BUY-TO-LET is back in the news, but for all the wrong reasons. This month, the Department of Trade and Industry shut down several schemes that promised — and failed — to make millionaires out of investors.

Rivals quickly moved to condemn the cowboys in their industry. Inside Track, one of the biggest companies in the business, went so far as to put forward its own four-point plan for regulating the property investment sector.

But against the background of a stagnating UK housing market, some property professionals are questioning the way that many of the remaining schemes operate.

Marketing material tends to be long on the potential to make money and short on the pitfalls. An Inside Track marketing leaflet tells you “how to make a million in property investment — even in a falling market”. The website of PropertySecrets.net, an agent for overseas property aimed at UK investors, proclaims: “Buy-to-let and property investment. Maximum profit — minimum risk.”

At the moment, such claims do not have to be substantiated, as they would if made by firms which came under the aegis of the Financial Services Authority. In fact, the Inside Track promotion’s boast that “last year we created over 200 property millionaires” relates to the gross value of its investors’ property. The company admits that the net value, after deducting the debt taken on to acquire the assets, would make their clients’ wealth look far more modest.

Ray Boulger, of John Charcol, the mortgage adviser, says that such claims are misleading. He says: “To be a property millionaire properly, you need to have net assets of £1 million. In the boom markets of three to four years ago, that was possible. In today’s quieter market, that is much harder.”

But the criticisms go much deeper than the promotional material. These buy-to-let companies typically aim to negotiate special deals with developers of flats or houses. In return for tying up the sale of a large chunk of a new development in advance, the agent will obtain a “discount” on the purchase price. This sum, often from 10 per cent to 20 per cent, should then be passed on to the buy-to-let investor.

Someone who has lined up a mortgage to cover 85 per cent of the value will then own a property with minimal outlay of their own. In a rising market, with a tenant covering the costs of a loan, this so-called off-plan buying is a licence to print money.

Lee Grandin, of Landlord Mortgages, a specialist buy-to-let broker, describes it as “a high-risk, high-reward, high-loss strategy”.

He points out that new properties tend to be sold at a premium anyway, while a valuer’s figure can be out by as much as 10 per cent. Taking account of either of those factors could wipe out your discount. Not only that, but when the property is eventually built, an investor’s flat will be coming on to the letting market along with all the others in the development. This “investor flooding” could make it harder to find tenants.

John Heron, managing director of Paragon Mortgages, the third largest lender to the market, is much more blunt. He says that such schemes are “fundamentally about property speculation and not about long-term investment in private rented property”.

Less than 5 per cent of the property his firm lends against is new because professional landlords find it difficult to let. “Much of the new property is higher value, whereas much of the demand is affordable,” he says.

Not surprisingly, such criticisms are rebutted by operators of buy-to-let schemes. Tony McKay, chief operating officer of Inside Track, says: “Our activity is completely transparent. We negotiate a discount with a developer and pass the whole of that discount to the investor.”

Such discounts are genuine, he says, because the developer saves on certain marketing costs by selling to an investment club, while a pre-sale reduces his risks. A valuation 12 months ago of 2,600 properties bought by Inside Track investors showed an uplift of £80 million on an original cost of £395 million, according to Mr McKay.

He admits that the subsequent flattening of the market may have left some property below the pre-discounted price, but he says that the discount provides insurance against falls in values.

Source: Times Online

Five Reasons to Buy Cayman Real Estate Cayman Net News - grand cayman,Cayman Islands … on the property. There are also no time deadlines for foreign investors to build on raw land; it can be held undeveloped indefinitely. Many British Overseas …

Emerging versus Established Property Investment Markets Assetz News - Stockport,Cheshire,UK The number of Britons owning a property abroad is expected to double by 2008, as more of us recognise the value of a holiday home overseas as a serious …

Buying property abroad to save money MyFinances.co.uk - London,UK Millions of Britons are looking to buy property abroad to try to escape the high cost of living in the UK. Research carried out …

HOUSE buyers in Scotland are becoming a jet-to-let generation - snapping up properties overseas, after being priced out of the domestic housing market.

The UK property boom has meant prices have soared above the means of many Scots. But, with a growing number of routes being offered by no-frills airlines from airports across Scotland, the option of buying a property overseas is increasingly popular.
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The claim - from the director of the Homes Overseas Exhibition, being staged at Glasgow’s Scottish Exhibition and Conference Centre today and tomorrow - comes as new research shows that the average UK homeowner had lived in their current property for 14 years and settled into their long-term family home at the age of 38.

Would-be home buyers - including first-time buyers and those looking for an investment opportunity - are looking at overseas markets for getting onto or climbing up the property ladder, according to Miki Reeder, director of this weekend’s exhibition.

Warmer climates, relaxed lifestyles and low-cost air travel have combined to make buying a property abroad an appealing alternative to buying in the UK, he said.

The average cost of a house in Scotland is now in the region of £105,500, according to the Bank of Scotland house price index. The most expensive area is Edinburgh, at £177,028, followed by Perth, at £144,993. The cheapest were Paisley at £95,792 and Dundee at £102,351.

It was not surprising then, said Reeder, that many first-time buyers were being seduced by more affordable homes overseas. Those looking for a holiday home or investment were also increasingly buying second homes in foreign climes, largely because of elevated prices in the UK.

“The UK housing market has become saturated with buy-to-let properties and investment in UK property is not necessarily yielding the same returns of yesteryear,” he said.

“This has led to the UK population looking further afield and, thanks to low-cost airlines servicing most European resorts and the lower cost of property throughout the EU, the jet-to-let generation is booming.”

Buying and letting out property overseas could be a sound investment, helping to raise capital for future property purchases or as a retirement home in years to come.

A two-bedroom property in Marbella’s Old Town on the Spanish Costa del Sol would cost in the region of £100,000 and could bring in £300 per week off-peak and £500 during the peak season. Meanwhile, in Carcassonne in France, the average cost of a property is just £72,000.

“Compare this to the average cost of a property in the local area and maybe buying abroad is the only option for many people buying for the first time or investing in their future,” said Reeder.

“With the added benefit of airlines such as Ryanair, EasyJet, Globespan and Excel Airways servicing more than 20 European destinations from Glasgow, Edinburgh, Prestwick and Aberdeen airports, it wouldn’t be too costly to get to the location of your choice.”

Despite the rising cost of getting on the housing ladder, research from online bank Egg has showed the bulk of British homeowners - 63 per cent - move because of aspiration, rather than necessity.

The average homeowner owns three homes during their lifetime - but moving just an average three miles from their previous address. One in four claimed they were influenced by TV property programmes and a desire to keep up with the Joneses. That compared with just 15 per cent in Scotland.

Scots also typically moved a little further than the average Briton. They moved 12 miles - nine more than the average and compared with a high of 21 miles in Wales and a one-mile average in London.

“Our research clearly shows we all want to live in nicer homes, in nicer areas which have good potential and will cater for our financial futures,” said Andy Deller, banking and insurance director at Egg.

“But what it also highlights is that British homeowners are motivated by a desire to climb the housing ladder, to improve their surrounding environment for themselves and their families before finally settling down into their long-term home.”

Source: Scotsman

Mortgage services to buy property abroad are available from many offshore banks and building societies.

Rates vary depending on the country, but they are likely to be slightly lower by purchasing in Europe and taking out a mortgage through a well-known offshore bank, then they are on a property in the UK.

Some banks will offer mortgages only in euros, although others do also offer them in sterling for people buying in Europe. Anyone who opts for a euro mortgage but is paid in another currency should remember that there is the risk of volatility in the exchange rate.

Anyone who is paid in sterling should try to borrow in sterling. Euro mortgages are really only suitable for those earning euros. David Hollingworth, of mortgage brokers London & Country Mortgages, said: “There can be additional exchange rate risk if borrowers take the mortgage in a different currency from that in which they derive their income.

“For example, if the foreign currency strengthens against the pound then effectively the mortgage and the monthly payments increase even though there has been no change in the interest rate charged. If a foreign lender is used, the mortgage is likely to be in the foreign currency, whereas some of the offshore operations of UK lenders will be able to lend in sterling.”

It is not just currency risk that could cause problems. Legal systems can vary greatly, so it is important to understand the specifics involved. Alison Rolls, of Norwich & Peterborough Building Society, which offers mortgages on properties in southern Spain and Gibraltar, said: “Do be aware that there are significant differences between UK and Spanish land law. In particular, note that contracts to purchase property can become legally binding very quickly, so don’t sign anything before seeking legal advice.

“If you have set your heart on a property because of its wonderful, uninterrupted views, do find out if any development is planned or would be permitted that would ruin your vista.”

Norwich & Peterborough will lend up to 75 per cent of the property valuation in sterling, and the minimum purchase price must be £60,000. Its Spanish home loans include a standard variable rate, currently 6.75 per cent; a tracker mortgage which is the UK bank base rate of 4.75 per cent plus 0.24 per cent in years one and two, followed by the base rate plus 1.25pc per cent in years three to five, followed by the variable rate; a two-year fixed rate at 3.79 per cent; and a five year fixed rate at 5.49 per cent. Application fees start at £375, depending on the valuation and there is a £250 reservation fee.

According to the building society, a typical customer buying in southern Spain pays £196,462, compared to £168,614 a year ago. Borrowing averages 58 per cent of the value of the property and the typical mortgage is £113,184 over 16 years.

Anyone finding it difficult to arrange finance could remortgage their UK property to release equity.

Source: Telegraph

Britons looking to invest overseas could do a lot worse than buying a place in Cyprus, a new report claims.

Since 2000 house prices in Cyprus have tripled, property group Assetz reports, with an 18 per cent rise in 2004. Over the last 12 months UK house prices rose just seven per cent, Nationwide said last week.

The island’s 340 days of sunshine a year make the country an attractive buy-to-let investment, and these are coupled with climbing house prices and European Union membership.

Additionally, Cyprus is set to join the euro in 2007, which Assetz believes will see property values rocket 50 per cent and mortgage rates fall from the current 7.5 per cent to the eurozone level of 3.5 per cent.

“Prices [on Cyprus] are still considerably lower than in France or Spain - a three-bedroom detached villa with a private pool would currently set you back around £250,000 in a quality location, which would probably only stretch to a large two-bedroom apartment in the South of France,” said Stuart Law, managing director of Assetz International.

And he said that growth in house prices was set to continue, due to interest from buyers across Europe and an undersupply of property.

Assetz points to Paphos as the top current location, with the Polis and Larnaca areas cheaper to invest in and seen as “up and coming”.

However, there are potential problems with investing in the Mediterranean island as well.

“There is a ’sixty day rule’ for registering land purchases in Cyprus when buying off plan. It is essential for the buyer’s lawyer to register the purchase within sixty days in order to preserve the purchaser’s legal rights over the land on which the building will sit,” Mr Law pointed out.

“If this is not done, the land remains the property of the developer until after the development is completed or beyond,” he explained.

He added: “I would also warn investors to limit their property investments for the time being to Southern Cyprus.

“Since restrictions on movement and trade in the north were lifted when Cyprus joined the EU last year, many Greek Cypriots have returned to land they lost and are claiming restitution or negotiation with one particular high-profile court case in the papers just last week. For this reason I would not advocate buying in the North until these issues have been resolved.”

Source: MyFinances

According to available statistics, the United Arab Emirate’s real estate market is expected to jump to 230 billion dirhams ($63 billion) in the next seven years which is an unparalleled achievement given the size of the country.

The sustained uptrend in global oil prices has contributed to this phenomenal growth leading to availability of surplus funds especially with the Gulf Cooperation Council (GCC) governments. Development of property and real estate has given rise to a host of property developers, financial institutions and fund management companies spread throughout the UAE with the main concentration being in Dubai.

Emaar Properties of Dubai has started construction of Burj View East Tower, the third and final high rise building in a three-tower project. Burj View is the world’s tallest tower, providing panoramic view of Downtown Dubai.

The project is expected to be completed by early 2008. The project offers one and two bedroom Burj Views residences covering an area of 726 square feet to 1400 square feet and offering a unique combination of amenities and unprecedented value.

Since its inception a year ago, the Dubai-based home finance company, Tamweel financed property worth 1.7 billion dirhams ($463 million). Tamweel’s meteoric growth within less than one year is ascribed to the fact that it has addressed a core sector of property market by affording a range of innovative products and working on distinct service strategies.

Jumeirah Beach Residence is perhaps the world’s single largest residential-cum-commercial property development project stretching along 1.7 kms of Jumeirah Beach. Besides Jumeirah Beach Residence, Dubai Properties has one more equally prestigious project, Business Bay. Both Jumeirah Beach Residence and Business Bay have been extensively exhibited at Home Owner Exhibition in Dubai which attracts visitors from the Gulf, the Middle East, United Kingdom, the whole of Europe, Russia, India, Americas and Australasia.

It is not only the residential or commercial towers/complexes which attract investors from the real estate market, even leisure and entertainment segment is making waves to leave a mark on Dubai’s property scene.

Tulip Business Developers’ flagship project, “Westside Marina” is worth 84 million dirhams and it offers the highest standard of designer, quality and luxury living to Dubai residents. It offers 67 luxury apartments of one to two bedrooms each with a price tag of 1.2 million to 1.8 million dirhams with 13 different layouts inclusive of six garden apartments with their own private gardens. Tulip is also investing more than $82 million (300 million dirhams) in Dubai Properties’ Business Bay and Palm Deira projects.

Another equally ambitious project is “Lakepoint” freehold tower at Jumeirah Lake Towers at a cost of 300 million dirhams. LAI General Trading (a 50-50 joint venture partnership between Al Yousuf Group and Gulf General Investment Co.) will develop the 45-storeyed Lakepoint Tower which consists of 414 apartments of one, two and three bedrooms each to be offered on freehold basis. The Tower, a purely self-financed project, is set to be completed by 2007.

Another relationship has come about between Damac Properties of Dubai and M.B. International Holdings, a leading private property company that owns and manages commercial and residential properties in the U.K., the Mediterranean and Eastern Europe. In a landmark deal, Damac has sold out all retail space in its “Marina Terrace” project to M. B. International. Its senior executive praises the project as “Marina Terrace” sets new standards for opulence, exclusivity and luxury living. Its super-contemporary design and sensibility exudes grace and style…..”.

RAK Real Estate Company is slated to embark on a very ambitious project called “Mangrove” at a cost of 2.7 billion dirhams. Starting initially with large scale renovations in certain parts of Ras Al-Khaima, the company shall undertake the development of Mangrove project which covers 700,000 square meters. Created under the royal decree, the RAK Real Estate Company operates in vast and diversified spheres including construction, purchase and sale of real estate, property rental and renovation of existing buildings/properties.

Another financial institution hitting the headlines on the Gulf’s Real Estate scene is Bahrain-based Gulf Finance House (GFH). Euromoney magazine has, second time in a row, selected GFH as the best Islamic Real Estate Finance House for its cutting edge Shariah-compliant investment initiatives in the real estate sector. GFH’s Chief Executive Officer, Esam Janahi, confirmed, “Real Estate, as an asset class, yields higher returns when compared to other conventional options. The finance house has made use of lucrative opportunities thrown up by the GCC as well as overseas property markets”. GFH has successfully positioned itself as a leading financial institution with a focus on raising investments in the Gulf and placing these as private investments in projects both internationally and in the Middle Eastern region. Across the globe, GFH has investments in blue-chip properties in Spain and France. Backed by a team of management professionals, GFH has, within a short span of time since its inception, increased its assets in excess of $1 billion.

Source: MENAFN