The Bank of Mum and Dad

Enable’s IFA’s in Bishops Stortford regularly find themselves helping Mum and Dad find a way of financially supporting their young people to be able to buy their own home. If you’re a parent of children in their 20’s and 30’s then the current housing pressures will come as little surprise. The current situation has gone so far that recently according to research by Legal & General and the Centre for Economics and Business Research the ‘bank of mum and dad’ is now the equivalent of a one of the top ten mortgage lenders in the UK.

Parents helping their children to get on to the property ladder has reportedly become such a crucial part of the housing market that they will be involved in a quarter of all property transactions this year. With constantly rising house prices despite years and years without any real wage rises, a shortage of supply and tougher more heavily monitored mortgage regulations since the financial crisis have made it more and more difficult for first-time buyers to get on the ladder. Parents on average give their children around £17,500 to help them get a foot on the property ladder which when all added together adds up to a staggering £5 billion per year.

Louisa Fletcher, a property expert, told the BBC: ‘We’re looking at house prices in many areas back to post-crisis highs, and realistically I think that’s only going to continue, so I can only see the bank of mum and dad probably growing in stature as one of the biggest lenders.’

If you would like to find out the best way to help your children get onto the housing ladder then why not give our team of IFA’s a call today, as we are independent we can give you the best deals from across the market place.

Source: The Spectator

Issued by: Enable Independent Financial Life Planners • 
25c North Street, Bishops Stortford, Herts CM23 2LD • Telephone: 01279 755950 - Fax: 01279 657339
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NOTHING CONTAINED IN THE ARTICLES SHOULD BE CONSIDERED AS GIVING INDIVIDUAL FINANCIAL ADVICE

Property investment.....what you need to know

In 2007, property investors had a roller-coaster ride.  As a result, many surviving investors gravitated towards the high-end, prime or luxury market, particularly in coveted areas with low supply such as central London. But remember real wealth management can be global and long term. Most financial portfolios will contain some property and at reputable wealth management providers like Enable our IFA’s can advise.

Another part of the world where property is at a premium is Hong Kong which remains the world’s most expensive place to buy a home, and prices have gained more than 78 per cent since early 2009 on record low mortgage rates and an under-supply of new units.

Closer to home – and in spite of the fact that properties worth more than £2m are now subject to 7 per cent stamp duty, a rise of 2 per cent from the Budget in March – the number of transactions in the UK remains largely unaffected. There were 1,518 property sales worth at least £2m in 2011, a rise of 5 per cent from 1,442 sales in 2010 and the highest number in this price bracket since records began in 1995. Purchases of properties topping the £2m mark were also 2 per cent higher in 2011 than at the peak of the housing market in 2007. In addition, the number of properties selling for more than £5m rose by 22 per cent from 128 in 2010 to 156 in 2011, providing further evidence of strength at the top end.

Get on the ladder before stamp duty goes up...

The number of mortgages taken out by first time home owners increased in December 2011 the latest figures show. Experience IFA’s of Bishop's Stortford, Enable can see that more firs-time buyers have been trying to get on the ladder before the stamp duty holiday on properties costing up to £250,000 changes.

Since March 2010, first-time buyers purchasing properties costing between £125,000 and £250,000 have not had to pay any stamp duty at all it was a move by the government designed to kick start the flagging housing market but from 25 March 2012 first timers will pay 1% on those homes in that price bracket.

Figures from the Council of Mortgage Lenders (CML) indicate that buyers are buying with the intention of beating the deadline to save money. With the average first-time buyer spending about £130,000, buyers typically stand to save £1,300. In December 2011, 18,700 mortgages worth £2.3bn were advanced to first-time buyers, up 7% by volume and 10% by value on November's figures.
There was also an increase in the proportion of properties bought by first-time buyers within the exempt price band from 50% to 53%, a statistic the CML said “suggested they are beginning to rush through purchases before the concession ends in March".

The CML's director general, Paul Smee, said: "We have been expecting a flow of first-time buyers on to the market as the stamp duty exemption ends in March; December's figures appear to show this has now begun.”

If you want to buy before the stamp duty goes up Enable IFA’s of Bishop Stortford can help you with your mortgage, as we have access to the entire mortgage market.

At Enable we are giving away several Kindles and £50 worth of vouchers, to enter just LIKE our Facebook page http://www.facebook.com/enableflp 

Rental Properties - your rental portfolio

The new from the Association of Residential Lettings Agents (ARLA) states that increased demand for rental property is sparking a renewed interest in the PRS in parts of the UK. If you are looking to invest in property achievable rent levels on residential property have risen in the last six months, according to 60 percent of ARLA member agents, and have outperformed other investment classes consistently for the past two years.

The average period for which a rental property is empty in between lets is just 2.7 weeks per year, down from an average four weeks two years ago. Ian Potter, Operations Manager at ARLA, said: “Three quarters of our members are reporting that demand for rental property is outstripping supply and, with rental returns currently at 5 percent, anyone thinking about investing a property to rent could be well-placed to consider their options in the coming months.”

“Our research shows that prudent landlords are moving quickly to expand their portfolios, with almost a quarter (23 percent) reporting that they have bought properties in the last year. The most popular regions for investment are the North West, Midlands and Central London. In contrast the Rest of London saw the fewest landlords buying property.

Reputable IFA’s like Enable of Bishop’s Stortford could help you look at your investment portfolio with a view to a buy to let mortgage even if it was appropriate to your means and plans. Not everyone is cut out to be a landlord, but at the same time a good letting agent should be able to help you navigate the market should you choose to invest.

When to buy a house - Safe as Houses

In the news recently the National Housing Federation’s independently-commissioned Oxford Economics Report predicts:  Home ownership in England will slump to just 63.8% over the next decade - the lowest level since the mid 1980s – locking an entire generation out of the housing market.  According to a new study,  huge deposits, combined with high house prices and strict lending criteria, have sent home ownership into decline in recent years and the downward trend will continue for the foreseeable future.

The Federation warned the housing market will be plunged into an unprecedented crisis as it forecast steep rises in the private rental sector, huge social housing waiting lists, and a house price boom – all fueled by a chronic under-supply of homes. 

According to Oxford Economics, who were commissioned to produce the forecasts: 
In England, the proportion of people living in owner occupied homes will fall from a peak of 72.5% in 2001 to 63.8% in 2021.

In London, the majority of people living in the capital will rent by 2021 with the number of owner occupiers falling from 51.6% in 2010 to 44% by 2021.

The North East will be the only English region to see any increase in owner occupier numbers over the next decade, rising marginally from 66.2% to 67.4%.

The average house price in England will meanwhile rise by 21.3% over the next five years from £214,647 in 2011, to £260,304 in 2016,

As investors what should you do? If you own a property hold on to it if you have the capital maybe buy to let is not such a bad idea again? Enable IFA's in Bishop Stortford can help you talk through what to do.