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

Last year I predicted that average house prices were likely to be flat over 2011, and for all the news mania in-between, this is pretty much what happened.  Halifax noted a 1% drop (up to November), Nationwide a 1.6% gain (up to November) and Land Registry (up to October) a 3.2% drop.  This is in stark contrast to some economists’ predictions of a 20% slump in house prices.  Compare to a 6% drop in the FTSE 100 over 2011.

The average figures of course belie a whole host of outcomes as I am always careful to point out.  London, was the only region to see gains in England and Wales for instance.  However, this is on a regional basis which is a very coarse average.  Within every town and village and even street,  each will have a different story to tell, which is why I always advocate focusing on local property prices when making an investment decision, whilst maintaining an overall view of house prices.

But what next for 2012?  Again as in 2011, there are many factors at play which could see property prices falling further, and opposing factors which could see prices recovering.  The main factors likely to drag on property prices are increased unemployment (especially as the Government continues its cuts in the civil service), constrained wage increases,  the eurozone crisis (as this could affect available mortgage funds), banking regulation (ditto).  Factors which will assist property prices include low interest rates, more quantitative easing and banks (perhaps given that property prices have been reasonably stable) offering more reasonable and flexible mortgage products.

The eurozone crisis is perhaps “the big one” and it’s impact is difficult to predict.  However, unlike the property crash, the problem is well known and understood by the majority of people and therefore is less likely to be a  “shock to the system”.   In comparison few economists actually predicted the crash in house prices due to lax credit via derivatives and securitisation of mortgage loans.  The Government and the Bank of England’s position has become reasonably transparent (even whilst they still do not admit such), they wish to have a soft landing for the housing market and have been following an inflationary policy to secure such.  The bank (due to our independence from the euro) still has its hands on some fairly significant levers for the economy and the Government are also carrying out policies of easing credit to medium sized companies.

It is for the these reasons that I predict the Government and Bank of England will be mostly successful in ensuring a soft landing and although house prices are likely to weaken next year, economists predictions of 10-15% drops are likely to be proven wrong again.

Transactions levels are likely to remain low as these opposing forces play out the probable stalemate that will ensue, and speculators stay clear (there will also, thankfully, be less property programmes on TV I predict).  However people will still have families and thus require a bigger home,  seniors will still downsize to release equity, people will continue to move around the country to find work, and pretty much life will go on.  Ultimately whilst people can pause in their dealings with property, it can’t be stopped and even the oft cited rental market has proved no great escape as tenants remain subject to rental fluctuations and potential upheaval, therefore, the ladder of life and property are intertwined and it is why it will remain, over the long term, one of the most stable asset classes.

Get to know your home
Make sure you know where the main stopcock for your water supply is located and check that it turns easily. It is usually near where the water pipe enters the house or under the kitchen sink.

Keep your house warm
To avoid burst pipes and damage to your home this winter keep your home reasonably warm day and night. During cold weather keep the heating on. If you have thermostatic radiator valves make sure these are all on. A room used left often should still have the thermostat value on low, to allow warm water to run through the radiators.

Your heating will be more efficient if it is on a lower temperature for longer periods of time. Set your timer to come on twice daily, usually in the morning and at night as these are often the coldest times.

Open or set aside the hatch to the loft space (if you have one). This will provide additional protection if your water tank and pipes are located in the loft. Opening the doors of your kitchen sink unit, and allowing the warmer air to circulate around the pipes, will also help prevent them freezing.

If your water supply becomes frozen, what action should you take?
• Turn off the water supply at the main stopcock
• Turn on all cold taps to drain the system
• Flush the toilet
• Do not turn hot water taps on as the hot water cylinder may
• Collapse if the pipes feeding it are frozen
• Switch off the central heating and immersion heater
• Collect water in the bath for washing and flushing the toilet
• Report the problem by telephoning 0161 257 2441

Remember!
Frozen pipes must be defrosted slowly. Never use a fierce heat or a naked flame to defrost pipes, as this may cause the pipes to burst. Once the pipes have thawed, turn the water back on slowly and check for any cracks or leaks. If these are detected, turn the water off again and reporting it as a burst pipe.

If your pipes burst, what action should you take?
If you have not already done so, take all of the steps mentioned above in relation to frozen pipes (turning off the stopcock, draining the system etc). If water leaks near your electrics or electrical appliances, switch off the mains immediately. If your mains switch is wet, don’t touch it!
Report the burst by telephoning 0161 257 2441.

If you live in a flat and are getting water in from the flat above, please make every effort to contact them direct, you should also contact the building manager or building management company. Our plumbers cannot arrange access to a property that we do not manage. If water is gathering in your ceiling, and it is in danger of collapse, place a bucket or basin under the affected area and carefully puncture the ceiling to let the water drain away.

Home Contents Insurance
We strongly recommend you insure your home for damage to furniture and fittings, personal possessions and redecoration. PAD4U and your landlord do not insure your belongings, and has no responsibility to assist in drying out or replacing items damaged by burst pipes.

Taking a trip?
If you are away from your home for any length of time, ensure that the heating system is left on timer at a low temperature. We advise that you pass your contact details on to neighbours and friends so that in the event of an emergency you can be reached easily. We also advise that you ensure we have your up to date contact details and a next of kin that we can contact in case of emergency.

Other useful telephone numbers
National Grid (for gas leaks)………………………………..0800 111 999
United utilities (for burst water mains)…………… 0845 746 2200

Rt.Hon Sir Gerald Kaufman MP will be switching on the Christmas tree lights at 5.30pm. Local children are invited to meet Father Christmas on the Village Green on the corner of Chapel Street and Stockport Road from 4.30 pm.
The event is the result of a joint partnership between the Local Traders and Manchester City council.

As part of the local traders PAD4U is pleased to contribute towards the event not only financially but also helping out by wrapping the presents and posing as Santa’s little helpers during the event.

No other district shopping centre does this and it is what makes the Levenshulme event unique.
We Love Levenshulme!

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

Whilst some areas of London are seeing dramatic increases in rent, across the country rent rises are long over due.  Rents are normalising – they are not out of control.

Rents have languished for many years and are only now beginning to rise, there are number factors for this discussed below.  Rents are merely playing catch up to the reality on the ground.

Legislation

Tenancy Deposit Scheme:  This scheme has increased Landlord’s costs in-between tenancies as “fair wear and tear” is often misrepresented.  This has also increased Inventory costs due to the level of detail required.

Energy Performance Certificates:  This EU legislation costs landlords for each property they rent.

Selective Licensing: Whilst HMO licensing can be justified, Selective Licensing has been used certain by some Councils to obtain significant funds although the work is already carried out by ARLA agents (for instance checking Gas Certs).  Effectively the landlord pays twice.

HHRSS: New Health and Safety checks that landlords need to be aware of, increasing administration costs.

Whatever your thoughts are about the above legislation, there is no denying that it all has a cost.  This cost, must in the end be met by the customer i.e. those paying rent.

Risk

For too long landlords (who rushed into buy-to-let properties) didn’t adequately caluclate for the risks they were undertaking including:

Void periods (although this risk is now very low)

Changes in interest rates

Housing Market turmoil (negative equity, etc).

Arrears (which can be insured for but at a cost)

Maintenance costs

With a more mature market and landlords taking proper account of risk, there must be adequate reward for the risk of owning the asset, which results in higher rent.

Demand

Due to the banks panicking over their own incompetence, first time buyers who would be willing to buy a property are now being forced to rent.  The banks seem incapable of calculating risk and therefore are closing the door on these purchasers.

All the above factors are going to increase rents to normal levels.  Landlord’s have effectively provided subsidised housing in the UK for many years, due to a buy-to-let boom and a lack of understanding of the risks and costs of being a landlord.  Rents will need to reflect the risk, legislation, and demand in the market as the Private Rental Sector (PRS) matures.  The PRS still provides a more competitive rate than any other form of housing, such as council and Housing Associations, once subsides are accounted for.

Our intrepid accountant who regularly bikes with Macclesfield Wheelers has recently taken umbrage with unsightly concrete bollards.  En route to a race, Simon targeted this particularly irksome bollard and steel chain, managing to smash both.  Sadly during this act of heroism he managed to sustain several injuries requiring operations to the wrist/hand as well as several sores and bruises.

Simon is making his way into work, to ensure all accounts continue to run smoothly, but please accept our apologies if there are any delays (as he mashes the keyboard with his working fingers).  We wish Simon a speedy recovery and, perhaps, to put aside his personal vendetta against this roadside nuisance.

Paul will remain a major landlord at PAD4U, having built up a significant portfolio during his time with the company.  The company has always encouraged its team to get involved in the property market as we feel being an experienced landlord is the best way to serve other landlords and understand their needs.  It also ensures that we ourselves demand the best service from PAD4U, as landlords.  Paul will certainly continue to expect the best service within the industry as a portfolio landlord from PAD4U and will continue to advise the company as it grows.

On a personal note Paul will be missed. He has helped me build and modernise PAD4U  since I took over the reins of the company and his dedication and his work ethic I have greatly admired and looked to emulate. Without such PAD4U would certainly not have grown and moved so far forward as it has.  Paul, in all but name is family, and I hope this move brings much happiness.  I’m pleased that property has given Paul the security to be able to make such a bold move and underlines our continued belief that property can bring wealth and security over time.

Luke Elston will have the daunting task of filling Paul’s shoes, as he becomes PAD4U’s Business Development Manager.  Luke, who joined PAD4U 3 years ago, from the Halifax Estate Agency, has shown great drive and determination in helping PAD4U deliver the best service to it’s customers.  Luke has successfully completed both his ARLA Technical Award for Lettings and Property Management, and NAEA award for Sales and is keen to become a landlord when the opportunity presents itself.   Luke has earned respect from landlords, tenants and colleagues alike for his tenacity, reliability, and commitment to his work and is looking forward to introducing himself to existing landlords over the next month and listening to their needs and continuing to improve our service.

Perhaps Ben Goldacre may turn his scrutiny to ‘Bad Economics’,  as there are countless examples of such.  One of my pet peeves is the comparison of investing in the Stock Market vs Investing in Property, as there are usually gaping holes in the analysis.

For example, leverage: the headline usually reads “Return of £100,000 invested in the Stock Market, equals £100,000 invested in Property”, (over some arbitrary time frame).  However, the error is in the question; £100,000 invested in property would equal  £400,000 invested as most investors would use mortgage funds to leverage their money (here I calculate for 75% Loan To Value as an example).  Of course it is not usally possible for a private investor to do the same with the stock market (although options, futures, etc offer leverage they do so over set time frames that require constant rollover, which may involve a margin call depending on how the investment has performed), as no bank will give long term funds for this type of investment.  So the actual comparison should be £100,000 invested in the Stock Market, against £400,000 invested in property (taking into account the interest costs of the bank funds).  The outcome of which, of course, would be very different.

The question above, however, is still incorrect because it assumes average house prices.  However, most property investors don’t buy into a property index, but rather an individual property or properties.  Thus, the comparison should be £100,000 invested in an individual Stock (or Stocks or Index) vs £400,000 invested in one or more properties.  Now this is where things get tricky.  There are significant studies which demonstrate that both private investors and professionals alike are pretty poor at choosing companies that beat the market over time, i.e. stockpicking, so it’s best the investor sticks with an index, but his/her returns will thus be limited.  There are many explanations for this, but one factor is likely to be a lack of understanding of what they are buying.  Whilst I have found no evidence to suggest that investors would be better informed on individual properties, I would hypothesise that they are more likely to buy in the area they live, and therefore have more information regarding schools, transport, the type of potential tenants, and that to a reasonable trained eye most of the information about a property would be more readily available to anyone.

Whilst this article does not provide the answer, perhaps if financial journalists could start by asking the right questions, the information gained can be used by private investors to make sensible financial decisions on real world scenarios.

First Time Buyers haven’t suddenly become a greater risk to the banks in recent times but their needs have changed. The solution isn’t to make loans unavailable or unaffordable for this group of buyers, but to adapt these products to today’s reality,

Firstly we are all living longer and perhaps more importantly we are going to be working longer. Longer mortgage terms are needed to reflect this new reality 30 to 35 year mortgages are available but these need to become more available for first time buyers.

Flexibility. Mortgages need to be far more flexible with mortgages breaks available perhaps one month every year to help during the difficult Christmas period. Again such holiday breaks are available in some products, but need to be more widely available.

Rate security and flexibility. Variable rate mortgage products need to have the flexibility to switch to fixed rate products any time during the term of the mortgage without any penalty. Such mortgages are beginning to appear.

Overall banks need to alter their approach from an adversarial short term approach, hoodwinking buyers in straight jacket mortgages, confusing first time buyers with complex fees and rates which eventually cripple their finances, to a sensible look at the long term requirements of first time buyers and providing products that meet the needs of this group of buyers. Ultimately this will result in long term stability for the banks, lower risk of default, and therefore feedback in sensible rates for first time buyers.

1. Price: Get it right, first time!

Firstly, you need to get an honest valuation on your property by an experienced local Estate Agency (choose three of the top agents in your area – only choose strong local agents and find out how they will market your property).  Secondly, if you find yourself using the phrase “Let’s try it at ‘x’ first and then we will go down to ‘y’”, stop!  Throw some cold water over yourself (no actually do it! It helps), then make the sensible decision to set the price correctly first time.  The best opportunity of selling a property is the first month it’s on the market, don’t waste this, or you will end up reducing the property more than ‘y’ to sell the property after the first month has elapsed.

2.  De-clutter to the extreme!

There is nothing worse than viewing a property that looks like an explosion of a Storage Depot has occurred nearby and left the shrapnel in the property you are viewing.  Pack everything away neatly in the Garage or Cellar or alternatively store some of your belongings with family whilst your property is on the market.  The property should be extremely clean and tidy for all viewings and when the agent is taking photographs.  You need to show your property in the best light.  I know this is hard work, but it pays.  Oh, and put the toilet seat down!

3. Click ‘Like’ on Rightmove or PAD4U website to get your property on Facebook!

OK so this isn’t the most likely route to finding a buyer, but with millions of Facebook users, its worth letting all your friends know your house is on the market as they may just know someone who is interested in buying a house in that area.

Over the years multitudes of legislation (mostly ill-thought) has been thrown at landlords.  This legislation may not have resolved any issues, but it has certainly resulted in extra costs for legitimate landlords.  Take the Tenancy Deposit Scheme (TDS), such schemes have insured that landlords rarely receive the actual costs of the works they carry out in-between tenancies.  For example, if a tenant has marked a wall, the landlord will NOT receive the costs of repainting that wall, only a minor adjustment for the mark itself.  Back in the real world a landlord will have to find a decorator willing to come in to paint one wall (good luck), or usually end up painting the entire room so that the different ages of paint correspond.

The landlord needs to recoup this shortfall somewhere, and that somewhere has to be increase rent for every tenant.  This is just one example of legislation that has increased the total costs for landlords.  Other legislation includes selective licensing, health and safety legislation, energy performance certificates.  All this legislation costs money and therefore rents have to increase to take account.

In conclusion rents have remained static for far too long, whilst the costs of being a landlord have increased.  It was only a matter of time before the increased costs resulted in the necessary increases in rent.  Whilst increased legislation isn’t the only reason rents are rising, demand is also increasing due to banks reluctance to lend to first time buyers, it is factor that landlords must consider when setting rents.

Governments need to think carefully before introducing legislation that ultimately benefits neither landlords or tenants and increases the costs to everyone in the form of red-tape.