15th April 2011

March/April Update

Dear Readers

Welcome back to the property blog.  I apologise for the delay since the last post.  This has been brought about by a sharp increase in the volume of business.   More about that later!  This blog will cover some of the property related highlights of the last 4 weeks and their impact on the market.

The Budget

The Budget did very little to assist the property market – the First Time Buyer Scheme was a damp squib and, as reported in the Press, did more to help Barratts than first time buyers.  Readers of previous blogs will know my strong views on helping more first time buyers into the market and I think the Chancellor missed a wonderful opportunity to introduce an imaginative scheme that could have really got the property market moving. 

Stamp Duty was reformed in the Budget which did take me by surprise – I am not sure if the Treasury has done its sums and worked how much it will cost! This scheme will certainly assist institutional or large investors who are looking to buy property portfolios but will do little to assist the housing market as a whole. A much better solution would have been for the Chancellor to lift the raise the value at which Stamp Duty applies.

To finish off my summary of the Budget I would also like to add that I had a very interesting and enjoyable meeting at the Clydesdale Bank listening to their Chief Economist, Tom Vosa, discussing the Budget in more detail and while I disagreed with most of his comments regarding the assistance required for first time buyers I still welcomed his input.

Spring in the Market

A report by the National Association of Estate Agents in March confirmed that the number of properties coming on to the market in February of this year had risen by 25% compared to last year.  NAEA President Michael Jones said “To see such a significant boost in activity amongst sellers compared with this time last year is encouraging news for the UK property market.  The signs are that they are being more realistic about the prices they can expect to achieve when they put their house on the market.  This means that, on the whole, supply can meet demand levels meaning a more stable market, for the short term at least.”

I agree with his views re the UK property market and although my firm has seen a significant uplift in market share compared to last year, in part due to certain initiatives that we have been running, it is my understanding that overall listings in this area and for Scotland as a whole are slightly down on last year.  While I still anticipate an upturn by the summer of this year, the property market still remains very unsettled.  The Land Registry has also issued a Report indicating that house prices had dropped by 0.8% since January.  Readers of previous blogs will know my concerns with house price surveys.  Interestingly a day after, the Nationwide issued a survey indicating that average prices across the UK slipped by just 0.1% in the first quarter and that they were indicating that house prices would move sideways during the course of this year.

Increase in Mortgage Products

There has definitely been an increase in the number of mortgage products and also the size of mortgages available. The Nationwide has returned to offering big money mortgages increasing their mortgage loan limit from £1m to £2m.  I think this is a clear example of the prime property market increasing.  More on that later.

Which Report

I was quick to highlight the recent ‘Which Report’ which criticised Estate Agents for over-valuing properties to get business.  This has been a common problem and something that we have never done – what is the point in listing a property at a high price which will just simply sit on the market? – unfortunately this is a practice carried out by some agents.  I also think that there is a discrepancy with the Home Reports with some valuers clearly being influenced by the instructing agent to over-value property.  I won’t get on my soapbox again but my plea is: Estate Agents – don’t over-value, Scottish Government – scrap the Home Report.

Winkworth Quarterly Market Review

I read the Winkworth Quarterly Market Review that came out at the end of March.  This was a very positive Report showing that there has been a surge in demand for family houses and an increase in the number of new instructions. It also showed that the property market outside London is beginning to thaw and more rental properties  are coming on to the market as Landlords grow their portfolios and rents continue their upward march. 

I will discuss the rental side of things in future blogs.

Surge in Buy to Let Lending

There is definitely an increase in confidence amongst lenders in respect of buy to let lending. Platform have recently announced that they plan to increase their share in the buy to let market – again more of this later.

First Time Buyer Scheme

By the start of April the First Time Buyer Scheme which had initially been welcomed by Developers was under attack from the National House Builders Federation. They indicated that their Members had serious concerns regarding the impact that the Scheme would have on their Balance Sheets.  This coincides with my view and earlier reading of the Budget and I would ask that the Chancellor gives serious consideration to a new first time buyer scheme.

Regular Home Saver

On 6 April a new scheme was launched to encourage first time buyers to save up for a deposit.  Clydesdale Bank and Yorkshire launched a new savings account – Regular Home Saver – which provides a monthly saving facility.  I am not sure if the scheme is clear enough or goes far enough in giving real assistance to first time buyers but I welcome anything that encourages first time buyers to get on the market and I will report back with interest on any feedback I get from the Scheme.

Increase in Mortgage Products

At the start of April there were bold headlines that stated that the number of mortgage products available to intermediaries had finally broken through the 10,000 barrier for the first time in 2½ years.  This is a very positive move and hopefully shows an increase in the willingness of Banks to support the housing market.  As an aside, the number of buy to let products doubled over the last year and with new lenders coming into the buy to let market, including Metro Bank, I think the increased competition will be of great benefit.  Part 2 of this blog will follow shortly.


Mortgage approvals and LTVs rise sharply

I was delighted to read at the start of April that mortgage approvals had risen from 46,967 in February to 48,979 in March – an increase of 4.3%. This is the third consecutive month of growth as the market recovers from a sluggish Christmas period.  The year on year comparison is more positive with the decline slowing to 0.6% compared to March 2010 – the slowest year on year decline since it began in May 2010.  The volume of higher loan to value mortgages has also increased with a proportion of the mortgages in the higher LTV band significantly higher than October 2010.  I am hopeful that this is the start of the Spring recovery in the market.

Commercial Property Values

A Report from CBRE UK indicated that the month of March saw a distinct pick up in the performance for all three of the major commercial property sectors in the UK – office , shopping centre and retail performance.  This is hopefully a sign of confidence returning to the property market.  Anything that strengthens the value of property assets, either residential or commercial, most of which have borrowing against them, will increase confidence amongst Banks and hopefully see them lending again in property transactions.  I am very keen to see an improvement in Bank funding for property developments as this is something that is urgently required.

UK Housing Shortage

As I have indicated in previous blogs, the main difference between the Irish and the UK housing markets is that in Ireland there is a vast over-supply of properties to demand whereas in the UK there is shortage of supply to demand.  The last figures showed that the shortage of housing stock would reach 375,000 units by 2025 if there is nothing done to encourage building.  I think the first stage is that the housing market requires assistance and brought back on an even keel by Government and thereafter it will take care of itself.  This is the main reason for the growth in the rental market. People realise that done properly with the correct advice, property investment is flexible and relatively safe.

Banking Reform

On 11 April we received the Interim Report from the Independent Commission on Banking.  My great fear was that it would put onerous responsibilities on to the Banks, leading to their break up and the movement of their Headquarters from the UK.  I was also concerned that any onerous provision on capital requirements would snuff out a tentative recovery as Banks would not be in a position to lend.  While I do appreciate that there are still some issues as far as the Banks are concerned, I do think that there is still too much Bank bashing from politicians and the general public and now it is time to forget past mistakes and allow the Banks to focus on encouraging the growth of the economy and the property market in general.  I thought the Interim Report had the correct balance between protecting the public and not bashing the Banks too hard.


I hope you have enjoyed this whistle stop tour of the activity surrounding the property market in the last month.  I will be reporting on a more regular basis again.  I am very encouraged by the increase in activity and hope that it is the start of a sustainable recovery. For those of you who have noticed, I have now been blogging for a year and as we enter into our second year, I look forward to keeping you informed of my thoughts on the property market and of course would welcome your comments.

Lindsay Darroch


Head of Blackadders Property



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