London | Frankfurt | Madrid | Milan | Rome

MODERN LAWYERSFOR CHANGING TIMES 'a City firm in a non-City location' - Legal 500

JUL
28

The Property Update; July Newsletter

london skylineWhether you voted to leave or remain, it's true to say that both the residential and commercial property markets have felt the effect of the ‘leave’ vote.

It's still too early to identify the underlying effects, but our specialist property lawyers noted that almost immediately some purchasers indulged in 'gazundering'. One purchaser, a banker, decided to reduce his offer on the date of exchange (which fell on the day after the referendum) by 25 percent, an offer which was abruptly rebuffed by our client, the vendor, and the sale fell through. However, the majority of all our property transactions completed normally during this period because our clients kept cool heads.

Our multi-lingual lawyers have stated that thanks to the pound being at its lowest level for over 30 years and record low mortgage deals on offer, that there has been renewed interest from foreign investors from the USA, Italy, France, China, South East Asia, Qatar and UAE, and they have dealt with a large number of such enquiries.

 

First Time Buyers

There has been a surge in First Time Buyers during the first two quarters of 2016, i.e. pre-Brexit. According to the Halifax, an estimated 154,200 stepped onto the property ladder for the first time.

The average age of such a buyer has now increased to 33 years old and is very likely to have been assisted by the Bank of Mum, Dad and Grandparents, who will lend/give an estimated £5billion to their offspring this year.

It seems that there is also a marked increase in the numbers of couples buying for the first time. Most of these types of buyers are buying well under the stamp duty limit, especially those buying outside London and the South East. There has also been a growing trend for young purchasers to purchase a 'buy to let’ property initially, with the intention of selling on in order to buy their first residential property. These individuals should take immediate advice, because they may find themselves facing a 3% Stamp Duty surcharge when selling that original property.

Additionally, those parents who own the properties that they live in but have added their names to their off springs mortgage may also find themselves in the same predicament - take advice now should you be in that situation.

 

Is this a good time to buy?

There are some stunning mortgage deals on the market at the moment; in fact, mortgages are at their lowest level to date. With the prospect of a Bank of England cut in August, lenders are looking to increase the volume of their mortgage sales.

So for a buy or re-mortgage from this prospective, it seems the answer is yes.

Additionally Santander, working with Legal & General (and equity release specialist Key Retirement) has just launched a lifetime mortgage, an acknowledgement that the days when a buyer could expect to pay off his or her mortgage within 25 years have now gone.

Certainly there has been a correction in price levels at the very top end of the London market, (this has been happening since 2014), RightMove in its July report state that post Brexit there has been a reduction of .9% (a UK average of £2,647) in prices of those properties coming onto the market in July. With the enormous uncertainty following Brexit that trend is likely to continue.

It has also been reported to our property lawyers that developers selling on 'off plan’ properties are reducing their prices markedly and this has attracted a great deal of interest from foreign investors. One word of advice; don't buy in the larger of developments of smaller flats where there are likely to be any number coming onto the market. There has been a definite slow down in the London new build market so there could be some great bargains there.

 

Downsizing?

Senior and mature property owners have recently been warned by Government not to look to their home as an additional source of income to fund their retirement, in fact it was described as a 'very risky strategy'. Once would be 'downsizers' have done their figures, it's likely that it will not be such a lucrative move.

There is also a huge demand for bungalows, which now command an average 16% premium. These properties are now rarely built by developers, older bungalows have traditionally been built in large plots with big gardens and there is often the potential to build on top of the original property, so they are an attractive proposition for older buyers and developers alike.

A third of equity release customers over 55 years of age still have mortgages and a large number of these have interest only mortgages.

 

Commercial Property

British Land have stated that post Brexit they expect that both tenants and investors will be very cautious.

This is against a background in which investment in commercial property has slumped over the last two years in any event. It is accurate to say that there has been a decline in commercial property prices, and of course there was enormous publicity following several property funds stopping withdrawals by their investors when facing the prospect of an avalanche of redemptions. However, there is evidence that SME’s (small medium enterprises) are bucking that trend.

The technological, media and creative industries in London have been the fastest growing sectors over the last 5 years. These (often young companies) want flexible working space - in admittedly cheaper areas -following the latest trends in 'agile’ working (hot design / working remotely etc.) The business life cycles of these SME are much shorter than traditional companies, so business owners are unwilling to commit to long leases any more. These tenants are more demanding and it pays commercial landlords to engage regularly with these tenants, rather than wait to for lease renewal dates.

 

If you require assistance with any prospective purchase or sale of any type of property in England and Wales, please contact our experienced specialist property (Real Estate) lawyers on 0207 387 2032 or use our online enquiry facilities at www.lewisnedas.co.uk

Continue reading
  1281 Hits
1281 Hits
JUN
17

At Long Last, the Mortgage Market is Waking Up

Housing questionThe mortgage market has finally realised that people are living for longer and the majority of property owners are asset rich and cash poor, and likely to lose out at the older end of the market to Equity Release, which has seen a huge surge over recent years.

After the early horrors of the early Equity Release products, the current offerings are clear, comprehensive but expensive.

Smaller specialist mortgage lenders have been prepared after the last financial crisis to lend to older borrowers but now the mainstream lenders have entered that older borrower market.

The Nationwide are prepared to lender BTL investors up to the age of 105, and The Halifax will lend to residential borrowers up to the age of 85 years.

Young people now fully expect to have a mortgage during their working lives and into retirement and so the mortgage market had to react to this and dispense with their ageist policies of refusing to lend after 65 years of age.

What is the best choice - Mortgage (mortgage extension) or Equity Release?

Equity Release, as we have already said is undoubtedly more expensive but it prevents repossession of the property. The ER borrower remains in the property until death or removal to a Care Home.

There is also the 'no negative equity guarantee'; i.e. that a borrower cannot owe more than the value of the property.

The huge increase in negative equity is used by borrowers to: assist family to get onto the property market; pay for grandchildren’s university education; meet the cost of home adaptations so that the borrowers can remain in their homes or to pay off existing debts There also remains the issues of potential beneficiaries, many of whom are shocked to learn after probate that their parents have obtained Equity Release against the family home, often the main asset. It's best to ensure that all potential beneficiaries are made aware, in writing, of your ER intentions before you go ahead.

If on the other hand you have an income in retirement it would be cheaper to mortgage or extend a mortgage but there always remains the threat of repossession should you default.

Continue reading
  1164 Hits
1164 Hits

Accreditations
and Awards

legal 500 uk leading firm 2017 chambers leading firm 2017