Property and economic update

The predicted post election house price bounce appears to have not materialised as house prices continue to stagnate. The Hometrack house price survey for May reports a small overall decrease of 0.1%. According to Hometrack, this is the eleventh consecutive month that house prices have fallen, although the figures are very small with prices on average 2.3% lower now than at the same time last year. Of the 57 'Hometrack' regions 38 have shown a price decrease, 12 remain static, and 7 have reported a small increase. Adopting a meteorological tone John Wriglesworth, Hometracks housing economist comments: "House prices are falling like drizzly spring rain, slowly and over most parts of the country. While there is no sunny outlook in prospect, there are no signs of a gathering storm either. The forecast for the next couple of months looks set to remain dreary". Although this sounds bleak, Hometrack do expect prices to begin a recovery towards the end of the year.

The Nationwide - though not quite as bleak - have reported an overall price increase of 0.3%. This brings the annual rate of house price inflation to just 5.5%. Fionnuala Earley, Nationwide's group economist remarks: "Prices have increased by an average of 0.2% per month in the last 3 months - a very different picture to this time last year when the average increase was 1.7%".

Strategies for a flat property market

For the last few years making money from property has been relatively easy. Anyone, even those with little understanding of property investment, could buy a reasonable property in a reasonable location, and sit back as the value has increased almost daily.

But of course, this could not last forever. Home owners were being forced out of the market due to decreasing affordability and many investors eventually realized that at yields of between 3 and 4%, the price of property was not sustainable.

Although the long-term trend for property prices in the UK is upwards, growth is not constant. Concerns about investor speculation, higher prices keeping first time buyers out of the market, the amount of consumer debt and the possibility that an aggressively rising property market could result in a property crash, prompted the Bank of England to raise interest rates to cool the market.

So with flat or stagnant housing markets around much of the UK obviously property investors will not be able to count on big increases in capital value to produce property profits over the next little while.

It is said that successful property investors should be able to make money under any market conditions. Although capital values may not rise as they have done over the last few years, and in some areas might even fall, there are strategies and techniques available to property investors to beat the market.

Characteristics of a stagnant or falling market

First, before we look at the strategies available to us, let's look at the characteristics of a stagnant or falling market.

In a stagnant or falling market, typically we will find that:

• There are less buyers
• Properties take longer to sell
• Property prices are falling or increasing only slowly
• More properties are sold at prices considerably below asking prices
• More people rent than before, especially first time buyers who either cannot afford to buy, or who do not want to risk going into negative equity
• Rents could potentially increase and vacancy periods reduce

At first sight this might all seem like bad news. But actually these characteristics provide property investors with opportunities to profit.

Opportunities for investors

There are more opportunities for investors because:

• There are larger numbers of flexible or motivated sellers, who will be prepared to agree a better price or better terms, or both, and so there will be more bargain properties to be found.
• Property yields increase as prices fall, but rents stay the same or even increase as more potential buyers stay out of the market and rent instead.
• The cost of refurbishing properties reduces as more builders look for less work and tender prices competitively.

Don't forget that so far, history has shown us that falling or stagnant markets are temporary. The good news for property investors is that in the UK, after any fall, prices have always recovered and have exceeded the level from which they first fell.
But now more than ever, you can't just buy any property or pay any price. To make money in today's property market you can't afford to pay market value for your property, rent it and wait for capital growth to generate equity. To be successful you need to buy below market price.

Take a look at our property pages www.propertyforlife.com/property/available.html for some great discounted property opportunities.

"The past cannot be regained, although we can learn from it; the future is not yet ours even though we must plan for it. Time is now. We have only today."
- Charles Hummell, Writer

"We either make ourselves happy or miserable. The amount of work is the same."
- Carlos Castaneda1925-2000, Author

Attitude Is Everything by Jim Rohn

The process of human change begins within us. We all have tremendous potential. We all desire good results from our efforts. Most of us are willing to work hard and to pay the price that success and happiness demand.

Each of us has the ability to put our unique human potential into action and to acquire a desired result. But the one thing that determines the level of our potential, that produces the intensity of our activity, and predicts the quality of the result we receive is our attitude.

Attitude determines how much of the future we are allowed to see. It decides the size of our dreams and influences our determination when we are faced with new challenges. No other person on earth has dominion over our attitude. People can affect our attitude by teaching us poor thinking habits or unintentionally misinforming us or providing us with negative sources of influence, but no one can control our attitude unless we voluntarily surrender that control.

No one else "makes us angry." We make ourselves angry when we surrender control of our attitude. What someone else may have done is irrelevant. We choose, not they. They merely put our attitude to a test. If we select a volatile attitude by becoming hostile, angry, jealous or suspicious, then we have failed the test. If we condemn ourselves by believing that we are unworthy, then again, we have failed the test.

If we care at all about ourselves, then we must accept full responsibility for our own feelings. We must learn to guard against those feelings that have the capacity to lead our attitude down the wrong path and to strengthen those feelings that can lead us confidently into a better future.

If we want to receive the rewards the future holds in trust for us, then we must exercise the most important choice given to us as members of the human race by maintaining total dominion over our attitude. Our attitude is an asset, a treasure of great value, which must be protected accordingly. Beware of the vandals and thieves among us who would injure our positive attitude or seek to steal it away.

Having the right attitude is one of the basics that success requires. The combination of a sound personal philosophy and a positive attitude about ourselves and the world around us gives us an inner strength and a firm resolve that influences all the other areas of our existence.

Let the Seeds Grow by Chris Widener

The thought that every great thing that has ever happened, been spoken or invented began first with a single idea is not a new one, but one I don't think many people have taken to heart.

I find that many people are constantly getting ideas. That is their mind is producing many new thoughts on a regular basis. This is incredible because that means that the seeds for great things are right there in the soil of our minds and hearts.

Unfortunately, all too often we do not let those seeds grow. Instead we dismiss the idea. We will never know, but I wonder who it was that first thought of the light bulb, but dismissed the idea. I wonder who it was that first saw the automobile in his or her mind's eye, but dismissed the idea. Who was it that thought up the way to run computers but allowed the seed to slip away?

Let these seeds grow! Do not dismiss any idea as a bad one immediately. Write your ideas down. Look at them for a week or a year. Brew over them. Consider them. Let them grow. In the end you may need to dismiss them, but not before you give them a chance to grow into something incredible that may change your life, your family, your business, your community or your world. If you let your ideas grow, you will surely see many great things happen in your life.

Let your seeds of ideas grow - see what they may become!

"So many of our dreams at first seem impossible, then they seem improbable, and then when we summon the will, they soon become inevitable."
- Christopher Reeve 1952-2004, Actor and Speaker

"Circumstances may cause interruptions and delays, but never lose sight of your goal. Prepare yourself in every way you can by increasing your knowledge and adding to your experience, so that you can make the most of opportunity when it occurs."
- Mario Andretti, Auto Racer

The Let-To-Buy Revolution

Are you finding it impossible to sell you home but circumstances mean you have to move? Then you might be tempted to take out a let-to-buy mortgage - which allows you to rent out your old home without changing lender - while taking out a fresh mortgage on your new home.

The idea is that you don't have to go through the hassle and extra expense of switching to a buy-to-let homeloan, but can keep your existing mortgage on your old home.

By renting out your former home, the mortgage repayments will be met by your tenants' rent. Your income will support the mortgage on your new home.

The original idea of let-to-buy mortgages was that they would offer a stopgap to homeowners who were forced to relocate or could not sell their homes. But now it seems that some homeowners are using them as a backdoor into the rental market.

Go to any mortgage lender and alarm bells will start ringing if they receive an application for a new house purchase when the mortgage on a current house is outstanding. But let-to-buy can be of major assistance if sluggish property sales prevent you from selling your current home.

With a buy-to-let mortgage, a borrower would have to obtain a specialist mortgage. A let-to-buy mortgage is only a change in status of the existing loan, which is why it can be seen as a short cut into the rental market.

Mainstream banks and building societies are often willing to allow homeowners to let-to-buy, but they will look closely at the borrower's reasons.

They will look favorably on people who have been forced to relocate because of a job and who may want to buy while they are away. Or it can be a way to break the buyers' and sellers' chain.

With let-to-buy mortgages, the potential rental income you'll get from the property will be included in the equation for working out how much you can borrow.

Lenders will look at the mortgage on the first property and would normally expect them to confirm with the existing lender that they are allowed to let the property out and that the buildings' insurer is informed of any changes.

If you follow the let-to-buy route it is important to remember that the rental income will be subject to income tax - although you'll be able to offset costs and mortgage interest against this.

So what rates are available? Currently it is possible to obtain a let-to-buy mortgage with a rate of around 4.85% fixed for two years. Based on this figure the monthly repayments would be around £575 for a mortgage of £100,000. Always remember though that other costs are often payable such as arrangement and valuation fees.

Need mortgage advice?

Maybe you're thinking of buying an investment property, or you need to release funds tied up as equity in your house. Perhaps you just want to find the best mortgage rate for your own individual circumstances and cut your mortgage payments. Why not call our mortgage department today? Our resident mortgage advisers will give you the best possible advice to suit your requirements. Call them today on 01252 737575.

Upcoming events

The entire Property for Life team will once again be at the Property Investor and Homebuyer Show North in June, so if you are attending the show why not drop by stand #314 and say hello. Our MD David Austin will be speaking each day as part of the seminar programme and we will have details of our latest property opportunities available for viewing on the stand.

The show runs from June 24th - 26th at the Gmex exhibition centre in Manchester.

Free Tickets

If you would like a free ticket to the Property Investor Show North we can help. We have pre-purchased a number of tickets for our members and they are going fast. If you would like one click on this link www.propertyinvestor.co.uk/manchester/register.asp and use our promotional code Y497490, you can then print the ticket which will allow you access to the show. Just make sure that you drop by stand number 314 to say hello.

What's available?

We currently have the following investment opportunities.

• The Warehouse Apartments, Preston
• Belvoir Street, Leicester
• Thames View, London Road, Purfleet
• Marco Island, Huntingdon Street, Nottingham

Please go to www.propertyforlife.com/discount_prop.php for full details and look out for more great opportunities coming soon!

Make some extra money?

The 'Property for Life' referral programme is a great way to make extra money. Take a look at the table below to see just how much. If you know of anyone who is interested in purchasing investment property why not refer them to us. It's simple, if they buy you make money, and the more they buy the more money you make. Take a look at our website for full details www.propertyforlife.com/tellafriend.htm

Back issues

Remember, you can read any of our back issues by following this link to our web site www.propertyforlife.com. If you missed one, or you want to read that really interesting article but can't remember where you put it, you will find it all here.