Houses sell for more during the school holidays!

A recent survey by online estate agent eMoov has uncovered an interesting trend in house prices identifying that houses sell for more during the school holidays! With an increase in prices of more than £12,000 on average! Their data uncovered that average selling prices for properties during term time were £296,100 and £308,150 during the holidays.

Russell Quirk, founder and chief executive of eMoov.co.uk, said: “As we wave goodbye to summer and finally see the kids return to school many will pause for a breath and a well-deserved cup of tea.”

The autumn half term is the best time to sell, as most customers want their transactions completed in good time before Christmas.

In other news, re-mortgage activity was strong in June of 2017, whilst the housing market growth has slowed down nationally, and there are a reduced number of new purchases taking place with a reported £20bn of lending taking place in July, against a £21.5bn in June 2017.

Remortgages were up to £7.3bn up from £6.6bn of remortgages in June 2017.

This may be a sign that house owners are locking in on low interest rates now, as opposed to sticking on variable rates.

The view from the market is that things are not growing as quickly as previously, but the market has not yet stalled, indicating that there is still a further period of growth in select areas before the market drips off.

Hertfordshire Business Funding specialise in Buy-to-Let, Commercial mortgages, bridging finance, development finance and mezzanine funding contact us today to discuss your funding requirements.

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What Is Mezzanine Finance?

Mezzanine Finance for property is a type of funding which will typically sit behind the senior debt or first charge lender as it is often called. The mezzanine funding will enable a property developer to complete a development opportunity whilst having to put in less of his own money than would be required without the mezzanine financing. Here we will discuss What Is Mezzanine Finance?

Mezzanine finance enables a developer to complete  development, albeit the costs associated with mezzanine finance are typically more expensive than normal senior debt.

Terms Available for Mezzanine Finance

Mezzanine finance lenders will offer a variety of different terms depending on the experience of the developer, the margin on cost which the development opportunity has inbuilt and the area which the development is due to take place.

Most mezz lenders will offer a second charge facility behind the first charge and rates are available from 0.75%-2% per month from different lenders.

In terms of loan to cost (LTC) on the development, again this will vary depending on the lender, but Hertfordshire Business Funding have got facilities agreed at up to 90% loan to value (LTV) and 100% of loan to cost (LTC).

Most developers will look at mezzanine financing costs in conjunction with their senior debt, and will normally consider these facilities as a “blended” rate of finance.

For example if the senior debt facilities were priced at 4.5%, for 60% LTV, and the mezz was priced at 12% for 35% LTV and 100% LTC, then the blended rate may be between 7-9% depending on the proportionate sizes of the facilities.

Mezzanine Funding Underwriting

There are an increasing number of development finance funding organisations with increasing competition for facilities. The underwriting process is normally quite straightforwards with the lender evaluating the developer and also the project, making sure that there is suitable headroom in the opportunity.

Typically Mezzanine Finance will be available on a phased release basis, and so will be available once the developer and his team have achieved certain milestones as part of the development process.

Hertfordshire Business Funding specialise in complex and technical funding with a particular focus on property development funding. If you are seeking funding for your current development projects it would be an absolute pleasure to assist you with your funding requirements. Contact us today and we would be pleased to assist.

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Loans To Buy Land

Hertfordshire Business Funding specialise in providing a combination of debt and equity to companies. Here we will discuss the potential options for loans to buy land.

There are a number of different financing options available for property developers who are seeking to buy land, these include:

Bridging Loans – these are short term loans which can be used to buy land and other buildings. There are an increasing number of lenders in this marketplace and loan to values’ are becoming increasingly competitive. Therefore you may be able to achieve up to 75/80% loan to value. The benefits of bridging lending is that they are normally pretty quick, and can often get facilities completed within 7 days. The negatives are that bridging facilities can be expensive, with rates starting at circa 0.4% per month, up to 2% per month. Bridging loans start at 3 months duration and it is possible to get an extended term to around 24 months. The bridging lender will want a clearly identified exit strategy to ensure that they are going to get repaid. Bridging loans are available from £250k .

Commercial Mortgages – are longer term facilities which are available from both high street and challenger banks. These will typically have a longer term facility with a minimum of 12 months, up to 30 years. The application and approval process for a commercial mortgage facility will normally take 2 weeks plus, more realistically 1 month to get implemented. Rates for commercial mortgages are normally on a variable basis and it is possible to achieve 3.5% above LIBOR (London Interbank Offered Rate). Commercial mortgages will typically have lower LTV’s than bridging loans, and will normally offer up to 65% LTV.

Development Finance – In some instances it is possible to get one lender to provide a multiple facility loan. This will typically start off as a bridging loan, once planning consent has been achieved then the lender may in some instances then provide a development finance facility on top, to enable a developer to build out a scheme. Each element of the loan will be underwritten by the lender on it’s merits, and will have variable interest rates.

If you are interested in securing a loan to buy land, Hertfordshire Business Funding would be delighted to assist. We work with a number of the UK’s leading property funding houses, development finance and bridging finance facilities. Contact us today for a free no obligation initial consultation.

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What Is Property Development Finance?

Hertfordshire Business Funding are a funding broker with strong relationships with a wide range of lenders across the UK and overseas. Here we will be discussing; What Is Property Development Finance?

Property Development Finance is a type of funding typically for larger scale projects with funds available for both new builds and rennovations. Hertfordshire Business Funding work with a wide range of development finance providers and in particular can provide property development finance facilities for residential developments, commercial developments and mixed-use developments.

Property Development Finance is normally available for medium and larger schemes, with typically facilities available from £250k upwards. For smaller renovation projects, renovation financing is available, along with bridging finance. If you are interested in this area please contact us via our website.

How Much Can I Borrow With Development Finance?

There are a wide range of different funders which provide development finance. Each lender will have different terms, and a general rule of thumb is that the more that you borrow, the higher the cost.

Hertfordshire Business Funding specialise in securing funding facilities for more complex, and higher Loan To Value (LTV) development finance. We are able to achieve up to 75% LTV and 100% Loan To Cost (LTC) in certain circumstances for experienced developers with sites which have high margins (30% margin on cost ).

Property Development Finance Facilities are typically available from £250k , up to £30m or above in certain circumstances.

Development Finance is normally drawn down in phases, so there will be an initial phase which will pay for ground-works, then phases when other agreed milestones are completed. Typically a surveyor will be appointed to confirm that the milestones have been achieved.

Property Development Finance Terms

Property Development finance is typically available from 6-24 months.

If you are interested in securing property development finance in Hertfordshire for a property development that you are working on, please feel free to contact a member of our team today. We would be very pleased to assist.

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What Is Bridging Finance?

Hertfordshire Business Funding provide advice and information on a wide range of financial products and services, here we discuss What Is Bridging Finance?

Bridging finance is typically a short term financial product which is used to solve a short term finance issue and is often used to acquire buildings or land.

Most borrowers will not want to use bridging finance for the medium or long term as the rates tend to be more expensive than commercial mortgages, with a typical rate of between 0.45-1.5% per month, combined with a 1% entry and exit fee.

Bridging finance is often used by property developers when they need to move quickly to secure a property.

Loan to values (the percentage of purchase costs) which bridging lenders will provide do vary, but will typically be between 65-75% Loan To Value (LTV).

Bridging Finance has significantly increased in popularity in the past few years, with a significant number of challenger banks and peer-to-peer lending platforms entering the marketplace. This could be good for the property markets in a downturn as private capital may potentially be more resilient than institutional money where banks will change their underwriting quite quickly.

Default penalties with bridging finance can be significant, therefore it is extremely important to understand how you are going to exit the bridging facility.

Underwriting for Bridging Lending

The underwriting for bridging facilities is normally relatively straightforwards, the lender will want to understand the purchase price and proposed loan to value, then they will instruct a valuation if the loan to value meets their lending requirements.

Most importantly as described above the lender will want the borrower to have a pre-identified exit strategy, so this will normally be a refinance from a high street or challenger lender.

If you are looking for bridging finance in Hertfordshire, or have any questions we would be very pleased to assist. Please contact us using our details on the website. We have a broad panel of bridging lenders and are able to achieve high LTV’s.

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Buy To Let Yields Shrink

Buy-to-let yields shrink according to the latest Your-Move index. There are a number of factors which are impacting returns to buy-to-let investors including increased stamp duty tax on the purchase of second properties, increased taxation on property related income and lack of rental growth against generally increased housing prices.

MortgageIntroducer reports:

Typical yields now stand at 4.9%, with the best being in the North East, (5.2%) North West (5.0%) and Wales (4.7%) and the worst in London, (3.2%) the South West (3.3%) and the South East (3.4%).

This is despite UK rents rising year-on-year – as they increased by 4.3% in Wales, 3.6% in the South East and 3.3% in the East of England.

Original article available here: http://www.mortgageintroducer.com/buy-let-yields-shrink-year-year/#.WakefNOGNo4

In addition to the above reasons, lenders are taking an increasingly firm line on buy-to-let with most high street banks increasing their interest cover to 145% from traditionally 125%, further signs that lenders are bracing themselves for increased pressure from the sector, and potentially a further indicator that the market believes that there will be a price adjustment in the next 12-18 months.

There are encouraging signs for buy-to-let investors in the North-West of the UK, and the North-East, however, the areas which have traditionally been dominant in terms of leading the growth have remained fairly stagnant or are experiencing reductions.

Buy-to-let investors have increasingly found themselves under pressure, with less availability of debt facilities from the cheaper high street banks and more restrictive terms when lending is agreed.

Matt Lenzie Director at Hertfordshire Business Funding said; “The government has attacked buy-to-let investors from a number of angles, unfortunately these attacks are beginning to impact returns which investors are experiencing.

The tax changes to the treatment of interest charges being deductible against income will inevitably begin to bite with investors with low yields being impacted first. This will lead to some investors finding themselves with negative yields.”

Hertfordshire Business Funding specialise in Buy-To-Let mortgages, we work with a wide range of commercial mortgage providers, and are a specialist commercial mortgage broker, contact us today to book a free initial consultation with a member of our team.

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London property market rebounds in Q2

It would appear that after a slow start to the year the number of property transactions in the capital has increased, with £6.1bn borrowed, which equates to 17% growth in the period.

Mortgage Introducer reported:

First-time buyers borrowed £3.1bn, up 10% on the first quarter and 8% on the second quarter last year. This equated to 10,600 loans, up 5% quarter-on-quarter and 3% year-on-year.

Paul Smee, UK Finance head of mortgages, said: “Home buying in the capital bounced back from the traditionally subdued beginning of the year, with both first-time buyer and home mover lending showing growth both on the first quarter of 2017 and on the same period a year ago.

Original article here:http://www.mortgageintroducer.com/london-market-rebounds-q2/#.WZ2jiZOGMWo

This shakes off some of the nervousness which was gathering regarding the London market potentially hitting a downturn, and hopefully this will help to reinvigorate the property finance sector where clearly there were some concerns.

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Home buying concerns for young

With increasing property prices, rents and no real increase in wages, particularly for the young, there is increasing concern that they are not going to be able to afford to get on the housing ladder.

Which? has recently conducted a survey where they have identified that half (49%) of 18 to 34 year- olds are concerned about buying, more than social care for older people (46%) and energy prices (34%).

Alex Neill, Which? managing director of home products and services, said: “Buying a home is one of the most significant purchases consumers ever make and one of the most stressful life experiences.”

“It takes people far too long to buy property and home-buyers are losing out on substantial amounts of money due to flaws in the system.

“The next government must fix the outdated home-buying process.”

Three in 10 (28%) people of all ages see homebuying and selling as a top three priority for the next government, rising to four in 10 (42%) for those in London.

Original source: http://www.mortgageintroducer.com/homebuying-top-concern-young-people/#.WRAm2FPysWp

That said there has been some flattening of rental prices, particularly in London, with Homelet’s April Rental Index has shown that rents in the capital fell 1.2%, which the first fall since December 2009.

Martin Totty, chief executive of HomeLet, said: “Rents have been rising at a more modest pace across the whole of the UK in recent months, with lower levels of rental price inflation and even falling rents in areas of the country where prices were previously rising most quickly.

“We continue to see landlords’ and letting agents weighing tenant affordability considerations very seriously.”

Original Source: http://www.mortgageintroducer.com/london-rents-fall-first-time-eight-years/#.WRAmYFPysWo

House prices in Hertfordshire continue to grow, although detached houses have seen a bit of a fall off of 2% since April 2016, according to Home.co.uk. This is potentially down to the increased stamp duty on properties over the £1m threshold, which would certainly impact house prices in Herts.

This in conjunction with recent tax incentives introduced by the government, which are designed to generate revenues from landlords could lead to a softening of housing prices, where some landlords landlords will inevitably be generating net losses on their property portfolios with tax taken into consideration.

However, reduced availability of loans for first time buyers, and more stringent borrowing criteria mean that the outlook does remain tough for the young aiming to get onto the housing ladder.

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Property Investor Confidence Continues

Property investor confidence continues to remain high.

Property investors appear to be maintaining confidence in the UK real estate market, according to a recent survey undertaken by Shawbrook Bank, who are one of the leading “challenger” banks in the marketplace, providing bridging, development finance and buy to let funding, along with a range of normal banking services.

A new survey undertaken by Shawbrook Bank, which focuses on the outlook for 2017 from property professionals and the expectations they have for their own investments, found that 81% of landlords feel confident that their property portfolios will perform well this year.

Many property investors are feeling broadly confident about the prospects for the property market, thanks in part to improvements in the lending environment, Shawbrook said.

Helping to boost this optimistic outlook, investors revealed that tenant demand remains strong with nearly one out of three (30%) landlords seeing an increase in renters when comparing the first half of 2016 to the second. As well as this, half of all buy-to-let landlords have also seen increasing rental income over the last year.

This feeling of confidence extends to property professionals looking to invest in the buy-to-let market, with 66% of respondents stating that they plan to acquire an additional buy-to-let property during the first half of this year, in spite of various tax changes and potential political upheaval following the Brexit decision.

Karen Bennett, managing director of commercial mortgages at Shawbrook Bank, said: “Despite uncertainty surrounding Brexit, landlords are still optimistic about the performance of their portfolios. With Brexit negotiations officially underway, as well as recent changes to housing policy, it is encouraging that the market doesn’t seem to be slowing.

“Following last year’s tax changes it’s clear that investors are still getting a feel for how the changes will affect them.

https://www.propertyinvestortoday.co.uk/breaking-news/2017/4/property-investor-confidence-runs-high?source=newsticker

Matt Lenzie of Hertfordshire Business Funding says: “it is an interesting time from an economic perspective with some focus on the recent tax changes and how these are going to impact. In the short term there won’t be a huge amount of impact, as these will only start to bite when investors start to file their personal tax returns. It is very important that private investors and buy-to-let landlords do start to consider this today, as otherwise they could have some lean years ahead.

A number of the leading lenders in the market are taking less aggressive positions in the facilities which they are providing, with a shortage of funding above the £1m per unit mark, as there is some concern that stamp duty costs will reduce the momentum in this area.

Critical for all developers and buy-to-let landlords is buying well, and we firmly believe that there is and will continue to be some value to be achieved if you look hard enough.”

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Bridging Finance Confidence Grows – Despite Brexit

Theresa May has now, as you are no doubt aware, triggered the formal process of the UK leaving the EU, and the view of the markets is mixed. There’s the pessimists as ever, who believe that the risks associated with the UK having to navigate the forthcoming choppy waters are not fully priced into the markets, and then there are those who firmly believe that the process is a breeze. Interestingly the situation with Spain and Gibraltar looks to be the first of many negotiation points which will no doubt ruffle a few feathers.

Anyway, in the UK lenders appear to be increasingly confident regarding the bridging market as reported by Mortgageandintroducer, which is interesting, as there is potential for some buy-to-let owners to begin to feel the squeeze post 5th April as the interest cover tax changes start to bite.

Bridging lenders are becoming increasingly confident about the sector’s prospects despite the recent triggering of Article 50, Association of Short Term Lenders research has found.

As it stands 85% of ASTL lenders expect their own volumes to increase in the next six months, while 56% expect the bridging market as a whole to increase.

Regarding the future prospects of the UK economy 45% are confident, up from 35% in November and 28% last April before the EU referendum took place.

Aspen Bridging joins ASTL

Among other members one in five (21%) were not confident about the UK’s prospects in the next 12 months, down from two thirds (67%) immediately after the referendum.

Benson Hersch, chief executive of the ASTL, said: “Good results in Q1 of 2017 have caused lenders to be more positive about the future.

“The ASTL should continue to grow in both numbers and influence as recognition of the sector spreads. Bridging finance has come a long way and, whilst there will no doubt be ups and downs, it’s here to stay.”

Source: http://www.mortgageintroducer.com/bridging-lender-confidence-growing-despite-article-50/#.WOP4m3TysWo

It really is a guessing game, and private investors and institutional funds alike appear to be able to earn good returns on their capital through investing in bridging, although this market has fundamentally expanded during a boom cycle. We are now 6 or 7 years into this boom and frankly it’s time for a correction in property prices, and Brexit could well be the trigger of this.

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