The UK has been greeted on its return to work today with the news that mortgage approvals rose 4% in the month from January to February this year.  Good news most will say.  However, the question that remains is is the UK market beginning its recovery, or is this simply a blip in an otherwise continuing downward spiral?

A number of property indicators in 2009 have suggested some form of recovery is under way.  From my own network of contacts in the property industry, January and February were certainly upbeat months.  So who is buying?  It seems it is a combination of first time buyers and property investors keen to take advantage of what they see as value in the market. There is certainly an increased level of demand from first time buyers who, having previously not been able to get on the ladder and have saved in the meantime, and now in position to take advantage of lower prices.

Many property investors, who will abide by the “buy low, sell high” philosophy, see an opportunity to buy up stock previously out of their reach.  Due to the increased numbers of repossessions, the Below Market Value (BMV) industry has certainly exploded in the last 3 months, with investors looking to buy at anywhere between 20% and 30% below market value on second hand property, and as much as 60% below market value for unsold developer stock.  These factors, combined with a stabilising in mortgage rates and products has led to increased enquiries, sales, and therefore the improvement in nationwide data released by various bodies.

In addition to this, lower interest rates have meant homeowners, specifically on tracker mortgages, have in some cases more than halved their monthly outgoings.  The government can therefore argue that lowering rates has put more money back in some people’s pockets.  However, it has been well documented that rate cuts have not, in the main, been passed on, so the financial easing has not affected the whole homeowner market.

So where are we?  Well general economic data would suggest the bottom has not quite arrived.  Job cuts are still being made and mainstream lending does not appear to have improved much.  Coupled with the facts that repossessions are still rising and general transactions between homeowners are still low would suggest that there is a blip in the market.  However, supply and demand are still fundamental when looking at the property market.  As prices fall, demand generally increases, and there is no doubt that demand has increased in 2009.  One could take a further view that if property prices continue to fall, the demand will continue to increase from both increased levels of first time buyers and investors looking for even better deals.  Therefore, it is my opinion that the property market will find a natural recovery point in the not too distant future.

It would seem that as the sun comes out, the days are longer and the weather takes a turn for the better, good news seems to be emerging from one of the nations leading Building Societies, with figures showing house prices and mortgage lending rising in March, compared to the previous month.

Nationwide have reported that in February 2009, the average house price was around £147,746, but the March figure has just emerged at £150,946, which is just under a 1% increase, at 0.9%.

I think it’s fair to say this is quite an unexpected rise, but does this really indicate we are heading into calmer storms and leaving the hurricane recession behind us? According to Nationwide, it is very early days, as they described the change as a “surprise bounce” and warned against concluding the market had turned.

Commenting on the figures Fionnuala Earley, Nationwide’s Chief Economist, said:

“Spring brought a surprise bounce to house prices in March. The price of a typical house increased for the first time since October 2007, rising by 0.9% during the month and reducing the annual rate of fall from -17.6% to -15.7%. This brings the price of a typical house to £150,946. The moderation in the annual rate of fall is somewhat distorted by conditions last year and so it would be unwise to draw strong conclusions from the significant slowdown in the annual rate of fall. Equally, while the rise in prices in March is welcome, it is far too soon to see this as evidence that the trough of the market has been reached.

The Bank of England has already taken strong measures to ease the tensions in economic and financial markets by cutting rates and commencing quantitative easing. However it will take time for these to work through into the housing market before we can expect a sustained recovery in house prices.”

To add to the good news about house prices, Nationwide also revealed to the country that Mortgage Approvals were the highest since May 2008, with February seeing mortgage approvals rise to 37,900, nearly its highest level for a year.

The more houses that are sold and purchased, the more money is pumped back into the economy, so these two pieces of news are not only a great joy to hear, but also tiny bits of gold dust that we need to start collecting in the years ahead.

So, in a year of mass redundancies, economic doom and gloom and of course the lack of any money to spend on the nice things, we say thank you Nationwide and may you bring us more good news next month, the month after and the following months that come.

You see, we like good news, it just feels better.

As soon as I finish this blog, it will take its place in history. Admittedly, it won’t be up there with world wars, births of monarchs and world cup winning football teams, but it will indeed have its own place in history.

A funny subject for an investment related blog? Probably, but as an investor, history plays a massive part in the way we invest, but is it always an accurate version of what really happened. Yesterday will almost always define how we approach tomorrow.

Let’s roll back to a week last Wednesday. I tend to play a few arrows with a good mate down my local pub (this really is going somewhere, I promise). It was one of those nights where every dart I threw was a winner and for once I walked away the darts champion of the 7th of January 2009, for my local pub and our game anyway. All said and done, I won, that is history, it is there for both me and my friend to reminisce to the grandkids about if we achieve nothing else as life moves forward.

This is not a rant I promise, but as we prepare for another massive match tomorrow, we had a quick chat about times and venues, then nothing more than a passing comment was motioned into the conversation, he said I won 3 – 1, whereas I think I won 3 – 0. He is sure, I am sure, there was no cheering audience or passing local to back either of our opinions up. The fact I won is there, we both agree, but as to the score, we both have different opinions. So this one piece of history is covered in doubt, possibly controversy, and although history dictates that I won the game, the score is still up for debate, even though it happened only 6 days ago.

Moving back to the investment topic, as we all sit down and plan and prepare for our investments for the next few years, how will we look back at the history of our previous investments?

Some will say its been a terrible year with house prices crashing, but the houses they owned all had tenants and the rent covered the mortgage, so does the history of 2008 define a bad year because of the house price drop, or does it indicate a good year as all the houses had tenants and we are not out of pocket in the physical sense, only in the paper value of what the houses might be worth today. If the reverse was true and they had no tenants for 6 months but their house price rose by 5%, would this indicate a good year or bad year, with a big loss of physical money, but a rise on the value of their houses?

This is where history, although it does indeed happen, can be taken and interpreted in many different ways. England winning the football world cup in 1966 did indeed happen, but for some people it was the greatest game they ever saw, for others in the crowd that day it was an immense disappointment.

Even though history may indeed make 2008 look like a terrible year for investors, we must as investors and individuals look back and look at it from a balanced point of view. If we are still standing and investing, it couldn’t have been that bad, could it?

Back in the autumn I was looking forward to the latest round of property exhibitions and promptly booked my tickets for a couple of them in London & Birmingham. I entered both in anticipation & left disappointed. However, my own personal feelings aside I noticed an overwhelming feeling amongst agents that the branding exercise of an exhibition stand was still very much a must, despite the lack of investors through the door.

Now before you say it, of course I attended on ‘trade day’ – day one of three which is often perceived as a big networking event where cold pitching business is welcomed as opposed to discouraged. However, upon following up conversations during the oncoming week I would ask how they felt the attendance was and they would all say the same, that it was “ok” but “no, not a great deal of leads but they’ll do”. And besides, since when would an agent take a non-client call the week after an expo!

This told me that the branding exercise of attending was still very much at the forefront of their priorities despite the economic downturn. So with another round of exhibitions just over a month away I have begun to think about attending these also. By contrast I could be right in not having enthusiasm for doing so and certainly on the basis of my attendance last time round it would be a waste of energy! However this time round I shall be there with bells on (ok, perhaps sans bells) for other purposes, more on that another time.

So between the autumn & oncoming exhibitions we have seen a fair few goings on in the exhibition scene, particularly goings. One major exhibition has downsized from its traditional venue at Excel to the smaller Earls Court whereas another has retained its choice of larger venue. For me this reflects a paradigm shift in the quality of the anticipated audience. Active investors in the market are fewer but most certainly present, so gone are the days of bag grabbing “shoppers”, which can only be a good thing.

However the question which does remain is that are those actively in the market likely to attend an exhibition nowadays? Are they now sticking to their trusted agents and or relying more on the internet? Only time will tell. For me this is a last throw of the dice for the exhibitions. If they work then they will live on, but what if they don’t? If no-one comes through the doors, who is going to part with their decreasing budgets to attend again this autumn? However, with market share diminishing and hot on the heels of the announcement this week of voluntary administration by a household name attendee & purchaser of larger stands, those agents remaining have little option of siding with the former. Attend they will and with maximum optimism, but one thing is certain.

The question is branding more important that online marketing will be answered come the end of spring.

Selling properties, especially investment properties and buy to let properties used to be quite easy. Sorry to all the sales people out there, but it did.

Having previously worked for a property investment company, I know that it was plausible to push through 4 – 5 deals a week, very rarely without any lending problems and mortgage approvals tended to be easier than finding a Manchester United fan in London. Those were the glory days of lending and up until a year ago the level of lending was at a record high and the amount of buy-to-let mortgages that were being approved was staggering, also accompanied by some of the best rates investors had ever seen.

Some would say this is the reason we are in the midst of a recession and struggling, but that is another blog, one of which we have covered and will cover elsewhere.

Recently, I brought a couple of stunning BMV deals to the table, as we felt that after a year in which we would not touch property, we now had a couple of deals that really did make sense to the investor. This was due to better discounts, newer and an increased amount of decent mortgage rates and just the general feeling that property had hit its lowest level and was now starting to recover, according to reports from leading lenders and banking institutions.

We sold Penn Lane within a couple of days and currently have offers on the further two properties that we have on our books, but we kept hitting a common discussion with some of our investors – “would love to buy it, I am just too old, I wont get the mortgage”.

As with anything, previous misconceptions had started to creep back in to investors minds. Some of our investors tried to get a mortgage just as things were starting to look really bad and were hit with many reasons why they would not be approved, one of them being age which is in fact in relation to risk. This had then been indented into their investment strategy and they were probably now missing out on deals that they really wanted to get involved with.

We work with one mortgage broker and a quick call to them to inform them of this supposed age issue and we were met with they reply that this indeed was not really the case anymore, and in fact we could offer mortgages to people in their late 50’s and beyond. Chris then went back to the investor, forms went in, and he is now waiting to complete on the deal next week, which is a bonus not only for us, but also for the investor that a year ago was simply not able to go through with these deals any more.

In April last year mortgage lenders got edgy, they were panicking, they knew trouble was ahead and they were refusing mortgages for many reasons. In fact, I can not mention the name, but I knew of one mortgage that would not go through this time last year because the property had decking!!

With mortgage lending now recovering, new criteria are in coming into play and some old reasons to refuse are falling away.

Are you too old for a mortgage on an investment property? Ask us, you might just be surprised.

New statistics were published today by the Council of Mortgage Lenders on mortgage arrears and possessions. Unsurprisingly, full year figures for 2008 show a sharp rise on 2007, but many steps are being taken to help borrowers facing difficulty. Interestingly, there were 5,000 fewer repossessions than expected and were forecast in the previous year, with the measures that were introduced towards the end of year seemingly having some kind of effect.

A few stats and figures released by the CML today:

* 5,000 fewer repossessions than forecast in 2008
* 40,000 repossessions in the year - 1 in 290 mortgages
* 10,400 repossessions in the fourth quarter - 1 in 1,100 mortgages
* 1 in 64 mortgages in arrears of 2.5% or more
* 1 in 53 mortgages in arrears of three months or more (inflated by lower interest rates)
* 75,000 repossessions forecast for 2009 remains unchanged.

Around 10,400 properties were taken into possession by first charge mortgage lenders in the fourth quarter of 2008, down from 11,100 in the previous quarter but up from 6,900 in the fourth quarter of 2007, according to the Council of Mortgage Lenders. The total number of first-charge repossessions in the year was an estimated 40,000. This was 5,000 lower than the CML’s original forecast for the year.

The fact that there were 11% fewer repossessions than expected, despite a worsening economy and rising unemployment, demonstrates that mortgage lenders are making strenuous efforts to ensure that repossession really is a last resort. It is important to recognise that repossessions include a proportion of abandoned properties and property fraud. They also include buy-to-let repossessions, as well as home-owner repossessions. In the vast majority of cases where home-owners are committed to working with their lender to keep their home, this outcome is successfully achieved.

At the end of 2008, around 182,600 mortgages - or 1.57% of the total - had accumulated arrears equivalent to 2.5% or more of the outstanding balance  - for example, £2,500 or more on a £100,000 balance (a £97,500 mortgage plus £2,500 arrears). This compares with 1.29% at the end of the third quarter of 2008, and 1.08% at the end of 2007.

On a “number of months” basis, 219,100 mortgages were in arrears of more than three months at the end of 2008, up from 166,600 at the end of the third quarter of the year, and up from 127,500 at the end of 2007. However, the big reduction in mortgage rates experienced in 2008 was a significant influence on the rise in the number of arrears cases measured on a “number of months” basis - as the same given sum of arrears represents a higher number of months payments as interest rates fall.

The vast majority of people who face temporary difficulties successfully work with their lender to stay in their homes, and get their mortgage back on track over time. Where borrowers contact their lender early, maintain good communication and are committed to paying what they can and resolving their arrears, lenders work hard to help wherever the household’s future prospects look feasible.

Source – CML Press Releases

The fifth of November 2008 is a day I will remember for some time. Now I know what you’re thinking, that’s the day a few centuries ago when a certain Mr Fawkes decided to try & blow up the powers that be, right? Or maybe that I went to a rather spectacular fireworks display? Neither of these were the case in this instance. That morning at around 10am our Ambulance Trading investment opportunity was emailed to one of our partner’s databases. I can remember telling my colleagues that I will be happy if we can generate 15-20 enquiries – after all, enquiry levels must be down as we prepared to head into recession.

After the eightieth enquiry had landed in my inbox just after 6pm you could say I had encountered my busiest day yet at Discover And Invest! Over the course of the following few days more filtered through ensuring that yours truly was putting in some seriously long hours!

Amongst this number was a variance in terms of quality, from those who were too afraid to hold a conversation over the phone to those who invested. In between were all extremes; those whose level of liquidity fell below the entry level, those who had no real interest, those who absorbed the information never to be heard from again, agents sniffing around and those who I simply could not contact! As all the enquiries are submitted in the same format, it’s impossible to gauge the level of quality until contact is established.

Investing is very similar in this respect. There are still so many opportunities out there ranging from property to bonds to shares to alternatives etc. How does one accurately appraise each individual opportunity? Which ones are most likely to do what they say on the tin and provide the promised returns? Which ones are the scams? Which ones are the big gambles?

Whilst there are no blueprints for what’s good and what isn’t, it’s fair to say that the usual rules apply. Over the course of sifting through the enquiries I received, the level of questioning was considerably higher than I expected – good! This goes to show that investors are doing their research, it shows that they are familiarising themselves with the workings of the opportunity, and it shows that where applicable they are using their experiences –both good and bad – to base their decision as to whether or not to take it further. Whilst this continues to be the case, those marketing the decent secure opportunities are certain to prosper.

£130 per month profit from month 1, guaranteed for 12 months?  It’s Discover and Invest of course!

Following on from our ambulance and renewable energy offers, Discover and Invest is pleased to announce yet another income generating opportunity that is sure to deliver.

Chris Davidson, Managing Director for Discover and Invest tells us that “whilst sourcing for 2009, and although we usually get involved in alternative income generators, we noticed that the UK property market was starting to show real value.  Prices had fallen, yields had risen, and a good quantity of cheap stock was available to the market.”  Therefore as usual the problem is separating good deals from bad.

Davidson continues: “there are various problems facing would-be  property investment buyers today: lots of stock without tenants resulting in poor cashflow forecasts, problems getting finance because the rental valuation coverage is too low (125% minimum these days), valuations getting downgraded too often meaning valuation funds are risked time and time again only to find the deal falls through.  Finally, in a market where the value is good and the immediate bonus is strong cashflow from rentals, how do you secure the rental income?”

We’ve finally come up with a deal that knocks the socks off just about all property deals at the moment.  Firstly, our deals guarantee a 20% discount from today’s RICS valuation, with only a 5% net deposit down.  The properties we are sourcing are rentbacks, so you have quality tenants in your property from day 1, paying from day 1…so no worries about finding tenants, how long it will take to get them in, and whether they will look after your property!  Remember the property used to be the new tenant’s home, so it will be filled with their own furniture, etc.  This is much more likely to mean you have stable cashflow and good quality tenants.  The new tenants also sign 12 month contracts on premium rent, meaning excellent cashflow and low hassle for you as the rental management company is in place.  Furthermore we have teamed up with Endsleigh Insurance to provide their rent guarantee scheme.  This secures your rental income for a period of 6-12 months.

We are also so confident that the valuations are accurate, we will pay for the buyer’s valuation, means no funds are risked.  If the valuation is downgraded, the seller will have to downgrade proportionately.  If they physically cannot, all parties walk away from the deal and no funds have been risked!  Furthermore, lenders need to see 125% minimum rental valuation coverage, so we will only supply properties that stick up unless the buyers pays in full with cash.

Our first property is being released on Tuesday in Cheshire.  Valued in the last few weeks at £115,000, the property is available for £92,000.  Monthly cashflow after mortgage, rental management and insurance comes to a whopping £134 per month!  Total net buying costs are £8,450 so this gives a return on capital employed of around 19%.  With £23,000 of built in equity as of today, there is sufficient leeway if the markets falls, and also built in profit for when the market recovers.  If you were to sell your property in a year’s time for the same price plus your rental income, you would have made a return of 250% on capital employed!

Chris Davidson Managing Director of Discover and Invest states that: “many analysts believe we are in a U curve recession now.  Property prices are nearing the bottom in a similar way to what has happened in Florida.  The bottom may take a while to turn but it also gives strong investor signals to buy up stock at value prices.  We are all taught to “buy low, sell high” and the first part of this equation is nearing the right point for many.  Now it is about finding the right deal.”

So yet again, Discover and Invest has hunted out the right deal for this market: accurate discounts, low risk, strong cashflow and secure income.  If you take the view that we are nearing the bottom, why not check out the deal at www.discoverandinvest.com

If you’re a global investor, there is one country in the world today that is screaming value for money… and it’s the UK.  Why so I hear you cry?  Well, there are two main reasons why, the same two reasons in my view that has made the USA a value for money buy over the last 2 years.

The first reason is a weakening currency; typical of an economy in a downturn, one that is importing more than it is exporting or of one that is printing vasts amounts of money, or  potentially all three.  The weakening of a currency, relative to your own means better value purchases.  Many Brits indeed found that to be the case when buying American over the last few years at as much as 2 Dollars to the Pound.  Times they have a-changed though!..Xe.com tells me that 1 British Pound Sterling buys me but 1.38 US Dollars, a fall in the last 9 months of around 60 cents, or in percentage terms,  approx. 31%!!!  So if you’re making an investment purchase in the UK, there is certainly inherent value compared to even the most recent past.

The second major reason is falling house prices, which begins to give this type of investment market inherent value too.  Property prices have fallen approx. 20% from their peak 18 months ago, and therefore considered better value.  Discounts are also being offered in the region of an extra 20% on distressed and new build sales, which provides further value.  Therefore investors are  taking the view that these discounts provide built-in equity in case we have another year of falls.

Finally, rental yields are now in the region of 8-9%, which means on the typical mortgage, cashflow positive deals of around the £100 ($138) per month mark are starting to appear.  With interesting new 12 month insurance policies available from major brands to protect rental income, these deals are incredibly attractive.  Some valuers will even pay for your valuation for you so no expenses are necessary until you know you can get a mortgage and the valuation is accurate.

So it’s easy to see why property investors are taking the view that the current UK deals are great value, income producing straight away and extremely secure.  On top of this, a long term view means the profits are much more substantial than in a boom.  We are all taught to buy low, sell high.  Well here is the chance to put the first part of that equation into practice…whether it is property, or an alternative investment, companies like Discover and Invest can help you to see why the UK is worthy of your attention.

My morning started with Take That on the radio telling me this could be the greatest day of our lives, and then a report from the British Bankers Association informing me that the mortgage lending rose in December, indicating the start of a possible recovery for our shattered economy. Coincidence?

With nine out of ten news stories indicating the end of the financial world, it is refreshing and relieving to finally hear some positive news on this cloudy Monday morning.

Figures indicated that approvals for house purchases in December were around 22,000, up from around 17,300 in November. This figure is still 46% down on this time last year, but to see an extra 5,000 mortgages approved in what is traditionally one of the weakest months for selling houses, is excellent news and a sure sign that investors and home buyers are now starting to understand it is a great time to buy, with some amazing bargains on the market.

2008 was undoubtedly a lot harder for mortgage lenders and estate agents than the previous few years, with borrowing at a much lower rate, and the BBA backed this up.

BBA statistics director, David Dooks, said of the latest data:

“This first opportunity to compare 2008 with 2007 shows that gross mortgage lending by the main high street banks totalled £170bn, some 23% below 2007’s total of £221bn. However, lending by the rest of the mortgage market was half the previous year’s total, showing how mortgage lending became much more concentrated during the year. The banks approved less than half the 2007 number of loans for house purchase, reflecting falling demand from households facing greater economic uncertainty and double-digit falls in house prices over the year which led to a wait-and-see mentality.

“Consumer credit was very weak in December as people reined in their credit card spending, despite early Sales and heavy discounting by retailers. This consumer caution was also reflected in personal deposits, which rose strongly.”

There are obvious problems at the moment but we are starting to see a rise in house sales, more mortgage companies offering more products and a general raise in enquiries reported by many estate agents. The question that will be asked is will this continue for the next few months or even the year, or will this rise only last a couple of months before things take another turn for the worse.

We will not know until it happens and I am sure there are more ups and downs ahead, but we must take notice of the fact that more people are now buying homes than in November, which in turn will not only help the economy but also give some relief to the many companies related to property.

With Discover and Invest launching our first Property Investment deals next week, this news is more welcome than a cold beer on a summers evening.