Owner: Negotiation, Negotiation, Negotiation URL:http://markharrison.wordpress.com Join Date: Fri, 23 Nov 2007 06:42:38 -0600 Rating:0 Site Description: UK Property (Real Estate) investment news and advice from Entrepreneur TV's Mark Harrison Site statistics:Click here
Home Information Packs - alternative viewpoint 2007-11-23 09:18:13 And yet another angle on Home Information Packs, again prompted by my article on Monday.
I’ve had some feedback from an estate agent (who wished to remain anonymous).
In his experience, HIPs are, rather than making the process quicker, significantly slowing down the marketing and sales process. He explains:
There’s a transitional rule, whereby as long as we’ve applied for a HIP, we can start marketing the property. The trouble is with water surveys. Vendors used only to need them in order to exchange, so after a sale was agreed. Now they’re needed for the HIP, we’re having to order them on every property we put on the market, whether it’s withdrawn or not. Because of this, [the local water company] have a backlog of several months, and nothing’s completing.
From his point of view, it’s only going to get worse:
If this continues into the new year, when we’re not going to be allowed to market until the HIP report has been completed, w
Internet Marketing Workshop - 8 free tickets 2007-11-23 07:10:44 My friend, Daniel Wagner, has an InternetMarketing
course aimed at individuals rather than businesses.
As such, it’s relatively short (just over 2 hours), and in an evening.
The next one is Thursday 29th November, at the Selfridge Hotel in London, and costs £97 per person…
… but, Daniel’s offered me 8 free tickets for subscribers to the YourPropertyExpert.com newsletter - unfortunately, he offered them to me just AFTER I’d sent out the newsletter for November.
Hence, we’ve agreed that I can offer them to readers of my blog.
If you’re interested, you can find out more, and apply for a free ticket, at Daniel’s website, by clicking here.
Read more:Workshop
, Internet Marketing
Kensington Mortgages (for the moment) pull out of the UK-SubPrime market 2007-11-23 03:30:34 As of this weekend, Kensington Mortgages, who only operate through brokers, are pulling out of the SubPrime market.
They’re also reducing their maximum loan-to-value for Buy2Lets from 90% to 85% (80% for self-certs.)
The SubPrime market is continuing to get worse in the UK, and there are fears of a US-style crash, however there are some differences:
UK mortgages, subprime or not, are regulated by the FSA. (Though be careful, some types of investor loan are NOT regulated).
In the US, 25% of mortgages were SubPrime, in the UK only about 8% are.
As ever, if you are needing finance, I’d recommend that you go to an independent financial adviser.
Home Information Packs - Update 2007-11-23 03:23:34 Since my post on Monday explaining HIPs, there has been an update.
Housing Minister, Yvette Cooper, has just announced that they will be extended to 1- and 2- bedroom properties put on the market after 14th December.
As you might imagine, the Association of Home Information Pack Providers (AHIPP) has welcomed the news.
On balance, so do I.
Read more:Update
Northern Rock - leaked memo? 2007-11-22 03:36:57 I was sent what claims to be a “leaked
memo” about Northern
Rock. A bit of research now reveals that the memo was a copyright document, so I’ve deleted it. However, I do feel OK in reporting what other websites have said.
The memo, known as “project wing”, is allegedly written by a bunch of financial institutions, including Citi, and Merryl Lynch (both of whom have ousted their chief execs in the last few months), and relates to a plan to sell off many of the assets of Northern Rock.
One of the scenarios in the memo was that the core mortgage business might remain strong, and that NR represented a good business going forward, which would continue to grow. To be fair the memo also posed another scenario in which it wouldn’t - so, which is more likely?
Or, to put the question another way, “would you take out a mortgage with Northern Rock today, or would you ask to find another lender?”
Personally, I’ve had an NR buy to let mortg
Property Negotiation - Slides now available on-line 2007-11-21 07:55:38 Following the feedback about putting my Negotiation
for small businesses slides online, I’ve updated my “Property Negotiation” slides.
These are from the 45 minute version of the talk I’ve given for organisations like the National Federation of Residential Landlords, and others.
If you run a networking event, and would like me to come and give this presentation (or any of my other presentations, please get in touch.)
You should be able to read the slides online here, or download them to your own PC.
And finally, thanks to Chris Brogan for his brilliant idea of using Flickr to find photos licenced under Creative Commons for use in this slideshow. Thanks also to the photographers (credited in the slides) for sharing their photos in this way.
Read more:Slides
, available
Northern Rock - politicians’ responses 2007-11-20 08:45:34 In my earlier post about Northern
Rock, I made the comment:
Sadly, the whole thing has degenerated into a political circus.
I’ve had an interesting email response from someone who, for whatever reason, didn’t want to post an open comment on this blog.
The gist of the comment was that I was being a bit harsh on politicians
from constituencies where a lot of people stood to lose their jobs, since supporting local people is surely the point of being elected.
Actually, thinking about it over the last few hours, I can respect that viewpoint. Our own local MP spent several years defending her party’s official line on our local hospitals, and saw a huge swing against her, only just holding on to her seat. Since her re-election, her line has changed, and she’s more able to balance what local people want with what the central party view is.
My issue with the political wrangling isn’t that politicians are looking to support local jobs… but that they appear to Read more:responses
Northern Rock - the story that wouldn’t die 2007-11-20 04:01:37 Back in September, I wrote a series of articles about Northern
Rock, the troubled UK bank. It would appear that the shouting is continuing.
Just to re-cap the facts to date:
Northern Rock stopped being a building society and turned into a bank some years back
Because of this, it is now owned by Shareholders, who are completely different to the “savers” who have accounts with the bank
It made a bunch of loans, on the assumption that it would be able to borrow the money back from other banks
Because of the US Problems, it wasn’t able to, so the Bank of England stepped in (after some pressure from the Treasury), to provide it with a loan facility of tens of billions of pounds
The news of this got out, and there was a run on the bank, people queued in the streets to get the cash back out of their accounts (about £10,000,000,000 - that’s Ten Billion has been withdrawn in the last 8 weeks).
Because of THAT, the shares collapsed
Key point is that SAVERS are protec Read more:story
Property Negotiation, The Book - now available from WHSmith! 2007-11-19 08:18:31 Ooh, well done, my publisher…
Available on-line from WHSmith here, or in-store (probably by order only at most branches.)
It’s quite an odd feeling - I’d not been expecting it to be available
anywhere other than Amazon, so pretty chuffed today
Now, if a few hundred thousand of you would go and buy it, and make it a breakaway Christmas Number 1, and I get invited onto Jonathan Ross, I promise I’ll make the tickets to the show available on my website
Read more:Negotiation
Home Information Packs (HIPs) explained 2007-11-19 05:11:44 Home Information Packs are with us, at least as far as larger houses marketed through estate agents are concerned.
You need to provide a HIP if:
You are MARKETING a property AND
That property is in England or Wales AND
That property has three or more bedrooms
The intention is that, once enough inspectors are recruited, they will be rolled out to all properties, presumably with two-bed places next. The government are saying that they will need about 3,000 inspectors total, but as well as the absolute number, will need to make sure that they are spread evenly across England and Wales.
The key word is MARKETING. A HIP is required if a property is advertised. This is, for most sellers, through an estate agent, but does not have to be. Under the terms of the Act, even a FOR SALE sign in the window is enough to require a HIP.
What this means, of course, is that, from a sellers perspective, if they are responding to a WE WANT YOUR PROPERTY flyer or ad, then it could be argued that they ar
LIBOR rates well above BoE base rates… (What that means, and why it’s not good news.) 2007-11-29 05:29:13 Bob Preston, in most recent his comments about the Northern Rock crisis, has noted that:
“Well three-month sterling Libor has been climbing for the past fortnight and is back at almost 6.6 per cent – well above
the Bank of England’s policy rate of 5.75 per cent. It means that funds for banks are both expensive and are still relatively difficult to obtain.”
Libor (the London Inter-Bank Ordinary Rate), is the rate at which “mainstream banks” can borrow from each other. As I said in my article about securitisation:
“lenders tried to get customers to accept mortgages tied to LIBOR, so if the rate THEY had to pay went up, customers would pay them more.”
That’s to say, the bank would loan me money at “LIBOR plus 1%”, and borrow money at “LIBOR” - so make 1% profit each year (which, on a B2L mortgage, is easily enough to cover the admin costs and make a nice earner for them, particularly given they’re not tying up the Read more:hellip
Bradford and Bingley, Alliance and Leicester - both in better shape than had been feared 2007-11-29 05:21:01 According to a report from the BBC, both Alliance
and Leicester and Bradford
and Bingley have issued trading statements today that show them to be in better
shape than had been feared.
The good news is that both of them, while they’ve both made some losses (see my post about securitisation earlier this week), they’ve also both got good cash reserves and borrowing facilities lined up.
As a result of this, no-one is expecting another Northern Rock-style run on those banks.
Both are blaming the American subprime crisis for the downturn (as you’d expect), but there’s a hint of naivety from one of them : Alliance and Leicester have apparantly blamed “unprecedented conditions”. Clearly they don’t have good enough memories, and are basing conditions on the relatively short period of time since the second world war… Looking back to the US experience in the 1930s, there are lots of precedents for what’s been happening.
Bradford and Bingley
UK Mortgage Arrangement fees have gone up 87% in the last two years 2007-11-28 06:13:07 According to a report by Moneyfacts, over the last two years, the average mortgage arrangement fee was:
£441 in November 2005
£827 now
That’s an increase of over 87%, which is getting close to having doubled.
The trend behind this has been of lenders wanting to quote low headline rates, but make up their profits by charging such fees. About the worst culprit was Northern Rock, who have been charging such fees as 3.5% on some mortgages.
In September 2006, I wrote an article on the impact of fees, which was beginning to grow then. You can
Read the article here, or
Listen to it here
What I said at the time is still true. Iwrote:
The way that I decided to treat the fees was to treat them as short-term loans, that had to be paid off during the course of the mortgage.
The difference, of course, is that those fees have got much, much bigger in the interim.
The conclusion I came to last year is something I also still stand by:
You can probably guess the punchline - I STRONGLY Read more:Mortgage
UK Bankruptcies have actually come DOWN this year! 2007-11-27 04:45:57 Figures release by the Government’s Insolvency Service seem to fly in the face of what people have been expecting.
Analysis of the figures done by BBC news has shown that insolvencies, bankruptcies, and IVAs are all down on last year:
Insolvencies down 5% to 26,072
Bankruptcies down 2.1% to 15,833
IVA down 4.3% to 10,239
What’s not clear is whether the emergence of various “Sale and rentback” organisations (including, well, mine!), that buy houses from people in financial difficulty and rent them back to the previous owners have helped reduce these numbers.
Of course, “expert predictions” for next year are showing that these numbers are going to come back up again, suggesting that the pickings for smart property investors able to move quickly to help people with problems will be even richer.
What is Mortgage Securitisation anyway, and does it matter? It did to Northern Rock 2007-11-26 05:14:36 One of the industry buzzwords being thrown around at the moment is “mortgage securitisation”. This is, it would appear, being blamed for everything from the collapse of Northern
Rock to the decline of the NHS.
So, what is Mortgage
Securitisation anyway?
Time for another history lesson.
Once upon a time, there were things called Building Societies. Building societies took in money from those who had it (called depositors) and loaned money to those who 1: needed it and 2: could convince the building society that they’d be able to pay it back (called borrowers.)
They would pay interest (at a low rate) to depositors, and charge interest (at a higher rate) to borrowers. The difference was used for three things:
To pay the running costs of the building society (rent, heating, wages and salaries)
To take into account the fact that some people wouldn’t pay the money back
To pay out even more to the depositors, because it was they who owned the building society
There Read more:matter
Northern Rock - Virgin look to be taking over 2007-11-25 13:09:04 It is being reported that, as of 18:51 this evening, the Northern
Rock board have recommended, and the Treasury have given their approval for Virgin
Money to take over Northern Rock.
Northern Rock are expected to make the announcement officially in the morning.
It is likely that the Treasury will remove the “100% guarantee” to depositors that they have offered - apparantly, they have promised to give three months’ notice to depositors if they do so. This is the guarantee that people with Northern Rock savings accounts would get their money back even if the bank went under.
Once this happens (as is likely, no matter who takes over the bank), this should leave depositors still with some protection from the Financial Services Compensation Scheme, which guarantees:
The first £2,000 of money from any depositor
90% of the next £33,000 from any depositor
It’s currently estimated that we, the taxpayers, have lent Northern Rock £25,000,000,000 (25 Billion pounds)
RBS takes a £1.5 billion loss due to US sub-prime loans 2007-12-07 04:38:49 Following the losses I reported from both Bradford & Bingley and Alliance & Leicester last week, the Royal Bank of Scotland (who own Natwest among others) is the latest to report a huge “writeoff” (ie - anticipated loss) as a result of the US sub-prime
crisis.
This may seem, at £1.5 billion
(of which £950 million was directly related to sub-prime assets), a huge hit, however, things aren’t as bad as they might appear.
Firstly, RBS is plenty big enough - its underlying profitability looks good, and could be as high as £10 billion, so writing off £1.5 billion in one area, while not great, only represents about 15% of the profit.
Secondly, analysts were expecting write-offs to be higher - many predicting as high as £2 billion earlier in the week, so a £1.5 billion write-off is seen as better than expected. (In a way that sort of reminds me of the famous “Mum, I’ve dropped out of college and am pregnant - not really, I got a B- and wanted you t
Bank of England - base rates down 1/4 % 2007-12-07 04:28:10 Yesterday, the Bank of England
monetary policy committee cut its base rate by .25%.
It’s already been reported that the larger domestic (ie - NOT buy to let) lenders are going to pass on this rate cut in full (which, frankly, I’d have been appalled if they didn’t.)
However, for those borrowers, particularly Buy To Let borrowers, whose mortgages are tied to LIBOR rather than the base rate, the news isn’t so good.
The markets are still making money very expensive, so the lenders who are re-borrowing the money they lend as mortgages on the open market are still finding this a lot harder.
I’m getting increasingly concerned about the UK economy next year - over the last few years, I’ve held off making predictions, but I think we’re in for a rocky time, and “effective repossessions” will be up.
What do I mean by “effective repossession” - it’s a (not very good) term I’ve coined to mean ACTUAL repossessions PLUS &ld
Are you buying property in the States? 2007-12-04 04:51:37 A request here.
In the New Year, I’m intending to write an issue of the YourPropertyExpert.com newsletter about investing in the States
, and whether the opportunities have got much better since the sub-prime crisis.
If you’ve invested in the US Property Market in 2007, or are thinking of doing so in 2008, can you either leave a comment here or mail me so I can interview you about why you did this, and how well it’s working for you?
Thanks,
Mark
Read more:property
US Reader: 16 year old girl missing, can you help? 2007-12-01 14:49:12 This post is particularly aimed at my US readers. I’ve been contacted by a couple of friends in the States and asked to help “spread the word”, using my Internet contacts.
Approximately 24 hours ago, 16-year old Manessa Therese Donovan disappeared from her mother’s home in Florida.
It is believed that she may have been going to see her 38 year old “boyfriend” Kevin.
Her family and friends are frantic, and are trying to locate her.
If you are in the US, particularly in Florida or Conneticut, please could you have a look at the blog they have urgently created, and be on the lookout. (Please don’t leave comments here - if you know anything that may be able to help, please contact the family directly via their blog.)
Click here to see the blog they created last night
[UPDATE: My mistake - Manessa actually went missing on the 17th November - the “last 24 hours” was the creation of the blog, not the disappearance. Apologies for the Read more:Reader
The “Cheque partial refund” scam appears to have spread to property 2007-12-03 09:30:00 Seasoned Internet users are certainly aware of the &ldquo
;cheque partial refund scam&rdquo
;, that has long plagued sites like eBay.
Just to run by the basics:
Someone “buys something”
They “accidently send a cheque for too much”
The ask for a refund for the difference
Lo and behold, the original scam has now migrated to property
, according to US Marketing Blog, MarketersStudio.
In the Property version of the scam, a potential tenant is being posted into the country, and is arranging furniture as well as rental. Sure enough, a cheque for the first month’s rent, the deposit, and, bizarrely the furniture turns up, with a request that the letting agency / landlord “pay for the furniture.”
By the time they realise the funds haven’t cleared, and investigate the furniture company, the “furniture company” turns out to have been a front for the scammer.
To date, the scams have been supposedly about British Doctors wanting to rent f
This week’s currency movements 2007-12-15 18:11:55 For some while, I’ve been getting Smart Currency Exchange’s weekly updates on currency movements.
Smart is a company I’ve used to transfer money to a company I’m setting up in Canada, and specialises in transfers for business and property-purchase purchases. (Basically, they don’t do small amounts, but have rather better rather than, say, my bank, for sending a few tens of thousands of pounds or more.)
Anyway, I’ve received permission to start reproducing their weekly newsletter here, so here we go - here is Friday’s. It’s written by Charles Purdy, their MD.
The rates given are the “inter-bank” rates, for comparison, not the “client rates for sending, by the way”.
Euro
1.399 / £, compared with 1.388 last week
Cypriot dollar
0.809 / £, compared with 0.807 last week
US dollar
2.022 / £, compared with 2.030 last week
Canadian dollar
2.057 / £, compared with 2.036 last week
Australian dollar
2.342 /
Avoiding Agency commissions? Don’t believe the adverts! 2007-12-14 07:09:08 I had a flyer through my door this morning, low-quality and poorly produced, and using such choice quotes as
SAVE £1,000’s ON ESTATE AGENTS FEES
OK, I can’t bring myself to type the rest of this in the CAPITALS that it used, nor am I willing to abuse the innocent apostrophe in the way it did, so I’ll stop complaining about the poor production, and look at what it says.
Basically, the flyer was advertising a website - they would put an “extensive” description of your property on their website, including up to 12 photos, for £99.
All well and good, but they then go on to talk about the Office of Fair Trading, and make the point that you can supposedly avoid paying an estate agency fee if you introduce a buyer directly, even if you have a contract with an estate agency.
I am not a lawyer, but something felt odd about this claim, so I took the advice of some local estate agents on their understanding.
The view they had (and of course, they are estate agent Read more:believe
Club Entrepreneur is really motoring 2007-12-13 08:37:01
Some months ago, I went to the first meeting of London’s Club Entrepreneur
, and had quite a fun time. However, I’m trying to schlep into London less and less as I get older, so I’d not been.
As it happened, though, I had a meeting in Baker Street yesterday afternoon, so call Tamkin Riaz to see whether he had an event running. Tamkin told me that the Club’s London meeting was that evening, and told me that the keynote speaker was Billy Schwer. Billy won the IBO light-welterweight belt in 2001. That much I knew.
What I’d not really appreciated until last night was that Billy is an entrepreneur as well as a sportsman, and that the discipline, determination and desire required to get to the number one in the world in a sport are very similar to the attributes requrired for growing a business. The last time I heard a professional sportsman give a talk was about 15 years ago (and it was Will Carling!) Billy seems, shall we say, more of a businessman than Will,
And he’s off (Northern Rock Chief Exec goes…) 2007-12-13 07:37:01 Adam Applegarth, Chief
Exec of Northern
Rock, has left today.
The new Chief Exec is Andy Kuipers, who had left a few months ago, but has just been reappointed as a Director!
Virgin seems to be the only game in town left for rescuing the crippled bank, since talks with Olivant (the other bidder) seem to have fallen through.
The new chairman, Bryan Sanderson (who took over in October following the resignation of Matt Ridley), has made the normal positive noises about how Andy Kuipers is the right person for the job.
Northern Rock are being coy about the payoff, and have said the departing Mr Applegarth will be paid “substantially less than the amount which he would otherwise be due.” I suspect that the staff and shareholders who have been rioting in the streets had he been allowed to run the bank into the group and leave with a massive cash bonus (and rightly so - personally, I support big bonuses for people who do well, particularly Entrepreneurs :-), but have a REAL problem Read more:hellip
Central Banks and strange games 2007-12-13 07:22:40 I’m still trying to work out the meaning of what happened yesterday. Let’s start with a quick summary of the facts:
A group of Central
Banks (who are part bankers and part civil servants), led, but the US Federal Reserve, and including the Bank of England, the European Central Bank (which is the central bank for the EU), plus the central banks in Switzerland and Canada made a joint move.
They each announced that they will be providing Billions of pounds ( or dollars / euros / whatever) in loans to banks… basically to try to prevent “another Northern Rock.”
Basically, the concern was that, even though the base rates had been cut, the actual rates banks were charging their customers weren’t coming down as fast, because banks were borrowing from each other at rates quite a lot higher than the base rates. I wrote about this in the UK in this article a couple of weeks ago, and the Wall Street Journal picked up on the story yesterday.
This move by the ban
The SubPrime crisis - as explained by Bird and Fortune 2007-12-11 11:43:54 Marvellous sketch from Bird and Fortune
about the SubPrime crisis attached here. (If you aren’t viewing this on my site, you may not see the video - you may have to click through to my site to watch it.)
Some people have found the sketch racist in that it refers to “unemployed black men”, however it is worth noting that:
The unemployment rate in the States is DOUBLE for blacks than it is for whites
The sketch does NOT say that unemployed people are the problem - but that industry professionals preying on them is.
If we can put the racial epithets to one side, and concentrate on the sarcasm used against the financial community, there’s some very telling stuff there.
The FNMA ups its fees 2007-12-11 10:20:38 Those who invest in the States have probably come across an organisation called the “Federal National Mortgage Association (FNMA)” (pronounced “Fannie May” - try saying FNMA in an American accent, and you’ll get the idea.)
The FNMA is an odd beast - it was founded as a Government agency in the 1930s, but privatised 30 years later - and has been a private company since, well, before I was born. Despite this, many Americans still believe that it is backed by the US Government (which isn’t true), or at the very least, that the US Government would step in to stop it going under if it had real problems (which might be true, but not something anyone would want to put to the test, particularly with a Republican Government in power.)
What the FNMA does is related to Mortgage Securitisation (if you need a primer on what that it, you can read my article here.)
The FNMA is odd, and basically “takes the risk” on ‘mortgage securities’ (sha
More SubPrime worries - the Eastern banks are now propping up the Western ones 2007-12-10 04:59:25 The BBC’s Bob Preston has made some comments that have worried me more than a little.
Firstly, he noted that Swiss giant UBS has just announced FURTHER losses of £4.9 billion due to the subPrime crisis - these are on top of the £1.8 billion it announced in October.
UBS is still standing up OK though, although these losses mean that it will make an overall loss this year, it’s just managed to raise £4.8 billion - not from its own Government (Mr. Darling, take note), but from the Government of Singapore’s Investment Corporation.
To put things in perspective, that’s about 3 times as much money as it looks like Northern Rock is going to end up needing to patch its problems.
UBS’s borrowing is in the form of “convertible shares” - firstly the Singapore Government lends UBS the money - at 9% interest - for two years. Then, at the end of that, it can convert that loan into shares if it wants to. A nice little earner for a government sitting on a lo Read more:Eastern
, banks
, Western
This week’s currency movements 2007-12-22 02:00:29
For some while, I've been getting Smart Currency Exchange's weekly updates on currency movements.Smart is a company I've used to transfer money to a company I'm setting up in Canada, and specialises in transfers for business and property-purchase purchases. (Basically, they don't do small amounts, but have rather better rather than, say, my bank, for sending a few tens of thousands of pounds or more.)
This is their weekly newsletter, reproduced with their permission.The rates given are the "inter-bank" rates, for comparison, not the "client rates for sending, by the way".
Euro
1.380 / £, compared with 1.399 last week
Cypriot dollar
0.803 / £, compared with 0.809 last week
US dollar
1.9847/ £, compared with 2.022 last week
Canadian dollar
1.973 / £, compared with 2.057 last week
Australian dollar
2.287/ £, compared with 2.342 last week
New Zealand dollar
2.588 / £, compared with 2.629 last week
Swiss Franc
2.292 / £, compared with 2.330
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