The August interest rate cut has brought buyers back to the market, increasing demand at all levels of the market. Reports indicate that the declining property market in the South-East has begun to improve once more, raising confidence for the UK property market generally. Certainly, any large fall in house prices in the West Midlands has not materialised.
A new factor to consider in the future performance of the housing market is the widening of the SIPP’s (Self Invested Pension Plans) regulations to allow residential property to be included in investment portfolios. With substantial tax breaks and the ability to purchase a property worth 50% over the value of your pension fund, rumours of a booming property market are rife. However, as with all such schemes, caution is advised.
The reality is perhaps not a hectic rush to purchase property, but a gradual increase from 6th April 2006. Property acquisitions need to be carefully considered as the type of property is important and, with restrictions on any subsequent disposal, hasty purchases need to be avoided. SIPP’s are unlikely to suit all investors, but are expected to contribute to a substantial number of acquisitions next year.
A key element in the continued improvement of the market today is ‘realistic pricing’. This has been used to good effect in a number of recent sales from the Stafford office, from solely residential property through to farms and development sites. Once interest has been generated, sale prices achieved, particularly for development sites and barns conversion opportunities, have often been in excess of the guide price.
For example, the marketing of a range of traditional Staffordshire barns, with planning permission for three dwellings at a guide price of £450,000, came to an extremely satisfactory conclusion, once again highlighting a certain degree of confidence by developers.
Farmers and landowners continue to seek planning permissions to develop barns, with one Staffordshire local authority recently classing conversions for residential use as being equally acceptable as conversions for commercial and other uses. Further barns will be offered for sale by the Stafford office later in the year, including a range near Market Drayton with planning permission and Listed Building Consent (subject to a s.106 agreement) for five live/work units and one solely residential unit.
The live/work concept is seen to be a good compromise by local authorities that usually prioritise commercial uses over residential, although we have had to ensure that occupation conditions imposed are not overly restrictive. Conditions that are too onerous, could seriously restrict the market for the final product.
Whilst the number of farms and parcels of land entering the market has gradually increased since May, the land market is frustrated by the Single Payment Scheme arrangements. We expect that once the Entitlements have been established and the first payments made, activity will increase.
Please contact James Pegrum on 01785 220044 for further advice or to be put through to your nearest property specialist.
