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Cheltenham's Property Market

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“The brisk Spring market is continuing with instances of sellers, some of whom are just ‘testing the water’, finding it surprisingly warm in the early days of marketing,’ says Phil Pugh of Philip Pugh Estate Agents, ‘and with an offer or two on the table, are providing a knock on effect as they quickly search for a suitable property themselves. Once again, however, the ‘right’ asking price is the key to attracting interest and I am finding that the majority of properties, particularly family houses in the popular price bracket, will sell in the current market. Flats are generally more difficult to find purchasers for at present, with perhaps an oversupply of the cheaper one bedroom period conversions, but it’s still worth trying as at least there’s a chance of a sale unlike in some previous years.”

According to Isherwoods Estate Agents, “the story during the spring for both sales and lettings has been that most stock has either been sold or let and more stock is urgently required! There is no shortage of sales and letting applicants and as a result prices and rental values are very healthy.

“A feature of the sales scene is the strong bounce from ‘buy to let’ with many investors realising that the returns from rental property are much healthier than is provided by savings accounts. The press reports of lenders preferring ‘buy to let’ lending at 70% loan to value to owner occupier loans at 85-90% LTV are probably correct and this is likely to mean ongoing issues for first time buyers.

“Having let virtually all available lettings stock during April, Isherwoods now has a good supply of newly available properties and relets coming through including luxury family properties in Montpellier and Leckhampton. We are now entering our manic summer period when demand for both quality family houses and apartments peaks. The longer term prospects for the lettings market look extremely positive.”

Which leads me on to the following...I had this really weird idea a couple of weeks back. What if we sold our house and rented while using the capital to provide us with an income. I suggested it to my husband but he thought it was a ridiculous idea, especially with interest rates still so low. But it seems I am not alone in researching the possibilities.

It appears that while buying a home is cheaper than renting in most parts of the country, some existing owners might still be tempted to sell up and live partly off the capital which is released, says a new analysis. For homeowners who decide to cash in - perhaps to cruise the world in their final years - Halifax says the average owner would release equity of £55,000. Unfortunately that won’t last very long in these expensive times.

Investing in a fixed rate bond could generate a monthly income of £114 to offset rental costs, but with average rents around £500, anybody in this position would be burning into their savings at a steady rate.

Suren Thiru, Halifax housing economist, says: “The typical monthly mortgage payment has declined by more than a third since 2008 as a consequence of falling mortgage rates and lower house prices. As such, the fall in the cost of buying a property compared to average rents has been significant. The marked decline in mortgage costs has improved affordability for those able to enter the market, and eased the pressure on existing homeowners’ disposable income. Although the current trade-off between buying and renting is expected to narrow when rates rise again, the long-term benefits associated with investing in bricks and mortar are likely to ensure many will still prefer to buy.”

So here’s another thought. How about buying a house with a group of friends or colleagues? The advice is buyers ‘must take care if they share’.

With house prices standing surprisingly firm despite so much gloomy economic data, the National Association of Estate Agents (NAEA) says more first-time buyers are getting on the property ladder by a shared purchase with friends or family. NAEA chief executive Peter Bolton King says: “At a time when a lack of mortgage finance hinders first-time buyers, buying with a friend or relative can be a sensible way of getting into the market. However, for anyone considering joint ownership I would stress the importance of a transparent, open relationship between all parties involved to ensure a smooth purchase and ownership process. This may be your home, but it’s also a business transaction and one of the biggest decisions you’ll ever take.”

THESE ARE THE NAEA GUIDELINES TO SHARED OWNERS IN BRIEF:

• Get lawyers to draw up a co-ownership contract and decide in advance what happens if one owner’s circumstances change.

• Get the right mortgage. Some are tailored specifically for shared ownership, so shop around for the best deal.

• Keep paperwork safe. Documents must be accessible to both parties, and those relating to the home or the mortgage should be in the names of each co-buyer.

• Count the pennies. A joint bank account may be the best way to ensure that mortgage/utility payments are made promptly.

• Know who owns the sofa. Drawing up an inventory of non-shared items at the start should ensure no confusion about which items belong to whom.

And finally...

Although demand for holidays in Britain is booming, not all of the one in seven couples in their fifties and sixties who owns a second home will necessarily cash in on it. Tax changes, to bring Britain into line with EU rules, mean some financial advantages of a second home will be lost, experts warn.

Dominic O’Connell, head of tax trust and estate planning at Coutts & Co, says: “Holiday home owners should be aware that from April 2011, losses from furnished holiday lets will no longer be available to offset against general income. Historically, this has been seen as the main benefit of furnished holiday lets, as losses were treated as originating from a trade and so could be set against a taxpayer’s other income, rather than just other rental income as with normal rented properties.”

From April 2012, the rules become even stricter as furnished holiday properties will have to be available for commercial letting for at least 210 days a year (from 140) and actually let for at least 105 (currently 70).

Official figures revealed by the Office for National Statistics (ONS) show that one in seven couples in their fifties and sixties own a second home, with an average of nearly £250,000 tied up in this property beyond their main residence.

Among the 250,000 second homeowners in England, the most popular hotspots for buyers include Norfolk, Cornwall, Berwick-upon-Tweed, Devon and Cornwall.