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House Prices Falling: Good News or Bad?
Whatever looms on the economic horizon for the UK, it will inherently spell outright disaster for some and rich pickings for others. In various corners of Europe, political and economic unease is prompting the kinds of headlines that are making investors on a global basis more than a little nervous. But as far as the UK is concerned, Brexit really is the be-all and end-all of things for the time being.
The effect the furore has had on property marketing is no laughing matter. Depending on which side of the fence you’re on, of course.
A new report published by Nationwide found that the past month brought about yet another drop in UK house prices, this time by an average of 0.4%. This is not only the second consecutive month to bring about a fall in property values, but also the largest monthly fall in over five years. As it stands, the average price of a home in the UK now sits at £207,699.
The noted cutback in consumer spending combined with higher inflation and the prospect of Brexit are all having an impact on the housing market. There’s also been a rather dramatic fall in GDP, having fallen to 0.3%. Not the kind of thing that makes for positive reading on the campaign trail.
A two-sided story?
Given the fact that mortgage rates have been hovering around record lows for some time now, the fact that the property market is showing signs of weakness is all the more troubling. This, combined with the fact that unemployment is also at an impressive low, is another factor that should be boosting the strength of the housing market.
But it isn’t, which means for the time being, at least there are a lot of homeowners and investors being forced to watch their properties lose money like there’s no tomorrow. As already mentioned, bad news for some is good news for others.
Obvious, first-time buyers aren’t going to be too upset about the prospect of house prices falling at least a bit. But at the same time, neither are those looking to play the long game. As far as most analysts and economists are concerned, the current doom and gloom will prove to be temporary at best.
For example, if the upcoming general election brings about a strong and trusted new government, things are expected to perk up significantly. Likewise, if Brexit doesn’t turn out to be as disastrous as many expect, it could result in a rapid acceleration of property values. The slight caveat is that by this time, record-low mortgage rates will have no doubt been wiped off the map for good.
So it remains a bit of a catch-22 situation: As is always the case where investments are concerned, Rock-bottom mortgage rates coupled with falling property prices should represent a no-brainer. But given what’s occurred over the last 12 months alone, taking for granted anything that might happen over the next year or so really isn’t the smartest idea.
For International Individual Commercial Investors, Britain Is Best
The picture from a British investor’s view right now might not be quite so rosy. Nevertheless, it seems as far as private property investors on a global basis are concerned, commercial real estate in the UK is as hot as it gets. More people than ever before are eyeing up the UK as a commercial property investment hotspot, the latest figures reveal.
Specifically, the report reveals that private buyers accounted for around 27% of all global commercial property transactions last year, while 25% of private wealth is tied up in real estate investments.
“We predict that private investors will continue to take global market share as both the number of wealthy individuals and their assets grow. The number with $30 million or more in net assets rose by 6,340 in 2016 alone, taking the total to 193,490.
“We expect that the appetite from private investors for commercial property will continue to increase. The report shows that 32% of ultra-high net worth individuals will invest in cross-border real estate deals in the next two years.”
In terms of wealthy investor populations seeking overseas investment opportunities, the report showed that the United States is slowly but surely being challenged by Asia. As it stands, there are just over 27,000 fewer ultra-wealthy investors in Asia than there are in the United States. However, it is predicted that this will shrink to no more than around 7,000 within the next ten years.
One of the effects of the global financial crisis has been a growing tendency among investors to diversify, both in terms of their portfolios and their chosen geographical locations.
“The top markets targeted will primarily be those exhibiting solid fundamentals, including tenant demand, liquidity, and transparency.”
“However, increasingly, we are advising clients not only on prime office, retail, and hotel assets but also strategic investments in growth sectors such as urban logistics, leisure, and specialist operating assets, including student housing and multi-housing. Overall, property as an asset class remains high on the agenda of private investors.”
Closer to home, investors at all levels in the UK continue to view commercial property investment as a relatively safe haven for the immediate future, at least. Once again, capital values have risen 2.5% across UK commercial property, with rental value growth having come out at 0.8%. Not quite as strong as the 1.1% growth recorded during the same period last year, but reassuring, to say the least.
Of course, the effect Brexit is likely to have on all the above remains the single biggest unknown for domestic and global property investors alike. So while investment from overseas investors may be on the rise, few are throwing caution to the wind, having acknowledged that things could look very different just two years from now.
A Brief Insight on Secured Commercial Loans and Unsecured Business Loans
If you are thinking of starting up a new business or you are looking to expand an already successful corporate enterprise, the chances are that you will get absolutely nowhere and at light speed if you do not have access to the required type of financing you need.
When trying to source suitable commercial finance products, an applicant will typically achieve funding by means of at least one, but sometimes multiple, business loan(s). When the time arrives, the borrower will ultimately be required to decide whether to apply for a secured business loan or an unsecured commercial loan product.
With this in mind, we need to understand the main differences between these two types of finance so that we can make an informed decision and take the most logical route.
What are secured loans for businesses?
A secured business loan is a long-term borrowing product that is available exclusively to applicants who are able to offer some type of collateral as security against the sum being borrowed. In most cases, this type of financing is usually secured on a property or suitable commercial assets. Although the borrower will typically use a commercially owned building or business asset as security, there are cases where secured business loans are taken out against an applicant’s home or primary residence.
Provided you are entirely certain that you can pay the loan back on time and in line with the terms and conditions set out in the agreement, a secured loan is often the most affordable type of financing available to the modern business borrower. As the loan is secured against an appropriate property or business asset, the rate of approval is generally exceptionally high, and your personal credit history and company finances will not be scrutinised as they would normally be when applying for an unsecured borrowing product.
Secured business loans are usually paid out at quite a fast pace, and the application process itself is incredibly quick and simple to understand. Of course, there is a downside to all of this, which is the fact that your assets will be removed from your possession and sold on to a third party should you find yourself unable or unwilling to make the required repayments in a frequent and punctual manner.
What is an unsecured business loan?
Unsecured business or commercial loans are short- to mid-term borrowing products that are not secured against an applicant’s assets. The main benefit on offer here is that if you are unable to pay an unsecured debt, you will not lose your home or valued assets as a direct result. However, with an unsecured loan, you won’t be able to borrow anywhere near as much as you could if you secure the funds against something of value. The application process is also a lot less forgiving, with much tighter restrictions, and you will also find that the interest rates can be quite high if you are successful in terms of accessing the funds you need to help your business grow and progress to the next stage.
Remortgaging versus Secured Borrowing
You may find it somewhat surprising to think that, when it comes to remortgaging, many borrowers remain completely unaware that another option exists. Recently, a growing number of independent finance advisers have begun to advise their clients of a unique range of secured borrowing products, which can sometimes be of much greater benefit to the homeowner in search of additional funds.
To understand the suitability of each borrowing product, it is important that you know the basic differences between a secured loan and a remortgaging option, so we’ll take a look at each one in the next couple of paragraphs.
What are secured loans?
A secured loan is a long-term borrowing product where the loan amount is secured against something of value. This is usually a homeowner’s property, and this is the main reason that secured loans are often referred to as homeowner loans. Whereas personal loans have an upper ceiling of around £25k, a secured loan is only limited by the amount of equity that a homeowner is able to offer, a figure that is worked out by subtracting any outstanding mortgage debt from the market value of a property. When applying for a secured loan, it is important to realise that your home could realistically be repossessed should you fail to make payments on time, either deliberately or through no fault of your own.
What exactly is a remortgage?
A remortgage is very similar to a secured loan in that the borrower is offered a loan amount in direct relation to the amount of equity they are able to provide. However, unlike a secured loan, which may or may not be secured against a homeowner’s property, a remortgage will typically always require the applicant to put their home at risk in the event of non-payment. With a secured loan, it is quite possible to offer other types of collateral against the amount you are seeking to borrow.
Another difference between a remortgage and a secured loan is that most remortgaging products can only be used for a limited range of reasons, such as home improvement. With a secured loan, the borrower can typically use the funds for any purpose they see fit. On top of this, the remortgaging application process is often quite complicated and can take a considerable amount of time to complete.
When you choose a secured loan
It is usually in your best interests to apply for a secured loan whenever you need to borrow a considerable sum of money over a substantial length of time. Secured loans are also the ideal option whenever you require the funds for reasons other than home improvement, although they can also be used for this purpose if this is what you are looking to borrow for.
Unlike remortgaging products, secured loans can be taken out against additional properties that you own other than your primary residence, and they can even be used for commercial reasons such as expanding a business or to secure new assets for a self-employed venture.
Although secured loans are typically much easier to apply for, with the funds being released in a matter of just two or three weeks, both products offer unique advantages, so it always pays to do a little research and seek sound borrowing advice from an FCA-approved broker or independent adviser before deciding on which product to apply for. Work out the costs of a mortgage using our UK mortgage calculator.
How To Get The Results You Need When Applying for Property Development Finance
Although most property development projects tend to radically differ from each other in terms of the actual work itself, they all share one key requirement. The primary underlying factor in terms of a developer being able to successfully deliver a project while simultaneously generating a healthy return is the ability to acquire the relevant funds to ensure that the task can be completed in a timely manner without exceeding the budget. Whether you intend to refurbish existing real estate or construct a new residential or commercial building from scratch, appropriately sourced property development finance will typically always serve as the dividing line between prosperity and failure.
In an ideal world, the developer would always have the required funds at their disposal without ever having to look elsewhere for help. However, in reality, this is seldom the case, and this is precisely where an expert property development finance broker can make a colossal difference, particularly in terms of ensuring that a project can be completed cost-effectively while increasing profit margins. If you happen to be a property developer and you are looking to improve your odds of getting a good deal on development finance, then there are a number of steps you can take in order to gain access to the competitive funding solution you ultimately need.
Here are five essential steps that will help you achieve the best property finance deal while ensuring your application is approved without any complications.
1) Whether you are applying for development funds for the first time or you are already highly experienced and well versed in the world of development finance as a borrower, one of the most important things you must do when completing your application is to always remain transparently honest with your lender from the outset. If you are realistic about your plans and can identify your business goals, financial standings, and even your fears or concerns (i.e., whether you may need to borrow more funds at a later date should an unforeseen event occur), the development finance lenders you approach will be more comfortable and inclined to deal with you.
2) Previous experience always plays a vital role when trying to secure development finance for a given project. Even if you are relatively new to the game yourself, the ability to show a lender that the people you will be working with on a project are suitably qualified and capable of completing the task at hand will ultimately improve your chances of accessing the credit you need. This includes architects, interior designers, builders, plasterers, and anyone else involved. In a nutshell, when you show a prospective lender that the people you have on board for a project are qualified, experienced, and reliable, with proven track records and quality references, the confidence they will have in your project will increase exponentially.
3) When it comes to development financing, the decision to lend is also based on numbers, hard facts, and figures. If you can demonstrate the feasibility of the project in an accurately numerical fashion, lending confidence increases further, and your chances of being approved for a property development funding package with a low rate of interest will also be much higher. Basically, you need to show the lender that you have done your homework and that your ambitions to succeed are realistic and achievable.
4) When applying for development funding, always make sure that you are confident in your own ability to see the project reach fruition. If you show any signs that you have outstretched yourself, either as a borrower or a property developer, your lack of self-assurance will be quite off-putting from the lenders’ perspective.
5) Regardless of your level of experience when dealing with or applying for property development funding, it is always useful to talk to a qualified and well-recommended professional who will discuss all the options available to you while taking your unique set of circumstances into consideration.
Additionally, when you apply for development finance online using an FCA-authorised and regulated broker such as UK Property Finance, you will also gain exclusive access to a diverse panel of mainstream lending facilities alongside a unique set of private investors who will be interested in funding any individual project based on its own merits. You should also be aware that many of the development funding options available through a specialist broker may not be available through other channels, even when approaching a specific lender directly.
UK Property Finance Embraces the Continued Use of New Technology for an Improved Customer Service Experience
UK Property Finance embraces the continued use of new technology for an improved customer service experience.
One of the UK’s leading providers of intelligently sourced, independent property finance solutions has voiced an opinion of concern against rival firms seeking to actively shun the introduction and development of new, automated services that have been designed and implemented to provide a much improved and significantly more streamlined customer service experience. Unlike many of their competitors, the team at UK Property Finance believes that the automation of various services should be embraced and not avoided entirely in order to maintain a supposedly more human and direct relationship with their customers.
On the contrary, rather than seeing automation as something that dehumanises the relationship between service provider and client, the team at UK Property Finance instead recognises the immense and numerous benefits that technology can provide in terms of speeding things up and simplifying many procedures for customers, and this has led to an increased investment into automated and semi-automated solutions that are aimed at improving services and overall satisfaction across the board.
Much-needed progress
“Rather than viewing developments like robo-advice as a threat, advisors should look at how new technology can help them stay one step ahead of the competition. Above all else, brokers must ensure that they are using every tool available to provide a modern, holistic service that meets the requirements of their customers throughout all aspects of the market, whether that be for mortgages, re-mortgages, second charges, or buy-to-let products.” L&G Mortgage Club director Jeremy Duncombe
With these precise sentiments in mind, UK Property Finance has invested a significant amount of time and money into a growing number of technological resources that enable customers to find and retrieve as much information as possible, quickly and efficiently, without ever having to speak to an advisor directly. Of course, the service is not completely automated, and help is always available whenever one-to-one advice is required, with the main emphasis based on providing quick and easy tools that are designed to augment the quality of customer service and not dispose of it entirely, as some rival brokers would have you believe.
A basic example of the use of technology to speed things up for customers would be the introduction of the online bridging loan calculator. One of the first tools of its kind, the UK Property Finance bridging loan calculator, was designed from the ground up to provide quick and easy access to the basic cost of borrowing and the associated fees and rates when this is the only information a client is interested in. Instead of spending a considerable amount of time on the telephone chatting with an advisor or organising a face-to-face meeting, a customer can obtain all the data they need using a simple on-screen app that tells them everything they need to know in order to make a genuinely informed decision.
Full commitment to customer service
“At UK Property Finance, we place the needs of our clients much higher than those of our own. In an industry where many of our competitors view computerization and technological breakthroughs as more of a hindrance than a stepping stone, we take the opposite view. Although it is true to say that some technologies do seem to be aimed at removing the need for human interaction altogether, there are many advantages to be gained when these new advancements are used in the correct context. In short, if it benefits the client, then we feel that this is something that should be embraced and not feared.”
The team at UK Property Finance provides a unique service package that remains completely focused on the needs of the client at all times. Instead of concentrating on increased sales and marketing, a much greater level of emphasis is placed on delivering the most appropriate financing product with the lowest available rates. From start to finish, the entire process of applying for a bridging loan or similar property finance solution is kept as simple, stress-free, and convenient as possible.
Buy-to-Let Landlords Feel the Squeeze as Lending Restrictions Tightened
It wasn’t long ago that it seemed as if an unprecedented spike in buy-to-let investment interest was here to stay. Investors at all levels were going crazy for the kinds of low-interest financial products never previously made available, spelling good times for property investors, bad times for first-time buyers on the lookout for affordable inventory.
However, ‘here to stay’ it just wasn’t to be, as figures compiled over the past few months have shown a trend in landlord landing that’s actually gone into reverse. According to figures shared by the Nationwide Building Society, the buy-to-let boom seems to have come to a screeching halt. Whereas the six months running up to September 2015 saw total buy-to-let borrowing of £2.9 billion, the figure feel to £2.8 billion for the same period this year. That’s according to the Mortgage Works, the buy-to-let subsidiary of Nationwide.
Why the sudden slowdown? Well, the lender stated that new affordability tests being rolled out across the industry are quite simply making it more difficult for landlords to gain access to the capital they need. This, in accordance with changes to tax relief set to go live next April, which could make the buy-to-let industry far more expensive for thousands of landlords.
“The buy-to-let sector is going through a period of substantial change resulting from new rules on landlord taxation [and] guidance on underwriting and affordability standards,” said Nationwide chief executive Joe Garner.
For borrowers looking to work with Nationwide, the prior 80% of the property’s value the borrower could apply for has been cut to 75%, while the minimum qualifying rental income of 125% the mortgage payment has been significantly hiked to 145%. This in turn has made it impossibly expensive to borrow for buy-to-let purposes in the UK’s higher-price property markets, including London.
And it’s not only Nationwide that’s clamping down on buy-to-let borrowing. Barclays and Santander have both announced the implementation of tougher lending restrictions for landlords, which over the coming weeks will make it harder and more expensive for investors to snap up properties.
On the plus side for property owners, Nationwide predicted that the coming year will see a gradual increase in house prices, though at a relatively modest pace.
“A less certain economic outlook may soften demand, but prices will continue to be supported by low interest rates and limited supply of new homes,” the bank stated, predicting rises of between 3% and 6% over the coming 12 months.
As buy-to-let lending via conventional channels becomes increasingly difficult and expensive, it’s hardly surprising that more investors than ever before are considering alternative options. The past few years have seen an enormous spike in bridging loans applications and general interest, from those looking to access the capital they need in a manner that’s fast, affordable, convenient and flexible. Once again, the tightening of borrowing restrictions by banks is expected to drive more customers the way of bridging loans providers than ever before. Work out the costs of a mortgage using our UK mortgage calculator