The recently published annual Buy to Let Guide by ARLA and the Council of Mortgage Lenders reaffirms the need for the private rental sector as a prime element of the housing market. It is expected to encourage further sensible investment in the rental sector, reflecting the view taken in the recent Rugg Report, which stresses the need to encourage small portfolio and individual private landlords.

The new edition looks at the rental market in today's credit crunch conditions and examines investment in Buy to Let, the tightening of lending criteria and how to find the right mortgage for individual circumstances.

In troubled times like these, the health of the private rented sector is vital. This new edition of the very successful ARLA/CML annual guide to investment in the sector will help to keep current investors up-to-date and encourage new and long term investment in a part of the property market that will continue to grow.

The Guide supports the general view that the Buy to Let market can withstand the current downturn conditions. I would recommend it as good reference material for everyone with an interest in the rental market.

It is still generally being reported that properties are not letting, are falling in value and that there are no new tenants coming into the market. This is absolutely not true. We are a team of 18 here at W. A. Ellis in Knightsbridge and we are all working at full capacity and have as many enquiries as we had this time last year. 

The main problem is that the market is being flooded with unsold stock that is not in a lettable condition. These are landlords 'by default' and only wish to let their properties until the sales market picks up. They are generally not prepared or able to inject capital in order to bring their properties to a good lettable standard. It is therefore correct to say that supply is outweighing demand, but not correct to say that good supply is outweighing demand. 

We are finding that any properties in immaculate order and well presented are letting quickly and for good rents. The very top end of the market remains extremely strong; for example, we put on a penthouse in Mayfair recently for £12,000 per week and we agreed terms on it straight away and close to the asking price.

Now, more than ever before, landlords need experienced agents like W. A. Ellis who have a wealth of experience of all market conditions. This applies to all areas of central London and with the amount of stock available, it is still difficult to let something sub-standard even lower down the market. So, my top ten tips for Landlords are the following: 

• ensure your property is newly decorated with a contemporary finish
• put new carpets in the bedrooms and wooden floors in the reception rooms
• install modern bathrooms with power showers
• provide easy access for transport
• ensure the rooms are light with high ceilings
• provide good storage
• install a lift if the property is above the first floor
• ensure the common parts are well-maintained
• install a good quality kitchen
• furnish smaller units.

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The current property news from
Richard Barber,
Partner, W A Ellis

low interest rates begin to take effect ...

Whilst the economic climate is still very precarious, there is activity in the Central London property market in spite of gloomy national statistics. With interest rates rapidly falling and sterling weakening, we are seeing a rise in interest from overseas, particularly as we approach parity between the Euro and the Pound. The decline in prices within Central London has been more rapid than in the recession of 1990-1992 and sellers with a realistic approach have already reduced prices from their June `07 peak by 25% in order to achieve sales.

It is predicted that we may see a further drop in capital values of possibly 5% over the next three months, but I believe that we have already experienced the majority of the correction within the prime central areas. With the cumulative effect of lower capital values, weak sterling and poor savings rates, it is not surprising that both domestic and international investors are beginning to reassess the investment potential of prime central London residential property.

Although the economic outlook for 2009 remains bleak with unemployment and uncertainty within the banking sector remaining the primary concerns, I believe that we will see a little more fluidity within the market as low interest rates begin to take effect leading to greater availability of mortgage finance to borrowers with at least 20% equity.

Whilst rental yields will remain at around 3-4% they may still outstrip savings rates over the forthcoming year and we may see the return of moderate capital growth towards the last quarter of 2010.

Economists may finally agree on one thing; interest rates in the UK, as elsewhere in the world, are coming down with the only question being when and by how much.

The MPC intention with the 150bps rate cut in November was that it was a ‘shock and awe’ move and that there probably would then not be a cut in December. Since then of course the economic situation has worsened considerably on the UK High Street (Woolworth’s and MFI) such that further, immediate cuts are more than possible with some commentators even calling for a further 1%.

This sounds all well and good but there is a real danger here that the UK could get to the point quite soon where rates are so low that further cuts in the official rate make little difference.  This happened in Japan in the 1990s, the so-called ‘pushing on a piece of string effect’.
What really matters is not so much the official policy rate as the effective rate in the economy i.e. to what extent Banks and mortgage lenders pass the base rate cut onto business and consumers. Credit needs to be cheap and easily available to pull the economy out of its recessionary cycle – if the Banks either won’t lend cheaply or worse still not lend at all then cuts in the base rate remain ineffective.

*STOP PRESS* UK Bank Base Rate slashed by 1% to 2% followed by a 0.75% fall in the ECB rate to 2.5%. There is renewed hope that lenders will pass on the full rate cut with HSBC and Lloyds TSB leading the field.

Merrie Carlton Dip PFS, Senior Consultant,
HFM Columbus Wealth Management Ltd. 
merrie.carlton@hfmcolumbus.com
www.hfmcolumbus.com
01892 500450

Swarovski and the Knightsbridge Business Group will unveil a five metre Swarovski crystal snowflake that will light up Knightsbridge this Christmas. The snowflake, designed by leading lighting designer Ingo Maurer, marks the first ever Christmas decoration in Knightsbridge and will hang between Harvey Nichols and Mandarin Oriental Hyde Park from Monday 8th December to 5th January. 

A miniature snowflake ornament will be sold as a holiday gift at Harvey Nichols and Harrods. Swarovski will donate a percentage of proceeds to UNICEF. For one day only (7th December) the ornaments will also be available at the CRYSTALLIZED™ - Swarovski Elements wrapping store at 47 Elizabeth Street.

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On our travels we came across this useful looking (and sounding) device. Highway is a unique, easy to fit in-car DAB digital radio that also enables you to listen to your iPod/MP3 player.

Powered from the in-car power socket and easily attached to your windscreen with a removable flexible mount (just like sat nav) Highway receives DAB stations and transmits them to your car radio on a free FM frequency. Simply tune your car radio to the FM frequency shown on Highway’s display to listen to DAB or your iPod/MP3 player. What also appealed is that you can also take it with you from the car and continue listening with headphones..

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