– The Knight Frank Prime Central London Index recorded positive growth for £1m+ house prices for the second month running in May.
– Prices in Central London rose by 1.6 per cent during May, which was four times the rate of growth seen in April, when prices rose by 0.4 per cent.
– On an annual basis prices are now down 20.1 per cent, and are down 22.3 per cent from the March 2008 peak.
– The recovery in prices has been led by the sub-£1million sector, where prices have now risen 2.7 per cent since March this year.

Source: Knight Frank

Nationwide Building Society, the U.K.’s biggest customer-owned lender, said U.K. house prices may keep falling for the rest of this year as more Britons lose their jobs.

The U.K. economy will remain in recession for the remainder of 2009 and any recovery next year will be “sluggish,” the Swindon, England-based company said today in a statement. Unemployment may continue to rise next year because the labor market will lag behind developments in the rest of the economy.

“I don’t think the fall in house price is over yet and will probably continue for the remainder of 2009 at least,” Finance Director Mark Rennison said on a conference call with reporters.

Source: Bloomberg

The Irish Times has run a story about Findlay Property in this weeks property supplement.

Click here to read more.

John Walsh, Simon McDonnell & Jean-Paul Van Cauwelaert

Sourcing property for investors

PETER CLUSKEY

Thu, May 14, 2009

LONDON INVESTMENTS: EVEN IN a flat market, new transport links are guaranteed to generate interest, so the long-awaited extension of a train line to south Hackney in east central London is already attracting investment.

Prices across the city are down by an average of 10–15 per cent since 2007, and agents say sales have virtually ground to a halt – so it’s a buyer’s market, with particular value for euro zone buyers.

“People in London are extremely conscious of the availability of transport when they buy or rent.” says Simon McDonnell, director of Findlay Property, which specialises in sourcing investment properties for Irish clients. “So when the new East London Line opens here in July 2010, we anticipate an immediate increase in property values of around 10 per cent. We’ve already been buying property within walking distance of where the stops are going to be.”

South Hackney, says McDonnell, was one of the last areas of central London resisting gentrification, but that’s changed, particularly in neighbourhoods like Shoreditch and London Fields.

“It’s within walking distance of The City and there’s easy access to the West End, so the train will put in place the element that’s been missing,” says McDonnell.

Three of the four directors of Findlay Property are Irish: Simon McDonnell, John Walsh and John Paul Van Cauwelaert. The fourth is Scot Alan Findlay. They set up the business in a small East End flat in 2001 and now operate from the more salubrious environs of Broadway Market.

“We’re not an estate agency,” says McDonnell. “We’re a property management company which sources properties on behalf of its clients and then manages it for them afterwards.

“Almost 100 per cent of our clients are Irish. Roughly a third of our properties are ex-local authority, a third are luxury modern apartments and a third are Victorian townhouses. So, if someone says he has €250,000 to spend and is looking for a rental yield of 7 per cent, we’ll source the property for him.”

Typically, a three-bed ex-local authority property can be bought for around €235,000. Findlay charges a 2 per cent finder’s fee, which could come to €5,000; refurbishment costs another €5,000; stamp duty adds €2,500; legal fees another €1,000; and furniture and white goods €2,000. That’s €250,000 all in – the cheapest McDonnell would recommend.

As to the “Olympic factor”, the well-documented boost to property prices before the games come to town in 2012, McDonnell is not really convinced. “The Olympics are on our doorstep, but I’m cautious about claiming too much for them. For me, the chief benefit will be the long-term one of improved infrastructure.”

www.127.0.0.1/oldfind

© 2009 The Irish Times

Surveyors have reported “tentative signs” of a recovery in the property market, despite small numbers of homes being sold.

The Royal Institution of Chartered Surveyors (Rics) said members were “universally optimistic” about sales.

They also reported a big rise in interest from potential new buyers.

Source: RICS

The European Central Bank cut its benchmark interest rate by 25 basis points to a new record low of 1 per cent today, as expected.

European Central Bank President Jean-Claude Trichet said the euro-zone economy was showing tentative signs of stabilising at a very low level.

The European Commission has forecast that the end of the recession is in sight.

The Bank of England has kept interest rates on hold at 0.5% and announced that it will inject an extra £50bn into the UK economy.

ECB HQ Frankfurt

Rents across Ireland have fallen 5 per cent in the first three months of this year, according to report published today.

In its latest survey on the rental market, property website Daft.ie found the national average rent is now €840 per month, a drop of €160 on the same period last year.

The major cities experienced the biggest drops, the report found. In Dublin and Limerick, cities rents were down by up to 6.5 per cent, while in Waterford city and Cork city, rents fell by 5.3 per cent and 5.1 per cent respectively.

Nationwide rents have posted falls for 14 consecutive months and are 17.5 per cent lower than the peak in early 2008.

“The rental market is feeling the brunt of too much supply and not enough demand,” said Ronan Lyons, economist with Daft. “The number of properties available for rent is now over 23,000 – an all time high. This additional supply is having a downward effect on price and is also pushing out the time it is taking to rent properties”.

The Daft Rental Report is based on an analysis of all rental properties advertised on Daft.ie since January 2009, including 250,000 since January 2008.

Sources: Irish Times & Daft

British Banks are offering mortgages to first-time buyers in the Irish Republic at half the rate that they are available in the UK.

Halifax, part of the Lloyds Banking Group, is charging 2.74 per cent for a two-year fixed-rate deal to first-time buyers in Dublin. A five-year fixed-rate deal would cost borrowers in its home town of Edinburgh 6.14 per cent. Royal Bank of Scotland (RBS) is charging 2.95 per cent for a new mortgage in Ireland; in the UK, it charges 5.99 per cent for a similar product.

Obviously the banks are speculating that the Euro will strengthen against the pound in the foreseeable future.

Source: The Times

The test case between the Office of Fair Trading and Foxtons, on the legality of letting renewal fees, appears to hinge on how much work an agent does.

The suggestion was made in court this week by Nicholas Green QC, appearing for the OFT.

He said the OFT was challenging Foxtons’ right to claim continued commission, regardless of whether Foxtons managed the property and regardless of whether they played a part in persuading the tenant to stay on after the initial tenancy period.

He added: “There is not necessarily any connection between an original introduction and a tenant’s decision to renew their lease.

“Where there is a link and the agent plays a part, we say it is fair for them to earn further commission. But what we object to is an automatic right to commission for forever and a day.”

Mr Green also criticised the confusing terms and conditions in Foxtons’ contracts, saying they were not in plain English and would confuse a consumer, because “nothing tells you what you are letting yourself in for”.

In the Foxtons case, the OFT is using the same consumer protection laws that it is using to challenge the high street banks over unauthorised overdraft fees.

The Unfair Terms and Conditions Consumer Contract Regulations (1999) state that contracts must be clear and also that some agreements are unfair and illegal, even if the consumer knows what they are getting into upfront and does so willingly. However, the OFT says that only a court can decide.

That decision may take some weeks to come through, the OFT said earlier this week.

Source: Estate Agent Today

Michael Coogan, director general of the Council Of Mortgage Lenders:

“The most important element of this Budget for the mortgage market over the long term may prove to be the new asset backed securities guarantee scheme. This potentially offers an opportunity to restart the capital market funding for mortgages that will be a crucial factor in delivering an adequate supply of mortgage credit.”

Gillian Charlesworth, RICS Director of External Affairs:

“The Chancellor has recognised the need for assistance to the housing market as essential to helping Britain’s economic recovery. Government action to support mortgage lending should help translate buyer interest, which has picked up in recent months, into actual sales. Additional funding for HomeBuy Direct and extending the stamp duty holiday should also encourage those wishing to get on the housing ladder. Measures announced by the Chancellor will help move towards a sustainable and vibrant housing market for the future.”

Ian Potter, operations manager of The Association of Residential Letting Agents:

“Yet again Gordon Brown’s administration has wasted an opportunity to improve the quality of stock of lettings property by failing to incentivise landlords through tax relief on labour and materials. Not only would this have helped to stimulate the market, particularly in the construction sector, but it would also have provided the greater standards of rented accommodation that this country desperately needs.”

Source: The Rat & Mouse

According to the Council of Mortgage Lenders there has been a 16% rise in March, but this is to be expected in Spring time.

Gross mortgage lending was an estimated £11.5 billion in March, a 16% rise from £9.9 billion in February but a 52% decline from £24.2 billion in March 2008.

Source: Council of Mortgage Lenders