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Expat Investor : October 2007
October 2007 EXPAT INVESTOR 23 Mortgage monitor -- a market view Tim Harvey, Managing Director, Offshoreonline.ORG, places a spotlight on the euro mortgage market for expatriate investors. Flight paths can seriously damage the price of your home Wales is hot as buy-to-let stays strong Rental demand outstrips supply Celebrity price premium fuels property profit potential The introduction of a new website by BAA, which tracks flight paths over London, is a welcome and a useful tool for homebuyers, according to Jonathan Haward, Managing Director of The County Homesearch Company.Mr Haward warns, "While the prices for properties under flight paths in London and other major cities are not seriously marked-down, houses in the country that are in the 'noise range' of flight paths can be significantly cheaper. "House prices in places like Barnes or Richmond upon Thames, which are affected by aircraft noise as they fall directly in line with Heathrow, tend to be relatively unaffected. However, it is a very different story if you're are looking to buy in the country. I have known houses that lie within the range of Gatwick airport to be 30% cheaper than those where aircraft have climbed to 7,000ft--10,000ft or more Euribor rates are reflecting the market expectation of a further rate rise of 0.25% in around one month, which means European banks may well have to raise variable mortgage interest rates again soon. European mortgage banks use the Euribor reference rate as their reference point for pricing variable rate home loans for both domestic and overseas buyers. Typically, the lending bank will add a margin of anything from 1% to over 2% to the quoted Euribor rate, depending on the type of product, size of deposit and assets of the borrower. Different banks use different Euribor rates as their base for pricing loans, with the most common being one, three and 12 months. Three month Euribor has now risen from 3.7% in January of this year to nearly 4.7% and this picture of rising central bank interest rates in Europe has reflected the situation in the UK, where UK base rate rise several times this year. However, the picture is not universally gloomy. Unlike UK lenders who tend to move mortgage Nearly 2 million Brits are investigating their homes' 'celebrity pedigree' in a bid to cash in on a house price premium of up to 10 per cent, according to findings published by Ancestry.co.uk.The findings indicate that house history is fast becoming the latest property craze, with one in five Britons currently researching the history of their property. Of this number, 21% -- the equivalent of 1.7 million people -- are doing so to uncover famous, or infamous, former occupants. And it's no wonder these property gold diggers are so keen to track down celebrity predecessors, as experts estimate that stellar residents can add significantly to a home's value. National property specialist Strutt & Parker reports that well-known rates as soon as UK base rate is changed, some European lenders take a more flexible view, with many waiting for some time after a change in central bank rates before announcing interest rate changes. Interest rates of 3.90% fixed for the first year are still available in France, a rate which is only marginally higher than the 3.75% being offered in January. New buyers now can still lock into fixed rates as low as 3.90% for 12 months, a figure which has hardly moved this year. Fixed rate loans do exactly what they say on the label, for example, there are no lock-in periods or punitive interest rates at the end of the fixed rate term. For those borrowers who opt to cash in a fixed rate loan early, there is usually a simple 3% penalty payment. Amongst variable rate loans , remortgage and equity release products often carry a 3% penalty for the first five years, but thereafter, early repayment can be penalty free. for mer occupants increase the saleability of numerous homes placed on the market. The Old Manor, once home of playwright Noel Coward, generated a huge amount of interest when it was launched onto the market, resulting in numerous viewings and a successful sale. Even with lesser known former residents the effects can be similar -- recent interest in the former home of Doctor Who scriptwriter Terry Nation, Lynsted Park, has been extremely high. A recent survey conducted on Ancestry.co.uk revealed that more than 14,000 of its 200,000 members are currently researching their property lineage, and a further 110,000 plan to do so in the near future. Urban myths about celebrity homes are helping to stoke interest, with many still waiting to be discovered: the whereabouts of David Bowie's childhood home in Bromley remains a mystery. John Lennon is said to have lived in a yet-to-be identified home in Blackpool. Bob Dylan is rumoured to have owned a house at Crouch End in North London -- if true, the potential owner could profit by as much as £32,000 (10% increase) if they can prove he lived there. Michael Fiddes, Head of National Estate Agency at Strutt & Parker, comments: "If your home has been lived in by a famous former occupant it will inevitably increase the publicity of the property and, therefore, the saleability. "Whilst it is hard to say exactly how much value this would add to a property, it can be anything up to 10 per cent." Tips on researching property lineage 1. Talk to the neighbours -- and especially those who have lived in the area for a while, and investigate any rumours about well-known or celebrity former residents. The key information you will need to know is their name and approximately when they lived at the property. 2. Research the name -- for a variety of reasons, many famous people change their names early on in their careers. When searching historical records, you should firstly desk- research the famous person and whether the name you know them by is, in fact, their real name. 3. Search historical records -- the historical collection you will need to explore is determined by the approximate dates of the person, or persons, you are researching. If you think they lived in the second half of the 19th century, you will want to examine the England and Wales Censuses; for late 19th through to the late 20th century, try the British phone books, 1880 to 1984. All are available on www.ancestry.co.uk. 4. Keep an open mind -- not only do people change their names, streets and even suburbs do, too. If you hit a brick wall, or if you are sure you have the right information but it is not adding up, visit the Land Registry. This will confirm whether your street's name has ever been changed. The information is available on www.landreg.gov.uk. and are not a constant nuisance. "The launch of this new website offers a useful guide for buyers. We would always advise our clients if a house or village is beneath a busy flight path with planes heading for large regional airports such as Manchester, Birmingham or East Midlands, but no agent is ever going to voluntarily reveal that a property is below a flight path. While buy-to-let remains strong in all parts of the country, Wales stands out as the latest 'hot spot' for residential property investors, according to Paragon Mortgages' Buy-to-Let Index. Rents are up by 33% over the past quarter and property prices by 18%. Rental yields are also following a positive trend, with Wales the only region of the country where yields exceed 7%. On top of that, this month Wales stands in second position in terms of total return, generating an average of 25.6% -- compared with an average of 12.9% for England and Wales as a whole. John Heron, Managing Director of Paragon Mortgages, says, "Rents are rising strongly in Wales, but so are property values, although to a slightly lesser extent. On the back of that, investors have been enjoying steady rises in rental yields over the past few months, up from 6.3% to 7.1% in one quarter. With a positive economic backdrop underpinning growth in tenant demand, it is not surprising that Wales is the country's top performer in terms of yield, and the only region to generate average rental yields in excess of 7%." An investor who bought a property one year ago will have generated an average total return of 25.6% or £34,079 on a property worth £133,297 in March 2006. Mr Heron concludes: "The astute landlord who invested in buy-to-let in Wales this time last year will have achieved almost twice the national average total return. While the national picture remains strong, residential property investment looks particularly attractive in Wales. Tr ends in the local economy are very positive, creating new jobs and causing an influx of workers into the area, which in turn fuels tenant demand". Demand for rented properties seriously outstripped supply and rent levels rose during the three months to the end of May according to the latest quarterly survey of ARLA Member Letting Agents. These results show the shortage of properties and the continuing need for investment in the private rented sector at all levels. Rents rose for the fourth quarter running for each type of property, including detached, semi-detached and terraced houses and flats. As a result of increased demand, void periods have fallen to an average of 24 days. Over two-thirds of all agents in prime central London report rising rent levels. Half of the agents in the rest of the South East say the same and in the rest of the country the proportion of agents reporting rises rose from 33% to 35%. Seven out of ten prime central London agents say there are more tenants than properties available to house them. This is the highest figure seen since the ARLA surveys started six years ago. In the South East, ten per cent more agents report demand is outstripping supply and the proportion in the rest of the country has also risen. Tenants continue to stay in rental properties for an average of well over a year. They remain in the same property for the longest in prime central London at an average of 17.7 months. This compares to an average of 15.2 months for the South East and 14.2 months elsewhere. These figures have shown little change for the past two years. Vintage move For many of us, the prospect of moving home can be very stressful, particularly if there are valuable and fragile objects to be moved. So spare a thought for the family who had not only fragile antiques, but also a cellar of wine, that had to be moved from Oxford all the way to the South of France. The job was entrusted to Abels Moving Services,which can claim considerable expertise in international moves and handling delicate and valuable items. In what could be described as a coals to Newcastle move, the customer's cherished wine collection had to be moved from Oxford to a vineyard in Lambesc, France. The fine wines were transported in a specialist temperature-controlled vehicle, to maintain their optimum storage temperature of between 10 and 12 degrees centigrade. Other challenges of the job included handling valuable fragile antiques, large mirrors and tapestries which required special packing and a number of large pieces of furniture which needed to be disassembled before removal. As well as the house contents, outside plants, a climbing frame and the contents of a stable and garage were also moved. Additionally, the stable was some distance from the house and needed to be cleared first before forecast rain made it too muddy for access. The move, including packing and unpacking, took seven days. www.abels.co.uk