Be Careful What You Read In The Paper!

I was perusing the property section of the Telegraph today and I came across this little piece from their “property sleuth” on his pick of good student investments: http://www.telegraph.co.uk/property/propertypicturegalleries/9393045/Ten-of-the-best-buy-to-let-investment-properties-for-children-going-to-university.html#?frame=2274157 . Picture no. 10 is of a property in Exeter, on the market for £410,000 with Knight Frank. A short amount of searching brings this up on any decent property portal and shows its location as Friars Walk, in the very elegant and sought-after location of St Leonards. So far all well and good…

 

Apart from the fact that this is an ill-informed suggestion! I’d be very intrigued as to who told the folks at the Telegraph that this was a good student investment. They’re encouraging parents who might not know better to spend £150,000 more than they need to (plus any cost of changing the property around) to buy a house in an area that, while a very pleasant one to live in, is miles away from where their children will want to live. It will make a comparatively poor return on investment and, if used as a student property, it will then make it very hard to sell on in future.

 

Having spent some time looking at the Exeter Student Let market and having been a student in Exeter myself, the places to look for student properties are St James, Newtown and Mount Pleasant. There are a whole range of ready-to-go student properties priced anywhere between £200,000 and £350,000 which are much better situated and need no work doing to the property. We have some on the market ourselves and there are many others out there as well.

 

So what do we learn from this? It’s always best to check with a trustworthy local agent before buying in an area you don’t know. Recommendations are always the best way to go so ask around and see who gets recommended all the time. Don’t just trust the national newspaper analysts, they’re unlikely to know the ins and outs of any local market.

Is Housing at its most affordable level in 10 years?

There’s all sorts of conflicting information sloshing round the internet at the moment about the various strengths and weaknesses of the housing market, with different commentators prophesying either a sooner recovery than expected or imminent doom depending on which headline their aiming for. However, the piece of news that has caught my eye in recent days was the report from the Halifax, claiming that housing is at its most affordable level in 10 years. Given the current economic climate and the pessimism about mortgage lending, this prompted me to do some digging to see if our experiences on the front line backed this up.

 

Once you dig into the reports that the Halifax have been putting out, it does seem that the BBC (who brought the story to my attention (http://www.bbc.co.uk/news/uk-18839255)) were guilty of a little bit of headline seeking – Housing is only really at its most affordable in Scotland. However it’s Halifax’s methodology, and overall subsequent findings, that seem most worth of attention. They worked on the premise that buyers would be looking to borrow up to four times their income and so multiplied the average earnings of a Local Authority area by the average house price in the same area. This showed that, of the areas surveyed, “54% were deemed to be affordable” which “was the highest figure since 2002.” So this all sounds very lovely but even more interesting was the news from the Halifax that “Mortgage payments for a new borrower remain significantly below the long-term average as a proportion of disposable earnings.” (http://www.lloydsbankinggroup.com/media1/press_releases/2012_press_release_brands/halifax/0507_HPI.asp) Not only do houses seem to be more affordable but the proportional cost of paying for a mortgage seems to have dropped as well in real terms. When combined by news of rising rents (http://www.propertydrum.com/articles/20120415_4), it looks like we could be set for a return to a buoyant housing market.

 

But is this borne out in the open market? While we saw a rise in viewings and sales in March and April (probably attributable to the change in stamp duty), things have stayed fairly uninspiring. The total number of viewings we’ve conducted have stayed constant over the last few months and, while the percentage of viewings that lead to sales has increased, this isn’t very helpful as the number of viewings is down on what it should be at this time of year. So while Halifax’s news is probably good news, we’re not seeing the effects on the market yet.

The Estate Agent’s Dictionary

Like every area of life, estate agency has evolved its own particular specialist vocabulary and not just that “deceptively spacious” generally means small! There’s usually quite a lot of confusion about some of the terms so we thought we’d post a few explanations here to try and clear things up. Many of these are fairly self-explanatory but sometimes have a bit of nuance to them.

1. Cash Buyer: You are a cash buyer if you have all the money you need sitting in the bank waiting to be spent. However, if you’re buying with a mortgage and a cash deposit, but not selling a house, you’re not a cash buyer.
2. Proceedable/non-proceedable: A silly jargon word really, but if you’re not in a position to immediately proceed with the purchase of a house, you’re not proceedable, usually because your own house hasn’t sold.
3. Mortgage Agreed/Decision in Principle: When you apply for a mortgage nowadays, they will give you an agreement or a decision in principle as to how much you can borrow. This usually applies just to first time buyers but is quite a useful thing to have if your estate agent wants to know how proceedable you are or if you’re going to be able to afford the purchase.
4. Conveyancing: When you buy a property, there are quite a lot of legal documents that have to be filled in and completed, like the land registry documents and contracts. While you can do it yourself (which we definitely wouldn’t recommend!), normally you’d appoint a conveyancing solicitor, who specialise in this area, to “convey” you into the property, generally doing most of the legal stuff for you. Just a word of warning, their prices can vary wildly, so do shop around.
5. Chains: When you buy a home, the person you’re buying off may be buying another home, as will the next person and so on until someone who is selling a home doesn’t want to buy anything else. This is called a chain. Generally, they all complete on the same day as the money has to move gradually from one property to another. While they can be unwieldy, they’re not to be afraid of and chains of four or more are not uncommon.
6. Exchange and Completion: Generally the final two points of the sale; you “exchange” contracts with your buyer/seller legally tying you to buy their house. You “complete” when the money has been paid to the seller and you take possession of the home.

We hope this helps but do ask us about anything specific and maybe we’ll do a second entry for the dictionary in the future!