and Humberside Housing Forum, commented: "We have the evidence here to demonstrate to government that affordability is not just a southern issue. We will be making a strong case to government as part of our submission to the [government's] comprehensive spending review for the appropriate resources and policy tools to be able to deliver much needed affordable homes across the region."
Also highlighted in the report is a split in the housing market, with average house prices in some locations almost four times the price of the cheapest areas.

Julie Gamble, of the National Housing Federation, said: "The figures revealed today make clear that much more needs to be done in this region to turn these two housing markets into one. We need affordable homes in the areas seeing a rapid rise in prices and continued support to renew the housing market in the more deprived areas of the region.
"It is vital that through the comprehensive spending review 2007 the government make housing a top priority for increased investment."
Around 4,500 to 5,000 new affordable homes are needed to prevent the housing crisis in the region, according to the report