Confidence amongst property investors rises again

Bank lending needs to be more affordable and accessible to small businesses

Mortgage lenders reduce fixed mortgage rates

“Inventories are not an optional extra”

Base rate likely to stay at 0.5% in 2010

According to figures released from the Worldwide Property Group, confidence amongst property investors has risen for the third month in a row.

The company’s survey revealed that 88% of respondents believe now is a good time to invest in UK property compared to 87% in October and 85% in September, clearly indicating that improvements in the UK property market are continuing despite ongoing economic difficulties.

Prices are expected to rise by over +5% in the next 12 months according to 23% of respondents compared to 14% from October, whilst two thirds state they are benefiting from the current low level of interest rates with 60% of those stating that this has increased their desire to purchase property.

Kevin Wilkes, Worldwide Property Group’s managing director, said: “The results of this survey once again show the resilience of the property market. With dreadful savings rates and continuing stock market volatility, investors are still turning to bricks and mortar as a safe place in which to invest their hard earned money. I see no reason why this will not continue throughout 2010 and beyond.”

Bank lending needs to be more affordable and accessible to small businesses

According to the Forum of Private Business (FPB), bank lending needs to be made more accessible and affordable following a report which identified a ‘permanent gap’ in small business finance.

In it’s submission to the Rowlands Growth Capital Review, the FPB highlighted a major shortfall in growth capital for businesses seeking between £2-10m and the forum has called for a range of finance options to be made available for more small firms, including those requiring significantly less capital. .

Following the review, the Government announced plans to introduce a new growth capital fund to plug the gap and a £1bn innovation fund for technology start-ups. Despite this, the FPB believes that the banks must also play their part by increasing the availability of lending, particularly for investments between £100,000 and £500,000, which is the level typically required by most small businesses. It also argued that the steep cost of bank finance must be reduced.

Some 77% of respondents stated that the terms and conditions of lending, including demands for personal guarantees had deteriorated during 2009. Only 4% of FPB members said they have seen access to working capital improve in 2009, while 58% said it has worsened. Around 65% said it was now harder to access finance for growth and 68% reported that the cost of finance had increased.

Matt Goodman, the FPB’s policy representative, said: “There are still small businesses unable to access the finance they need but affordability is now the key issue, the growth capital and hi-tech start-up funds announced by the Government will be significant steps forward, but the steep cost of traditional bank lending remains a huge barrier for many viable yet struggling firms.”

In all, 47% of respondents to the FPB’s quarterly referendum survey said they expected an increase in trade in the next 12 months, with 13% already experiencing an upturn in orders with 45% intending to expand their businesses and 37% looking to recruit additional staff by September 2010.

Goodman said: “We are entering a key period - firms are likely to require finance from a greater range of sources over the next year. Growth funding is certainly welcome but must be accompanied by more sustainable banking lending and public sector support – including a replacement for the Enterprise Finance Guarantee (EFG) - so that they are able to take full advantage of future opportunities.”

Mortgage lenders reduce fixed mortgage rates

The average two-year fixed rate mortgage rate has fallen, according to Moneyfacts.co.uk.

The average rate as of 8 th December 2009 was 4.86%, with average two-year rates falling below 5% for the first time since June 2009 at the beginning of the month.

Michelle Slade, spokesperson for Moneyfacts.co.uk, said: “Margins on fixed rate mortgage deals have steadily increased in the last year as lenders looked to repair damaged balance sheets.

“Following their peak in October 2009, mortgage margins on the popular two year fixed deals have fallen steadily, now standing at the lowest level since August 2009. The number of two year fixed deals paying below 4.00% has increased by from 53 to 94 in last two months and now accounts for a quarter of all two year fixed deals on the market.”

Lenders who have cut fixed rates include Abbey cut selected rates by -0.2%; Accord Mortgages cut rates by -0.4%; Alliance & Leicester reduced selected rates by up to -0.25%; Cheltenham & Gloucester cut selected rates by -0.1%; First Direct reduced selected rates by -0.05%; Leeds BS reduced selected rates by -0.26%; Post Office reduced rates by up to -1.3%; Scottish Widows Bank reduced rates by up to -0.4% and Yorkshire BS reduced rates by up to -0.3%.

“Inventories are not an optional extra”

The National Landlords Association (NLA) believes that “inventories are not an optional extra” and those landlords that do not take a property inventory at the start of a tenancy are taking risks with their money.

When a tenancy ends, some landlords can find themselves left with damage, cleaning or the cost of replacing furniture and fittings. And if they can’t provide evidence of the state of their property at the start of the tenancy the landlord could well end up footing the bill.

Since their introduction in April 2007, tenancy deposit schemes require landlords to provide evidence to justify withholding any of their tenant’s deposit for damage or cleaning costs. Inventories are a good way to record the condition of a property, and show exactly how a property looks when a tenant moves in, plus any changes that have occurred during the tenancy.

A detailed inventory can help deposit negotiations be dealt with quickly and easily at the end of a tenancy. If there is a dispute it can also be used as evidence in a tenancy deposit adjudication process.

David Salusbury, chairman of the NLA, said: “Put simply, inventories are not an optional extra; they are just as important as getting your tenant to sign their AST, or protecting their deposit. If you want to avoid having to pay for your tenants even after they’ve moved out, taking an inventory will help.

“It is also worth considering a proper check out report at the end of a tenancy. This is a sensible way to note any changes in the condition of the property, furniture or itemised items that have occurred during the tenancy.”

Base rate likely to stay at 0.5% in 2010

For the ninth consecutive month, the Bank of England (BoE) has left the base rate unchanged at 0.5% and left its quantitative easing (QE) programme at £200bn, having just extended it by £25bn in November.

It has not ruled out any extension to its QE programme, with some indication that it could raise it by another £40bn, due to risks to growth greater than those highlighted in the latest Inflation report.

James Thomas , head of residential development and investment at Jones Lang LaSalle, said: “House price growth has strengthened further in the most recent months, with the Nationwide index recording a +0.5% increase during November. The pace of house price increase, however, is slowing down with the three-month on three-month comparison showing the rate of increase moderating to 2.8% in November from 3.5% in October. Similarly, the number of new mortgage approvals and the new buyer enquiries have started to slacken slightly heading into the end of the year.”

Simon Gammon, head of Knight Frank Finance, added: “Even though some countries such as Australia have started to raise interest rates, we still do not expect rates in the UK to rise for at least six to nine months and possibly not until 2011.

“Even though five-year fixed-rates are now available at under 5%, many of our clients are still opting for tracker mortgages allowing them to keep their options open with the confidence that rates are not likely to suddenly change soon,”

The BoE stated that base rates were most likely to maintain at the current level for the majority of 2010.

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