In most geographical areas the fall in the property market has severely reduced the number of properties available for sale. Another contributing factor is the pitifully low interest a vendor would earn with the funds if they did sell. As a result unless you are in the position of having to sell most are holding off until the market improves.

But the reverse side of the coin is that because of the lower prices and historically low interest rates the number of enquiries has risen. This has ensured house prices in many areas have remained reasonably stable and in some instances has led buyers to pay more than the asking price in the face of such a shortage of possibilities for anyone who is determined to move.

When we add to this the issue that new build supply had significantly reduced since last year the gap can only get bigger.

But based on the above, the law of supply and demand suggests prices will therefore rise. What do you think?

How do you get started, once you’ve decided it’s the right time to get involved in property investment?

If you’re keen to just jump straight in you’re likely to want to go and view a number of the properties available for sale in the area you are inetrsted in. To see how good your negotiating skills are you may just put in a number of low offers and see if any get accepted.

Is this a sensible approach?

The short answer is “No”. This si likely to lead to a lot of wasted hours. Whilst it’s very exciting to go straight out and start “doing” it is much more sensible to sit down and consider what your investment strategy is. .e. do you want to buy for long term capital growth: do you want to achieve monthly cashflow.

Dependant on which option you choose this will determine the type of property you need to invest in to fulfil this need.

The following are all different options to consider:

• 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 Buy to let income i.e. generate a monthly income with rents in excess of costs
• 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?

Rightmove, the property website has been reported in The Financial Times as having a significant increase in house hunters to its website. For the first time in April 2009 traffic to the website has increased relative to the same month in 2008. Interest on the website is now running at a similar level to that shown before the downturn.

In addition, it has been reported that there has been a significant decline in the rate at which estate agents are leaving the industry. No estate agents have left the industry in 2009.

Rightmove’s board of directors said that the outlook for the UK property market was now “cautiously positive” and that 2009 pre-tax profits should be ahead of its previous expectations.

A glimmer of light at last?

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.

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…………

The FT has reported that ARLA, the Association of Residential Letting Agents has reported signs of improvement in the buy to let sector. For the first time in 2 years, landlords are now buying more properties than they are selling.

The biggest bargains have been noted to be in new build developments coming up to completion. Sales prices which were agreed maybe 2 years ago, now look too high. Consequently some investors are choosing to lose their deposit and walk away from the transaction.  Developers have therefore been agreeing significant reduction in price to shift their stock.

It’s been reported that some property agents are selling blocks of new-build flats to private investors at discounts of up to 40 or 45 per cent of the peak market price. Some developments are now providing gross rental yields of up to 10 per cent.

Mortgage approvals have risen by the biggest margin for three years in February according to the FT. In addition, lending to companies has also grown at its strongest pace in almost a year.

Other good news is also from RICS and Hometrack. The Royal Institute of Chartered Surveyors (RICS) are reporting increased enquiries from new buyers, and property expert Hometrack has reported house prices are declining at a slower pace.

“It adds to the glimmers of hope that the UK is nearing a bottom, or will reach the bottom in the first quarter of this year,” said Colin Ellis, an economist at Daiwa Securities SMBC, whose forecasts for the UK economy are among the least optimistic in the City of London.

Whilst there is still a long way to go until approvals and company lending meet anywhere near their earlier peak levels, it is heart warming to see some good news on the property front.