TSI
British appetite for overseas property remains strong, new figures suggest
British investors’ appetite for overseas property is still strong with one specialist reporting enquiries up by 37% so far this year compared with 2013. Spain continues to top the list of hot spots, accounting for more than half, 51%, of enquiries received from January to September, according to overseas mortgage firm Conti. The volume of enquiries for Spain has, in fact, increased by a massive 95% when compared with 2013. France, in second place, accounts for 29% of enquiries received so far this year, followed by Portugal with 12%. The data suggests that France appears to be making a comeback, overtaking Spain in the third quarter with 35% of enquiries, and 45% in September alone, compared with 32% and 18% for Spain respectively. According to Conti, there couldn’t be a better time to buy, with the strong pound shedding tens of thousands of pounds off property prices in the euro zone. Sterling exchange rates had a bit of a bumpy ride in the lead up to the Scottish referendum result in September, but the dust appears to have settled and the pound to euro exchange rate is hovering near €1.27 at the moment. Rewind to last summer when the pound fell to a low of €1.14, and the difference is pretty significant when you apply it to property prices. It means that a €200,000 property in Spain, for example, is now almost £18,000 cheaper, showing just how much difference the currency markets can make. ‘When you combine the strong pound with the low property prices to be found in many European property markets together with historically low mortgage rates, affordability is better than it has been in years,’ said Clare Nessling, director at Conti. ‘With buyers’ budgets stretching that much further, the purchase of that place in the sun could seem even more tempting, especially when you compare the cost with overheated parts of the UK market,’ she added. Conti says that it’s vitally important for buyers to seek the right advice. Bitter experience has taught many overseas property buyers that scrimping on independent legal advice can effectively cost them their holiday home. Buyers should always go through the same process that they would follow if they were buying a property in the UK. ‘There’s nothing to be gained, and everything to lose by cutting corners and failing to carry out due diligence,’ said Nessling. Advice from the firm includes never signing a contract that you don’t understand. If two versions are provided, i.e. English and local language, ask your solicitor to confirm the English version is a true translation, as you need to ensure it doesn’t contain errors, omissions or extras. Obtaining a mortgage ‘approval in principle’ will confirm you can obtain the necessary funds before signing on any dotted line and prove to sellers that you’re a serious buyer. And it costs nothing. Buyers should consider fluctuations in the exchange rate. It’s generally advisable for an overseas mortgage and the income used to service the… Continue reading
Worrying number of home owners plan to use pension to pay off mortgage
More than half a million 40 to 70 year olds in England intend to use part or all of their pension to repay their mortgage, according to new research. While 58% take a more traditional approach to managing their mortgage by making monthly repayments until it is paid off and 22% making lump sum payments in addition to monthly contributions some have other ideas. One in 10 intend to use their tax free pension lump sum to repay the outstanding balance on their mortgage and 5% plan to use their pension to repay the outstanding balance on their mortgage. In addition, 7% claim to have savings or investments set aside to meet this cost which suggests that they may hold one of the estimated 2.2 million interest only mortgages outstanding on lenders books. The firm says that it is worrying that 6% plan to use an inheritance to repay their mortgage and 3% to take in a lodger to help them meet this cost, neither of which are guaranteed sources of finance. ‘It is worrying to see that over half a million people in England plan to use all or part of their pension to repay their mortgage. This suggests that the number of people who actually need to do this is likely to be far higher as unexpected events such as redundancy, illness or family financial emergencies cause issues,’ said Mark Stopard, head of product development at Partnership. ‘While it is natural for people to want to retire debt-free, the purpose of these savings is ideally to provide an income for their retirement which can last up to 30 years or more. Although the state pension will provide a very basic safety net, it is unlikely to be sufficient for people to have as comfortable a retirement as they might wish,’ he explained. ‘This research clearly highlights that people need to focus on repaying their mortgage as early as possible and avoid traps such as remortgaging for the full period each time they take out a new deal,’ he pointed out. ‘Even those who are currently retiring have options such as working longer, downsizing or taking out an equity release plan, all options that will help to keep their pension funds intact,’ he added. Continue reading
Sustained recovery in Spanish property market looking more likely
Improved confidence in the economy, a wide spread belief that property prices have finally hit rock bottom and more readily available financing are all helping encourage sales in Spain, according to experts. It has been widely reported that the summer months saw a recovery in the country’s property market with some seeing sales increase by 8.8% in June compared with the same month in 2013. Lending also increased, up by 19% in June 2014 compared with June 2013 and there was also a slight rise in prices which saw a 1% increase in the second quarter of 2104, the first quarterly rise for six years. According to a new analysis from the Spanish Brick Company the next two to three quarter will give an indication whether or not this is a sustainable recovery or a circumstantial rebound. ‘The main difference between 2007 and 2014 is that in 2007 the majority of buyers were speculative; they bought with a view to selling it on in a couple of years, with a gain of up to 20%. Now, investors are looking for long term investments, using the rental market to make a profit,’ said the firm’s Daniel Talavera ‘Any yield higher than 5% is considered a noteworthy investment and a 8% to 9 % yield is a real money maker. Regarding Capital Growth and Capital Gains, Spain delivers good results now but is suffering expensive taxation,’ he added. The research shows that before the economic crisis 40% of mortgages were taken out by immigrants. This has now fallen to only 3%. The average age of buyers has also gone up. The percentage of buyers younger than 25 has fallen from 16% to 3%. When it comes to investors, the volume of foreign investments is constantly increasing and 2013 saw a 16% increase on 2012. It is not uncommon for 80% of an estate agent's client base to be foreigners. It points out that the difference in house prices between 2007 and 2014 varies according to the region. Prices have dropped at a rate of between 30% and 70%, and, on average, it is estimated that houses are now 58% cheaper. It also highlights the importance of getting the price right. The economic situation created a negotiation culture. Before the housing market crash, the asking price was non-negotiable but according to the firm currently only 70% of offers get to completion and often these offers are only accepted because the seller is under pressure to sell due to mortgage obligations, unemployment and pressure from costs associated with the property. The typical seller has also changed. Financial entities have become the main Spanish real estate developers, followed by privately owned used homes and, lastly, new build developments. The biggest change to the type of home being bought has been an increase in the number of rooms compared with the buyer's initial expectations. Before the crisis, prices meant that the buyer had to lower their expectations when it came to the number of bedrooms. Now, a… Continue reading
