Real Estate

Luring Affluent Renters in Manhattan

By VIVIAN S. TOY

Published: June 29, 2008

The rental market in New York City usually gets stronger when co-op and condo sales slow down. But this year, some landlords of high-end buildings are feeling the need to offer free rent and other enticements.

http://www.nytimes.com/2008/06/29/realestate/29cov.html?ex=1372392000&en=ac3816c1019b7238&ei=5124&partner=permalink&exprod=permalink

What do we learn from this development?

1) Landlords have adjusted accordingly.

The article says:

“A lot of landlords were getting ready to increase rents for the busy season, but they’re finding that those projected rents aren’t attainable,” said Daniel Baum, the chief operating officer at the Real Estate Group New York, a Manhattan brokerage. “No one anticipated having problems on the rental side, and it’s definitely forcing property owners to take a second look at marketing and to rethink their pricing.”

Likewise, in the United Kingdom landlords could think of increasing rents but in some city centres that may not be possible. There is still an excess of new build and creating vacant flats. Manchester, Nottingham, Liverpool, Norwich to name but few city centres.

If You Want To Buy A Property In 2008  you should watch Out these companies:

New build properties - There are very limited mortgages for these properties.  There reason being that banks are unhappy with the way this type of property is valued. Obsviously it can only be valued above the same type of much older properties. Since property property prices are going down in 2008  much property are reducing in value. The only way to value new build properties is to in comparison to older build properties since the banks are nervous at the moment, theyve restricted lending for new build. Unless you have a big deposit more than £35, 000 forget it..you will struggle to you get finance.

BMV Companies - Prices are falling so you want to buy Below Market Value using BMV companies. This type of purchasing is more for investors. BMC companies used to state that you can bridge and remortgage to buy properties with no money.  Lenders recently closed this loophole. Some investments companies are still advertising workarounds but be very cautious. 

Land Sales Companies - There is no finance for land simply because you cannot rent an empty field to anyone.

What are your other options?

You can buy a property with a sitting tenant which happens to be the former owner. There are companies operating ethical sale and rent back scheme. You get to buy an investment with a tenant who will take good care of you property!

The Credit Crunch - Consequences In 2008 And Beyond.

I am puzzled from what I read on the Telegraph’s website
http://www.telegraph.co.uk/money/main.jhtml?xml=/money/2008/06/19/bcnking219.xml

The article titled: “Bank of England’s Mervyn King warns wages will stagnate and house prices will fall“.

The title in itself signals that the Government and Bank of England can’t do anything to prevent it or they don’t want to do anything, do they? Is it not just a propaganda to prepare our mind for difficult economic times ahead of us? Do house prices have to come down and conversely food, fuels and other necessities have to go up? May be, just may be. But at UK Property Ladder we’ve identified four consequences to watch out for and will tell you what you could do to protect yourself.

1. Negative equity - homeowners
   Negative equity occurs when a mortgage outstanding is larger than the current value of a property on which it is secured. For example, if a property which has down valued to £160,000 but the oustanding mortgage is still £180,000, the negative equity of £20,000. This means that the property is worth less than the loans secured on it, then selling it up will not clear the outstanding debts. Is this case avoid a forced sale at all cost. As long as you don’t need to move you are fine. Eventually things will improve.
2. Negative equity - landlords or second home owners
   You can’t sell without finding extra money. To make things worse you could also have negative cashflow where the rents you’re getting do not cover the mortgage. In this case a lease option or let to sell is your best solution. esIf yat the property is worth less than the loans secured on it, then selling it up will not clear the outstanding debts. Visit our landlord-sellers section.
3. Repossessions - homeowners
   You’re beeing forced to sell by your mortgage lender. You must avoid a repossesion of your home at all cost.  This will  bear negatively on your credit file for several years and seriously damage your ability to borrow money in the future. Selling and renting it back could be an option. Make sure you ask the option to buy your property back when your circumstances improve.
4. Repossessions - landlords - second homeowners
5. Asking price too low but you must sell
   

Council Of Mortgage Lenders - Housing and mortgage market forecasts 2008.

The original document can be retrieved from: http://www.cml.org.uk/cml/publications/forecast

We’ve uploaded it here for your convenience.

CML Housing and mortgage market forecasts 2008.
http://ukpropertyladder.com/wp-content/uploads/2008/06/1forecastdocumentfinal05081.pdf

Our comments:

The CML is suggesting that “The worst of the credit crunch may now be over“.   But this is contradiction of various reports that Property Investors are receiving. Please bear in mind that this report was published in May 2008 about a month before the blog was posted. It was on Wedesnesday night 19/06/2008, in his annual Mansion House speech that Mervin King the governor of the Bank of England warned that the UK faces a few tough years ahead.

Mervyn King said that Britain is facing its ‘most difficult economic challenge for two decades’, due to falling growth and the steeply rising cost of living. In some cases, household finances will be stretched to the limit, due to modest pay rises being gobbled up by soaring food and energy bills.

Out of all these uncertainties we can state three certainties:

1. Overall house prices are going down generally in UK. According to the CML, there should be about a 7% reduction on average house prices between 2007 and 2008.
2. Mortgage lenders have all tightened up their lending criteria. Getting a new mortgage for first time buyers is proven more difficult and those remortgaging are have aslo difficulties if they don’t have a lot of equities in their house.
3. Now is a very good time to be opened up to more creative ways of buying properties in UK. We believe that rent to buy or lease options gives much more flexibility to sellers and landlords. All that needs to be done is to understand the conveyancing process and find solicitors who are familiar with it.

People perceive many commodities as necessities although they may not be of prime importance. Without generalising, a woman may think that having some make up is a necessity or man may think that having some power tools is a necessity. But since the dawn of human presence on earth men and women primary necessities have always been: food first, clothing second, then shelter.