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Please note that articles on this site & any other 'planning-approval' related web site does not constitute professional advice. All articles are intended to provide a general view of many subjects. We suggest you to consult a solicitor before making any important decisions.  The author is not an expert in any given field.

Property Auctions
Obscure lots
by Howard Goodie

I am not quite sure whether it is the passing of the Millennium, the advancing of the years or merely end-of-winter SAD, but two lots in my February auction have put me in a rather reminiscent mood for the start of this article. I hope that this reminiscence will lead you into the primary purpose of attending auctions - buying that bargain!

What have I seen from my rostrum and in other sale rooms that have provoked a hindsight recollection of what good buys there were? I quite frequently remember from the days when I was selling for the British Rail Property Board the long, thin strips of land which they offered which sometimes turned out to be tremendously useful and at other times did not. Before now I am sure I have cracked the hoary old joke about needing brochures of unusual length (or width) to cope with the long, thin site plans. In the days when I was selling for BR, British Rail had an urgent and justifiable need for the cash and therefore some of their sites were offered before the possibility of obtaining planning consents and negotiating rent reviews or renewals due or shortly renewable had been explored. I feel sure that with more time in the buyers' hands than in the vendors', many of those sites with additional research and work by the purchasers showed that they were bargains. There is no need to think that the British Rail Property Board in those days were the only vendors who could put cash readily available to an immediate and appropriate purpose, and it was in their interest overall to see a quick sale. There are plenty of vendors around today who also have the same need. Incidentally, I understand that many of the plots of land previously owned by the British Rail Property Board are now being offered by their successors and are listed in the Internet, and rumours in the profession suggest that only about 2,000 sites and investments are left for sale. Look out for two or three auctions coming up during the year 2000 including many of these remaining sites. Evidently the intention is that the majority should be sold before the end of the year - unless the politicians change their policies again!

part from frequently being long and thin, when I continue reminiscing about railway holdings I begin to think about how valuable cuttings or holes in the ground can be for taking fill, once you have overcome the problems of planning associated with pollution and the current level of tax on landfill. If we look at the reverse of cuttings and think of old embankments from railway lines closed many years ago, these can often contain valuable fill material for sale on, before the flattened site is ready for a saleable use. I frequently pass a site in Greater Manchester - not a British Rail one - where the lucky purchaser came to tell me what valuable sand that heap contained, and what a bargain he had. That was before I noticed that he had obtained planning consent for a car showroom, making the site even more valuable. It should have been, when I look at the prices on the windscreens of the Mercedes that are now displayed there, with many a model now priced at more than the land cost in the first place. There is the story, not apocryphal, of the six acres of land bought in a West Country sea port, which the purchaser intended to be used by his daughter for horses. The horses presumably now forage elsewhere, since on the site is one of the larger supermarkets - a lucky purchaser indeed. A similarly lucky, but not as profitable purchaser, at one of my auctions recently, bought (after the sale) a municipal lavatory - then closed down - which now hosts a major advertising site adjoining a trunk road junction. It was only last week I was reading of a property about to be auctioned, previously used as a lavatory, which had a planning consent for a café - my taste buds squirm at the thought!

So where do these reminiscences take me? How should I be advising you to weigh up auction catalogues? Here are a few suggestions:

Are there some small plots of land of obvious value to a larger development? I have not caught up with their subsequent history, but just before Christmas Clive Emson had two small plots (if I remember rightly, they were offered without reserve) which had no apparent use. Was one of our PAN readers the lucky individual who bought them, or did they perhaps not sell? Clive Emson, for all his charisma, selling from the south of London, was offering those two small plots up in the Greater Manchester conurbation. I keep on trying to persuade Clive that he should be encouraging his clients to put anything in the North West in my auctions, just down the road! But I do wonder whether either of those two plots had a ransom value, or were they just a waste of time.

This does prompt me to the next category of property which is often worth researching, and I have seen several letters from readers of PAN who have talked about the matter, and that is properties located in your own area being sold at auctions held outside the district. It is always worth while looking at many of the larger brochures, particularly of sales held in London, where occasionally lots might go cheaper because they are being sold outside their geographical area.

I was talking just a little earlier about clients who need immediate cash, and with no time to weigh up the future prospects or research the future of the properties they are offering, and do not have the time perhaps to carry out rent reviews. This leads me on to what should be your constant search for the properties that are being sold by mortgagees in possession. 'Repossession' is not necessarily to be considered synonymous with 'bargain' - you should still thoroughly and properly research your target - but it appears from their success rate that there are certain finance houses who trim their reserves in the interest of not continuing to hold repossessed houses for a long time, for the sake of reaching a high price. Thorough research of auction results, combined with critical analysis of the auction brochures, may help you to discover these special sources in the future. I must warn you however that in my experience of selling repossessed houses the prospect of obtaining a bargain is not always there, and I saw in roughly one in five cases of repossessed houses offered in my sale room that the price was more than the figure that had been asked for the property when it was offered on the market by private treaty, so don't be carried away in your bidding merely because you know the property was repossessed. Back to that recommendation - do discipline yourself to fix your upper limit before you start bidding!

And how do you judge that a property is repossessed? Maybe the auctioneer makes the job easy for you and in the brochure it has a phrase similar to "by order of mortgagees in possession". Quite frequently brochures carry the logo of the finance house for which the property is being sold - Lloyds, Halifax, Abbey National etc. This of course is likely to be an indication that the property is a repossession, but it will not always be so. Some banks and building societies are very coy about the public knowing that they have repossessed properties, and take considerable steps to avoid it being known, but you can still look for the clues. Does the principal advert for the auction contain a general list of the clients for whom the auctioneers are acting? Do the names of building societies, finance houses, or banks figure in that preliminary part of the advert? Is there an indication that certain properties are being sold on the instructions of an LPA Receiver (LPA is Law of Property Act) or 'on the instructions of a liquidator' or similar?

Without these clues, there can be more subtle indications. The solicitor acting may have as his address the head office of a building society or a bank. Even without that direct indication it is possible that the name of the building from which the solicitor operates is an indication of the Society for which he works - "Nationwide House" or similar. It may even be possible to link the solicitor's telephone number quoted, or that quoted for access to the property. If all else fails, an outright enquiry at the auctioneers' office or at the co-agent's office may reveal that the lot you are considering is the result of a repossession.

Finally, as a guide to looking for those bargains, how closely are you thinking in the year 2000 of the fringe areas of those that are in demand, that are likely to be 'on the up'? Over my period in practice there have been certain uses that have been in vogue. My immediate thought goes back to petrol stations, post offices and launderettes in the '70s and '80s, and more recently car wash sites, residential investments, mobile aerial sites, and buying-to-let, at the end of the last century. Unfortunately as yet, Internet sites don't seem to need a property base, and although we are now reading of the sale of internet domain names, they do not yet seem to be coming into the general purview of property auctioneers.

And lastly, I promised to talk to you about my two recent lots which provoked these reminiscences. I have to be a little careful, since my editor is not too fond of too much personal promotion of my business, but in mid-February my brochure starts with two lots which are titles to the Lord of the Manor. There has been an increase in sales by auction of such titles recently. Robert Smith, of the Manorial Society, is well-known for his promotion and auctions of this type of title. Although a specialised field, there still are bargains and profits to be made out of buying such titles.

The two in my latest brochure are little more than an ego-trip for the buyer since they do not appear to have any extra rights, but it is not unusual for Lord of the Manor titles to include title to road verges, which can subsequently be turned into ransom strips, or at worst produce rent from telegraph poles (or, presumably, in this day and age, mobile telephone aerials). Certain other Lord of the Manor titles contain restrictive covenants which can sometimes produce fruitful negotiations when development or re-development of land in the Manor is taking place.

A few titles include the right to hold a market. It is a specialised field, but well worthy of research for those with a historical bent. The titles are conveyed with a contract and completion in a similar way to the title for ordinary property. They are not registered. The titles date back to medieval times. Of the two that I am selling, the original Manor of Poughley in Berkshire was called a manor in 1366 and there is succession throughout the years right up to date. As far as I know there are no manorial rights attached to the title. The second is the Manor of Knossington in the county of Leicestershire, and here the title starts as early as 1086, which was the date of the Domesday Book, and its ownership has been recorded all the way through to the present day. Any manorial rights that might have existed lapsed by the end of the 19th century. With my sale only one day after St Valentine's Day, I have suggested that buying the title of either of these to turn one's beloved into a Lady of the Manor would be a unique and romantic idea.

Enough of my self-promotion. All auctioneers have unusual lots, all of them occasionally sell bargains - I hope you find one that falls cheaply into both categories. Ring my office on February 16th if you want to know the prices those Lords of the Manor sold for - or heaven help me - if they remained unsold, you will be able to discover how much it will cost to treat your beloved to a title.

Plan4 Group - Consolidating information on the web

Property investing, buy to let, buy to sell, refurbishment, income from property, business opportunities, getting started, business finance, Solicitors, working from home, liability & all other home property investing matters.

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Where to start with property investing

Property investor information is available for free with Plan4group.

There are many paths in property, and all are exciting and interesting. For a start, some of the paths in property you could choose from are in the menu.

These of course are not all of the routes you can take.

Plan4group information is mainly focused on residential and in the UK only. Once you have reviewed each path, you have lots of planning to do to make sure you are maximising the benefits of each route. It is best to try to be focused, pick a path and learn as much about it as you can. Once you have enough experience, then if you want to expand you will have a good base to start from. I have found that most people in property who have not been successful, have been so because they tried to do a bit of everything, and bit off more than they could chew. They also had unrealistic low budgets for any refurbishments or upgrades (just look at the twee tv programme property ladder). No one can tell you what is the right path for you. This is something you have to decide yourself. Research this site to find out more about buy to let and property investing in the UK.


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Buying To Sell property

When looking at buy to sell, you want to make profit in your deals.

When I look at buying to sell, I am looking to buy in my property with 1st day value in it - so that if I was to sell it on right away without doing anything, I would make a profit. I look for different types of deals to give me different returns. For example - if I had a desperate seller I do not worry about the condition of the property but what I can achieve for it if I put it straight back on the market. I call 3 local agents - describe it in the way it was described to me, and tell them I want to sell it in 4 weeks, and hope they can pick up the phone, call about 10 people and sell it. You can look at buying to sell fast, buy in below market value and put on the market at full market value without doing a thing (maybe tidy up). You can look at adding value to make the property worth more.

Reversionary Property Investments

What are reversionary investments?

Reversionary investing is where an investor buys the reversionary interest in someone else's property, usually their home. This means they are buying the rights to own the property when the owner dies or leaves. All property has some value. By unlocking the value in their home in this way, they convert from owner to tenant. The tenant can stay in the property, possibly gaining a monthly income or cash lump sum. The current owner is granted a lease that lasts the rest of their life. When an investor buys a property in this way, they are usually getting it at a discount of around 50% or more. This discount is in effect a single lump sum payment for the whole time it is anticipated the tenant will live in the property. The tenants continue to live in the home as if it was their own. It is the responsibility of the tenant to maintain it. One of the advantages of being an investor in this way is that the tenants are totally liable for all outgoings, maintenance and insurance. Whereas with buy to let property the landlord has lots more responsibility. As soon as the property is vacated possession reverts to the investor. Reversionary property investment should be viewed as a medium to long term investment.

How can I do this? To read and learn more on this topic, we suggest you visit and have a look through the Cavendish Properties website. This company specialise in this field. There are other companies on the web that term this as Equity Release - you may want to contact them also.

Buy To Let

Unravelling the different aspects of but to let and property investing.

Buy To Let can be great fun, but it can also be very hard work. You are looking at an option where you are responsible for property that people live in. This is not a responsibility you should take lightly, and you should take as many precautions as possible to make sure your tenant is safe.

When you are looking for your first buy to let property you should push out of your mind that you are buying it for you to live in. It is easy to get carried away and not buy a property because you think you would not live in it, yet it could be a good investment. I always adopt a clinical approach.

Researching an area is simple. I call up several local agents and ask them what is in demand. There is no point in buying a 2 bed flat in Birmingham if there are 20 on the books, and they are not rented - if you do buy one, you may end up forcing the rental prices down in the area, making other investors suffer. You need to take responsibility for what you invest in, and respect other investors in the market.

Look closely at what is needed, and aim for that. If it is out of you price bracket, look further a field - the Internet is a fantastic source of information for you to find area that may suit your budget. In your research, it is good to look at deeper issues of demand - are tenants requesting furniture? What level of furnishing? Do they demand car parking? What levels of involvement can you manage in letting? Using a letting agent to manage your property.

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By far the less hassle route of buy to let. You need to find a good letting agent. Once you have bought your property a good letting agent will help you prepare it for the market. They will require an inventory of items to remain in the property and of the overall condition, gas certificate and most now expect an electrical test.

The letting agent should vet your tenant and prepare the tenancy agreement. The agent should manage any calls regarding your property, and chase any overdue rent, depending on the level of service you have agreed with them. Different agents charge different management fees ranging from 5% for multiple property to about 15% for a single property.

Managing your own property

Some people like a hands on approach. I would suggest if you are new to the market that you use a letting agent for the first on and monitor the process. This should give you a guide of what to do yourself once you go it alone. There is a chance that this option can be very time consuming and demanding. You need to decide if you have time to spare for this. Use a company to source and manage your property.

The easy way out maybe? Well not always. If you find a good company who do what they promise, you could be set for life with a fantastic portfolio. It saves you time and energy - and though you may have to pay a premium for the property, it lets you have a hands off and feet up approach. Beware there are many companies that do not do what they say. You should research all companies very carefully. I suggest that taking a personal recommendation is a good approach - but make sure its not a set up - and it’s someone from the company. This is just a taster of buy to let - to get you mind focused on possibilities and options. There are many more options in this area of investment that you will discover, the more you read and network.

Bust the jargon code!

Assignment : The sale of a tenant’s entire lease to another person.
Adverse Credit
: A poor credit record.
APR : APR stands for Annualised Percentage Rate. A lender is always required to quote the APR rate when advertising a loan / borrowing rate. The lender will usually also quote the headline rate, and the APR next to it. The headline rate states the rate of interest you pay per month or per year on the mortgage, but the APR calculates the total amount of interest that will be paid over the whole term of the loan. It should also take into account any charges, which the borrower has to pay during the loan period. The APR is therefore always higher than the headline rate, and is a realistic representation of the cost of the mortgage over time.
Arrangement Fee
: The charge some lenders make for providing a loan.
ASU : Accident Sickness & Unemployment Insurance.
Base Rate
: The UK's core interest rate, set by the Bank of England. The lender’s Standard Variable Rate (SVR) is higher than the Base Rate, but is often adjusted by reference to it.
Bonding Scheme
: An agreement by members of a profession or trade to establish a central compensation fund which consumers can draw on in cases of fraud or insolvency.
Booking Fee
: The charge paid on application to secure funds, usually required for special deals such as capped or discounted rates.
: A person that advises on a mortgage or loan that will suit your needs. They usually work from a restricted range of deals.
BSA : Building Society Association, the trade body for building societies.
BTL : Buy To Let.
Building Insurance
: Insurance cover which protects the holder against damage to the property itself (although it can be linked with contents insurance in a combined policy). The amount insured may vary from the purchase price/valuation of the property depending on the type of location of the property. The valuer will usually provide a rebuild cost for insurance purposes.
Building Survey : A detailed survey of the property you are planning to buy. Also known as a full structural survey.
Buy To Let
: The practice of buying a house or flat for investment purposes. Income is provided by the tenants' rent, and capital growth (if any) by the property's increasing resale value.
Buy To Let Mortgage : A loan to buy an investment property.

Capital : The amount of money borrowed to buy your property.
Capital & Interest
: In the context of mortgages, a capital and interest mortgage is also known as a repayment mortgage. It involves paying all of the interest plus repayment of a little of the capital each month; an interest only mortgage involves only paying off the interest.
Capped Rate : A mortgage which allows your interest rate to climb or drop no higher or lower than a specified level, usually for the first few years of the loan.
Cash Back
: A mortgage that provides a borrower with an immediate lump sum payout on top of the sum borrowed to buy the property. This has to be paid for one way or the other, so cash back mortgages will typically be at a higher rate than other mortgages and will usually have redemption penalties for several years.
CAM : Current Account Mortgage.
CML : The Council of Mortgage Lenders, which has devised the Mortgage Code to ensure lenders treat customers fairly.
: This is shorthand for compulsory insurances. Some lenders, at least for certain mortgages, insist that you take out their buildings insurance – which needn’t necessarily be the most cost effective on the market. Our Mortgage Wizards allow you to select out these products if you wish to (although sometimes of course, the mortgages can be so good that it outweighs the potential disadvantage of taking the compulsory insurance).
Completion : The final stage of the house-buying process, which comes after exchange of contracts. The sale must proceed after Exchange, but Completion occurs when the property's agreed sale price (less any deposit already paid) safely reaches the seller's bank account.
Contents Insurance
: Insurance covers which protects the personal belongings your home contains. In the case of rented accommodation, the landlord is responsible for insuring those contents, which he owns, but not those owned by his tenants.
: Can refer to a property that was once a house but has been converted to a flat. Also could refer to a loft that has been converted to a room. Changing from one use to another.
: Normally carried out by a solicitor or licensed conveyancer on the buyer's behalf, conveyancing includes proving the property is really owned by its seller, making sure that all the loans secured on it are discharged, establishing its legal boundaries and searching local planning information for upcoming developments which could affect the property's value.
Council Tax
: A local authority charge, which replaced the Community Charge in 1993/94. Generally speaking, the more valuable your property is, the higher your Council Tax bill will be, although the amount for an identical property can vary considerably between different local authorities. In rented or buy to let accommodation, the tenants are usually responsible for the Council tax.
: County Court Judgment. If a County Court rules against you for defaulting on a debt, that ruling is listed on your credit record. Having such a judgment listed against you may mean you are turned down for future loans, or be expected to pay a higher rate than other customers. The Scottish equivalent of an English CCJ is a Decree.
Credit Reference Agency
: When assessing your application, a mortgage lender will study your credit records. These records are held centrally by credit reference agencies, and contain information from many different aspects of your life.
Current Account
: A bank account linked to a cheque book and/or debit card. In exchange for instant access and the ability use cheque or debit facilities, most pay little or no interest on the balance they contain.
Deeds : The formal written document, which lists exactly who owns a property and enables transfer of a property's ownership from seller to buyer. A mortgage lender will record details of their mortgage on these deeds (which means they can take ownership of the property if you default on the loan payments).
: In the context of mortgages, the deposit is the initial lump sum payment, which the buyer must contribute to the property's total purchase price.
Disbursements : The costs of the legal process that your solicitor or conveyancer will have to pay for on your behalf and which are added to their bill. (i.e. land registry searches).
Discharge Fee
: A fee charged by a lender for releasing its charge over a property once you have paid off your loan. You may incur this fee if you move to another lender.
Discounted Rate
: A mortgage which has an interest rate below the lender's standard variable rate (SVR), Bank Base Rate or Libor rate, typically for the first few months or years of the loan. The rate payable may move up and down, but the discount on SVR remains constant.
: The principle that wise investors should spread their risk among many different types of investment. A properly balanced portfolio will contain elements of share, deposit-based and property investments. Fund performance and objective achievement are not guaranteed.
Drawdown Facility
: The ability to borrow extra money through your mortgage later on, possibly after you have paid some off. You can be issued with a cheque book for this.
Early Redemption Penalties
: Fixed-rate, capped-rate, cash back and discount rate mortgages commonly carry early redemption penalties which can in some cases persist long after the initial special rate itself has expired. This can make it prohibitively expensive to move to a rival lender in the first few years of the loan. The Charcol online web site shows you the size of any redemption penalty and how it changes over time.
Employment Status
: A term used by lenders to describe potential borrowers' working arrangements. Self-employed applicants are sometimes seen as a greater risk than employees are. But many specialist lenders and mortgages have emerged in recent years designed specially for different types of employment status, and the Charcol online website has a wide variety of these in its database.
Endowment Mortgage
: A mortgage funded by an insurance-based savings plan, which may give you a bonus payment or additional returns by the end of the loan's term if it performs well.
Equities : Another name for ordinary shares.
Equity : The difference between the value of your property, and the amount of loan secured on it.
Exchange Of Contracts
: The terms of a property's purchase become legally binding for both parties when contracts are exchanged. The buyer is then committed to buying, and the seller to selling. As a buyer, you should normally ensure that building insurance from this date covers you, because even if the property were damaged badly, you would still have to buy it.
: A service, which offers no advice, but merely carries out the customer's orders.

Feuhold : A form of legal title applicable only in Scotland.
First Charge
: The legal charge a lender has over your property. They have first call on funds available from the sale of a property.
Fixed Rate
: A mortgage, which fixes your interest rate at a specified level, typically for the first few years of the loan.
Flexible Mortgage
 : A mortgage, which allows borrowers to make overpayments when they have spare cash. Other features could include the option to reduce or miss payments altogether when times are tight, and to re-borrow any overpayments. Not all flexible mortgages offer all of these features. Often useful for self-employed people, whose income varies from one month to the next. The most flexible form of mortgage is a Current Account Mortgage (CAM), which can potentially save you money by linking your current account and mortgage together.
: Ownership of the land on which a property stands.
Full Status Loan
: A loan where complete checks are made on your credit history and income.
: Using lenders funds to fuel your investment growth. Remortgage to buy more, realising equity and keeping it moving.
: Before tax.
: A growth strategy is one, which seeks to maximise the capital value of your investment without the requirement to generate any minimum level of income. Any income may be reinvested.
Ground Rent
: Annual rent paid by the owner of a leasehold property to the person who owns the freehold.
: Someone who agrees to guarantee your loan or payments should you default.

Illustration : In the context of mortgages, a lender's estimate of the monthly payments you would have to make under a particular loan arrangement, together with the costs to set it up.
Impaired Credit
: Impaired credit mortgages are specialist loans for customers whose credit problems disqualify them from using mainstream lenders' standard products. Some lenders specialise in loans like these, which are also known as adverse credit loans.
IFA : Independent Financial Adviser.
Income Multiplier : How a mortgage lender works out how much you can borrow usually by multiplying your income.
: The premium, which a borrower must pay a lender in return for use of the lender's money.
Interest-only Mortgage : With a mortgage like this, your monthly repayments cover only the interest element of the loan. You will normally need a repayment vehicle, such as an ISA, endowment or a personal pension, to repay the capital.
ISA Mortgage
: A mortgage loan funded by contributions to an Individual Savings Account. ISAs provide tax-free growth, generated mainly by stock market investment. The ISA aims to repay the loan's capital at the end of its term, but the interest element must be paid separately as you go along. It's important to remember that past performance is not necessarily a guide to future performance.
: Symbol for a thousand when added to the end of a sum of money ie £13k is £13,000.
Land Registry
: The official body responsible for maintaining records of property ownership.
: Ownership of a property, but not the land on which it stands. When the lease expires, the property reverts to the freeholder.
Lenders Reference : An endorsement from a previous or current lender to say if you have maintained your payments.
Letting Agent
: A property agent who can help landlords locate suitable properties for purchase, and who finds tenants to occupy those properties and can manages the rental process which follows.
LIBOR : London Interbank Offered Rate, the rate at which banks notionally buy and sell money to each other. LIBOR-Linked mortgages are susceptible to a change in interest rate every three months.
LTV : Loan To Value This is the amount you want to borrow divided by the purchase price. In other words, it reflects the size of your deposit. Generally, the lower the loan to value, the safer the lender will view the loan.
Missives : Scottish equivalent of exchanging contract. No deposit is required but it is legally binding.
MIG : Mortgage Indemnity Guarantee This is an insurance premium which you have to pay for some mortgages, usually when the Loan To Value is higher than a certain figure. It protects the lender to some extent if you default on the mortgage for any reason. It is important to understand that although you have to pay the premium, the lender benefits from any payout, and that if the payout doesn’t cover their costs they may seek further money from you. With many mortgages you can add the MIG to the loan, unless this takes your Loan To Value over a certain figure. The insurer may pursue the defaulter for reimbursement of any monies which have been paid out in respect of lenders claim.

Negative Equity : Where the size of your property loan is greater than the market value.
: After tax has been deducted.
No money down deal
: Using Finance to place a deposit, or finding finance that covers whole purchase. Some lenders offer Loan To Value and so if you buy a reduced price property, you may not have to put money down.
: Open Market Value The price a property fetches when there is a willing buyer and willing seller.
PPR : Primary Place of Residence, also known as Primary Domicile.
Repayment Mortgage
: A mortgage loan funded by simple monthly repayments, calculated to repay capital and interest usually over a term of 25 years (less if preferred).
: Holding back part of a loan until repairs to a property are complete.
Reversionary Interest
: This is a contractual ownership where people sell their house but they are allowed to remain living in it until some future date, usually until they die.
: Return on Investment.
: Registered Social Landlord. (Housing Association).

Sealing Fee : See Discharge Fee.
Search : A local authority search is an examination of local planning records to uncover details of any upcoming developments near the property which could affect its future value or existing restrictions on the site.
SHEP : Second-Hand Endowment Policy Endowment policies part-way through their term can sometimes be sold on the open market. Disposing of an unwanted policy in this way often produces a better price than the traditional route of early surrender. Also known as Traded Endowment Policies (TEPS).
Secured (loan)
: If you should default on your mortgage, the lender can ultimately repossess your property to recover their money. The loan is hence said to be "secured" on the property.
Self Build
: Where you design, manage and build your own property.
Self-certification : Where no proof is available, prospective borrowers are sometimes allowed to vouch for their own income. Self-employed applicants who lack the two years' record of accounts that lenders would normally require most commonly use this process, known as self-certification. Many lenders charge a small premium on self-certificate business to reflect the extra risk involved.
Sitting Tenant : Someone who has a legal right of occupation, even if the property is sold to someone else, and can apply to the local authority to have a fair rent set.
: Standard Variable Rate. A mortgage lender's main interest rate. Fixed-rate and discount loans usually switch to SVR when the special offer period expires. Conversely, tracker mortgages switch to a fixed percentage above Bank Of England Base rate (or LIBOR).
Status : A shorthand term for the borrower's credit record and employment situation. See "Non-Status Loan".
Stamp Duty
: A government tax on property purchase. Some property is exempt from this.
Sub-Prime : Borrower with adverse credit.
: The process of cashing in an unwanted endowment policy with the insurer who sold it to you. Doing this often produces a poor return for the money invested to date in the policy's early years.
: An expert examination of the property you are considering buying, aimed at discovering any structural flaws or repairs needed which you may have failed to notice yourself.
: The period of time over which your mortgage will run. Typically 25 Years or to expected retirement date if that comes first.
Title Deed
: Legal document assigning ownership of a property or land.
Tracker : Tracker mortgages link your interest rate to a benchmark, such as Bank of England base rate. The rate you pay moves up and down in line with the benchmark selected.
: Traded Endowment Policy (TEP) Another name for Second-Hand Endowment Policy (SHEP).
Under Offer : A term used when a seller of a property has provisionally accepted a buyers offer.
: A very basic survey of a property to determine its value. Mortgage lenders insist on this before lending on a property.
Variable Base Rate
: The basic rate of interest charged on a mortgage. This may change in reaction to market conditions, so your monthly payments can go up or down.
Vendor : Seller.
: Profit or return on investment.

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Schedule of Articles

property investing
property refurbishment
buying overseas property
moving house
home letting
buy to let
home improvements

top 10 celebrity areas
6 up & comming areas
5 signs that an area is up & comming
city types yearn for the country in town
your place in the sun
equity release
planning permissions & extensions
estate agents
rent or buy
buy to let
mortgage overpayment
mortgage endowments
mortgage protection
stamp duty
self build your home
electrical surveys
the cost of moving in
the perfect neighbourhood
council tax
house price league
good neighbours
stamp duty land tax
top 20 towns 2003
cut the cost of moving
interest rates
buying in scotland
dream homes
first time buyers
the worth of uk homes
bad estate agents
keeping up appearances
home improvements

Property Auctions
Do you really ned a valuer? by Howard Goodie

Did you absorb that article in Developers’ Notebook on tax saving ideas? It really gave me reminders of quite a few legitimate tax items that are worth considering. I gave it a second read the other day and felt the time was still well spent. It reminded me, too, that I have just received the news that we have secured a speaker from the accountants WJB Chiltern for our next Conference on May 25th. If you don’t note it elsewhere in this edition of PAN, we shall all be at the University of Westminster at 309 Regent Street (easily accessible in the West End) from 8.30am to 11pm - if you stay for the networking supper at the end. As I have been saying to all the enquirers, “I look forward to seeing you there”. I am sure Peter will be warning you as the Order Forms go out shortly we have already received nearly as many expressions of interest as there are places, so make sure you book early.

Thinking about other professionals has encouraged me to consider again the facet of my own work which I enjoy a close second to standing on the rostrum – building surveying and valuation. Strangely enough, I am going to encourage you to think very hard about how often you will need an expensive and thorough valuation and survey before you go out to buy at an auction. Later on in this article I am going to plagiarise part of my own book and for this I apologise to all of our readers who already own the printed word or the CD ROM.

If you are buying for restoration and resale, unless you are very confident of your own abilities and judgment you may well feel you need guidance from a builder on costs and from a selling agent on your eventual realisation figure. I would hope that you already have both in tow on the basis that they have an opportunity to profit from your endeavours as well as you. You might already have decided to cut your builder in for part of the profit, although this should not stop you from ensuring that he is fully aware of how his costs are quantified and how the profit, or dare I say, any loss, is to be split. With a common sense approach you should be able to get a pretty good idea yourself of what needs doing to a property or, alternatively, be capable enough to decide whether you need the advice of a building surveyor or structural engineer. Let me run through many of the items to look for that a surveyor ran through at our last Conference.

The first look. Always start by a slow, and I mean slow, general look round inside and out to get your bearings and familiarise yourself with the property. If you can, choose a time when it’s raining (and if it isn’t the first time, go back when it is). There’s nothing like a cold wet shower down your collar to draw attention to faulty rainwater goods!

Now start to use your common sense and start looking about you more carefully.

1. Structural failures. No one needs to be a surveyor to judge a wall is out of true or a window frame is crooked. Who straightens all the pictures in you house after the dusting? Look for noticeable cracks at the corners of door and window frames, the line of mortar in brickwork being crooked or bent and for settlement over window and door arches. Look for ceiling cornices that have cracked and crooked door lintels inside. If you must be like an old-fashioned surveyor, carry a marble in you pocket to check how sloping is the floor that your sensitive feet have already detected – or if you must, take a spirit level, just in case! Be particularly suspicious of cracks in walls that run beneath the damp proof course level. For good measure it is worthwhile giving a cursory look at other houses nearby to see whether they are suffering settlement. If they do, go back and check for incipient cracks in the same places in the structure of the one for which you are thinking of bidding. Only now is the time, if you are suspicious, to start talking to a surveyor or engineer.

2. Damp. Damp should be obvious. Smell it or feel the humidity; look for old and new damp stains; run your hands over the lower half of the ground floor walls or indulge yourself in a damp meter, if you are feeling adventurous. Then trace back the reasons for any damp you find. Leaking roof or gutters? Faulty downspouts or overflows? An old and faulty damp proof course? Faulty plumbing? They are all curable, at a cost. Then go out and find out that cost.

3. Wood. Faults. Look carefully for the flight holes and you will know you have found woodworm. Make sure you lift the carpets and the linoleum and that you look in dark small corners, under stairs and in roof spaces. If there is fresh dust and clean holes then specialist treatment is necessary. Once you find it somewhere, suspect it elsewhere. Any self-respecting woodworm turns into a little fly in it’s third year and goes prospecting! That’s when it has bored its way out through the clean hole you have found. Woodworm is treatable. Wet rot is mere deterioration in timber which has been subjected to damp and is treatable – just look for the crinkled rotted looking timbers and replace them after you have cured the cause of the damp which caused it in the first place. Dry rot is vicious. Smell, if you are lucky, as you walk into the property – like a cross between wet seaweed and a clutch of vile fungus up close. And that’s what it is. A fungus that can grow large coloured fungous mushroom-like growths. It starts with an airborne seed that fruitfully falls on damp wood in stagnant surroundings. It then grows long thin white tendril roots that go seeking dry fresh timber for further sustenance. I have seen the roots grow through an 18in thick brick wall and fill a dry cellar beyond with a thick cotton wool type mesh in 6 months. The roots will spread everywhere. You will really need a good and thorough specialist to poison and eradicate this menace and cure the conditions that fostered it’s growth in the first place. Make sure you get a contractor who gives you a guarantee that is worth much more that the paper it’s written on! Dry rot is not for treatment by amateurs and your future buyer or mortgagee will certainly need to have the guarantee. Furthermore, that guarantee is very likely only to cover the new timber that has been installed! It will not cover you or your buyer or the mortgagor against future attack of the timbers that have not been replaced.

4. The Cosmetics. This perhaps is not an item which can be covered too lightly, but it should be immediately obvious to you if the bathroom and kitchen fittings need replacing. How are the plumbing and electric installations? How’s the decorating, inside and out? Don’t skimp on any of these and don’t use paint and wallpaper just to cover up any faults.

5. The Exterior. Too often I feel people don’t think about gardens, paths and boundaries. What was that about first impressions? In housing they always count. Think of your first thoughts as you began the first inspection.

So now I’ve frightened the life out of you! If I have, maybe you should think about getting a surveyor in anyway! There are really three approaches:

1. You can call in a builder you feel you can trust. This has the advantage that you have the practical approach and a chance of a realistically quick approximate costing. On the other hand you probably have lost any chance of pecuniary recourse if he misadvised you.

2. You can get a full building survey. If you do this you should ask the surveyor to give you a full and detailed structural survey. He or she will then carry out a detailed inspection of the building and will give you a relatively comprehensive report on the nature of, and defects in the structure. He should be able to give you approximate costs for bringing the property up to scratch and to advise you on appropriate specialist firms, if you require any. The professional surveyor may well be able to advise you on market values as well. This approach is relatively expensive and you may decide that your own initial survey will be sufficient for you to decide whether you need to spend on the cost of such a report before you go to the auction. 3. You can obtain a House Buyer’s report of the kind promoted by the Royal Institution of Chartered Surveyors. This report will certainly cost less than the full building survey but is in my opinion of only limited value. You get what you pay for and this report will only give you sketchy comments on likely problems in you building.

And how, you may ask, is a property valued? Avid readers of my past columns, or my book or my CD ROM (see later), I’m afraid may already be too well aware of my answer to that question, so maybe I should avoid answering it this time. I will instead treat you to a copy of my Valuers’ Checklist so that you can do it for yourself.

Obtain as much preliminary information about the property as possible, in particular:

(a) Tenure of site.
(b) Any tenancies.
(c) Size and extent of accommodation and site.
(d) Any peculiarities of the district, situation and site.
(e)  Recent sales, purchases or lettings of the building or ones close by.

Thoroughly inspect the property inside and out.

Ascertain any outstanding defects and deficiencies that need remedying to bring the property up to good standard.

Make a provisional estimate of the costs of curing those defects or deficiencies using specialists where appropriate.

I judge the effect of those costs on the mind of a hypothetical buyer.

Obtain details of recent transactions of comparable properties.

Adjust those transactions for any rise or fall in the market over the period in which they have taken place.

Compare and adjust the information from those comparables so that it relates as closely as possible to the subject property.

For vacant properties use as far as possible values from other vacant comparables.

For investment properties consider rental levels as well as yields of comparables.

Allow for differing states of repair.

Come to a conclusion in the light of your analysis which you would hope will equal that of a would-be-buyer.

And, finally, let me give you the wisdom of the very first valuation lecture I ever attended at Cambridge by a curly red-headed Chartered Surveyor, C.W.N. Miles, who was so good that he subsequently became a Professor and the Principal of the Department of Land Economy at Reading University.

“If” he said “you are going out to value a property in a district with which you are not familiar, talk about it over lunch at the local pub, ask where it is in the local Post Office and make sure that you need to ask the way at least three times before you get there. By then you should not even need to go to see it, having been told all about it before you arrived!”

Unfortunately, with the local pub and post office now gone, you may have to rely on the local estate agent, the postman, your wits and my advice, but I’m sure you will come to the same conclusions! Good luck in your research.

Copyright 2004 all rights reserved