The Chancellor will produce his second budget next Wednesday 22nd March. What impact will it have for landlords and homeowners?

Stamp Duty

The stamp duty threshold at which you start to pay stamp duty was increased last year from £125,000 to £175,000. At the time it was introduced as a temporary measure and is scheduled to end later this year on 2 September..

During the period that the increased threshold has been in place house sale volumes have been very poor. The relief has therefore had limited impact.  In order to be of benefit to property investors and homeowners we would need to see the increased threshold remain for longer or at least a new threshold of say £150,000.

The Financial Times reports that based on figures from The Land Registry the average house price is less than £175,000 in all parts of England & Wales - apart from the South East (£190,000) and London itself (£298,000).

Therefore if the increased threshold is extended for a longer period for anyone buying a property valued up to £175,000 there is a saving of £1,750- a not inconsiderable sum.

Let’s hope the Chancellor does bring in some measures to assist the property market.

What are the chances that in the coming weeks we are we likely to see more mortgage products being made available?

It has recently been reported in The Financial Times that banks are now displaying a renewed appetite for lending”. As a result banks are now beginning to ease criteria, making more products will be available, including to those with smaller deposits. Up until now the only competitive rates were available for those with a 25% deposit. Certainly wouldn’t include a typical first time buyer!

The recent injection of cash from the government has assisted significantly in that more funds have now been made available for lending.  In addition there are now a number of reports that the property market is stabilising. There isn’t talk of price rises; but a numbers of reports now suggest the fall is easing.

Is good news around the corner?

New mortgage rates have recently been offered by Bank of Scotland and Halifax specifically aimed at existing borrowers with little or no equity in their homes.

Due to the lack of available products any lenders coming out of a fixed or tracker rate could only take the lenders Standard variable Rate (SVR). The SVR is currently very low (3.5%). However, if rates increase later in the year the SVR could then become unaffordable.

The Financial Times have reported that a Halifax spokesman confirmed that the available rates could be made available for existing customers in negative equity, although this was not “a hard and fast rule”.

Whilst this is only good news if you are currently with one if the 2 banks mentioned it can only be hoped that some of the other lenders also follow.

Earlier this week I highlighted the need to have a well considered property investment strategy. If you do, this should ensure your property investment will let well at the rent you expect and give limited voids.

How can you generate wealth from property?

Maybe you want to buy for long term capital growth; maybe you want to achieve monthly cashflow. Dependant on which option you choose the type of property you will be seeking to meet the need will differ.

The following are all different options to consider:

• Buy to let income i.e. generate a monthly income with rents in excess of costs
• Buy to let capital- monthly cashflow is flat, but the investment has the potential for significant capital growth
• Buying a distressed/repossessed house at undervalue
• Back to back trading i.e. Buy and sell within a short time frame to make a profit
• Investing abroad

Have you considered which option is most appropriate for you and your circumstances?  Do let me know your thoughts.

The following 3 changes are being introduced with effect from today, 6^th April 2009 in relation to selling your property:

• Previously a property could be marketed provided a HIP had been instructed. This temporary first day marketing exemption for a HIP is now being removed and from today it will be unlawful to market a property unless the HIP is actually available.
• The HIP must also now contain a Property Information Questionnaire, which must be completed by the seller and included in the pack before the marketing of the property can begin. The intention is that the PIQ will provide the prospective buyer with a helpful checklist as they walk around the property.  The PIQ must be completed by the vendor. If the selling agent assists with completion the agent will be liable under the Property Misdescriptions Act 1991.
• An insurance policy designed to cover any missing data in personal searches will no longer be allowed.  From today all searches must be complete.

If you have decided that it’s the right time to get involved in property investment, then how on earth do you get started?

Do you just wander through the high street talking to estate agents and letting agents? And if so, what do you ask them?

Over the next few days I will talk you through the steps you need to follow and the research you need to do to get you started with your first buy to let. It’s not simply a case of looking at a few properties up for sale, making an offer and then instructing a letting agent.

A good property investment will let well with limited voids at the rent you expect. If you do not do adequate research you may end up with a property that you are struggling to let, with increasing void periods. This will therefore end up being a huge cost and drain on your resources rather than the good investment you were expecting.

To get the advice you need………….watch this space…………