On my return from annual leave I soon scoured the papers and Internet to discover the latest property news.   I didn’t have to look too hard as it was all over the headlines again, fear of the dreaded double dip!  Hometrack reported lower prices in August a drop of 0.3 percent from the previous month, the biggest drop since April 2009.  Rightmove reported that first time buyers (FTBs) had dipped sharply over the last 12 months only 22% of potential buyers were considering purchasing their first home compared with 31% in 2009.  And finally The Times reports on valuers marking down 1m-plus properties in some cases by as much 20%.

Before I join the mass panic however, I try to think back to the comedy sketch that I watched during the crisis where a distraught homeowner rants about the dramatic fall in his property’s value and that he doesn’t know what he can possible do about it, his work colleague retorts “why don’t you just live in it?”.  I think of this to remind me that human nature isn’t likely to change very soon, people need to live in houses and there are more people than ever in the UK.  My eye catches another article in The Times concerning immigration, it rose by 20% in 2009 to  196,000.  That’s a lot of people and although the Coalition may have plans to reduce immigration, this in the main originates from the European Union of which the Government can exert little control.  I remember also that we have had a sharp bounce in property prices over the year and it is not surprising that this is now cooling off.  Nor is it surprising that FTBs are struggling to get on the market and that this is due more to the restrictive practices of the banks than any dramatic change in the demand from these individuals to purchase their first home  (although certainly renting is being given far more consideration by individuals than before the crisis).  This doesn’t change the fact the property market needs FTBs, but pressure will continue to be placed on the banks.  As regards re-valuation of 1m-plus properties this is likely to have more to do with bank bonuses being reduced than any set of factors that is likely to affect the rest of us who live in the real world.  As for the fear of the recent drops in the American market being replicated here, I would have thought that UK banks who securitized a great deal of American mortgages would have realised by now that it’s a very different ball game and drawing comparisons isn’t likely to yield useful results.

Once though the mainstream media, I turn to the investment weeklies that have been piling up whilst I’ve been away.  Here I read with more interest that large insurance companies such as Aviva are about to invest in Private Rented Sector (PRS) some 1 billion pounds in fact.  The attractions are clear, residential property is providing handsome yields and is seen as a lower level of risk that many other asset classes.  Interest rates are low and are likely to remain low until 2012 (although they will increase from their current historic low), rents are rising as demand increases as FTBs cannot get on the property market and fewer properties are being built both in the private and public sectors.  Inflation is high and given the Governor of the Bank of England has hinted that if the economy was to weaken more Quantitative Easing (effectively printing money) would be forth coming I think it’s likely that deflation is seen as a bigger threat and Bank is likely to err in favour of inflation, which is historically good for property.

Don’t misunderstand me, I don’t think everything is rosy for the property market, but neither do I buy into the doom and gloom either.  Landlords with a long term investment horizon (at least 10 years), should not flinch if properties do dip, yield is still the most important aspect of property investment and currently there are opportunities within the market not seen for sometime which will provide good yields (on that note we have recently teamed up with movewithus and have a number of repossessed properties for sale – please discus if you are considering increasing your portfolio).  For many of us however, we may not be able to take advantage due to the lack of available finance.  Rest assured however that your money (via your pension) is likely to be invested in the PRS sector over the coming years… one of few investments I’m happy for my pension company to make.

On the 19th July 2010 Peter Anthony Estates officially re launched as PAD4U, opening our newly refurbished offices to the public. Our office was opened and our red ribbon cut By Councillor Keith Whitmore who commented on the value of investing in the area and the local community.

Attendees also included many of our local business, local residents, our business partners, landlords and contractors. Who all celebrated this special occasion with sparkling wine, nibbles and a PAD4U cake.

Our free Ipod raffle was also enjoyed!

David Boyd, Managing Director, PAD4U Letting Agents Manchester writes:

This week HSBC has recorded a near doubling of it’s profits for the year, Northern Rock has also reported profits (on the loan book now owned by the Government), Barclays results are also likely to be impressive, whilst RBS should also return to profit.  So why is this?  The first reason is that “bad debts” on properties have not worsened due to lax monetary policy, but I also suspect at lot of it comes from ‘Improved Margins’.  ‘Improved Margins’ roughly translates to the banks ripping us off; mortgage rates hover around four to six percent (taking into account ludicrous fees added on to the mortgage), whilst Bank of England base rates remain at the historically low level of just half a percent.  I therefore can’t say I’m surprised that the banks have bounced back.  And I won’t discuss what’s happening with overdrafts and premium account charges.

It  is difficult not to be cynical regarding bank profits (and the return of bonuses for their staff) which have come either through Government subsidy or through lax monetary policy combined with “Improved Margins’ from all of us.  But the fact of the matter is it had to happen, it was predictable and sadly necessary.  Without strong banks making good profits, rating agencies and the market would likely take a dim view of UK Ltd., and this could have had and adverse effect on all of us.  So although I will not be toasting to the “success” of the banks I will be breathing a sigh of relief as the worse maybe behind us.

However, this is only true, and the dual refinancing of the banks both by us tax payers and us mortgagees, justified, if the banks begin to lend money back into the UK economy for small businesses and by increasing the availability of mortgage finance to those without huge deposits.  If the banks fail to do this UK Ltd., is likely to suffer.  Thus it is imperative that the coalition Government push the banks on our behalf to do this, whilst they maintain sensible financial prudence.  The banks are still ‘flapping’ and ‘panicking’ and have not demonstrated that they have changed their spots as of yet.  Instead they continue to advocate form filling as the answer (but with different numbers now) in the hope that they have found a better formula.   Whereas the correct formula is to train staff, have sensible pay structures based on long term success and take account that they are lending to people not forms.  Only when this happens will we see successful banks profiting from their abilities rather than our pockets.

Does the boiler in your rented property or even your own home in need or replacement? Maybe it is not efficient at is should be or have you been paying out for repair after repair PAD can install a new ‘A Rated’ efficient boiler (24 he) with 2 years parts and warranty from £995 + Vat.

Inefficient boilers can cost you or your tenants a fortune in heating bills especially in Winter, you could save upto £275 per household per year according to the Energy Saving Trust. www. energysavingtrust.org.uk

If you replace your boiler now rather than waiting until it breaks down, you could avoid the hassle of finding someone to fit a new one at short notice and being without heat or hot water for weeks.

We have been currently fitting new ‘Ideal’ boilers as part of our property refurbishments and for those properties requiring replacement boilers,. For an extra £99 + Vat you can upgrade the warranty with Ideal enabling the guarantee to be extended upto 5 years giving you piece of mind for your future tenancies. Ideal boiler is just one of the many boilers we have installed but we feel this is a boiler that is cost effective, has a compact design with a tidy drop down panel to shower the user controls and even our tenants have said how easy they are to operate.

Please Note

The above cost shown is based on a like-for- like swap

Does not include making good where disturbed or where back boilers may have been removed

Does not include replacing any radiators or TRV’S (Thermostatic radiator valves)

Does not include a separate room thermostat

Does not include powerflush of system