A new report has shown that activity in the £500,000 and above mortgage market in the UK has increased by a massive 162%, year-on-year. This significant rise clearly reflects  that dampened market conditions took prominence during the first half of last year, although recent market trends illustrate that market growth still has forward momentum, according to the newest prime mortgage market briefing from UK property firm, Knight Frank.

In the three months to May, the market saw a 26% increase in £500,000 and above property completions, although May’s general electricity definitely had an impact on all market activity in the early part of the mortgage process. This was illustrates by the fact that the total number of offers fell by roughly 40% in May as compared to February, according to the report.

However, although the prime mortgage market is certainly far healthier than at the same point last year, there appears to be a growing swell of  evidence that mortgage lenders have become more particular about just whom they will actually make offers to in terms of loans.

‘After a long period of steady decline the average LTV for £500,000 plus mortgages rose in May for the second month in a row to hit 68%, up from 53% in March, lenders are widening their spread of products on the market, despite this uplift in average LTV the market at this level is still being driven by equity rich purchasers,’ commented Simon Gammon, head of Knight Frank Finance.
 
‘Average rates on newly agreed mortgages have moved up slightly over the past month, from 3.27% to 3.40%, but are still lower than average rates last May of 3.96%. The rise in average rates is related to the trend towards higher LTV products. Borrowers are increasingly looking at fixed rate deals with concerns from many to secure deals before rates rise,’ added Mr Gammon. He further commented that activity at the £1 million and over market level is now being more and more driven by those coming fresh into the market. Asian and Middle Eastern banks have become more and more active in the UK market, and are increasingly looking to the higher end of the market through overseas investment.

Britain’s recent emergency budget has afforded rural landowners the opportunity to make various cost-cutting changes. Consultants have also stated that such rural landowners need to make themselves aware of the new tax treatments involved. They will also be able to plan their capital purchases prior to the reduction of investment allowances in 2012 will be able to investigate employment incentives (for new businesses), be able to examine the possible alterations to the taxation treatment of furnished holiday lets, and will also need to make themselves aware that the government is currently taking soundings on inheritance tax on trusts.

Perhaps one of the most straightforward ways for rural property owners to protect themselves against the increase in CGT is by using Entrepreneurs’ Relief, a system that is made available after the sale of eligible businesses.

“All proceeds made from the sale of such eligible businesses up to a particular ceiling will be subject to a CGT rate of only 10%,” stated Andrew Shirley, who is the head of rural property research.

He added that, due to the fact that the Chancellor raised the Entrepreneurs Relief ceiling from £2 million to £5 million, a lot of land or farm sales could effectively be exempted from the newly-introduced higher CGT rate.

‘Landowners need to make sure they are in a position to make best use of Entrepreneurs Relief if the need to claim it ever arises. The amount of gain on which relief is available can effectively be doubled from £5 million to £10 million if a business run by a husband and wife is structured correctly. If both parties are genuine partners in the business each can claim the relief,’ Mr Shirley added.

He went on to point out that Entrepreneurs’ Relief cannot simply be claimed on the sale of farms and land alone, as the owner must have been demonstrably involved in the actual process of farming.

All estates and farms that are currently not paying tax as a corporation could now consider restructuring in order to take best advantage of lower tax rates.

According to figures in a new report, the real estate sector in Edinburgh is exhibiting marked signs of recovery, and prime properties in the West End and New Town districts have produced the strongest performance this year so far. The registered number of potential house buyers including overseas investors has risen by more than 120% over the last six months, with the value of Edinburgh’s prime houses rising by an average of 0.7% for the year so far according to the figures from the latest report by Knight Frank.

Top end residential properties with values of less than £1 million rose by nearly 3% during the first half of 2010. However, sellers’ price expectations will need to stay realistic in order to garner continued interest, according to Knight Frank’s report.

Knight Frank’s Prime Edinburgh Residential Index illustrates that average property prices rose by 0.3% during the second quarter of 2010, and this took total growth to 0.7%. For the annual overview, prices have climbed by 0.3%, and this illustrates the current tough market conditions.

‘It is very encouraging to be able to report that the market for Edinburgh’s best houses and flats has started to show some signs of recovery. Values are by no means recovering across the board and are still some way below the levels seen prior to the credit crunch, but some sectors of the market are undoubtedly in far better health than they were at the end of 2009,’ according to Matthew Munro, head of Edinburgh city sales, Knight Frank.

The report also indicates that the most demand has been seen in the market for properties valued at under £1 million. A rise of more than 1.5% during the second quarter of this year has taken total growth for the year to around 3%. Properties in this price bracket are now worth more than 4% more than a year ago, according to the report. Mr Munro went on to explain that properties valued at less than £1 million are in especial demand, and benefit from the fact that buyers with a high net worth have set their sights slightly lower, thus creating greater competition amongst buyers at closing dates.

According to the latest figures from the UK Land Registry, property prices in England and Wales fell in May by 0.2%, which represents the first monthly fall in property prices since April of last year. The biggest falls were seen in Wales, with property prices in both Denbighshire and Blaenau Gwent seeing prices fall by 3.6%. This was followed by price falls of 1.2% in Bedford and North Tyneside, with Sheffield seeing a fall of 1%.

In overall terms, the price of the average property has fallen from £165,596 to £165,314, although the picture is variable across the country generally, with prices in London and the South East continuing their upward trend. The rises stood at 0.9% in the south east and 0.7% in London. London’s 0.7% month change represents the third monthly house price rise in a row for the capital, with the average property price in London now standing at £338,708 and commercial property also seeing a boost within the city.

In terms of Year-on-Year figures, all regions experienced increases in average property values, with London prices rising by 14.2%, the south east rising by 11.3% and the south west climbing by 10.7%. By contrast, prices rose by only 1.8% in the north east, with a 3.1% rise being recorded in the east midlands. Average monthly property transactions have risen to 50,658 during the four months from December 2009 to March 2010 from 32,009 over the same period for the previous year, according to the figures. The monthly fall appears to indicate a slowing in the  recovery of the property market, with the most recent figures from the property consultancy Hometrack showing that June saw a rise in prices of just 1%. Because of this interest by overseas investors has also renewed – good news for receiving foreign capital to help bolster the market.

The housing market has been hit by a slow start to 2010, thanks to the end of the stamp duty holiday, as well as the severe winter weather seen during January and February particularly as well as the uncertainty posed by the run-up to May’s general election. The market has, however, not recovered its momentum after these factors have receded, causing economists to speculate that perhaps the recovery’s momentum may have been stymied.

According to a new report, there have been a substantial increase in the number of properties being put on the open market valued at £1.5 million and above. The report says that this is especially the case in southern regions of the UK, which have seen a 66% climb year-on-year.

The report from The Buying Solution, entitled ‘The country property, land and estate market report’ points out that there still exists a dearth of what it refers to as ‘best in class’ properties available, and there also exists evidence of top-end properties being traded off-market and above guide prices in combination with big demand for land from a wide range of buyers. The report also indicates that prices have also climbed significantly during the last quarter.

‘The post election rush and more certainty in our economic circumstances have encouraged vendors, general purchasers, new buyers and overseas investors alike. That said, as always, there is still a lack of best in class properties available across the board. Such properties are attracting competition and in some cases, selling above guide price and there is still evidence prime properties are trading off-market at high prices,’ according to Philip Selway, Managing Partner of The Buying Solution, which is an independent buying consultancy of Knight Frank.

The Home Counties have seen a distinct lack of stock, although more stock has been available privately, according to Paul Frost, who is a buying consultant for the region.  ‘The most active buyers are those making necessity purchases as they need to move for schooling, for example, and demand remains strong across all prime areas in our region,’ Mr Frost explained.

In Beaconsfield, Weybridge, Esher, Virginia Water, Henley, villages around Guildford and in the Petworth and Midhurst triangle, the prime range properties are fething guide prices-and higher. This was recently illustrated by the fact that a house in Wonersh Park, near Guildford attracted bidding beyond its guide price of £2.75 million before it had even been formally marketed. Mr Frost is convinced that this proves that good houses will never fail to sell strongly. In Hampshire, Wiltshire, West Berkshire and Somerset, however, there still exists a supply shortage.

‘A flurry of good quality houses were released onto the market after the election with reasonable guide prices being achieved. This has quickly reverted and we anticipate a shortage of supply as we head into July and August, the traditionally quiet summer period, although we anticipate the private market will continue to operate through this period,’ according to Bobby Hall, Partner and head of the Southern region.

Despite the fact that the recent problems in European markets may well have impaired the prospects of recovery globally, a recent report from CB Richard Ellis has shown that there has been an improvement in activity in the Dublin property office market during recent months.

Take-up rates in Dublin over the past three months are liable to be higher than in the first quarter of the year, according to the report, with a number of landmark deals set to be signed imminently.

Pretty well all transactions being completed in the Dublin office market currently are lettings deals, although one high-profile office sale has gone through in recent weeks-that of a Georgian office which sold for around two-million Euros.

Added to decent letting activity, there are also several significant necessities for office accommodation in Dublin, which the report claims is very encouraging.

Dublin’s prime rents are currently keeping steady, at around 376 Euros per square metre, or 35 Euros per square foot. However, downward pressures are still affecting secondary accommodation, especially around the M50 where there exists a lot of vacant accommodation.

Although there has been a fall in eth number of new schemes coming on stream of late, the current overhang of space will not erode quickly – and not until more net absorption is achieved, according to the report.

The report states that the rising number of foreign firms – especially IT and pharmaceutical companies – that have chosen to set their European headquarters in Ireland has been particularly encouraging. The report states that many have undoubtedly been attracted by the 12.5% rate of corporation tax, as well as the fact that prime rents have fallen by as much as 44% from peak rates. It says also that the marked decline in wage rates over the last year and a half has also helped, along with the ready labour availability.

The report concludes that, although there is an overall clear improvement in the demand for property investment in Ireland, there is still a lack prime properties coming up for sale. Also, transaction values, despite being up by a significant margin year-on-year, are still weak, the report concludes.

According to many mortgage experts monitoring the market today the buy-to-let (BTL) market should be more heavily regulated by a party such as the Financial Standards Board (FSB) in order to prevent potentially debilitating economic conditions from developing once more and undermining the recovering economy. This push is primarily based on the fact that, according to recent studies, at least 32% of all BTL clients found on the market throughout the country are amateur landlords, with roughly 75% of BTL purchasers amateur investors.

The boom in BTL interest has been primarily driven according to most mortgage professionals by low mortgage rates offered in different products across the country coupled with decent fixed-rate mortgages being available on the table for purchases. This, along with the recent property market drive for more and more people to accept renting over outright purchases, has meant that the BTL market has seen considerable interest by many people in recent years that it may not have seen otherwise.

The result now is that many BTL property owners are finding themselves trapped in financial arrears in regards to their mortgages, being unable to pay off all of their debts as the market shifts and adjusts to the growing BTL trends. This means that the majority of BTL owners and investors out there are at risk of holding potentially high non-performing loans that may make a significant blow to the current real estate sector should they go under.

Because of the large quantity of inexperienced and potentially economically dangerous participants in the BTL market as of right now many mortgage professionals are hoping that the FSB will provide some sort of more stringent regulation or oversight over lenders in order to ensure that further market saturation of those that are unprepared to take on the financial risks of buy-to-let ownership does not happen. Whether or not this will actually occur, however, is still yet to be decided as the market adjusts to the coming summer months of activity.

With the new budgeting and finances set for the coming year many experts in the real estate industry and paying heed to the recent change in Capital Gains Taxes that are affecting the market. Having been set at a standard 18% in the past for all gains on sales the new rate would venture upwards of 28% for the highest gains in money through the successful sale of a property – meaning substantial losses for many of those caught in the set gain field that would fetch such a high price.

The result of this gain is expected to take its toll on the property market throughout the country in a number of different ways. For one, working with the continued low mortgage rates offered by lending institutions, this is expected to see more and more properties placed onto the market before prices appreciate too much into a realm where their sale would mean an overall loss in earnings – something that will help drive down the cost of homes on the market due to a higher saturation of properties available for purchase. This in turn is also expected to stimulate a stronger market for first-time buyers looking to make a purchase outright that may have felt hampered in the past due to exorbitant prices in desired purchase locations simple due to the fact that these individuals will have a greater selection of various priced places to choose from.

This may have a negative impact for some people seeking re-mortgages, however, as lower valued homes tend to drive down the overall value of a re-mortgage taken out and home owners may be tempted to avoid this form of financing in months to come. Indeed, recent figures do in fact show an overall decrease in the number of re-mortgages being approved on the market today, with lending institutions favoring first-time loans over any other offered to date in the past few months.

While the property market has seen some considerable changes over the past few months since the beginning of the year one of the most interesting facts for many economists thus far is that the mortgage sector appears to be leveling out and remaining static. In fact, recent reports show that in May a grand total of roughly 49,000 mortgages were approved across the country, having not changed from April figures.

One of the primary reasons for this stagnated growth lies in the fact that, although buyers and other investors are offered a number of appealing incentives such as continued low mortgage rates supported by the central banks, many people are opting to eliminate their existing debt rather than risk taking on additional burdens with a major home purchase. This is shown especially in regards to mortgage approval trends, with re-mortgages dropping to nearly zero in the past few months and banks reporting a considerable drop in overall revolving debt for residents across the country.

This does not mean that the market is in danger of a turn-around, however. In fact first-time mortgages in recent reports have grown considerably in number over the past few months as a result of the continued support offered to first-time buyers as well as the drop somewhat in market competition for many homes due to the higher saturation of properties being found on the market today. This is particularly good for many couples in particular that have reportedly been putting off marriage in lieu of saving money to afford a home of their own and allow greater purchasing power to many individuals and families alike that have been effectively edged out of the prospective market in the past.

With the summer months now coming on strong and the real estate market expected to go into full swing before the winter mortgage approvals may continue to rise somewhat should financial support for the sector by central banking establishments continue, though this may make an adjustment somewhat towards the end of the year as buying and selling tapers off and individuals focus more on capital retention rather than expense.

According to the Intermediary Mortgage Lenders Association (also known as the IMLA) Chancellor George Osborne is currently at a position in regards to the property market throughout the country where he needs to provide greater clarity over just how he intends in the coming months to support and otherwise address mortgage funding. This concern has been brought about due to the fact that many feel the currently released budget is lacking somewhat in terms of this area and that, if left handled inappropriately, could potentially result an economic reversion to situations similar to what was being experienced in approximately this same time last year.

The IMLA further underlined the key role that many housing markets and lending industries play in the country’s economy, highlighting that any reasonable funding drought seen now could worsen progressively as pivotal government support plans are begun to be repaid by banks.

Continued government support is also being seen as key to the continuation of many government projects currently underway, such as the continued low mortgage rates supported by the central bank’s 0.5% interest policy. According to reports this has worked in many favors, with last week seeing the lowest rate for two-year fixed mortgages being made available to consumers since September of 2003.

Other concerns lie in regards for many consumers who are reliant upon re-mortgages for handling many debts incurred over the past two years of financial woes. Should this be handled poorly the result could be a major loss of financial stability for many families, the least of which could set back all recovery efforts that have been seen since the start of the year.