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LettingFocus

Unbiased buy to let, property investment and letting coaching, mentoring, advice and seminars for landlords from top selling property author and media commentator.

Commentators don't understand the new paradigm on house prices says LettingFocus.com

I do think that some property market commentators are over fixated on first time buyers’ chances of getting mortgages as the lead driver of the future direction of house prices.
It matters, yes, and so does the ratio of earnings to house prices but it does not matter as much as it did before
For quite a long time now I have said that in the future, the new driver of activity will be either professional investors or wealthy parents with spare cash to pass on to their kids.
Don’t forget that over 40% of people have no mortgage so don’t give a stuff about mortgage rates and if they are not buying for themselves they will be giving their lucky offspring at least some of the money for a deposit and for the hefty mortgage fees which are now the norm.
Hard nosed property investors and rich parents of first time buyers are two key groups with the money to buy property and many commentators should wake up and realise the paradigm has shifted.
They should stop looking only at the standard measure of the ratio between a young person’s earnings and house prices or the affordability of mortgage interest payments but look instead at the stock of wealth that first time buyer’s parents and experienced property investors have.
I think it was the think tank, "The Future Foundation" who said that property was becoming more "dynastic" in nature.
I agree and about four years ago I wrote a press release suggesting that because of these and other factors, the proportion of property in the UK that is privately rented (then about 9%) could hit a third within 20 years.
Well, today I expect the budget may well give a boost to more private rented accommodation so I think my predictions could yet prove correct as more people either choose or are forced to stay in private rented accommodation.
It is sad to say - and a real shame for would be first time buyers- but if your parents are not rich your chance of getting on the housing ladder these days and in the future will be a whole bunch harder than it was in the past.
Maggie Thatcher gave us hope that we could all be home owners if we saved a little bit and worked hard. This hope is slowly being dashed.

ABOUT LETTINGFOCUS.COM and DAVID LAWRENSON
I’m David Lawrenson of LettingFocus.com - the property letting experts. Read Property Articles.
I’m the author of “Successful Property Letting” which for the last 3 years has been the UK’s top selling property book - buy Property Investing Book.
The new edition is for accidental and experienced landlords and is fully up to date with all the recent changes to tenancy deposit schemes, HMOs, licensing and capital gains taxes.
I’m an expert property writer and property speaker - and I run the well known property letting blog that you are reading now.
I contribute to newspapers and a host of property websites, write a number of columns in the press and I provide general advice on property letting and consulting to anyone looking to buy property for themselves or to let out. I can help private individuals with any aspect of buying property or buy to let.
What’s unique about lettingfocus.com is that we offer independent unbiased property investment advice because unlike most people in the buy to let and property “advice” business we are not linked to a property company, developer, agent or bridging loan financier and do not receive commissions from these sources.
On the contrary, we are often asked to evaluate other property investments.
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Copyright: David Lawrenson 2009. This blog is updated roughly once a week.
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Housing Statistics Can Be Misleading Home owners says Lawrenson of LettingFocus

A good example is the Council of Mortgage lenders stats.
These are dutifully quoted from as if they are the Word of God by many property journalists. Take the often quoted stat about the percentage of a house buyers’ income that goes on mortgage interest. This stat rightly gets quoted every month it comes out.
Trouble is its not entirely comparing like with like because it does not take account of the ubiquitous mortgage “application” or “arrangement” fee - a misnomer if ever there was one.
As these fees are now often well over 2% for a typical two or three year discounted mortgage, and seeing as they hardly existed at all 10 odd years ago, comparing this on a time series is meaningless. It’s also a bit daft to not take account of them either.
It’s not the fault of the CML -they haven’t got time to adjust their stats for all the different fees the lenders charge and it would be very hard to do so anyway.
But really, the journalists who quote this stuff ought to ask some more questions and go beyond the confines of the press release to delve into the figures a bit more.
For the rest of us, just don’t believe all you read.
If you need more advice on buy to let mortgages or buy to let investment in general please ask me. I’m David Lawrenson from property investment advisors http://www.lettingfocus.com/
I’m the author of the buy to let book “Successful Property Letting - How to Make Money in Buy to Let” the UK’s top selling property title.
I’m an expert on property investing for profit and a well known property freelance writer and I contribute to newspapers and a host of property websites, write a property investment blog and run a landlords advice service.
I also work as a consultant helping banks, building societies, housing associations and web portals with their buy to let and property products and services.You can read more of my property investment blog and details of my networking, advice, property networking programme at my website http://www.lettingfocus.com/
Our next London landlords networking meeting is coming soon. Click here for details: Property Investment Advice
What’s unique about lettingfocus.com is that we offer independent property mentoring because unlike most people in the buy to let and property “advice” business we are not linked to a property company, developer, agent or bridging loan financier and do not receive commissions from any of these sources.If a property investment is lousy – We’ll tell you straight and we will tell you all about buy to let and property investment - the good and the bad and we won’t make silly promises that you’ll become a millionaire overnight.
Copyright: David Lawrenson 2008.
This blog is updated at least twice a week. Permission must be sought before using the material in the blog.

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